The 24th Cambridge International Symposium on Economic Crime has just concluded. As it has, for the past 24 years, the Symposium prides itself for serving as a “a truly unique event which over the years has made an unrivalled contribution in promoting understanding of the real issues involved in successfully preventing and controlling economically motivated serious crime.” (Barry A.K. Rider, The 24th Cambridge International Symposium on Economic Crime, The Price of Crime, The Identification and Control of Risks Associated with the Enterprise of Crime and Terror, Programme Document). “The Symposium is able to draw upon a unique network of recognised experts from around the world. Well over two hundred speakers and panellists will address a wide range of issues of special relevance to those concerned with the prevention and control of serious crime and in particular the funding of criminal organisations and the laundering of the proceeds of crime.” Id.
And so it did. The conference brought together a number of leading actors involved in the detection, prevention, trial and punishment of people and organizations involved in economic crimes, and especially trans-border economic crime. Over the course of a week, these leading actors, from the public and private sector, representing states, economic enterprises, ad significant elements of civil society provided individual perspectives on a variety of aspects of trans-border financial crime and its interdiction. While there were many perspectives developed by the speakers, there were also three broad themes that seemed to emerge from virtually all presentations. These four themes—(1) conflation of economic and political criminality, (2) privileging of surveillance, (3) seizure, and (4) interruption—are worth exploring if only to highlight their importance in formulating policy, and public sector responses to the threats posed by economic crime.
1. Conflation of Economic and Political Criminality: much of the focus of the speakers was on economic and financial crimes flowing through or conducted with banks and banking facilities. For many speakers, banks have become the critical flow point in economic and financial crime. That importance has only been increased as the global system of banking has become increasingly seamless. Bank related criminality tends toward a finite set of profit maximizing methodologies. They also provide a methodology of veiling transactions. Consequently, economic and political criminality have blended. That is to say, that the methodologies of economic criminals (those interested solely in the financial rewards of crime) and that of politically motivated criminality (those who whom economic criminality is a method of financing political activity), have begun to harmonize. As a consequence, public sector officials tend to conflate approaches to the interdiction of both sets of activity. Where once economic or ordinary criminals were treated as a different species of criminality from politically motivated criminals, that seems no longer to be the case. And there might be good reason to do this. Increasingly, it appears, traditional criminal collectives have begun to engage in transactions with networks of political criminals. As a result, there has arisen a global shadow economy of sorts, which mimics and intersects with the formal global economy in key sectors. Thus, for example, global drug cartels may be engaged in business with certain terrorists groups to the mutual benefit of each. And even states may be involved; there was a suggestion, for example, that states augment their economic and social position by acting through semi-autonomous networks of economic and political collectives to advance their own interests in a way impossible if conducted directly. Thus, globalization has produced an odd sort of harmonization, leading perhaps to the integration of criminal activity, and its interdiction. The result is that while typical criminal statutes continue to apply to political criminality, political criminality (and principally terrorism related statutes) may come to be applied to ordinary economic criminality as well.
2. Privileging Surveillance: The conflation of economic or financial crime and political crime (financing terrorism in its most extreme aspect) has resulted in a privileging of surveillance. Surveillance became the key policy point of the conference. There was no longer a question of whether to implement systems of surveillance. Rather, the question for virtually all speakers consisted of (a) how much surveillance could be tolerated, (b) who ought to have the burden of surveillance (the private or public sector), (c) against whom would surveillance be targeted, and (d) for whose benefit should increasingly elaborate and complicated systems of surveillance be implemented.
It was clear that the public sector is pushing for a tremendous expansion in deployment of surveillance. There was much talk about the technologies of surveillance and the economics of surveillance maximizing technologies and systems. Rhetorically, at least, there was more than a passing resemblance to the discourse of the Cold War with respect to defense spending and the development of new weapons systems. It was clear to some speakers that there is a race between global criminal collectives (whether economic or political in objective) for control of the technologies of commerce. It also seemed clear that the stakes had considerably risen since the attacks of September 11, 2001 on New York and Washington, and the subsequent military actions in Afghanistan and Iraq. As a consequence, there was a sense that both the necessity and acceptability of much higher levels of surveillance, in every aspect of life, ought to be tolerated. In a sense, the idea of total war, first understood in its modern sense after 1914 in the West, has now developed to new levels. We live in the shadow of the consequences of that idea.
Much more lively is the discussion about the mechanics of surveillance. While the public sector retains the responsibility for surveillance and its products, there was a sense that the private sector was to bear an increasingly greater responsibility for actually carrying out surveillance. Thus, for example, if banks are the focal point of economic criminality, then banks ought to be the focal point of surveillance. And the responsibility for that surveillance ought to fall on the bank. Similarly, American law has increasingly imposed on a broad category of economic enterprises a greater and greater responsibility for monitoring all of the people and institutions with which it comes into contact and to report the results of that monitoring to the state. See Larry Catá Backer, Surveillance and Control: Privatizing and Nationalizing Corporate Monitoring After Sarbanes-Oxley, 2004 MICH. ST. DCL L. REV. 327 (2004).
