financial crime thesis

Prevention and Control of Financial Fraud: a Scoping Review

• Published: 22 November 2022

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• Sofie Gotelaere   ORCID: orcid.org/0000-0002-3033-6782 1 &
• Letizia Paoli   ORCID: orcid.org/0000-0002-3609-9239 1  

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As awareness has grown internationally of the harms caused by financial fraud, there has been a concomitant increase in efforts to prevent and control it. Despite this growing awareness, the literature addressing measures against financial fraud has not yet been systematically reviewed or synthesised. On the basis of a scoping literature review, this study provides a structured overview of the literature on prevention and control measures targeting financial fraud ( n  = 159). We classify these measures on the basis of four functions specified by Maesschalck and Bertók (2009): “determining and defining,” “guiding,” “monitoring,” and “enforcing.” Looking at a period of just over 20 years, we see that a growing number of studies have been published on this topic, with most focusing on “monitoring” ( k  = 98) and the least on “enforcing” ( k  = 37). With 11.3% and 12.0% of the studies respectively, both criminology and Europe are less represented in the literature than expected. Most studies are cross-sectional, many are methodologically weak, and they all provide only limited information on the effectiveness or the costs of the anti-fraud measures. The literature is thus not up to the challenge of facing what has become one of the most frequent and threatening crimes worldwide. In the conclusion, we sketch an agenda for future research to help address this gap.

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Acknowledgements

The authors thank the participants of the consultation exercise and the anonymous reviewers for their very helpful comments and suggestions.

The study is part of the Prevention of Fraud in Sports (PrOFS) project. Research Foundation Flanders granted funding for this project within their Strategic Basic Research (SBO) funding scheme (grant number S005521N).

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Gotelaere, S., Paoli, L. Prevention and Control of Financial Fraud: a Scoping Review. Eur J Crim Policy Res (2022). https://doi.org/10.1007/s10610-022-09532-8

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Article contents

Finance crime.

• Arjan Reurink Arjan Reurink Divison of Sociology of Markets, Max Planck Institute for the Study of Societies
• https://doi.org/10.1093/acrefore/9780190264079.013.272
• Published online: 20 November 2018

Finance crime, that is, white-collar crime that occurs in the markets for financial goods and services, appears to be pervasive in 21st-century capitalism. Since the outbreak of the global financial crisis of 2007–2008, virtually all established financial institutions have been implicated in finance crime scandals, ranging from the mis-selling of financial products to money laundering and from insider dealing to the rigging of financial benchmarks. The financial stakes involved in such scandals are often significant, and at times have the potential to destabilize entire economies. This makes the phenomenon of finance crime a highly relevant topic for white-collar crime researchers. A major challenge, however, for those studying the phenomenon of finance crime is to engage with the complex mechanics of finance crime schemes. These often involve esoteric financial instruments and are embedded in arcane market practices, making them seem impenetrable for those unfamiliar with the intricacies of financial market practices. A helpful way to make the empirical universe of finance crimes intelligible is to construct a typology. This can be meaningfully done by distinguishing finance crimes by the different rationales that underlie the laws and regulations they violate. Doing so renders five main types of finance crime. These are (i) financial fraud, (ii) misuse of informational advantages, (iii) financial mis-selling, (iv) market price and benchmark manipulation, and (v) the facilitation of illicit financial flows.

White-collar crime scholars have taken various theoretical and analytical approaches to the study of finance crime. Some scholars have studied finance crimes in the light of their macro-institutional contexts. Such approaches are based on the premise that actors find meaning—motivations and rationalizations—and opportunities for their actions in the cultural and institutional environments in which they are situated and that such environments can be criminogenic in the sense that they structurally facilitate or even promote illegal behaviors. Others have studied the organizational dimensions of finance crime, looking at both the social networks through which finance crimes are perpetrated as well as the ways in which these networks are embedded in broader organizational and industry structures. Still others have studied the costs, consequences, and victims of finance crimes. Finally, some white-collar crime scholars have studied the ways in which societies create legal regimes that prohibit certain financial market practices as well as how these prohibitions are subsequently enforced by regulatory agencies, public prosecutors, and the courts.

• finance crime
• financial crime
• financial misconduct
• financial fraud
• financial corruption
• white-collar crime

Defining Finance Crime

The term “finance crime” is used here to refer to white-collar crimes that occur in the markets for financial goods and services—that is, banking, investment, securities, mortgages, pensions, and insurance. In accordance with standing practice in the broader white-collar crime literature, the “crime” label is used here in a broad sense as a characteristic of a course of action that provides sufficient grounds for a regulatory enforcement action, successful private litigation, criminal prosecution, or all of these. Thus understood, the notion of finance crime is not limited to conduct that breaches criminal laws but includes a wide range of regulatory and civil offenses, ranging from the mis-selling of financial products to money laundering and from insider dealing to the rigging of financial benchmarks.

Most white-collar crime researchers make no explicit conceptual distinction between white-collar crime and finance crime. There are, however, good reasons to do so. As Friedrichs ( 2013 ) notes, the financial stakes involved in finance crimes are typically much larger than those involved in other types of white-collar crime and in some cases, finance crimes have the potential to destabilize entire economies. To this could be added that the social context in which most finance crimes take place is a unique one. Criminological and anthropological work has suggested the existence of a distinct finance subculture in which “amorality” is the guiding principle and in which transgression has become an occupational risk that is no longer subject to the discourse of criminality (Luyendijk, 2015 ; Stanley, 1996 ; Tillman, Pontell, & Black, 2018 ). This unique finance culture is both reflected in and facilitated by the physical isolation of financial centers such as Wall Street, Canary Wharf, and the City of London, from surrounding business activities. A third reason to conceptually distinguish finance crime from other forms of white-collar crime has to do with the unique challenges related to the social control of such crimes. Many of these crimes are committed by, or in the context of elite financial institutions that sit at the very heart of the global economy and that maintain close ties with countries’ economic and political elites. As a result, those responsible for policing those institutions are reluctant to use the full force of the law, as they fear this could imperil the stability of entire economies as well as their own career prospects. Moreover, these influential connections go a long way in explaining the lack of regulatory scrutiny that allows financial elites to commit their crimes in the first place.

A Typology of Finance Crimes

Finance crimes come in many forms. Concrete acts of finance crime vary widely in their representation, depending on the market segments in which they are perpetrated, the financial instruments they pertain to, and the actors involved. Not only is the empirical universe of finance crimes a vast one, it also is a highly complex one. This is because finance crimes often involve esoteric financial instruments and are embedded in arcane market practices and institutional arrangements. As a result of this, the empirical universe of finance crimes may seem impenetrable to those who lack the necessary knowledge about the intricacies of financial market practices. To make the empirical universe of finance crimes intelligible and to facilitate future research, this section presents a typology that distinguishes different acts of finance crime by the different rationales that underlie the laws and regulations they violate.

Financial Fraud

A first type of finance crime is that of financial fraud. The term financial fraud is used here to refer to the unlawful falsification, manipulation, or omission of financial information with the aim of inducing other market participants to enter into financial contracts where, given perfect information, they would not have done so. Financial information acts as the linchpin for financial market transactions. Participants in financial markets merely exchange intangible rights and obligations, the present and future value of which depends entirely on the status and future performance of the issuer (Lomnicka, 2008 ). Thus, no financial market participant can make proper decisions with regard to engaging or not engaging in financial contracts without having accurate information about the contract itself, the issuer of the contract, and contextual conditions affecting the contract. To facilitate the provision of information to the market and to safeguard the integrity of such information, financial regulators have imposed disclosure requirements as a central pillar of financial market regulation in all developed financial markets. Disclosure requirements prescribe that issuers of financial instruments and providers of financial services disclose to the market and their counterparties all relevant information and that they do so in a timely manner. By disseminating lies and untrue facts, financial fraudsters corrupt this essential flow of information. Conceptually, it is possible to distinguish between two subtypes of financial fraud.

Financial Statement Fraud

A first subtype of financial fraud is that of financial statement fraud. Financial statement fraud occurs when financial market participants make false statements about the true nature or financial health of an investment outlet—a company, fund, borrower, or investment product. Notwithstanding the deceptive element, misrepresentations that constitute financial statement fraud pertain to otherwise legitimate enterprises, actors, or products. This distinguishes them from investment scams, which make up the second subtype of financial fraud. Financial statement frauds can be observed in a great variety of contexts. For example, a company’s management may issue fraudulent financial statements to mislead investors or regulators about the financial health and future prospects of the company. Such financial statement fraud in the context of publicly listed corporation is also commonly referred to as “accounting fraud.” Alternatively, actors seeking insurance or applicants for mortgage loans may make false statement about their income, assets, or liabilities in an attempt to ensure better terms for a financial contract.

Another context in which financial statement frauds have repeatedly surfaced over the last decades is at the proprietary trading desks of securities firms and investment banks. Securities traders working at these trading desks have repeatedly been found to have manipulated accounts and internal control systems to cover up unauthorized trades or to make their trading activities look more profitable and/or less risky than they were. The “rogue trading” case that is probably most infamous is that of Nick Leeson, a young derivatives trader working at the British investment bank Barings who lost over a $1 billion for the firm in an elaborate scheme that he built up over three years (see Fisher QC, 2015 ; Kane & DeTrask, 1999 ; Krawiec, 2000 ). Leeson began his career at Barings in 1989 , settling trades in the bank’s back office. After being transferred to the Baring’s Singapore office, Leeson was soon promoted to become a speculative trader dealing in futures contracts. From his promotion in 1992 until early 1995 , Leeson reported increasingly large profits on apparently riskless arbitrage trading. The large profits he made for the bank, soon granted him the status of star trader and motivated management to subject him to less stringent trading limits and less oversight. Leeson was even permitted to settle his own trades, a highly unusual and questionable combination of roles. As it later turned out, Leeson in fact started to experience losses not long after he commenced trading for the bank. Hoping that he could trade out of trouble, Leeson speculatively increased his positions in futures contracts in the hope that the market would turn and revert to an upward trend. Meanwhile, he used an error account—superstitiously numbered 88888—to conceal his deteriorating trading positions. Leeson persuaded a back-office programmer to alter the Barings account system so that information about the account would not be reported back to the head office in London. Investigations conducted after the scandals revealed that on multiple occasions management at Barings had received warnings from auditors, competitors and SIMEX, the exchange on which Leeson was trading. However, given the large profits reported by Leeson, management choose not to act upon those warnings, effectively joining Leeson in his gamble that the market would move in favor of his trading positions. Leeson was eventually sentenced to several years in prison.

Investment Scams

The second subtype of financial fraud is that of investment scams. Investment scams are deceptive and fully fraudulent schemes in which fraudsters, often assuming a false identity or exhibiting a misplaced aura of trustworthiness, convince, mislead, or induce people to voluntarily interact with the fraudster and, ultimately, to willingly hand over money or sensitive information related to their personal finances. (Reurink, 2016 , p. 35)

Financial scams are different from financial statement frauds in that, unlike the latter, they are designed from the beginning as con games or larceny schemes.

The investment scam that has in recent years attracted most media coverage and academic scrutiny is the multibillion Ponzi scheme perpetrated by Bernard Madoff. Although exact figures vary from source to source, Madoff allegedly cheated about 4,000 to 10,000 investors in his scheme of somewhere between $15 billion and $65 billion (Geis, 2013 , p. 89). In the scheme, which lasted over an extended period of approximately 40 years, Madoff offered his clients—a truly global clientele that included large and established financial institutions—an unfluctuating return of 10% to 12% per year regardless of market conditions (Nolasco, Vaughn, & Del Carmen, 2013 , p. 376). Madoff explained these returns as the result of a complex “split-strike conversion” investment strategy. In reality, Madoff never made any investments, instead using the money coming in from newly acquired clients to pay returns to existing clients. What in hindsight comes as a surprise is that apparently his clients never exercised any serious due diligence. Madoff had his multibillion enterprise audited by Friehling & Horowitz, a little-known three-person accounting firm with only one certified accountant on its payroll (Geis, 2013 , p. 90). Even more surprising is that not only investors but also regulators took Madoff on trust. Over the years, investigators conducted several investigations into Madoff’s enterprise but never bothered to cross-check trades with supposed counterparties and did not check the stock records against the central securities depository: acts that would almost certainly have revealed the scam Madoff was operating (Lewis, 2012 ). As is often the case with Ponzi schemes, it appears that the lack of due diligence was due to the fact that Madoff enjoyed a high level of credibility, both because of his membership in the Jewish community, which harbored many of his clients, and because of his star status on Wall Street.

Misuse of Informational Advantages

This type of finance crime groups a number of behaviors in which financial market participants illegally misuse privileged information not available to other financial market participants. As emphasized in the previous section on financial fraud, information acts as the linchpin for financial market transactions, and regulators in most jurisdictions impose disclosure requirements on financial market participants. As a corollary to the principle of disclosure, securities laws in most countries prescribe that all investors should have equal access to the disclosed information. The only permissible informational inequalities arise from the various market participants’ abilities to analyze and interpret information. In reality, however, information is not evenly distributed. Some financial market participants have informational advantages over others. This may be due, for instance, to a managerial position in a firm or a work role that in some other way exposes them to undisclosed information. Although having such an informational advantage is not in itself illegal (in fact, the existence of informational advantages cannot realistically be avoided), improper disclosure (tipping others off) or trading upon it prior to disclosing it to the market has been prohibited by law in most countries.

