Countries ‘compete’ with each other to turn a blind eye to crime and the criminal origin of money. Put most simply, if you turn a blind eye, the crooks might bank with you.

It’s obviously a more nuanced picture than that.

The business model of these places is the product of two apparently conflicting offerings or incentives to international owners of financial capital.

The first is to convince them that the jurisdiction is safe, trustworthy and law-abiding.

The second is to convince many of them that they will tolerate and protect law-breaking dirty money.

This helps explain the apparent paradox that jurisdictions such as Switzerland are regularly ranked among the ‘cleanest’ and least corrupt in international corruption rankings – while also harbouring oceans of of dirty money. One useful way to understand how these two conflicting incentives are reconciled is to summarise the overall ‘offshore’ business model, colloquially, as a message to international investors that “we will not steal your money, but we will not mind if you steal someone else’s.

The U.S. financial criminologist Bill Black notes:

“The embrace of the three “de’s” by both parties – deregulation, desupervision, and de facto decriminalization – has created ever more criminogenic environments that cause crises to become more severe.
. . .
The finance industry in the U.S. and the U.K claims that their nation must win the regulatory “race to the bottom” so that they can out-compete residents of the other financial center.”


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