Who should be targeted? What emerges is an increasing embrace of the idea that everyone ought to be targeted. The Conference participants confirm that the West has moved from the idea that people are presumed to be acting lawfully unless they giove an indication otherwise, to the notion that all people and institutions are potential wrongdoers who must be monitored to ensure that such wrongdoing is quickly interdicted and the perpetrators punished. This great change in fundamental policy approaches finds ramifications throughout the law enforcement and economic organization regulation fields.
For whose benefit is surveillance conducted? This seems a simple issue at one level—the state is the primary beneficiary of regimes of surveillance, and through the state, the people. But consider the effects of regimes of surveillance on the so-called front line institutions. One speaker brought out the economic effects of surveillance regimes on the profitability of banks, for example. She suggested that Section 311(a) of the USA Patriot Act, that requires designated financial institutions to act to correct deficiencies in their anti-money laundering regimes, (See USA Patriot Act), also have commercial effects. In this case, bank reputations, and profitability, can be enhanced by avoidance of designation, an avoidance that banks can exploit in their marketing. On the other hand, designation can ruin the reputation of any financial institution, in one case, we are told, resulting in the withdrawal of about 30% of the deposits of a bank in Macao, deterioration in relations with corresponding banks, all resulting in the sale of the bank. Thus there is as much advantage to be obtained from the new surveillance regimes as there are burdens imposed. Moreover, to the extent that the implementation of elaborate surveillance systems produces a reduction in exposure to liability for the institutions, such systems tend to be cost effective ways of minimizing exposure to liability, especially to third parties (and non state actors, principally depositors, borrowers, employees, etc.). Thus, privatized surveillance coupled with limitations on liability tend to encourage a broadening of surveillance as much as the necessities of state policy in combating crime.
3. The Importance of Seizure: While the burden of surveillance is increasingly privatized, the power over remedies and the form of those remedies has drifted out from the public sector and to the public. Thus for example, though banks might have the primary obligation to gather information, public authorities may have the sole power to seek remedies—from fines, to confiscations, to criminal liability. The state has increasingly taken a monopoly position over remedies, even as it has devolved the obligation to enforce. Among the form remedy often identified as valuable was seizure. Not seizure after indictment and trail, but seizure pending the outcome of judicial proceedings. The idea is a simple yet powerful one—to prevent criminals from exploiting the judicial system by using the fruits of their criminal enterprises to tilt the mechanics of judicial proceedings in their favour.
This is not a new approach. The Americans have been experimenting with this since the early days of RICO. The Americans have extended this notion to state policy within the federal Justice Department, by applying a system of guidelines for the exercise of prosecutorial discretion that essentially coerces corporate employers to breach even agreements to advance the costs of litigation and investigation defense pending trial, Larry D. Thompson, Principles of Federal Prosecution of Business Organizations, January 30, 2003, the so-called Thompson Memo ("The Thompson Memorandum sets forth nine factors that federal prosecutors must consider in determining whether to charge a corporation or other business organization."). But even this approach may have limits in the United States. See U.S. v. Stein, No. S1 05 Crim. 0888 (LAK) (S.D.N.Y.) slip opinion June 26, 2006, in which a federal district court determined that this practice violated the American Federal Constitution.
But seizure is not limited to things. It also includes the seizure of persons. The idea is that the faster and more often the players in the fields of international economic and financial crimes are removed from active participation in this field, and the more often goods in such commerce are removed from the stream of illicit commerce, the more difficult it will be for stakeholders in these enterprises to successfully maintain their operations. More likely, it suggests that the affect will not be on the viability of the operations as on their profitability. And in this light, there is an intimate connection between seizure as a methodology of fighting economic and financial c rime, and interruption as an object of such endeavors.
4. Interruption. All of this elaboration, however, has not lead conference participants to harboring false expectations. Conflation of criminal activity, expansion of surveillance, and seizure as a proactive tool may serve policies of interdiction. But few of the conference participants supposed that such strategies could actually overcome economic and financial criminal activity, and particularly politically motivated financial crime. As a consequence, the focus of law enforcement, however implemented, is not on “victory” but on interruption. The idea is that prevention is unrealistic, and recovery is only partial. Interruption is the most effective means of affecting financial and economic crime. The reason is simple—interruption is meant to target the costs of crime. To the extent that public authorities can affect the cost of producing illicit economic activity, it may reduce its incidence. If the cost of crime is significantly increased, then there may even be a significant reduction in the rate of such crime. More importantly, it seems, interruption targets political crime. Drug cartels and other economic criminal activity, like other businesses, is not overly constrained by timing issues (except for example with respect to things like harvesting crops etc., perhaps). But politically motivated crime is usually much more likely to be dependent on timing issues. The ability to engage in specific acts of terror, for example, may depend on getting funds or other goods to the right peoiple at the right time in order to affect an act in the right place for maximum effect. Windows of opportunity may open and close quickly. Thus, to the extent that interruption becomes more effective, planning for political activity becomes more difficult.