Insider Trading

The classical example of the misuse of informational advantages is “insider trading,” which refers to trading on the basis of undisclosed information in the market for corporate securities. Such undisclosed information may involve confidential knowledge of imminent takeovers, quarterly earnings that are about to be reported, or the public announcement of a successful patent application. Such information is typically obtained through corporate insiders: actors that have privileged access to information about the operations and strategy of a publicly listed firm due to the fact that they hold a managerial or boardroom position in the relevant firm, they serve in an advisory role (think of investment bankers, accountants, lawyers, consultants), or because they are employed in lower-level positions that expose them to sensitive information (think of administrative staff responsible for preparing and printing of a firm’s annual reports). Once disclosed to the market, such information is likely to have significant price effects on the stock of the relevant firm. Market participants engaging in insider trading anticipate these price effects.

A recent high-profile example of insider trading is the case that evolved around the multibillion-dollar hedge fund Galleon and its founder Raj Rajaratnam (Colesanti, 2011 ; Packer, 2011 ). Being a hedge fund, Galleon’s business model was based on voraciously collecting, combining, and analyzing bits and pieces of publicly available information in order to generate unique insights about a company that diverged from the general consensus among investors. By then investing large sums of money in that company’s securities, Galleon hoped to benefit from expected price movements from those securities once the insights became part of the general consensus among investors. Galleon appeared to be highly successful in such information processing. As it later turned out, a considerable part of Galleon’s investment successes were attributable not to enhanced information processing capabilities but to privileged access to confidential inside information obtained illegally through a network of informants. This network included executive managers of large Silicon Valley tech firms, an analyst at credit rating agency Moody’s, as well as people who held prominent positions in the financial sector. Most of the informants held direct or indirect investments in Galleon and thus benefited personally from the unlawful trades they helped it to make. One example of such a trade took place at the height of the financial crisis of 2008 . Goldman Sachs’ board of directors held a conference call in which CEO Lloyd Blankfein announced that Warren Buffet, one of the world’s most respected investors, was about to make a $5 billion investment in Goldman Sachs. Among those participating in the call was Rajat Gupta, CEO of management consulting firm McKinsey, member of the board of directors of Goldman Sachs, and part of Rajaratnam’s network of informants. At a time when investors held a considerable mistrust of banks’ stocks, Buffet’s investment would be an important vote of confidence in the stability of Goldman Sachs. The news was about to be revealed to the wider public that evening after the markets had closed. The conference call had ended at 3:54 pm. One minute after that, Gupta called Rajaratnam to share with him this confidential piece of information. At 3:58 pm, just two minutes before the markets closed, Rajaratnam executed a large buy order, worth $43 million, of Goldman Sachs shares. Later that night, the world would learn about the Buffet investment, causing Goldman Sachs share prices to rise and resulting in considerable profits for the Galleon Group.

Front-Running

Another way in which financial market participants have been found to illegally exploit informational advantages is through a practice that is known as “front-running.” Front-running occurs when a market actor takes advantage of having nonpublic knowledge of a large impending financial market transaction that is likely to significantly influence the price of a given security (Adrian, 2016 ). One group of financial market actors that is traditionally associated with front running is that of broker-dealers (Comerton-Forde & Mei Tang, 2007 ). Broker-dealers simultaneously act as agents, executing orders on behalf of clients, and as principles, trading on their own account. When broker-dealers receive and collect orders from their clients they thus obtain relevant information about upcoming market transactions that are not yet known to other market participants. As these client orders need to be executed by the broker, the broker can easily place his own order prior to that of the client. Such front running enables the broker to profit from the anticipated price movement the client’s transaction is likely to affect. Regulators in most jurisdictions have explicitly prohibited broker-dealers from front running their clients and tipping off others about their client’s orders.

In the 21st century , concerns about front running have also been raised in relation to high-frequency traders (Adrian, 2016 ; Lewis, 2015 ). High-frequency traders are stock market players that make use of cutting-edge technology and complex algorithms to rapidly buy and sell securities, which they only hold for a fraction of a second. High-frequency traders have become an important force in contemporary stock markets. It has been estimated that in the U.S. stock markets today, high-frequency traders are responsible for 50% to 70% of total trading volume (Adrian, 2016 ). Among the many trading strategies adopted by high-frequency traders are some that resemble the broker-dealer front-running practices discussed previously. However, for high-frequency traders to engage in front running requires a little more ingenuity. High-frequency traders exclusively trade on their own account. They thus lack the benefit of having direct access to information about upcoming client orders. Instead, high-frequency traders that engage in front running use a number of techniques that rely on sophisticated algorithms and trading pattern recognition software to “sniff out” impending orders and then use their extraordinary computer and processing power to “run ahead” of these orders as they travel from one exchange to another (see Adrian, 2016 , for a detailed description of these techniques). Such practices have triggered new debates about the effectiveness of existing protections against front running and regulations designed to guarantee equal access to information more generally. A key issue in this debate concerns the meaning of the legal notion of “public information” in a world in which anyone can access pieces of information simultaneously; yet only those with the financial means to make large investments in computer power and data processing infrastructure are capable of combining the pieces of information to see the whole puzzle (Adrian, 2016 ).

Financial Mis-Selling

Financial mis-selling constitutes a third type of finance crime. Financial mis-selling can be defined as “the deceptive and manipulative marketing, selling, or advising of a financial product or service to an end user while knowing that that product or service is unsuitable for that specific end user’s needs” (Reurink, 2016 , p. 53). As has been emphasized before, financial market participants cannot make proper decisions with regard to engaging or not engaging in financial contracts without having accurate information. However, even when financial market participants do have access to adequate information, they still need to be able to interpret and extract meaning from this information with regard to the future performance of a contract. Many financial market participants lack the financial expertise to do so. To protect those financial market participants that are deemed not to have sufficient expertise from being exploited by more sophisticated market players, legal systems impose fiduciary duties or suitability requirement on certain financial market participants. Fiduciary duties and suitability requirement, which are especially pertinent in retail financial markets, prescribe that financial service providers and financial advisers share some of the knowledge and expertise they hold so that clients or customers can make informed decisions about financial transactions. Financial mis-sellers violate these legal stipulations by making misleading and speculative statements about the suitability of a financial product or service for a specific end user.

Mis-Selling in Retail Financial Markets: Predatory Lending

Financial mis-selling practices are widespread in both the retail and the wholesale segments of 21st-century financial markets. In retail financial markets, mis-selling practices manifest themselves typically not as isolated incidents but tend to become institutionalized throughout entire industries. Examples of such industry-wide mis-selling scandals are the life insurance mis-selling scandals in the United Kingdom, India, and the Netherlands (Anagol, Cole, & Sarkar, 2013 ; J. Black & Nobles, 1998 ; Ericson & Doyle, 2006 ), the payment protection insurance scandal in the United Kingdom (Ashton & Hudson, 2013 ; Ferran, 2012 ), and the interest rate swap scandals in the United States, the United Kingdom, Belgium, and the Netherlands (Marshall, 2014 ; Zepeda, 2013 ). The mis-selling scandal that has probably received most attention in recent years is the one that occurred in the U.S. market for subprime mortgage loans. Commonly referred to as “predatory lending,” the mis-selling of mortgage loans involves a wide range of practices that include charging excessive fees, steering borrowers into bad loans that net higher profits, making unaffordable loans based on the borrower’s assets rather than on the borrower’s ability to repay, inducing a borrower to repeatedly refinance a loan in order to charge high points and fees each time the loan is refinanced, or to induce, convince, or mislead a borrower into signing a loan where income, credit, or assets are misrepresented and the loan is unsustainable (Barnett, 2013 , pp. 110–111; Nguyen & Pontell, 2011 , p. 9). Although predatory lending is hard to define, a common trait shared by all of these practices is that they steer borrowers into mortgages or loans that they either cannot afford or that are much worse than other available offers on the market, making them unsuitable for the borrower.

Mis-Selling in Wholesale Financial Markets

In wholesale financial markets, mis-selling scandals typically involve large one-off transactions between investment banks and their clients, institutional investors, and other financial institutions. One especially notorious example of such a transaction is what has become known as the ABACUS case. The ABACUS 2007 -AC1 transaction was a contract between a group of banks and institutional investors that involved a $2 billion synthetic collateralized debt obligation (CDO) that referenced a pool of mortgage-backed securities. Acting as underwriter in the transaction, Goldman Sachs, and especially one of its lead salespeople, Fabrice Tourre, allegedly tricked investors into investing in the synthetic CDO, while knowing it to be a bad investment. Not only did Tourre endorse the viability and soundness of the housing market while fully aware of the impending future of that market, he had also forgone to disclose material information about a significant conflict of interests involved in the construction of the instrument. 1 This conflict of interest consisted in the fact that the reference portfolio had been assembled by hedge fund manager John A. Paulson of Paulson & Co. Inc., whose firm had subsequently taken a short position on that same CDO. Acting accordingly with his short position, Paulson had carefully selected a portfolio of assets that he knew to be of poor quality. The deal was closed on April 26, 2007 , and by October 24 of that same year, about 83% of the loans included in the reference portfolio had been downgraded (Rosoff et al., 2014 , p. 261), resulting in major losses for the investors in the ABACUS CDO—in particular the German bank IKB and Dutch bank ABNA AMRO. Goldman Sachs invoked caveat emptor in its defense and maintained no legal wrongdoing (Fligstein & Roehrkasse, 2013 , p. 28). The case was eventually settled on the grounds that a “mistake” had been made by Goldman Sachs (Dorn, 2011 , p. 162).

Market Price and Benchmark Manipulation

A fourth type of finance crime is that of market price and benchmark manipulation. Market price and benchmark manipulations are schemes that illegally interfere in the price-forming mechanism of securities markets by creating a misleading impression as to the supply, demand, or the market liquidity of a specific security. To protect the integrity of the market’s price-forming mechanisms and to maintain investors’ confidence in its orderly operation, legislators and regulators have established anti-manipulation rules. Such rules prescribe that it is prohibited to intentionally and without legitimate economic motivation cause prices to deviate from what are deemed to be their economic fundamentals. Market manipulators violate those rules. The price distortion that is at the heart of any market manipulation scheme may be effectuated in various ways, resulting in four subtypes of market price and benchmark manipulations (Ledgerwood & Carpenter, 2012 ; Pirrong, 2010 ).

Market Power–Based Manipulation: Corners and Squeezes

One way in which the price-forming mechanism of the market could be corrupted is through the manipulative use of market power. Market power refers to the ability of a financial market participant or a group of financial market participants to control the supply or demand in a certain market to the extent that they can dictate prices in that market. In market jargon, such schemes are known as “corners” or “squeezes.”

A good example of a market manipulation scheme based on the manipulative use of market power is the Salomon Brothers Treasury bond scandal (Instefjord, Jackson, & Perraudin, 1998 , pp. 610–611; Partnoy, 2002 ). In 1990 , Paul Mozer, chief government bond trader of the investment bank Salomon Brothers, devised a hugely profitable scheme to manipulate the U.S. government bond market. To understand Mozer’s scheme, it is important to get familiar with the way in which the Treasury bond market functioned at the time. When the U.S. government wants to borrow money on the capital market, it issues Treasury bonds. These bonds are not sold in an open market but are auctioned in a “primary dealer system,” in which designated broker-dealers, so-called primary dealers, bid against each other for a share of the issue. The role of the primary dealers is to then distribute the bonds to investors in a secondary market. In reality, however, the primary dealers would find buyers for the Treasury bonds already before the auction actually took place. This they did in the so-called when-issued market. In this market, primary dealers would sell future rights to Treasury bonds that did not yet exist but that would be created shortly “when issued” by the Treasury in its next auction. At the time, the U.S. treasury had designated 40 primary dealers, of which Salomon Brothers was the largest. To prevent these primary dealers from obtaining a share of an issue large enough to control the price of the bonds in that issue, the U.S. Treasury had put in place a rule that no firm could bid for more than 35% of an issue. To get around this rule, Mozer began bidding not just on his own account but also on behalf of some of his clients (without their permission). When these bids were successful, he would then arrange an immediate sale of the bonds from the client’s account to his own account. In this way, Mozer managed to gain control of a significant share of bonds in several issues, effectively creating a monopoly for himself in the when-issued market for those specific issues. At one time, Mozer even ended up controlling $10.6 billion of an $11.3 billion issue. Other dealers, who needed the bonds to fulfill their obligations to sell in the when-issued market, saw no other option than to buy the bonds from Mozer, who, of course, was willing to sell them only against an artificially inflated price.

Trade-Based Manipulation: Banging the Close

Another way in which the price movement that is central to a market price manipulation scheme could be achieved is through manipulative and uneconomic trades. These are trades in which market participants leave legitimate business purposes behind and engage in trades with the sole purpose of distorting prices in the market. Abstracting somewhat from their often mindboggling complexity, trade-based market manipulation schemes typically consist of two parallel activities that together enable the perpetrator to make illegal profits (Ledgerwood & Carpenter, 2012 ). First, the manipulator engages in a price-making trade. This price-making trade (the trigger), which typically represents a money-losing trade on a standalone basis, causes a certain price or benchmark (the nexus) to move either up or down. This artificial price movement is then translated into illegal profits through a parallel activity that consists of the perpetrator(s) occupying a price-taking position (the target) in a market that is in one way or the other affected by the manipulated price or benchmark. In many cases trade-based manipulation schemes involve financial derivatives. These are financial contracts between two or more parties, the value of which is derived from an “underlying” security or index. 2 Manipulators then benefit from the payoff on their derivatives position by manipulating the price of the underlying security or index.

