Offshore Centre and International Anti-Money Laundering Policy: An Incentive - Oriented Approach

The existence of very deep-rooted incentives to be an OFC suggests that the international effort to create a level playing field is more likely to achieve using a cooperative game between offshore and onshore jurisdictions, rather than a crude name and shame approach. If the name and shame approach does not influence the policy maker cost benefit analysis, it will be ineffective, and the regulatory gap will remain stable. If the OFCs, on the one side, given their political and historical endowments, gain from the growth of the foreign financial flows and, on the other side, are relatively immune to the crime pollution costs and insensitive to the international organizations’ blame, they perceive the global surveillance programmes just as discriminatory practices. As a consequence the OFCs will be less likely to be cooperative, confirming their no compliance attitude. The regulatory gap will remain a stable equilibrium outcome, as well as the likelihood of the false and reluctant friend effects.