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8 J. Fin. Crime 7 (2000-2001)

handle is hein.journals/jfc8 and id is 1 raw text is: ANALYSIS Regulating against White-Collar Crime in the Financial Services Sector George P. Gilligan As the forces of globalisation gather pace, national economies are becoming more internationalised and interdependent, and the power of individual nation- states is being diminished in relative terms. Increas- ingly, individual countries are less able to control their national economics. One consequence of these developments is that regulatory structures and pro- cesses are becoming more internationalised and a variety of modes of global governance is emerging. These shifts in regulatory power are apparent in the growing influence of bodies such as the Basle Com- mittee on Banking Supervision (BCBS); the Finan- cial Action Task Force (FATF); the International Organisation of Securities Commissions (IOSCO); the Organisation of Economic Cooperation and Development (OECD); and the World Trade Organisation (WTO). Similar shifts are facilitated through networks of specific agreements between professional and industry associations, and state- sanctioned self-regulatory organisations (in particular through Memoranda of Understanding - MoUs). However, although there is a trend towards growing regulatory harmonisation, different national aid cultural influences impact upon national systems of regulation, and in international contexts these values may conflict. Given these developments, it is becoming increasingly important to understand how regulatory structures and standards function in different countries. Two elements that are constant in nearly all jurisdictions are the acknowledgement of public-interest concerns in regulatory systems and the need for compliance with regulatory standards. This paper considers the issue of regulating against white-collar crime in the financial services sector in the contexts of promoting regulatory compliance and the representation ofnotions ofthe public interest. WHITE-COLLAR CRIME IN THE FINANCIAL SERVICES SECTOR In most advanced industrial economies entre- preneurial skills have assumed primacy and this affects the classification of what is considered legitimate and illegitimate activity. Aubert's comment of almost 50 years ago, that the perceptions of both the general public and the perpetrators of white-collar crimes may not be congruent with those legal definitions that do exist, still has resonance today.i In fact some white-collar misconduct can have economic value for a community. This may be particularly true for the financial services industry, which is highly resis- tant to external interference and is the engine of the enterprise culture that dominates most advanced economies. One result of this economic and political reality is that it can be more difficult for law enforce- ment agencies to be proactive against white-collar offences by increasing regulatory obligations if this enforcement reaction is interpreted as stifling enter- prise and raising production costs, thereby reducing economic benefits for society. Regulatory agencies must operate in a political environment, continually making political and moral decisions regarding how they can best employ their usually limited regulatory resources in the law-making/law-breaking/law enforcement process. A partial explanation of why many white-collar offenders escape punishment is the fact that harm is a concept crucial to the process of penalising conduct and deciding sanctions.2 In comparison to many conventional offences, the effects of white- collar crime are often diffused over a long period of time so that many people do not recognise its occur- rence. White-collar crime is largely impersonal, the offender/victim relationship is distanced, and the links between its regulation and social mores are weak in comparison with more conventional offences.3 This makes punishment of many white- collar offences less likely because it can be difficult to apply culpability and demonstrate intention to harm. Many white-collar crime behaviours attract limited or ambiguous censure. In fact ambiguity permeates the definition and regulation of white- collar crime and these factors can be mutually © Emerald Backfiles 2007 Journal of Financial Crime Vol SNo 1.2000.p0 7-11 iHenry Stewart Publications ISSN 969-6458

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