One example of a trade-based manipulation strategy is what is known within the industry as “banging the close.” In this strategy, traders place a large quantity of uneconomic trades in a market from which the settlement price for a certain derivative contract is derived, just before the closing period of that derivative contract (i.e., the period during which the settlement price is determined). By way of illustration, consider the case of Amaranth, an American hedge fund that was highly invested in speculative positions in the market for natural gas. In 2007 , both the U.S. Commodities Futures Trading Commission (CFTC) and the U.S. Federal Energy Regulatory Commission (FERC) leveled enforcement actions against Amaranth and Brian Hunter, a trader working in Amaranth’s energy trading department, accusing them of manipulating the price of natural gas futures contracts traded on the New York Mercantile Exchange (NYMEX) (Markham, 2014 ). On behalf of Amaranth, Hunter had entered into large volumes of derivative contracts on the Intercontinental Exchange (ICE) and elsewhere. The final settlement price of these contracts was based on the price of natural gas future contracts traded on the NYMEX. Specifically, the prices in that market as recorded during the last 30 minutes of trading before the closing of the ICE derivative contracts. Hunter’s derivatives positions on the ICE and elsewhere stood to benefit from a lower settlement price of the NYMEX futures. Rather than letting the fate of his derivatives position be determined by unencumbered market forces, Hunter decided to take fate into his own hands. According to the CFTC allegations, for each of the expiry days at issue, Hunter acquired more than 3,000 NYMEX natural gas futures contracts, which he then sold during the 30-minute settlement period. This massive selloff drove down prices during the settlement period. Ultimately, the artificially lowered prices of the NYMEX futures resulted in large payoffs to Amaranth’s swap positions on the ICE and elsewhere. Although both Amaranth and Hunter never admitted any guilt, Amaranth settled with the CFTC and FERC for a civil penalty of $7.5 million and Hunter agreed to a permanent trading ban and to pay a $750,000 civil penalty to settle the CFTC case.

Information-Based Manipulation: Pump and Dump Schemes

When perpetrators of market manipulation schemes lack the ability to move prices in the market by themselves, they may induce others that are not involved in the scheme to cause the desired price movement. This can be achieved through the manipulative dissemination of information. In such information-based manipulation schemes, which constitute a third subtype of price and benchmark manipulations, perpetrators disseminate false information about the issuer of a security, the security itself, or events that may impact the future prospects of the market for a specific security in order to affect demand and supply—and ultimately the price of the security.

The quintessential information-based manipulation scheme is what is often referred to as a “pump-and-dump” operation. Through online chatrooms, spam e-mails, or cold calls made from so-called boiler rooms, pump-and-dump operators create excitement about a security they have previously invested in only to sell them after their fraudulent promotion of the security has pushed up the price. Typically, this involves low-priced securities traded in small volumes in the over-the-counter market, rather than on an exchange. Such securities are ideal for pump-and-dump operations because they require minimal initial investment by the perpetrator and allow a small amount of investment activity to generate wild swings in price.

An iconic case of a pump-and-dump operation is the one executed in the early 1990s by Jordan Belfort, also known as the “Wolf of Wall Street” (Belfort, 2007 ). Belfort, together with his business partner Daniel Porush, used his brokerage firm Stratton Oakmont to execute numerous aggressive pump-and-dump schemes through which he swindled investors out of some $250 million (Tillman & Indergaard, 2005 , pp. 42–52). Many of these schemes involved initial public offerings (IPOs), in which Belfort and Porush managed to gain control of the majority of a company’s outstanding stock just before their brokerage firm Stratton Oakmont was about to take the firm public in an IPO. One such IPO involved the executive recruiting firm Solomon-Page Group. In June 1993 Belfort and Porush paid $250,000 for 700,000 shares of Solomon-Page. That is about $0.36 per share. A little over a year later, in October 1994 , Stratton Oakmont took the firm public in an IPO on the NASDAQ stock exchange. To soothe NASDAQ concerns triggered by the fact that a large proportion of Solomon-Page shares was owned by executives of the very brokerage firm underwriting the IPO. Belfort and Porush sold all of their shares. But instead of actually distancing themselves from their vested interest in the Solomon-Page stock, they sold their shares to a number of Stratton-connected people, nine of which worked as brokers for Stratton Oakmont. After actively promoting the IPO among its clients, Stratton Oakmont took Solomon-Page public at an opening price of $6.50 a share. Shortly after the IPO, one of the company’s largest customers announced it was taking its business elsewhere, causing the value of the stock to plummet, so that by July 1995 the stock was trading around $2 per share. By this time, of course, insiders to the deal had already sold their shares for substantial profits (Tillman & Indergaard, 2005 , pp. 43–44).

The logic that underpins classical pump-and-dump schemes is, however, not confined to thinly traded securities in over-the-counter markets. It can also be seen at work in the more institutionalized spheres of the public stock markets. As Tillman and Indergaard ( 2005 ) have convincingly argued, during the Internet boom of the 1990s, established investment banks engaged in manipulative practices that resemble in many ways the classical pump-and-dump schemes previously discussed. At the time, highly influential security analysts of respected Wall Street firms would hype the shares of large telecom companies by giving “buy” or “strong buy” recommendations for those firms’ shares, irrespective of their true beliefs about those firms’ financial conditions. When the over-hyped and over-priced shares collapsed, as they inevitably would, ordinary investors were left bewildered with worthless shares, while elite investors had already left the market before the fall.

Benchmark Manipulation

In some cases market manipulation schemes do not target prices per se; they target price indices or benchmark rates. Such benchmark manipulations constitute a fourth subtype of market price and benchmark manipulations. Price indices and benchmarks, such as the S&P 500 or LIBOR, summarize market prices and have become increasingly relevant in contemporary financial markets. They are used by market participants to compute the day-to-day value of their holdings and are often hardwired into financial regulations and private contracts. As a result, manipulating a price index or benchmark rate can be as consequential as manipulating the underlying prices. Moreover, because benchmarks are typically derived from only a small slice of the market, they are often easier to manipulate than prices themselves (Verstein, 2015 ).

The exact techniques that manipulators apply to manipulate a price index or benchmark rate very much depends on the exact way in which that specific rate is set. Each benchmark rate has its own unique rate-setting procedure. However, most of them, in one way or the other, rely on either one or a combination of the following two methods. The first method takes a snapshot of actual trades in the market. For example, WM/Reuters rates, a leading set of benchmark rates that reflect the price of different currencies in the foreign exchange market and used to compute settlement values for a variety of derivative contracts, are derived from trades executed on the Thompson Reuters electronic trading platform, especially those trades taking place during the 60-second window just before 4 pm London time; the so-called London Fix. The second rate setting method relies on quotes submitted by nominated specialists who are considered experts in the relevant market. Exemplary of this method are the so-called London Interbank Overnight Rates (LIBOR), a set of benchmark rates for short-term interest rates widely used as a reference rate in financial contracts. To compute LIBOR rates, a panel of nominated experts drawn from selected banks, so-called submitters, are asked at the start of each trading day to indicate the rate they estimate their bank could borrow funds, were they to do so, from other banks in the London interbank market at various maturities and in various currencies. LIBOR rates for each currency and each maturity are then determined by averaging the rate quotes reported by the rate-setting panel for that term and that specific currency. As these quotes are not based on actual market transactions, they are sometimes referred to as “off-market rate quotes.” As recent scandals have shown, both methods can be susceptible to manipulation when appropriate measures to safeguard the integrity of the rate-setting process are not in place.

As an illustrative example of benchmark manipulation, consider the ISDAfix manipulation scandal that surfaced in 2013 . The ISDAfix is a benchmark rate used around the world to value, among other things, interest rate swaps; a specific kind of derivative contract used by corporations, fund managers, and local governments to manage risks stemming from fluctuations in the interest rates they pay on their debts. The ISDAfix rate, which is set and published daily by the London-based brokerage firm ICAP, affects financial assets totaling around $379 trillion, making any successful manipulation of the rate highly consequential. The rate-setting procedure of ISDAfix at the time combined the two broad approaches mentioned above. In the first stage of the rate-setting process, ICAP would establish a “reference rate,” which captured the average rate at which interest rate swaps were trading on the ICAP trading platform at 11 am each morning. Subsequently, in the second stage, dealers at nominated panel banks would submit their own rate quotes, which were supposed to reflect at which price the dealer would himself be willing to buy and sell an interest swap in a given currency and of a given maturity, were he to do so, in the market. In the third, and final, stage, ICAP would adjust the reference rate on the basis of the rate quotes submitted by the dealers at the panel banks and publish the final ISDAfix benchmark rate for that day.

In 2013 , it was revealed that dealers/submitters at panel banks, in close collaboration with ICAP brokers/rate setters, had attempted to manipulate the ISDAfix rate almost every day during the period between 2007 and 2012 (Taibbi, 2013 ). The reason they did so was to benefit derivatives positions held by those dealers who were linked to the ISDAfix rate. The dealers/submitters used different techniques to achieve their attempted manipulation. In a first stage, panel bank dealers engaged in large quantities of trades in interest rate swaps just prior to the 11 am setting window. Rather than serving legitimate business purposes, and thus reflecting true supply and demand in the market, these were uneconomic trades designed with the sole purpose of affecting the market prices of interest rate swaps that would feed into the reference rate. 3 These manipulative trades could, of course, only be successful if they were coordinated. To do so, panel bank dealers communicated with each other through electronic chat rooms and other forms of private communication to determine whether there was a collective desire to manipulate the ISDAfix rate and, if this was the case, in which direction the rate was to be manipulated. In addition to this, dealers/submitters would make false submissions to the ICAP poll. Instead of submitting quotes that truly reflected the prices at which they were willing to buy and sell in the market, panel bank dealers submitted quotes that were close to or similar to the reference point and thus merely reflected dealers’ desire to manipulate ISDAfix rates. Here again, panel bank dealers seem to have coordinated their manipulative actions. Econometric analysis conducted on behalf of a class action complaint filed by an Alaska pension fund has shown that panel bank dealers regularly submitted quotes that were exactly or almost exactly the same, a pattern that is extremely unlikely to occur without explicit coordination (see Alaska Electrical Pension Fund v. Bank of America Corporation and others , 2014 ).

Facilitation of Illicit Financial Flows

This type of finance crime groups together schemes in which financial institutions provide financial services to illicit actors or to actors that use these financial services to engage in illicit activities. To safeguard the integrity of financial markets and to assist the fight against organized crime, terrorism, and tax evasion, the international community and individual countries have developed rules and regulations aimed at preventing illicit actors from using the formal financial systems. These rules and regulations are often referred to as the anti-money laundering (AML) framework. The AML framework grew out of concerns with drugs-related crime in the 1980s. In the 1990s it was also adopted in the fight against organized crime, and after 9/11 it became a cornerstone in the “War on Terror.” Today, its scope has been extended to issues related to tax evasion, kleptocracy, and grand corruption. The AML framework relies primarily on so-called know-your-customer (KYC) requirements, sometimes also referred to as Customer Identification Programs (CIP). KYC requirements prescribe that financial institutions must identify and verify the identity of those they provide financial services to. As a corollary to KYC rules, regulators require financial institutions to file a so-called suspicious activity report (SAR) to designated law enforcement agencies whenever a customer’s identity or financial activities are in some way suspicious and may indicate money laundering or the financing of illegal activities. Despite heavy penalties attached to violations of AML policies, financial institutions, especially banks, have repeatedly been found to do business with illicit actors. Among other things this involved the accepting of funds that had criminal origins, the administration of bank accounts linked to organized crime or terrorist organizations, the processing of transactions related to financial fraud or corruption, and the knowingly assisting of tax evaders in hiding their assets out of sight of tax authorities.

Facilitation of Money Laundering

Money laundering can be defined as the process by which funds obtained through illegal activities are disguised and cloaked in legitimacy to hide the link between the criminal, the crime, and the funds obtained from it, whereby the criminal nevertheless retains control over those funds. A standard, albeit frequently critiqued (e.g., Platt, 2015 ) description of the money laundering process identifies three stages. In the placement stage illicit funds are put into the formal financial system. When it concerns the proceeds of cash-generative crimes such as drug trafficking placement may involve the depositing of large amounts of cash in bank accounts. Where other types of crime are concerned, such as insider trading or corruption, the placement stage is obsolete because the proceeds of the crime are already in the formal financial system at the moment the crime is committed (Platt, 2015 ). The layering stage then serves the purpose of making it difficult for law enforcement agencies to uncover the trail that links the illicit funds to their source. This is done by moving the funds via electronic transactions through the financial system. Typically, this layering involves nested structures of anonymous shell companies registered in jurisdictions that have weak corporate transparency laws or that only halfheartedly enforce such laws. These shell companies in turn hold bank accounts in yet other jurisdictions that tend to have strong bank secrecy legislation. Finally, in the integration stage, the funds reenter the legitimate economy where criminals use them for their benefit and enjoyment. They may, for example, invest the funds into real estate, business ventures, or choose to purchase luxury items such as yachts or jets. Financial service providers play a crucial role throughout the money laundering process. Attracted by cheap funding and the hefty fees they can charge for services rendered to customers whose financial dealings require “special” treatment, banks have proven time and again willing to turn a blind eye to KYC requirements or to fail to report suspicious transactions in order to do business with criminal actors.

