College Papers

p.p1 0.0px 0.0px 0.0px 0.0px; text-align: center; line-height:

p.p1 {margin: 0.0px 0.0px 0.0px 0.0px; font: 12.0px ‘Times New Roman’; color: #000000; -webkit-text-stroke: #000000}
p.p2 {margin: 0.0px 0.0px 0.0px 0.0px; font: 12.0px ‘Times New Roman’; color: #000000; -webkit-text-stroke: #000000; min-height: 15.0px}
p.p3 {margin: 0.0px 0.0px 0.0px 0.0px; text-align: center; font: 13.0px ‘PT Serif’; color: #f79646; -webkit-text-stroke: #f79646}
p.p4 {margin: 0.0px 0.0px 0.0px 0.0px; text-align: center; line-height: 14.0px; font: 13.0px ‘PT Serif’; color: #f79646; -webkit-text-stroke: #f79646}
p.p5 {margin: 0.0px 0.0px 0.0px 0.0px; font: 12.0px ‘PT Serif’; color: #000000; -webkit-text-stroke: #000000}
p.p6 {margin: 0.0px 0.0px 0.0px 0.0px; line-height: 14.0px; font: 12.0px Times; color: #000000; -webkit-text-stroke: #000000}
p.p7 {margin: 0.0px 0.0px 0.0px 0.0px; line-height: 14.0px; font: 12.0px ‘PT Serif’; color: #000000; -webkit-text-stroke: #000000}
p.p8 {margin: 0.0px 0.0px 0.0px 0.0px; font: 12.0px Helvetica; -webkit-text-stroke: #000000; min-height: 14.0px}
p.p9 {margin: 0.0px 0.0px 0.0px 0.0px; line-height: 14.0px; font: 12.0px ‘Times New Roman’; color: #000000; -webkit-text-stroke: #000000}
p.p10 {margin: 0.0px 0.0px 0.0px 0.0px; line-height: 14.0px; font: 12.0px Times; color: #000000; -webkit-text-stroke: #000000; min-height: 14.0px}
span.s1 {font-kerning: none}
table.t1 {border-collapse: collapse}
td.td1 {width: 239.0px; height: 21.0px; background-color: #4f81bd; border-style: solid; border-width: 1.0px 1.0px 3.0px 1.0px; border-color: #ffffff #ffffff #ffffff #ffffff}
td.td2 {width: 240.0px; height: 21.0px; background-color: #4f81bd; border-style: solid; border-width: 1.0px 1.0px 3.0px 1.0px; border-color: #ffffff #ffffff #ffffff #ffffff}
td.td3 {width: 239.0px; height: 30.0px; background-color: #cfd7e7; border-style: solid; border-width: 3.0px 1.0px 1.0px 1.0px; border-color: #ffffff #ffffff #ffffff #ffffff}
td.td4 {width: 240.0px; height: 30.0px; background-color: #cfd7e7; border-style: solid; border-width: 3.0px 1.0px 1.0px 1.0px; border-color: #ffffff #ffffff #ffffff #ffffff}
td.td5 {width: 239.0px; height: 38.0px; background-color: #e8ecf4; border-style: solid; border-width: 1.0px 1.0px 1.0px 1.0px; border-color: #ffffff #ffffff #ffffff #ffffff}
td.td6 {width: 240.0px; height: 38.0px; background-color: #e8ecf4; border-style: solid; border-width: 1.0px 1.0px 1.0px 1.0px; border-color: #ffffff #ffffff #ffffff #ffffff}
td.td7 {width: 239.0px; height: 22.0px; background-color: #cfd7e7; border-style: solid; border-width: 1.0px 1.0px 1.0px 1.0px; border-color: #ffffff #ffffff #ffffff #ffffff}
td.td8 {width: 240.0px; height: 22.0px; background-color: #cfd7e7; border-style: solid; border-width: 1.0px 1.0px 1.0px 1.0px; border-color: #ffffff #ffffff #ffffff #ffffff}
td.td9 {width: 239.0px; height: 30.0px; background-color: #e8ecf4; border-style: solid; border-width: 1.0px 1.0px 1.0px 1.0px; border-color: #ffffff #ffffff #ffffff #ffffff}
td.td10 {width: 240.0px; height: 30.0px; background-color: #e8ecf4; border-style: solid; border-width: 1.0px 1.0px 1.0px 1.0px; border-color: #ffffff #ffffff #ffffff #ffffff}
td.td11 {width: 239.0px; height: 30.0px; background-color: #cfd7e7; border-style: solid; border-width: 1.0px 1.0px 1.0px 1.0px; border-color: #ffffff #ffffff #ffffff #ffffff}
td.td12 {width: 240.0px; height: 30.0px; background-color: #cfd7e7; border-style: solid; border-width: 1.0px 1.0px 1.0px 1.0px; border-color: #ffffff #ffffff #ffffff #ffffff}

