Illicit Money: Can it be stopped
Usefully for readers who have not previously encountered the offshore economy and secrecy jurisdictions, Raymond and Eva locate these phenomena in an historical context that broadly coincides with the period of decolonisation in the 1960s:
Minor parts of this system were in existence earlier, but the 1960s marked the take-off point for two reasons. First, from the late 1950s through the end of the 1960s, forty-eight countries gained independence from colonial powers. Many leaders in these new countries, sometimes influenced by domestic instability and cold war politics, wanted to take money abroad: bankers in Western countries responded by devising creative strategies such as the use of secret accounts and false invoices for moving such large sums across borders. . .
Second, during the 1960s a number of large corporations became multinational, establishing hundreds of locations across the globe, sometimes even moving corporate headquarters offshore. "Tax planning" - devising creative ways to reduce or avoid corporate taxes - became a normal practice.
Thus decolonization and the growing international reach of corporations propelled the development of a whole system of offshore finance that was designed to avoid taxes and regulation. In the process, the system also obscures the origin and destination of the increasingly large sums of money passing through it.
The article proceeds by exploring the implications of the creation of a system which was turbo-charged by the financial market de-regulation initiated by Margaret Thatcher and her American best friend Ronald Reagan. The consequences are clear for all to see: combining secrecy with unimpeded capital mobility and uneven regulation has made financial markets that are criminogenic in nature and almost purpose-built to support illicit financial flows.
Read the article.