A recent high-profile case that aptly reveals how banks may be involved in the money laundering process is that of Wachovia. In 2010 , Wachovia admitted in a deferred prosecution agreement that it had provided Mexican drug cartels with a gateway through which $110 million of proceeds from the illegal drugs trade could enter the U.S. financial system ( United States of America v. Wachovia Bank, N.A ., 2010 ). This gateway was intermediated by so-called Casas de Cambio (CDCs) in Mexico. CDCs are licensed currency exchange businesses that enable Mexicans to exchange dollars for pesos in cash or to wire transfer the value of a certain amount of cash to bank accounts in the United States. Because the CDCs are not U.S.-licensed banks, they need the support of a U.S. bank to offer these services. CDCs would therefore hold so-called correspondent accounts with Wachovia in the United States. Correspondent accounts essentially are accounts maintained by one financial institution for use by another. They enable foreign financial institutions to receive and transfer funds into them and thereby to offer their customers banking services in the country and in the currency of the country in which the correspondent account is located. This correspondent relationship between the CDCs and Wachovia, combined with the lack of effective money laundering controls on the side of Wachovia, provided drug dealers with the financial infrastructure to launder millions of dollars of proceeds from the illegal narcotics trade. This worked as follows.

First, drug-trafficking organizations would smuggle large amounts of cash dollars obtained through the selling of drugs in the United States over the border into Mexico. They would then bring the dollars to a CDC. At this point, they had several options. One was to convert the dollars into pesos. This enabled the drug dealers to finance their trafficking operations in Mexico or to spend the pesos for personal benefit. The CDCs stood to gain from these transactions as they provided them with a convenient source of discounted dollars. However, it would leave them with a large amount of dollars in cash. To deal with this situation, the CDCs made use of Wachovia’s so-called bulk cash service, a service that provided for the physical transportation of large amounts of U.S. dollars to the United States. The dollar amount would then be credited to the CDCs’ correspondent accounts they held with Wachovia. Under the AML framework in place in the United States, it was Wachovia’s legal obligation to do KYC checks on the origins of the cash and to report to the authorities any transactions or dealings that appeared suspicious. Joint investigations by several U.S. law enforcement agencies found that Wachovia persistently failed to do so. As court documents of the Wachovia case state, the bank had “no written formal AML policy or procedure for the monitoring of bulk cash to ensure that suspicious activity was reported” ( United States of America v. Wachovia Bank, N.A ., 2010 , p. 9). It did not examine or review the source of the bulk cash and did not check whether the monthly total amounts of cash shipped to the United States by each customer matched what could reasonably be expected from that specific customer.

Not all of the dollars smuggled across the border were exchanged for pesos. In fact, most of the cash dollars that arrived at the CDCs were used to execute wire transfers to U.S. accounts. Under the correspondent account arrangement, Wachovia allowed CDCs to conduct wire transfers through Wachovia. Here again, Wachovia’s intermediating role put it under the legal obligation to conduct KYC suspicious activity checks on those wire transfers. According to the U.S. Department of Justice, Wachovia failed to properly conduct those checks on a staggering $373 billion worth of wire transfers made from CDCs. At least $13 million of those transfers involved wire transfers into the accounts of aircraft brokers. Investigation by U.S. law enforcement agencies found that the individuals and the business in whose name those specific transfers had been made had submitted false identities and that the business was a shell entity. The specific aircraft that was acquired with the transfers was eventually seized by U.S. law enforcement agencies with approximately 2,000 kilograms of cocaine on board.

Facilitation of Reverse Money Laundering

Reverse money laundering (Cassella, 2003 ) involves not the proceeds of past crimes but money intended to be used to commit crimes in the future. Like legitimate enterprises, criminal organizations and rogue states need access to the formal financial system to fund and execute their operations. From a law enforcement perspective this dependence on the formal payment system represents the Achilles heel of criminal organizations and thus provides a meaningful point of entry for countermeasures. Governments and their law enforcement agencies thus publish lists that specify parties (i.e., states, organizations, or individuals) that are to be banned from using a country’s financial system. Banks and financial service providers operating in that country are prohibited from providing financial services, such as the processing of wire transfers or foreign exchange transactions, to parties on those lists. The enforcement of sanction regimes relies largely on their implementation by financial institutions, especially banks. Banks are legally obliged to have due diligence systems in place that automatically filter out and block transactions that contain any reference to sanctioned parties. But banks, or subsidiaries of banks that are eager to do business with sanctioned parties, have repeatedly been found to knowingly and willingly circumvent such systems. To disguise the true beneficiaries of specific transactions and to avoid detection by automatic due diligence systems, some banks have been found to use a technique called “stripping.” Stripping involves bank personnel deliberately removing or falsifying material information about customer identities from payment documentation to cover up the involvement of a sanctioned party. Stripping thus enables banks to process payments for which either the bank’s own sanction screening tools or that of other banks would have raised an alert or that may otherwise have been blocked as the payment processes through a country’s official payment system.

One recent example of such stripping practices involves the French bank BNP Paribas (BNPP). In June 2014 , BNPP pled guilty to criminal charges and was fined $8.9 billion for knowingly and willfully processing transactions worth billions of dollars on behalf of Iranian, Cuban, and Sudanese parties that were subject to U.S. economic sanctions ( United States of America v. BNP Paribas, S.A ., 2014 ). The majority of the transactions, which were all processed in the period 2004 to 2012 , were executed by BNPP’s subsidiaries in Geneva and Paris. These subsidiaries received the requests to execute the transaction either directly from some of their own clients that had been put on the U.S. sanction list, or indirectly from U.S.-sanctioned Sudanese and Cuban banks, which in turn requested the transaction on behalf of some of their clients. Because the transactions were denominated in dollars, they had to pass through BNPP’s New York office and thus were subject to the U.S. sanctions regime. To disguise the parties involved in the transactions and to evade detection by U.S. authorities, BNP Paribas employees in Geneva and Paris stripped identifying information from payment messages sent to the New York office. In addition to this, BNPP Geneva helped to re-route certain transactions through unaffiliated non-Sudanese, non-U.S. banks; so-called satellite banks. As a result of this, to the U.S. bank it appeared that the transactions were coming from the satellite bank rather than the Sudanese bank. It appears that these practices were widely known and condoned by BNPP’s senior executives. Internal e-mails that are referred to in court documents showed that from 2005 onward, BNPP compliance staff had repeatedly raised concerns, but time and again these concerns were dismissed by senior executive because of the substantial commercial stakes involved in BNPP’s dealings with the sanctioned entities ( United States of America v. BNP Paribas, S.A ., 2014 ).

Facilitation of Tax Evasion

Tax evasion involves the use of illegal means to minimize one’s tax burden. Tax evasion should not be confused with tax avoidance , which refers to the taking of legal measures to minimize one’s tax burden, a practice that is widespread among multinational corporations. The objective of a successful tax evasion scheme is to keep wealth beyond the reach of the tax authorities in one’s country of residence and to not report any income earned on that wealth. This may involve stashing wealth in bank accounts located in foreign jurisdictions that have strong bank secrecy laws and whose tax authorities are reluctant to proactively exchange information with tax authorities in other countries (which makes it difficult for tax authorities in the country of residence to find out about the existence of the wealth) or owning valuable assets such as real estate or yachts through shell companies registered in jurisdictions that have limited corporate ownership disclosure requirements or that only halfheartedly enforce such requirements (which makes it difficult for tax authorities in the country of residence to find out who the owners and beneficiaries are of the company that owns the assets). Banks, especially the private wealth management departments of banks operating from secrecy jurisdictions, have repeatedly been found to actively facilitate and even promote such schemes.

One example concerns the Swiss bank UBS. In 2007 , Bradley Birkenfeld, a banker who used to work for the private banking and wealth management arm of UBS in Geneva, came forward as a whistleblower, opening up to U.S. law enforcement authorities about what he knew about UBS’s role in assisting U.S. taxpayers to hide assets from the IRS, the U.S. tax authority. Birkenfeld admitted that while working for the bank’s Geneva office he had helped numerous U.S. citizens evade taxes on assets held outside of the United States. One of those clients was the Russian-born American real estate developer and billionaire Igor Olenicoff. In 2007 , Olenicoff pleaded guilty to charges of tax evasion and paid $52 million in back taxes. As his private banker at UBS, Birkenfeld had facilitated Olenicoff’s tax evasion scheme by helping him to conceal his ownership and control of $200 million in assets held in offshore accounts in Switzerland and Lichtenstein. Among other things, this involved Birkenfeld opening a UBS account in the name of a Bahamas corporation, which was controlled and beneficially owned by Olenicoff. Although Birkenfeld was fully aware that Olenicoff, a U.S. resident, was the beneficial owner behind the Bahamas corporation, he failed to indicate this in the account opening documentation. In this way, they ensured the account would not be disclosed to the IRS. Birkenfeld also facilitated Olenicoff’s tax evasion scheme by actively assisting him in seeking legal counsel and forming an offshore structure—involving a Lichtenstein trust and a Denmark corporation—that was specifically designed to circumvent the triggering of certain reporting requirements that were put in place by the IRS to identify American-owned assets held overseas. Birkenfeld was sentenced to 40 months in prison and fined $30,000 for abetting tax evasion; but when he was released from prison Birkenfeld received a $104 million award for his whistleblowing.

It appears that the Birkenfeld-Olenicoff affair was not an isolated incident. As a result of Birkenfeld’s whistleblowing, the U.S. Senate Permanent Subcommittee on Investigations started an investigation into UBS’s overseas dealings with American clients. The investigation resulted in a report finding that in the period 2000 to 2007 UBS maintained Swiss accounts for an estimated 19,000 U.S. clients. None of these accounts, which together held approximately $18 billion in assets, had been disclosed to the IRS (U.S. Senate, 2008 ). The report also stated that, to maintain client confidentiality, UBS private bankers would travel to the United States with encrypted laptops and had received training in counter-surveillance techniques to help them prevent the detection of the identities and offshore assets of their U.S. clients. The U.S. Department of Justice (DoJ) followed up on the Senate report by taking steps to prosecute UBS for facilitating tax evasion. The case, however, never made it to court: in 2009 UBS and the DoJ reached a deferred prosecution agreement, in which the bank agreed to pay $780 million in fines and restitution and to provide the U.S. government with the identities and account information of some of its American clients. For UBS, however, the story did not end with the DPA it reached with the DoJ. In subsequent years, law enforcement authorities in Belgium, France, and Germany would also start campaigns against the bank for its involvement in facilitating tax evasion by citizens resident in those countries.

WCC Approaches to the Study of Finance Crime

White-collar crime scholars have taken various approaches to the study of finance crimes. Each of these approaches highlights different dimensions of the complex and multifaceted phenomenon of finance crime and thus complements rather than competes with the other approaches. This section surveys the most prominent of those approaches. The overview presented here is by no means an exhaustive account of how white-collar crime scholarship contributes to our understanding of the phenomenon of finance crime. Nevertheless, the four approaches discussed here cover the majority of WCC scholarship on finance crime and provide useful points of departure for future research on finance crime.

Macro-Institutional Contexts of Finance Crime

A first strand of WCC research on finance crime studies finance crimes in the light of their macro-institutional contexts. This strand of research is based on the premise that actors find meaning—motivations and rationalizations—and opportunities for their actions in the cultural and institutional environments in which they are situated and that such environments can be criminogenic in the sense that they structurally facilitate or even promote illegal behaviors (Needleman & Needleman, 1979 ). WCC scholars adopting such an approach have proposed a number of theoretical frameworks to make sense of the specific empirical manifestations of the finance crimes they were witnessing.

The New Economy

A first such framework has been proposed by Robert Tillman and Michael Indergaard. In a cluster of writings that appeared in the wake of the corporate-financial scandals of the late 1990s and early 2000s, Tillman and Indergaard proposed to understand these scandals as products of what had come to be referred to as the “New Economy.” For Tillman and Indergaard ( 2005 ) it was the combined effect of changes in economic institutions, business organization, and corporate culture that explained the novel forms of white-collar crime witnessed in the early 2000s. In the New Economy, they explained, firms increasingly adopted a new type of business model. The prerogative for New Economy firms was to boost their share price so that the stock could be used as a currency to acquire talent, capital, and other firms. Managers were thus disciplined to give primacy to the financial markets’ assessment of their firms and to fixate on quarterly financial results. This New Economy “doctrine” was accompanied by new conventions about investment. Investors should “shift from the ‘value’ strategy of holding shares in old established corporations to a ‘growth’ strategy of investing in companies with potential for achieving high rates of growth” (Tillman & Indergaard, 2005 , p. 17).

The New Economy also saw the rise to prominence of new forms of coordination and corporate governance. In the corporate governance system for the New Economy, Tillman and Indergaard ( 2007 ) explain, a crucial role was reserved for so-called reputational intermediaries—mostly financial professionals such as auditors, investment bankers, financial analysts, credit rating agencies but also lawyers and board directors. These reputational intermediaries, or “control agents,” were supposed to safeguard the interests of investors by certifying the soundness of financial information provided by corporate insiders. According to dominant economic theory and the neoliberal version of corporate governance it informs, these “control agents” are kept in line because they are subject to extra-legal sanctions in the form of “reputational penalties,” which in turn decreases the value of their services in the markets in which they operate. In fact, however, “by the late 1990s many of these individuals and organizations had abandoned their roles as independent monitors of corporate behavior to become accomplices, or at least facilitators, of their corporate clients’ schemes to enrich themselves at the expense of shareholders” (Tillman, 2009 , p. 366).

