Chaikin, David --- "Corrupt Practices Involving Offshore Financial Centres" [2011] ELECD 998; in Graycar, Adam; Smith, G. Russell (eds), "Handbook of Global Research and Practice in Corruption" (Edward Elgar Publishing, 2011)

Book Title: Handbook of Global Research and Practice in Corruption

Editor(s): Graycar, Adam; Smith, G. Russell

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849805018

Section: Chapter 11

Section Title: Corrupt Practices Involving Offshore Financial Centres

Author(s): Chaikin, David

Number of pages: 21

Extract:

11 Corrupt practices involving offshore
financial centres
David Chaikin


INTRODUCTION

This chapter explores the relationship between offshore financial centres
(OFCs) and international criminal activity. The first part examines the
phenomenon of OFCs and canvasses three important research issues:
whether OFCs are more susceptible vehicles for transnational crimes,
whether OFCs have been captured by onshore financial institutions and
professionals, and whether there is any meaningful difference between
OFCs and tax havens. The next section outlines the legitimate uses of
OFCs, pointing out that a lack of information about OFCs makes it dif-
ficult to provide an objective judgement of their licit and illicit role in
international commerce.
From a criminological perspective, the hallmark of OFCs is their lack of
transparency, which is generally regarded as a major obstacle to the pre-
vention and investigation of transnational crimes, including corruption.
The secrecy structures of OFCs are not only based on their banking and
financial secrecy laws, but also and perhaps more importantly on the wide-
spread use of international business companies (IBCs). However, many
of the secrecy features of IBCs, such as nominee ownership, corporate
directors and bearer share are also found in onshore jurisdictions, raising
the question of whether a lack of transparency is an exclusive problem of
OFCs.
The role of OFCs in providing corrupt facilities is illustrated by the liter-
ature and practical cases concerning organized crime, money laundering,
shell bank fraud, grand corruption, illicit capital flight and international
tax evasion. More recently, the Global Financial Crisis has raised ...