NCJ Number
193911
Date Published
January 2000
Length
126 pages
Annotation
This report presents the results of research conducted as part of Project EUROSHORE, which is intended to protect the European Union (EU) financial system from the exploitation of financial centers and offshore facilities by organized crime.
Abstract
The report begins by examining the point at which the demand for financial crime meets the supply of financial services furnished by financial centers and offshore jurisdictions. This report discusses the rationale for such exploitation by organized crime. It concludes that the combination of the facilities provided by offshore jurisdictions and the increasing availability of information about them may heighten the risk of their exploitation by organized criminals. In order to suggest effective remedies, this report discusses in which jurisdictions and sectors of regulation these financial facilities are to be found, and it attempts to quantify them. The underlying assumptions on which this research has been based are that the risk of exploitation is a function of asymmetries in regulation; and that protection of the EU financial system is a function of the risk of exploitation. Summarizing the two functions implies that the protection of the EU financial system depends on the level assumed by asymmetries in regulation between EU countries and offshore jurisdictions. This research examined which group of jurisdictions deviates most markedly from the general integrity standards and in which sectors; the asymmetries in each of these sectors and in which group of jurisdictions; and remedies to reduce the risk of exploitation and to ensure the best protection of the EU financial system. Remedial recommendations are to harmonize and raise, when necessary, the level of regulation among EU member states; export the standards thus achieved to financial and offshore centers to reduce the asymmetries between the regulatory system of financial centers and offshore jurisdictions and those of the EU member states; and prevent EU financial mechanisms from receiving financial transactions that originate in financial and offshore centers outside the EU, unless they meet the level of regulation of the EU member states. Extensive figures and tables