What had emerged were “collusive networks of reputational intermediaries” (Tillman, 2009 ) that operated in the basis of questionable reciprocity. Much of this reciprocity, they explained, involved some sort of business intermediary and linkages to the financial sector: investment bankers allocated “hot” IPOs (Initial Public Offerings) to favored clients in return for future business and subsequently conspired with those clients and financial analysts to artificially drive up the stock prices of these same IPOs. To ensure their participation in deceptive deals and to secure access to cheap credit when needed, corporate executives took intermediaries and bankers to join them on expensive trips to exotic locales. Important for understanding the transgressions of those involved in this questionable reciprocity, Tillman and Indergaard argue, were “instituted rationalities”: norms and routines that helped to organize and “normalize” corruption (Ashforth & Anand, 2003 ) among those integrated in the small circles that controlled access to the deal flows.

Postmodernization

An alternative interpretation of the corporate-financial scandals related to the bursting of the dot-com bubble was suggested by David O. Friedrichs. For Friedrichs, these crimes, and especially the Enron scandal (which for him represented the “paradigmatic white-collar crime case for the new century”) (Friedrichs, 2004 ), were best understood as expressions of white-collar crime in a postmodern world. Borrowing from the work of the French philosopher Baudrillard, Friedrichs singled out two concepts developed in the postmodernist thinking that he believed to be especially helpful in understanding a number of important features of the contemporary manifestation of white-collar crime. The first of these is the concept of “hyperreality,” which, he explained, “holds that reality has collapsed and has been replaced by image, illusion, and simulation” (Friedrichs, 2007a , p. 12). If one, for example, considers the various accounts of the Enron case, Friedrich argued,

one is struck by a fundamental disconnect between the presumed ‘modernist’ assumptions of most ordinary investors—that they are putting their money into something ‘real’, into an appropriately assessed product or service with a good potential for growth—and the apparent postmodernist orientation of some of the central figures in this case, whose primary concern seemed to be the manipulation of assets and numbers in ways that maximized their own short-term gain, with almost complete indifference to the ‘real’ demonstrable value of the ‘product’ or service at the center of their business. (Friedrichs, 2007b , p. 167)

Another concept developed in postmodernist thinking that Friedrich believed to be helpful for understanding the new manifestations of white-collar crime is the concept of “intertextuality,” which for him represented the idea that “there is a complex and infinite set of interwoven relationships . . .; that everything is related to everything else” (Friedrichs, 2007b , pp. 167–168). Again taking the Enron case as an example, he argued that “one is struck by the complexity of the many suspect deals, financial arrangements and instruments (e.g., derivatives), to the point that it seems possible that at a certain juncture none of the key players could any longer fully grasp the scope and character of the financial edifice they constructed” (Friedrichs, 2007b , p. 168). Also, the direct and indirect intertwined involvement of a great number of different parties—that is, corporate executives, corporate boards, auditors, investment bankers, stock analysts, lawyers, credit rating agencies, and the like—in these transactions represented a form of intertextuality for Friedrichs.

Globalization

A third framework that has been adopted by WCC scholars to make sense of the empirical manifestations of white-collar crime is that of globalization . The globalization framework as developed in the WCC literature focuses on the criminogenic dimensions of the internationalization of politics, trade, and production. It emphasizes how white-collar crimes increasingly transcend nation-states and manifest themselves in a global context. A number of themes figure prominently in the globalization framework.

A first of these themes concerns the way in which globalization multiplies and intensifies what have been called “criminogenic asymmetries”—structural problems that result from discrepancies and inequalities in the realms of the economy, politics, the law, and culture (Passas, 1999 , 2000 ). Especially troublesome is the mismatch between, on the one hand, increasingly globally and transnationally organized economic structures and, on the other hand, nationally organized rules and law enforcement bodies (Pakes, 2013 ; Passas, 1999 ; Tillman, 2002 ). This mismatch enables malicious actors to engage in “jurisdiction shopping”: finding the jurisdictions that allow for (or fail to enforce laws against) business conduct that has been criminalized in other jurisdictions (Passas, 2002 ; van Duyne, 2002 , p. 5). As a result of the combined effects of criminogenic asymmetries and the inefficiency, or even absence, of rules and enforcement mechanisms at the international level, one increasingly find cross-border or transnational crimes (Passas, 1999 ) that operate in “the space between laws” (Michalowski & Kramer, 1987 ).

A closely related feature emphasized in the globalization framework concerns the increasingly networked organization of such crimes. To exploit cross-border criminal opportunities, perpetrators of transnational crimes set up strategic alliances that take the form of loosely coupled and fluid networks (Block & Griffin, 2002 ; Grabosky, 2009 , p. 132; Tillman, 2002 , pp. 136–137; Williams, 2001 ). Closely mirroring developments in the corporate world, these networks are said to be “diverse, flexible, and highly mobile, giving them the ability to respond quickly and adapt to rapidly changing environments” (Tillman, 2002 , p. 137).

Moreover—and this is a third feature emphasized by the globalization framework—these transnational crime networks typically involve links between the “underworld” and the “upperworld” —that is, between traditional organized crime groups and otherwise legitimate businesspeople, corporations, or financial institutions (Passas, 2002 ; van Duyne, 2002 ). These alliances provide underworld actors with access to the legal economy and financial system, while upperworld actors benefit from low-cost financing, cheap supplies, or new products to market. Typically, such mutually beneficial operations crystalize in secrecy jurisdictions, where upperworld and underworld can interact behind a veil of secrecy (Block & Griffin, 2002 ; Tillman, 2002 ).

Financialization

A fourth framework is that of financialization. Already in the aftermath of the 1980s U.S. savings and loan crisis, a group of prominent WCC scholars that included Kitty Calavita, Henry Pontell, and Robert Tillman observed that unlike much of the corporate crime of earlier decades, the white-collar crimes of the 1980s “had nothing to do with production or manufacturing but instead entailed the manipulation of money” (Calavita, Tillman, & Pontell, 1997 , p. 20). Calavita and colleagues traced this new form of white-collar crime to the distinctive qualities of an emerging form of finance capitalism in which it was embedded. In doing so, their aim, as they put it, was “to suggest the utility of drawing a distinction in white-collar crime studies between manufacturing and finance capitalism and examining fraud in financial institutions as the product of the unique ‘production’ process of the latter” (Calavita & Pontell, 1991 , p. 97). In finance capitalism, the scholars explained, the “means of production include corporate takeovers, land speculation, currency trading, real estate ventures, futures trading, and land swaps” (Calavita & Pontell, 1991 , p. 96). Moreover, they suggested, the illusory nature of the product in finance capitalism makes it so opportunities for finance crimes can be expanded almost indefinitely: “unlike manufacturing capitalism in which consumers receive products for their money, in finance capitalism the consumer receives only a ‘promise’ that some relatively ephemeral or distant service will be rendered” (Calavita & Pontell, 1991 , p. 103). As a consequence, they argued, finance crimes are unencumbered by the confines of the production process.

More recently, Tillman and colleagues (Tillman, Pontell, & Black, 2018 ) have reemphasized the relevance of the concept of financialization for understanding the prevalence of finance crime in contemporary capitalism. In their 2018 book Financial Crime and Crises in the Era of False Profits Tillman and colleagues suggest that financialization has greatly increased the opportunities and the motives for engaging in finance crime and created a subterranean set of values within the financial industry itself that enables financial market participants that engage in finance crimes to rationalize their actions, rendering them reasonable and legitimate.

Organizational Aspects of Finance Crime

A second strand of WCC scholarship on finance crime has approached the phenomenon by studying its organizational dimensions. These organizational dimensions involve both the social networks through which finance crimes are perpetrated as well as the ways in which these networks are embedded in broader organizational and industry structures.

Finance Crime Networks

Finance crimes tend to be complex organizational phenomena that involve intricate webs of social relationships. On the one hand, social networks have been identified as important channels through which victimization takes place. Baker and Faulkner ( 2003 , 2004 ), Comet ( 2011 ), Blois ( 2013 ), and Nash, Bouchard, and Malm ( 2013 ), for example, all found that perpetrators of investment scams often rely on social networks to reach out to prospective victims and to garner the minimum level of trust necessary to entice investors to participate in the scam. On the other hand, social networks may play an important role in the coordination among the multiple actors involved in the perpetration of finance crimes. Zey ( 1993 ), for example, has shown how such crime networks played a crucial role in enabling the fraudulent leveraged buyout transactions engineered by Michael Milken and his co-conspirators in the 1980s. Similarly, Tillman ( 2009 ) revealed how “collusive networks of intermediaries” were central to the New Economy crimes of the late 1990s and early 2000s.

Structural Embeddedness in Formal Organizations

Another important organizational aspect concerns the way in which finance crimes and finance crime networks are structurally embedded in formal organizations. To better explain the emergence and patterns of finance crimes, WCC scholars have therefore studied the continuously evolving internal structures of financial firms as well as the interorganizational relationships between them. For example, in her previously mentioned examination of the fraud networks through which Michael Milken engineered his fraudulent leveraged buyout transactions, Zey ( 1993 ) found that transformations in the intra- and interorganizational structure of securities firms in the 1980s had greatly facilitated the emergence and sustaining of these networks. Specifically, Zey showed how the transformation of securities firms from multidivisional to multi-subsidiary firms enhanced the formation of finance crime networks as well as the efficiency of information processing, decision making, and resource transactions in such networks. A number of scholars have studied widespread fraud in the U.S. mortgage industry during the years leading up to the financial crisis of 2007–2008 . These studies have shown how fundamental changes in the organization of that industry had created market structures and competitive conditions that imposed perverse incentives toward predatory lending and fraudulent selling and underwriting of mortgage-backed securities (Fligstein & Roehrkasse, 2016 ; Nguyen & Pontell, 2010 ).

Organizations as a Weapon to Defraud

Another organizational aspect studied by WCC scholars concerns the way in which formal organizations may be used as vehicles for the perpetration of finance crimes (Black, 2005b ; Calavita & Pontell, 1991 ). Traditionally, WCC scholarship has made a conceptual distinction between two forms of white-collar crime in business organizations. On the one hand, “occupational crimes” are committed for the benefit of the individual without organizational support. “Organizational crimes,” on the other hand, are those crimes that are committed with organizational support and for the benefit of the organization (Clinard, Quinney, & Wildeman, 1994 ). Although this conceptual distinction has its benefits for the analysis of white-collar crimes in the manufacturing sector, it is less useful for understanding the organizational character of many finance crimes. As both Black ( 2005a ) and Calavita et al. ( 1997 ) found when studying the major frauds related to the U.S. savings and loan industry in the 1980s, the organizational setup of many finance crimes represents a hybrid of the above two forms. In what they refer to as “collective embezzlement,” or “control fraud,” those who are in control of a firm use the firm’s resources to enrich themselves. The organization thus becomes a vehicle for perpetrating crime against itself; “crime by the corporation against the corporation” (Calavita et al., 1997 , p. 63). Many of the finance crimes that were exposed in the aftermath of the global financial crisis of 2007–2008 indeed closely resemble the control frauds perpetrated in the savings and loan industry in the 1980s. For example, in her analysis of the finance crimes perpetrated by insiders in the Icelandic banking sector prior to its collapse, Susan Will (Will, 2015 ) describes how Icelandic banks made numerous improper loans to companies that were linked to the banks’ managers and major shareholders.

Costs, Consequences, and Victims of Finance Crime

A third strand of WCC scholarship on finance crime has approached the phenomenon by studying the costs, consequences, and victims of such crimes. As is the case for white-collar crimes in general, the costs and consequences of finance crimes are often diffuse and indirect and may come in different forms (Friedrichs, 2010 ). Although the types of costs and patterns of victimization are different for different types of finance crime, at a general level, three categories of costs have been identified in the literature.

Monetary and Financial Costs

Monetary and financial costs associated with finance crimes include those borne by individual victims. In some cases, individual victims are easily identified. In most cases, however, the ultimate victims of finance crimes are tied to the actual crime through long and complex chains of victimization. For example, the illegal manipulation of LIBOR rates by traders of large investment banks affected not only the LIBOR-related derivatives positions held by those traders but also millions of homeowners around the world who held mortgages tied to the LIBOR rates.

When finance crimes are perpetrated in the context of financial firms, shareholders of those firms may suffer monetary costs as well. Monetary costs to shareholder may result from fines, customer redress, or settlements with law enforcement agencies as well as from share price depreciations; when news of enforcement actions against a firm gets out, this may have a significant impact on that firm’s share price. Moreover, regulatory or criminal enforcement actions against financial firms are often followed by civil litigation and private lawsuits, which can bring significant costs with them as well.

Emotional, Psychological, and Behavioral Consequences

Monetary and financial costs are, however, not the only costs associated with finance crimes. Equally important for WCC criminologists are the emotional, psychological, and behavioral consequences of finance crime for individual victims. Individuals that fall victim to finance crimes may experience feelings of shame, embarrassment, and self-blame as well as intensified levels of stress, anger, and depression (Spalek, 1999 ).

