The Challenges Facing the Global Financial Sector, National Financial Centres and Jurisdictions

Within the global financial sector, ethics and Integrity are centred in corporate financial governance and market integrity of banks and other financial services. The present global financial crisis has shed light on certain aspects only of the issues of ethical conduct and integrity that originate from within the global financial sector, namely the willingness to engage in legitimate activities presenting excessive risks, rewards that promote the taking of such risks, lack of transparency and failure of responsibility and accountability in financial business management and oversight. The whole has been severely compounded by failings and shortfalls of those responsible for regulation, oversight and enforcement.

Admittedly, stakeholders in the exceptional financial gains generated, be them shareholders or originators of such gains in banking or other financial services amongst others, have found no qualms in accepting the financial benefits of the whole set of activities in question. The accumulation of wealth as an end in itself, devoid of ethical considerations, has been a major driving force. There has been no consideration given to the tradeoff between gain and ethical standards based on the principles of integrity, namely fairness, transparency, responsibility and accountability.

The only criminal issue brought to light and into focus in the context of the present global financial crisis is that of tax evasion, which is related to legal considerations of tax policies and practices of nations around the world. For banking and other financial services, and the national financial centres and jurisdictions in which the financial transactions take place, client confidentiality (or so-called bank secrecy) and exchange of information between nations have been the sole matters subject to scrutiny and vowed public actions.

The Global Tax Forum of The Group of Twenty Nations (G20) and the Organisation for economic Co-operation and Development (OECD), pertaining to transparency and exchange of information, are at the forefront of concerted government activities to combat tax evasion and improve information exchanges between jurisdictions. Money laundering is broached only as the side effect of the financial “recycling” of ill-gotten gains from tax evasion.

The political focus on tax evasion and on so-called bank secrecy is obviously driven to no small degree by the practical matter of governments seeking increased revenues under the considerable pressures that have risen due to the exceptional increases in national public debts as a result of the dramatic jumps in national public expenditures to contain the global economic crisis and restore economic activity. Both global financial and economic crises, intertwined and inseparable, have brought in a new era of international financial cooperation with new and existing international agencies, being reorganized and equipped with new powers, to orchestrate increased global regulation, oversight and enforcement across national financial centres and jurisdictions. The World Bank, the International Monetary Fund, the OECD and the Financial Stability Board, to name but the most recognised bodies, are about to impact profoundly the global financial sector and its national financial centres and jurisdictions.

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