Secrecy jurisdictions are best defined as ‘places that intentionally create regulation for the primary benefit and use of non-residents in their geographical domain and with the intention to provide a means of avoiding the legislation or regulation of another jurisdiction. To facilitate its use, secrecy jurisdictions also often create a deliberate, legally backed veil that ensures that the misuse or illegal profit of the concerned jurisdiction cannot, or can hardly, be identified from outside’. 
Fig 3. shows that  major characteristics for criminal entrepreneurs, offers the ability to take advantage of  the  availability of instant corporations and legislation in to support their activities. This shows that financial havens and bank secrecy jurisdiction are paramount in the circular process of Money Laundry. 

Major Characteristics 

 Additional Characteristics

No deals for sharing tax information with other countries

A free-trade zone

The availability of instant corporations

Flag-of-convenience shipping registry

Corporate secrecy laws

Large tourist trade which can help explain major inflows of cash

High degree of economic dependence on the financial services sector

Fig 3: Features of an Ideal Financial Haven Major Characteristics 

Fig 4 

Offshore financial centres are invaluable to the contraction of the global economy. Its role is to provide finical services through its banks to non residents. It is as a result of a conscious effort by the jurisdiction to create a specialisation in the market, in order to create major government revenue streams. Secrecy jurisdictions are reluctant to cooperate with others jurisdictions and is only open to non residents, where usually the place of regulation is unknown. From the customer point of view low tax, deregulation, no regulation for filling of accounts, strict bank secrecy for all purposes these points are seen as favourable towards the consumers interests. 

The transaction from transactional corporations such as banks provide point of access and cash flow which in turn are capitalised by criminals in offshore financial centres, its vital to acknowledge that offshore financial centres have an essential role to the global economy. As illustrated in Fig 4. Half of all global trade passes though tax heavens, it is estimated that 33% of the worlds wealth resides there. However, “financial opacity undermines the rule of law and destroys trust in the market” which can lead to lack of confidence in democracy.
Micro-states such as the British Virgin Islands and several developed countries use their legislative power and sovereignty to create an environment that induces illicit transactions. This suggests that AML agencies and FATF regulation have not brought about change to the ethical conduct within the global financial system 
However, use of tax breaks is only one way of understanding the meaning of OFCs, this  diminishes the increasing role of corruption. In the fight against ML and corruption, the Financial Action Task Force (FATF) was developed, which is an intergovernmental body whose purpose is the development of policies at national and international levels, to combat ML. FATF focus is on the political will to bring about the necessary national legislative and regulatory reforms in order to combat the effect fo the criminal proceeds. This is evident in the establishment of the ‘Anti-Money Laundry Standards’ in 1990, with a total of 49 recommendations by 2003 on how to substantively create a framework for combating money laundry and terrorist activities. 
FATF Recommendation carry no legal consequence or sanction, however countries on the the FATF blacklist were under immense financial pressure to comply with AML regulations, this has proven effective. FATF publicly recognised the progress it had made in Cyprus and in 2009 FATF issued a statement which encouraged Turkestan, Uzbekistan, Iran, Pakistan and S?o Tomé and Principle to work together on AML standards, most have taken action in implementing the regulations . As a direct result by February 2011 just two countries where deemed to have substantial ML and terrorist financing links