Broader Societal Costs

A third category of costs, and of primary concern to WCC criminologists, consists of the costs that finance crimes may impose on society at large. Societal costs of finance crimes identified by researchers are manifold, but two of them stand out. The first of these concerns the erosion of trust in the financial system. Already 40 years ago when Edwin Sutherland ( 1949 ) introduced the term “white-collar crime” he suggested that far more significant than mere dollar losses is the way in which white-collar crimes erode confidence in private and public institutions (Sutherland, referenced in Moore & Mills, 1990 , p. 413). In contemporary scholarship, the belief that the erosion of trust in financial markets and institutions is at least as significant a harm inflicted by finance crimes as are monetary costs, is still upheld (e.g., Black, 2005a , p. 1).

Another important social cost of finance crime identified by WCC researchers concerns the ways in which such crimes contribute to the formation of financial crises. Contrary to neoclassical economists’ beliefs that markets are self-correcting in the sense that investors and intermediaries will discern fraudulent businesses and drive them out of the market before they can become big enough to cause systemic problems (e.g., Fischel & Easterbrook, 1991 ), WCC scholars have long insisted that finance crimes can, and often do, play an important causal role in the formation of systemic financial crises (Black, 2005b ; Pontell, 2005 ; Ryder, 2014 ). Neoclassical economists, or “fraud minimalists” (Pontell, Black, & Geis, 2014 ), they argue, are mistaken in their belief that markets are self-correcting because they overlook the potential for “control fraud”—crimes in which those in control of large firms use the firm’s resources to optimize the firm for fraud and fool investors into believing that the firm runs a legitimate business (Black, 2005b ). The firm’s resources can, for example, be used to “convince” reputable accounting firms to sign off on their financial statements, create a favorable image of their firm in the news media, or establish political connections that shield them from scrutiny by law enforcement agencies (Black, 2003 ).

Legal and Political Responses to Finance Crime

A fourth strand of WCC scholarship on finance crime studies the legal and political responses to such crimes. This strand of research investigates how societies create legal regimes that prohibit certain financial market practices as well as how these prohibitions are subsequently enforced by regulatory agencies, public prosecutors, and the courts. A common thread running through much of this scholarship is the acute awareness that both the prohibition of certain financial market practices and the enforcement of those prohibitions are processes that cannot be understood separately from the historical, cultural, political, and economic contexts in which they take place.

Lawmaking: Prohibition and Criminalization

Historical events such as financial crises and scandals have the potential to force political and legal debates over the norms and laws regulating financial market conduct. It is in these debates that perceptions of financial misconduct are constructed and appropriate legal responses to it are invented. Eventually, such debates may culminate into new regulations and the adoption of new standards and codes of conduct by industry self-regulatory bodies. But the process that leads from crisis to reregulation is a long and contentious one, and the work done by WCC and financial regulation scholars has emphasized the way in which powerful interests use resources at their disposal to influence this process in an attempt to control the form, shape, and meaning of the laws that set the boundaries of accepted financial market conduct (e.g., Barak, 2012 ; Coffee, 2012 ). To understand how they succeed in doing so, it is important to be aware that the legislative process does not end with the adoption of a certain piece of legislation by the legislator. Once a law has been adopted by Parliament, specialized regulatory agencies examine the law and translate the general principles enshrined in it into concrete rules and regulations that contain specific stipulations and detail how exactly those stipulations will be enforced. This process of administrative implementation is especially susceptible to influencing by powerful and well-organized industry interests that aim to minimize the disruptive effect of new regulations and their enforcement on existing business practices. Good examples of such “administrative softening” can be found in the implementation of the Public Company Accounting Reform and Investor Protection Act of 2002 —also known as the Sarbanes-Oxley Act—and the Wall Street Financial Reform and Consumer Protection Act of 2010 —colloquially known as the Dodd-Frank Act (Coffee, 2012 ).

Of specific interest to WCC criminologists is also the extent to which the prohibition of certain financial practices is encoded in the criminal law as opposed to civil and administrative law. The criminal law is usually reserved only for those behaviors that are deemed harmful to the public interest. In this regard, historians of white-collar crime have suggested that although exploitative and abusive practices had long been commonplace in financial markets, it was only in 19th-century Victorian Britain that certain financial practices came to be perceived as harmful to the public interest and therefore worthy of criminalization (Taylor, 2007 ; Wilson, 2006 , 2014 ). The rise of industrial capitalism at the time required large amounts of savings to be mobilized for investment in capital stock, which was achieved through mass participation in the stock markets. This, however, required a minimum level of confidence among the investing public that financial markets were fair. The stock market collapse of 1845 and the financial abuses that were revealed by it shook this confidence and triggered a panic among investors who had to scramble to get out of investments already made. This panic brought about the realization that financial market conduct needed to be subjected to more stringent rules and morality and that some behaviors should actually attract criminal liability (Wilson, 2006 ).

As financial markets evolved rapidly and continuously throughout the course of the 20th century , debates about what constitutes (im)permissible financial market conduct and how to demarcate the boundaries between civil and criminal liability have resurfaced on several occasions. Major events that triggered such debates were the Wall Street stock market crash of 1929 (Keller & Gehlmann, 1988 ), the savings and loan crisis of the 1980s (Malloy, 1989 ; Pontell, Calavita, & Tillman, 1994 ), and the wave of corporate accounting scandals in the early 2000s (Coates, 2007 ; Cunningham, 2002 ). The most recent debates emerged during the aftermath of the global financial crisis of 2007–2008 . The instances of financial mismanagement and abuse exposed by the crisis triggered debates about the appropriateness of criminal liability for bank managers in relation to “reckless risk-taking” on behalf of their banks (Black & Kershaw, 2013 ; Fisher QC, 2015 ) as well as the meaning of conflicts of interests and the fiduciary duties of broker-dealers as they conduct business with supposedly “sophisticated” investors in a financial marketplace that has gone through a number of structural and transformative changes (Buell, 2011 ; Davidoff Solomon, Morrison, & Wilhelm, 2012 ; Jeffers & Mogielnicki, 2010 ; Scopino, 2014 ).

Law Enforcement: Monitoring, Policing, and Sanctioning

The legal prohibition of certain financial market behaviors is only the first stage in societies’ broader political response to financial abuse. Once certain prohibitions are enshrined in laws and regulations, these then need to be enforced. Enforcement of the laws and regulations that set the boundaries of accepted financial market conduct is a complex process that involves a chain of public and quasi-public agencies. At the beginning of the chain are self-regulatory organizations, such as stock exchanges, clearing houses, and industry associations. These are non-governmental organizations that set legal or ethical industry standards and monitor adherence to these standards by controlling the flow of business operations. When standards are violated, or when suspicions arise that market players may have engaged in conduct that violates formal laws, self-regulatory organizations may notify independent financial regulatory agencies about the misconduct. Financial regulatory agencies are specialized agencies that have been established by governments and accredited with the task to actively monitor and police business operations in specific financial market segments—for example, banking, insurance, the thrifts sector, commodity markets, securities markets, etc. These agencies, examples of which are the U.S. Securities and Exchange Commission (SEC), the European Banking Authority (EBA), and the UK Financial Conduct Authority (FCA), have the authority to impose administrative fines and sanctions or to bring civil cases when laws or regulations are violated. They do not, however, have any prosecutorial power. When it appears that criminal laws have been violated, regulatory agencies may refer cases to public prosecutors, which might then decide to bring criminal charges against alleged offenders. As public prosecutors generally lack the intricate knowledge of financial market operations needed to bring charges for finance crimes, they work closely together with regulatory agencies when building their cases.

Financial regulatory agencies thus take a central position in the law enforcement apparatus. To better understand how exactly regulatory agencies go about in executing their task, WCC scholars have studied their organizational features and operational practices (e.g., Shapiro, 1984 ; Snider, 2009 ; Williams, 2012 ). These studies have shown that financial market policing and regulation are anything but straightforward enterprises. Partly, this is because they are inherently knowledge based (Williams, 2012 ). In their day-to-day activities, regulators face the practical problem of making sense of the chaos of activities, relationships, and transactions that constitute financial markets. To do so, they need to access, process, and interpret large amounts of information, distill from that whatever information might be relevant from an enforcement perspective, and eventually decide whether to develop cases out of the collected information. How they engage with this problem depends to a large extent on the tools and procedures they use to “settle the seeming chaos of market activities into workable frames, according to which transactions can be designated as ‘normal’ or ‘deviant” (Williams, 2012 , p. 181). Put simply, where and how enforcement agencies look for abuses determines what they will find.

That enforcement is not a straightforward enterprise also stems from the fact that the mandate of enforcement agencies is not fixed but ambiguous and contested. Financial regulators face a double mandate of protecting the integrity of the market while being careful not to construct a regulatory regime that is too stringent regarding regimes in other jurisdictions, as this would create the risk of investors abandoning the national market for jurisdictions that have more competitive regulatory regimes (Williams, 2012 ). Regulators have to balance these contradictory objectives while operating in a complex social field in which regulators, financial firms, and the professionals who stand between them (i.e., lawyers, accountants, tax advisors, etc.) all hold and proclaim their own ideas of what it means for financial regulation to be successful and legitimate (Snider, 2009 ; Williams, 2012 ). This negotiation of regulatory terrain is further complicated by the often- overlapping jurisdictions of different regulatory agencies. As these agencies all seek to deliver on their promised mandates, their objectives and organizational interests are not always aligned. At times, such interagency politics may take the form of turf wars (Condon, 2006 ). WCC scholars have pointed out how this continuous renegotiation of the purpose and scope of financial regulation typically follows a cyclical pattern in which crackdown periods, initiated by financial market crises and increased political salience of finance crimes, are followed by periods in which regulatory budgets are slashed and regulators become much more accommodating to industry preferences (Snider, 2007 , 2013 ).

Law Enforcement: Criminal Prosecution

When financial regulators find that market participants have engaged in behaviors that possibly violated a jurisdiction’s criminal laws, they may refer cases to public prosecutors, who may then bring criminal charges against those market participants. Criminal prosecutions can target both individuals and corporations, and the sanctions imposed for criminal liability are harsher than those imposed for civil or administrative sanctions. These may involve the revocation of licenses or corporate charters, debarment from bidding for public contracts, or the imprisonment of individuals responsible for the perpetration of the crime. WCC scholars have been especially interested in the discretionary application and enforcement of the criminal law. Many forms of financial misconduct arguably violate both civil and criminal laws and the ultimate decision to prosecute an offense using civil or criminal law is often determined by extralegal factors (Coleman, 2006 , p. 6).

Of specific concern in much recent WCC scholarship on the legal and political responses to finance crime is the reluctance of governments and public prosecutors to use the criminal justice system to respond to finance crimes related to the financial crisis of 2007–2008 . Despite revelations of serious misconduct in finance markets both before and after the crisis, few financial firms have faced criminal sanctions, and virtually no senior executive has been sent to jail. Instead, many cases have been concluded by way of settlements in the form of deferred prosecution agreements or non-prosecution agreements. Governments and their law enforcement agencies have typically ascribed the absence of criminal prosecutions to the difficulty of collecting the evidence necessary to prove “beyond a reasonable doubt” that there was criminal intent, which is the standard of evidence required to validate a criminal conviction. Although WCC scholarship does recognize the difficulties involved in the prosecution of complex finance crimes (Friedrichs, 2013 ; Pontell et al., 1994 ), it has questioned the credibility of this claim and has instead, or complementary to this, proposed alternative explanations. These alternative explanations are diverse and multidimensional, but two narrative threads figure prominently in most of them.

One of these concerns the way in which powerful financial interests exercise influence over the selective and discretionary application of the law. At one level this is said to happen through revolving doors between government enforcement agencies and the financial industry. Many financial regulators and public prosecutors either worked in the financial sector before they commenced their work as law enforcer or end up working in it afterward (Taibbi, 2014 ). A result of this hat switching is that regulators tend to socially identify with the financial industry and internalize the industry’s objectives, norms, and values (Barak, 2012 ; Veltrop & de Haan, 2014 ). As such, it has been suggested, revolving-door dynamics are instrumental to the promotion in regulatory institutions of a neoliberal ideology that advocates minimal government intervention in markets and a preference for industry self-regulation (Barak, 2012 ; Tomasic, 2011 ). At another level, powerful financial interests are said to curtail the institutional capacity of criminal justice agencies to investigate, prosecute, and sanction finance crime (Barak, 2012 ; Pontell, 1984 ). Financial interests use the political influence they wield through lobbying and campaign financing contributions to limit the resources available to government agencies responsible for the monitoring and prosecution of finance crime. Constrained by scarce resources, but under intense pressure to produce output, enforcement agencies tend to select out less demanding and more winnable cases. As a result, criminal cases are brought against offenders of petty crimes, while more complex offenses and offenses committed by persons with deep pockets are put aside (Barak, 2012 ; Taibbi, 2014 ).

A second narrative thread seeks a more structural explanation and emphasizes how prosecutors are held back by concerns over the fragility of financial firms and, ultimately, the financial system. To understand how this has come to be the case, two developments that have marked the evolution of capitalist economies over the last decades should be considered. The first is that, since the 1980s, advanced capitalist economies have gone through a number of transformative changes such that the importance of the financial sector for these economies has increased dramatically. In a process that is often referred to as “financialization,” the economic fate of firms, governments, and households have become increasingly mediated by relations with financial markets (French, Leyshon, & Wainwright, 2011 ; Van der Zwan, 2014 ). At the same time, the structural composition of the financial industry itself has undergone a radical transformation as well. A continuous process of consolidation has led to a situation in which a small number of large financial conglomerates make up the lion’s share of the financial sector in most advanced economies. The combined result of these two developments is that certain financial institutions have become of such systemic importance that they have effectively become “too-big-to-fail” (Sorkin, 2010 ). The collapse of any such institution would have serious adverse consequences for the financial system. With this in mind, prosecutors have become reluctant to aggressively prosecute finance crimes and have taken a less adversarial approach, resorting to deferred- and non-prosecution agreements instead. Effectively, then, these institutions have become “too-big-to-indict” and their executives “too big to jail” (Barak, 2012 ; Garrett, 2014 ; Tillman, 2013 ).

