Risk impact is in the eye of the beholder: The difficulties faced by the regulator in an offshore financial centre

Paul Coleman

Journal of Financial Compliance, 2017, vol. 1, issue 1, 37-45

Abstract: Protecting the financial integrity and reputation of the financial sector by achieving strong anti-money laundering and combating terrorist financing regimes is a crucial responsibility of the regulator. Conflicting objectives exist between the regulator and the financial institution based upon their assessment, should money laundering occur, of the reputational impact to the country’s financial sector and to the financial institution itself. The expectation of the regulator, through rigorous supervision, to uphold the integrity of the financial sector continues to increase. While agreeing with the concept of effective management of money laundering and terrorist financing risks, the financial institution must protect the integrity of the financial system in the context of an environment of demanding cost constraints. This paper considers the impact of centralisation as a cost effective operating model against the increasing demand and expectations for robust regulatory compliance, highlighting the conflicting objectives of both the regulator and the financial institution.

Keywords: offshore financial centre; anti-money laundering (AML) compliance; risk; transaction monitoring; regulator; regulatory fines (search for similar items in EconPapers)
JEL-codes: E5 G2 K2 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jfc000:y:2017:v:1:i:1:p:37-45

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