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• Tillman, R. , Pontell, H. N. , & Black, W. K. (2018). Financial crime and crises in the era of false profits . New York, NY: Oxford University Press.
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Court Documents

• Complaint at p. 24–38. Alaska Electrical Pension Fund v. Bank of America Corporation and others (United States District Court, Southern District of New York, 2014).
• Deferred Prosecution Agreement. United States of America v. Wachovia Bank, N.A . (United States District Court, Southern District of Florida, 2010).
• Plea Agreement, Exhibit Statement of Facts. United States of America v. BNP Paribas, S.A . (United States District Court, Southern District of New York, 2014).

1. The most incriminating evidence for Tourre was an e-mail that had surfaced in the SEC investigation that read: “more and more leverage in the system, the whole building is about to collapse anytime now . . . Only potential survivor, the fabulous Fab . . . standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!” (cited in Rosoff, Pontell, & Tillman, 2014 , p. 261).

2. Examples of financial derivatives contracts are options, futures, swaps, and collateralized debt obligations (CDOs).

3. Note that this manipulation strategy is equivalent to the trade-based strategy discussed earlier that is known as “banging the close.”

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Contemporary Issues in Audit Management and Forensic Accounting

ISBN : 978-1-83867-636-0 , eISBN : 978-1-83867-635-3

Publication date: 10 February 2020

Financial crimes involve several offenses without violence with some people obtaining financial benefit and causing financial loss to some others. The globalization of financial systems, the growing volume of trading transactions, and the acceleration of information technologies have brought many conveniences to the financial world; but unfortunately, financial crime has spread and diversified. Therefore, the fight against financial crimes, which are often complex and organized in a way which is nonviolent but causes significant financial damage to people and organizations, is gaining importance. In this sense, the struggle against this type of crime, which has become a serious threat, must be resolved by applying a comprehensive policy that should include all segments of the society.

In this chapter, we aim to give a general framework of financial crimes and carry out a literature review on the subject. Moreover, we outline the different types of financial crime (such as money laundering, insider dealing, fraud, market abuse, bribery, corruption, terrorist financing, white collar crimes, tax evasion, embezzlement, forgery, counterfeiting, identity theft, etc.) and their impact. As a result, this study has the purpose of providing awareness by drawing attention to the concept of financial crime, which is an important threat nowadays that an ordinary person may suffer at any time in daily life.

• Financial crime
• Money laundering
• Insider dealing
• Market abuse

Ünvan, Y.A. (2020), "Financial Crime: A Review of Literature", Grima, S. , Boztepe, E. and Baldacchino, P.J. (Ed.) Contemporary Issues in Audit Management and Forensic Accounting ( Contemporary Studies in Economic and Financial Analysis, Vol. 102 ), Emerald Publishing Limited, Leeds, pp. 265-272. https://doi.org/10.1108/S1569-375920200000102019

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Primary menu, a comparative analysis of the control of financial crime from the perspective of the uk, usa and nigeria.

Adetunji, Adeoye (2017) A Comparative Analysis of the Control of Financial Crime From the Perspective of the UK, USA and Nigeria. Doctoral thesis, School of Advanced Study, University of London.

Citation: Adetunji, Adeoye (2017) A Comparative Analysis of the Control of Financial Crime From the Perspective of the UK, USA and Nigeria. Doctoral thesis, School of Advanced Study, University of London.

Adetunji, A - IALS - 2017.pdf

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In 1939, Edwin Sutherland’s thesis on white collar crime drew the global attention to the bane of crime committed by persons in upper social class who use their privileged position to commit crime and are protected from prosecution by the state while persons in the lower social class who commit street crimes do not enjoy similar privilege, despite several criticisms against the thesis, it altered the theory of causation of crime and the earlier perception that financial crime is a victimless crime and thus created an awareness of the consequences of financial crime on economic development, social stability, national security, integrity of the capital market and good governance. The influence of information technology, globalisation and the link between financial crime, corruption, illicit drug trade, terrorist financing, human traffic and fraud (many of which are predicate offences of money laundering) demand a global concerted approach, development of which the UK and US laws have influenced with the introduction of national and international AML, OECD initiatives, the Vienna and Palermo conventions, the UNCAC and the FATF Recommendations. Many of these international initiatives (excluding the earlier Commonwealth initiatives) evolved from drug control measures, consequently, they have not effectively achieved the desired objectives in diverse ways, like the failure of the existing international initiatives (multilateral or mutual legal assistance) on the enforcement of transnational crimes. In Nigeria, part of the reason why regulating, interdicting and disrupting financial crime has been less effective is due to the introduction of the British method of criminal jurisprudence to Nigeria criminal justice system, in contradiction to the Nigerian traditional customary laws, values and remedies of restitution, compensation and reconciliation; consequently, the imposed foreign criminal codes failed to adequately control crime and also failed to adequately disgorge the proceeds of financial crime. While different nations have adopted various means of disgorging the proceeds of crime either by amending their adjectival laws to shift the burden of proof in certain circumstances (like criminalising the possession of unexplained wealth) without violating the offender’s right of presumption of innocence or right to remain silence, however, such adopted method must be informed by the circumstance of any given country, so far due process, equity and justice are ensured. Nigeria has not deemed it appropriate to use the prohibition of possession of unexplained wealth as an effective tool of financial crime control, except Lagos state. Again, due to the vast involvement of corporations in financial crime, an effective means of holding them liable through a clearly defined and pragmatic concept of corporate criminal liability has become necessary because this would play a crucial role in crime control. Consequently, this research questions the gross inconsistencies and ineffectiveness in the application of the organic or directing mind theory in holding complex, modern multinational corporations culpable and argues in favour of using a combination of principles of organic or directing mind, vicarious responsibility and strict liability offence (for failure to implement adequate internal policies to prevent crime by agents, similar to the provisions of the UK Bribery Act 2010, s.7) in attributing the knowledge of the agent or employee to the corporation, depending on the circumstance of a given case.The thesis argues that the future of money laundering control lies in the criminalisation of unexplained wealth, without infringing the right to own property. It identifies and proffers solutions to the problems associated with legal systems, jurisdictions, complexity of law and standard of proof, it recommends the use of civil enforcement by victim, regulatory actions, disruption of financial crime through internal control and compliance mechanisms with emphasis on recovery of proceeds of crime either through conviction based confiscation or civil forfeiture. Further, the thesis argues that due to the challenges associated with scientific means of evidence gathering and the high standard of proof in criminal proceedings beyond reasonable doubt, it prescribes that Nigeria ought to adopt the non-conviction based civil recovery of proceeds of crime, it also recommends the use of tax law to seize proceeds of money laundering. The thesis observes that the Nigeria criminal justice system needs to deemphasise the restrictive use of traditional punishment like imprisonment and fine in controlling complex financial crime, and suggested the use of clearly defined negotiated pleas like DPA, NPA and plea bargain. In addition, argues that the social and cultural factors responsible for greed and impunity must be identified and attacked in order to create a new social order, similar to the African communal lifestyle which was effective in controlling public and private corruption, notwithstanding, its basic tenet of gift giving. The thesis recommends that Nigeria ought to consider the introduction of an hybrid accusatorial and inquisitorial system of criminal justice so as to make its judiciary more participatory in criminal proceedings, it also recommends the provisions of fund for legal aid, compensation of victims of crime; prison and judiciary reform with a view to removing corruption without compromising the independence of judiciary and finally, it recommends legislations for protection and motivation of whistle blowers.

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Facilitators of financial crime: An explorative research on money mules in the Netherlands

Technology is constantly evolving, and cybercrime has become one of the best tools for criminal organizations to earn a living and make millions of euros. Cybercrime has become a lucrative, profitable business and the use of money mules has been vital to this success. This thesis focuses on how the money mule phenomenon works in the Netherlands and the logic behind such recruitment. This research thus aims to answer the following question: How are money mules recruited and used in the Netherlands, and which characteristics make an individual vulnerable to money mule recruitment? This thesis has identified the rudimentary relationship between a money mule and a cybercriminal as follows: the cybercriminal needs the money mule in order to launder money and remain anonymous. This study has also identified two primary forms of recruitment: face-to-face and online job scams, with face-to-face recruitment being the most common form in the Netherlands. The results of this thesis show that financial strain, rationalization about recruitment, and social networks play essential roles in making an individual susceptible to money mule recruitment. Furthermore, depending on the method of recruitment, there are two kinds of money mules: those who are aware of their illicit behavior, and those who are not.

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Dissertations / Theses on the topic 'Financial crime prevention'

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D’Souza, Jayesh. "Measuring Effectiveness in International Financial Crime Prevention: Can We Agree on a Performance Metric?" FIU Digital Commons, 2008. http://digitalcommons.fiu.edu/etd/286.

Saito, Emiko. "A comparative analysis of the prevention and control of electronic crime in the financial sector." Thesis, City University London, 2003. http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.409543.

Mambwe, Richard. "FINANCIAL EXPLOITATION OF THE ELDERLY, WHAT IS THE WAY FORWARD?" Thesis, Malmö universitet, Malmö högskola, Institutionen för kriminologi (KR), 2020. http://urn.kb.se/resolve?urn=urn:nbn:se:mau:diva-18738.

Švec, Martin. "Pojistné podvody." Master's thesis, Vysoké učení technické v Brně. Ústav soudního inženýrství, 2012. http://www.nusl.cz/ntk/nusl-232651.

Flysjö, Lars. "A script analysis of organized crime in the Swedish construction industry." Thesis, Malmö universitet, Malmö högskola, Institutionen för kriminologi (KR), 2021. http://urn.kb.se/resolve?urn=urn:nbn:se:mau:diva-41840.

Dokládalová, Michala. "Podvody finančních poradců a jejich prevence." Master's thesis, Vysoká škola ekonomická v Praze, 2011. http://www.nusl.cz/ntk/nusl-149836.

Maia, Antonio João Marques. "Fatores organizacionais explicativos da corrupção." Doctoral thesis, Instituto Superior de Ciências Sociais e Políticas, 2015. http://hdl.handle.net/10400.5/12741.

Hamman, Abraham John. "The impact of anti-money laundering legislation on the legal profession in South Africa." Thesis, University of the Western Cape, 2015. http://hdl.handle.net/11394/4766.

Theodorakis, Nikolaos. "Corporate crime : genesis, regulation and compliance. The role of law & policy in deciphering & preventing financial crimes." Thesis, University of Cambridge, 2015. https://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.708865.

Ahlm, Kristoffer. "IDENTIFIKATION AV RISKINDIKATORER I FINANSIELL INFORMATION MED HJÄLP AV AI/ML : Ökade möjligheter för myndigheter att förebygga ekonomisk brottslighet." Thesis, Umeå universitet, Institutionen för matematik och matematisk statistik, 2021. http://urn.kb.se/resolve?urn=urn:nbn:se:umu:diva-184818.

Bègue, Guillaume. "Confidentialité et prévention de la criminalité financière : étude de droit comparé." Thesis, Paris 1, 2016. http://www.theses.fr/2016PA01D019.

WU, BANG-FAN, and 吳邦藩. "Research on Financial ATM Transfer Fraud Crime Prevention." Thesis, 2019. http://ndltd.ncl.edu.tw/handle/s3nwz5.

LEE, MEI-CHIN, and 李美金. "The Application of Forensic Accounting on the Prevention of Financial Crime." Thesis, 2019. http://ndltd.ncl.edu.tw/handle/3f5wzk.

LIN, Chao Hung, and 林炤宏. "Prevention regulations on major financial fraud-discussing on deprivation proceeds of crime." Thesis, 2011. http://ndltd.ncl.edu.tw/handle/96512474965451891949.

Mostert, Derick. "Utilisation of the financial intelligence centre as a crime intelligence source." Diss., 2012. http://hdl.handle.net/10500/9116.

Botha, André Eduan. "Combating financial crime : evaluating the prospect of a whole-of-government approach." Thesis, 2018. http://hdl.handle.net/10500/24432.

SHEU, CHING-SHIH, and 許清事. "The Cause and Prevention of Communication Financial Fraud Crime—To Instance the Investigations into the Surrogate–Related Fraudulent Crimes in Taipei County." Thesis, 2006. http://ndltd.ncl.edu.tw/handle/52519237793088755133.

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Botha, Andre Eduan. "The Net Worth method as technique to quantify income during investigation of financial crime." Thesis, 2009. http://hdl.handle.net/10500/3305.

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Financial Crime and Cyber Crime Research Network

Details about the Financial Crime and Cyber Crime Research Network at UWE Bristol

The Financial Crime and Cyber Crime Research Network comprises members of the Global Crime, Justice and Security Research Group , the Computer Science Research Centre  at UWE Bristol, and external scholars.

View the profiles of the Network members who lead research into financial and cyber crime.

Dr Mary Young , Senior Lecturer, UWE Bristol Mary is a recognised subject expert in financial crime in offshore financial centres and transnational organised crime. She is a subject expert for the Global Initiative Against Transnational Organised Crime, and a contributing intelligence analyst with Open Briefing. She has been researching the complex relationship between financial secrecy, criminal proceeds and offshore financial centres since 2003, when she undertook the LLM International Business Law at Aberystwyth University – she later focused on the subject for her PhD (Aberystwyth University, 2011).

Mary’s main research interests surround the concept of confiscation law and its interaction with financial secrecy laws. She is also interested in transnational crime at the wider level, particularly drug trafficking and its interaction with drug trafficking. In October 2012, Mary gave a training workshop on offshore financial centres and money laundering for members of the Abu Dhabi Police force, held at the (former) Serious Organised Crime Agency (SOCA) headquarters. In 2013, Mary was interviewed on the subjects of money laundering and offshore banking for international publications including the  LA Times . She was interviewed in 2014 by the Eastern Europe desk of  Deutsche Welle  (the German news broadcaster), the  Financial Times , and was invited to speak by Dods Parliamentary Communications.  With recent and forthcoming projects, she has concentrated on empirical research to uncover the truths behind wildlife trafficking and money laundering in Vietnam. Mary was a Visiting Research Fellow of the Lauterpacht Centre for International Law, Cambridge University (2015 and 2017).

Samantha Bourton ,  Lecturer in Law, UWE Bristol Sam has been an Assistant Support Lecturer in the College of Business and Law at UWE Bristol since November 2014. Her research interests focus on tax evasion, money laundering and fraud. She has published on the areas of money laundering and tax evasion, including the implications of the Fourth European Money Laundering Directive and the response by the UK authorities to the recent HSBC bank tax evasion scandal. Sam is currently working on a book chapter evaluating the responses in the UK and USA to mortgage fraud since the financial crisis of 2007 to 2008. 

Dr Phil Legg , Associate Professor in Cyber Security, UWE Bristol

Phil is an Associate Professor in Cyber Security and Programme Leader for MSc Cyber Security at UWE Bristol. His research interests address the intersections of cyber security, machine learning, visual analytics, and human-computer interaction. He has led externally-funded research projects and works closely with industry partners on PhD research studentships in the areas of cyber, defence and national security, and on industrial consultancy projects. 

Phil is the Programme Leader for MSc Cyber Security course at UWE Bristol, which has been provisionally certified by the NCSC. He teaches Information Risk Management on  MSc Cyber Security , and Security Data Analytics and Visualisation on  BSc Cyber Security and Digital Forensics . Phil supervises PhD students as well as a number of  undergraduate and postgraduate dissertations each year.

He is  also co-founder of the  Colloquium for Information Systems Security Education UK (CISSEUK) , supported by the NCSC, which aims to promote sharing and collaboration to improve cyber security education across the UK.  

Ian Johnson , Associate Head of Department of Information Science, UWE Bristol

Ian is currently Associate Head of Department/Cluster Leader for Cyber Security and Business Computing) in the College of Arts, Technology and Environment at UWE Bristol, where he is responsible for managing roughly a third of the department's staff. Prior to this, he was Programme Leader for the BSc Forensic Computing and Security programme (now renamed Cyber Security and Digital Forensics). He is a highly experienced teacher and academic with a history of programme and module design. He has designed and led modules for nearly 30 years in a number of programmes from the MSc Parallel Computer Systems (1989) through the MSc Systems Administration and Security, to the current undergraduate Forensic Computing and Security programme, for which he led the redesign in 2016. 

Ian's main interests are networks and network security, operating systems and embedded systems. He also has interests covering a wide gamut of cyber security issues, from embedded systems security, through network forensics to the traceability of digital currency transactions.

Diana Johnson , Programme Leader LLB

Diana is a programme leader on the LLB and is a solicitor with several years of practice experience. Before working at UWE Bristol, Diana worked in the European Commission’s Directorate for Competition, then in an international law firm in Brussels and law firms in Bristol. Her research interests focus on the role competition law plays in the enforcement and regulation of financial crime, specifically that of benchmark rate manipulation. Diana has written several articles and a book chapter for an edited collection by Routledge. Diana is undertaking a PhD in financial crime and competition law.

Dr Ester Herlin-Karnell ,  Associate Professor of EU Constitutional Law and Justice, VU University of Amsterdam

Ester is a Professor of EU Constitutional Law and Justice and the Co-Director of the VU Centre for European Legal Studies. Her publications include a monograph on the constitutional dimension of European criminal law (Hart publishing, 2012) and numerous articles on the EU security regulation, EU criminal law, constitutional aspects of EU law and on regulatory market-based challenges in the EU’s fight against financial crimes and terrorism. She is also the co-author (with Nicholas Ryder) of  Market manipulation and the financial crisis: Regulatory challenges and responses in United States of America, the European Union and the United Kingdom , (forthcoming Hart Publishing 2018), as well as the co-editor (with M Fletcher and C Matera) of  The European Union as an Area of  
 Freedom, Security and Justice .

Dr Umut Turksen , Professor in Law, Coventry University

Umut has 15 years of international experience in designing, managing and delivering legal education, research and high impact consultancy projects in prestigious organisation.  Umut is the Head of Commercial Law Research Unit. He is a business facing academic who is currently researching the risks, challenges and opportunities that the digital assets and property pose for society. He has published extensively in the area of financial crime and brings a wide range of expertise and experience in areas including international trade and economic law, energy law, counter-terrorism law, financial crime and banking regulations, commercial law and European Union law.

Saamir Nizam , Solicitor at DWF, Editor-in-Chief, Scottish Parliamentary Review and The British Journal of White Collar Crime

Saamir is chief editor of  The British Journal of White Collar Crime  and the  Scottish Parliamentary Review . Saamir has over 25 years of experience in researching and drafting legislation, committee reports, and investigative materials relating to financial and budgetary matters. In the past, Saamir participated in the BCCI investigation (and legislative/regulatory responses), the savings and loan crisis (and resulting legislation), financial failures by municipalities and public bodies, and more recently, the mortgage loan crises. His legal practice will entail EU/UK/US competition/antitrust law, cartel offences, corporate investigations, and white collar criminal defence. Saamir holds a BA (George Washington), LLB (Edinburgh Napier), MSc and Dip LP (Edinburgh) degrees and is currently a visiting scholar and tutor at the University of St Andrews.

Andrew Baker , Senior Lecture, Liverpool John Moores University

Andrew is a senior lecturer at Liverpool John Moores University. His research interests are in the regulation of banks and financial crime. A specific focus of his interests is in the links between regulation and market abuse, and whether an alternative to the current regulatory reforms could be found in an enhanced sanctions-based regime. Other research interests include the confiscation of criminally obtained assets and the difficulties posed by law enforcement in denying criminal enterprises the fruits of the illegal activities.  Andrew is a doctoral candidate at UWE Bristol researching the current developments in regulatory reform, with a focus on the complexity of regulatory regimes and what alternative mechanisms are available. Andrew has written articles on corporate social responsibility in banks and on the UK market abuse regime. He is course leader for Bank and Financial Services Regulation and Law Relating to Financial Crime on the LLB and LJMU and course leader for Financial Crime on the LLM.

Paul Keenan , Keenan Regulatory Consulting Limited

A senior financial markets professional with extensive and diverse knowledge, skills and experience gained in both on-shore and off-shore investment environments at board and CEO level. Paul has in-depth knowledge of the complex products, the required systems and controls, and regulatory supervision and enforcement in those investment environments that he built on a career in inter-governmental projects and financing, investment banking, regulation and education over 40 years. He also has broad experience of working at committee level with the finance industry's Trade Associations.

The breadth and depth of this combination of professional experiences has uniquely qualified Paul to contribute at a high level to all aspects of the regulatory risk management function. He has a good reputation for the ability to communicate complex ideas to non-expert groups, and for training and coaching others in the intricacies and requirements of compliance policy, from the trading floor up to Board level. He is a highly regarded speaker on regulatory risk and financial crime (AML) issues at Chartered Institute for Securities & Investment Chartered Institute for Securities & Investment (CISI), Complinet and academic seminars.

Professor Jackie Harvey, Professor of Financial Management, Newcastle Business School, Northumbria University

Jackie Harvey is Professor of Financial Management and Director of Business Research at Newcastle Business School. Her research is focused in the area of criminal financial management, in particular money laundering.  Early outputs considered costs and benefits of regulatory compliance before moving on to evaluate the effectiveness of the Anti-Money Laundering Framework.  Jackie has been invited to speak at a number of very high profile academic and practitioner conferences in both the UK and Europe. She is on the Editorial Board for the European Cross-Border Crime Colloquium that brings together researchers from across Europe. Her main teaching interests focus on risk and investment management together with financial market regulation.  Prior to becoming an academic, Jackie, whose PhD is in Taxation Policy, spent 10 years working for a major merchant bank, followed by a three year posting as fiscal policy adviser (under the auspices of the British Government) to the Ministry of Finance in Belize.

Dr Colin King , Reader in Law, The Institute of Advanced Legal Studies

Colin King has joined the Institute as Reader in Law from 1 October 2019. Colin previously worked at the School of Law, University of Sussex, where he co-founded the Sussex Crime Research Centre. Prior to joining Sussex in 2015, Dr King taught at the Universities of Manchester and Leeds. He received his LLB in Law and European Studies, as well as his PhD, from the University of Limerick. Colin has recently published two books,  The Handbook of Criminal and Terrorism Financing Law  (2018) and  Negotiated Justice and Corporate Crime: The Legitimacy of Civil Recovery and Deferred Prosecution Agreements  (2018). In March 2016, Colin gave oral evidence at the Home Affairs Select Committee Inquiry into the Proceeds of Crime Act. He is a member of the AHRC Peer Review College (2015-), on the editorial board of Lloyds Law Reports: Financial Crime (2015-), and an Academic Fellow at the Honourable Society of the Inner Temple (2014-). His teaching is in the areas of Criminal Law; Criminal Evidence; Transnational Offending; Financial Crime; and Banking Law. His research focuses on civil recovery (NCB forfeiture), particularly in Ireland, the UK, the EU, and with reference to the ECHR. Colin is co-editor of  Dirty Assets: Emerging Issues in the Regulation of Criminal and Terrorist Assets  (King and Walker, Ashgate, 2014).

Dr Alison Lui,  Reader in Corporate and Financial Law at Liverpool John Moores University (LJMU)

Alison is a Reader in Corporate and Financial Law. She is the Associate Dean (Global Engagement) for the Faculty of Business and Law at LJMU.  Alison obtained her LLB (European Legal Studies) from the University of Bristol. She spent a year in Germany as part of her undergraduate degree. She then studied a LLM (Corporate and Commercial Law) at the London School of Economics. She obtained her PhD from the University of Liverpool. She qualified as a Solicitor and practised commercial law before joining LJMU. She is a joint module leader for Bank and Financial Services Regulation on the LL.B programme.  Alison’s research interests are predominantly in financial regulation and corporate governance. She has published articles and book chapters. Her monograph  Financial stability and prudential regulation: A comparison between the regulators and central banks of the United Kingdom, the United States, Canada, Australia and Germany  was published in 2016 with Routledge. She has also appeared in radio programmes. Alison has won a number of awards to date. In 2010, she was runner-up in the British Federation of Women Graduates Travel Bursary Competition. In 2011, she was awarded a Winston Churchill Fellowship. A year later, she was a joint winner of a Higher Education Authority grant for employability and social media. In 2013, she was awarded an LJMU Early Career Researcher Fellowship. Alison won a Max Planck Society Scholarship in 2015, which enabled her to spend three months at the Max Planck Institute of Comparative and International Private Law, Hamburg to conduct research into financial regulation. Alison is an Academic Fellow of the Honorary Society of the Inner Temple. She is a reviewer of the Journal of Financial Regulation and Compliance.

Dr Steven Cairns , Lecturer in Banking and Corporate Law, University of Leeds

Steven is a specialist in the role of corporate governance in preventing financial crime within multinational financial groups. His doctoral thesis, entitled  Changing the Culture of Financial Regulation: A Corporate Governance Approach , analysed the roles and responsibilities of the director (both executive and non-executive) within large corporate groups. His research used the global financial crisis as a lens for wider critique. Dr Cairns’ subsequent research has focused on the liability of directors for decision making within the corporate structure. His wider research interests focus on the roles and responsibilities of formal regulators and the board of directors. He currently delivers lectures on banking regulation and financial crime to both undergraduate and postgraduate students.

Dr Lorenzo Pasculli , Associate Head of School at Coventry University

Lorenzo is Assistant Professor of Law at Coventry Law School and Associate of the Centre for Financial and Corporate Integrity at Coventry University. He is the founding Director of the Global Integrity Research Network and Sessional Lecturer in Conflict, Crime and Justice and Law and Professional Ethics for Science and Technology at Imperial College London. Prior to my appointment in Coventry, he was Senior Lecturer in Law at Kingston University London. He has been a visiting researcher at many institutions in the UK and overseas, including Oxford University, Queen's University Belfast, Columbia University, Fordham University, University of Adelaide, Florida International University and Bahcesehir Universitesi Istanbul. Lorenzo's main research interest concern on the prevention of global crimes, such as transnational corruption, corporate crimes, organised crime and terrorism.  His first book on the Measures of Prevention of International Terrorism and Criminal Trafficking (2012) was awarded the international prize "Opera Selezionata G. Falcone - P. Borsellino" in 2015.

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