In any case, one comes away from the 24th annual Cambridge International Symposium on Economic Crime with the sense that the international elites charged with meeting the challenges of trans-border economic and financial crime have come closer to adopting a unified position—at least with respect to policy issues—touching on the foundational approach to combating such activity. That unified position will increasingly conflate economic and political crime, privilege surveillance even as the mechanics of surveillance are privatized, and rely increasingly in seizure (before trial) and interruption as means and goals of the system. . It will be interesting to see whether or to what extent this sort of policy is effective.
And so it did. The conference brought together a number of leading actors involved in the detection, prevention, trial and punishment of people and organizations involved in economic crimes, and especially trans-border economic crime. Over the course of a week, these leading actors, from the public and private sector, representing states, economic enterprises, ad significant elements of civil society provided individual perspectives on a variety of aspects of trans-border financial crime and its interdiction. While there were many perspectives developed by the speakers, there were also three broad themes that seemed to emerge from virtually all presentations. These four themes—(1) conflation of economic and political criminality, (2) privileging of surveillance, (3) seizure, and (4) interruption—are worth exploring if only to highlight their importance in formulating policy, and public sector responses to the threats posed by economic crime.
1. Conflation of Economic and Political Criminality: much of the focus of the speakers was on economic and financial crimes flowing through or conducted with banks and banking facilities. For many speakers, banks have become the critical flow point in economic and financial crime. That importance has only been increased as the global system of banking has become increasingly seamless. Bank related criminality tends toward a finite set of profit maximizing methodologies. They also provide a methodology of veiling transactions. Consequently, economic and political criminality have blended. That is to say, that the methodologies of economic criminals (those interested solely in the financial rewards of crime) and that of politically motivated criminality (those who whom economic criminality is a method of financing political activity), have begun to harmonize. As a consequence, public sector officials tend to conflate approaches to the interdiction of both sets of activity. Where once economic or ordinary criminals were treated as a different species of criminality from politically motivated criminals, that seems no longer to be the case. And there might be good reason to do this. Increasingly, it appears, traditional criminal collectives have begun to engage in transactions with networks of political criminals. As a result, there has arisen a global shadow economy of sorts, which mimics and intersects with the formal global economy in key sectors. Thus, for example, global drug cartels may be engaged in business with certain terrorists groups to the mutual benefit of each. And even states may be involved; there was a suggestion, for example, that states augment their economic and social position by acting through semi-autonomous networks of economic and political collectives to advance their own interests in a way impossible if conducted directly. Thus, globalization has produced an odd sort of harmonization, leading perhaps to the integration of criminal activity, and its interdiction. The result is that while typical criminal statutes continue to apply to political criminality, political criminality (and principally terrorism related statutes) may come to be applied to ordinary economic criminality as well.
2. Privileging Surveillance: The conflation of economic or financial crime and political crime (financing terrorism in its most extreme aspect) has resulted in a privileging of surveillance. Surveillance became the key policy point of the conference. There was no longer a question of whether to implement systems of surveillance. Rather, the question for virtually all speakers consisted of (a) how much surveillance could be tolerated, (b) who ought to have the burden of surveillance (the private or public sector), (c) against whom would surveillance be targeted, and (d) for whose benefit should increasingly elaborate and complicated systems of surveillance be implemented.
It was clear that the public sector is pushing for a tremendous expansion in deployment of surveillance. There was much talk about the technologies of surveillance and the economics of surveillance maximizing technologies and systems. Rhetorically, at least, there was more than a passing resemblance to the discourse of the Cold War with respect to defense spending and the development of new weapons systems. It was clear to some speakers that there is a race between global criminal collectives (whether economic or political in objective) for control of the technologies of commerce. It also seemed clear that the stakes had considerably risen since the attacks of September 11, 2001 on New York and Washington, and the subsequent military actions in Afghanistan and Iraq. As a consequence, there was a sense that both the necessity and acceptability of much higher levels of surveillance, in every aspect of life, ought to be tolerated. In a sense, the idea of total war, first understood in its modern sense after 1914 in the West, has now developed to new levels. We live in the shadow of the consequences of that idea.
Much more lively is the discussion about the mechanics of surveillance. While the public sector retains the responsibility for surveillance and its products, there was a sense that the private sector was to bear an increasingly greater responsibility for actually carrying out surveillance. Thus, for example, if banks are the focal point of economic criminality, then banks ought to be the focal point of surveillance. And the responsibility for that surveillance ought to fall on the bank. Similarly, American law has increasingly imposed on a broad category of economic enterprises a greater and greater responsibility for monitoring all of the people and institutions with which it comes into contact and to report the results of that monitoring to the state. See Larry Catá Backer, Surveillance and Control: Privatizing and Nationalizing Corporate Monitoring After Sarbanes-Oxley, 2004 MICH. ST. DCL L. REV. 327 (2004).
Who should be targeted? What emerges is an increasing embrace of the idea that everyone ought to be targeted. The Conference participants confirm that the West has moved from the idea that people are presumed to be acting lawfully unless they giove an indication otherwise, to the notion that all people and institutions are potential wrongdoers who must be monitored to ensure that such wrongdoing is quickly interdicted and the perpetrators punished. This great change in fundamental policy approaches finds ramifications throughout the law enforcement and economic organization regulation fields.
For whose benefit is surveillance conducted? This seems a simple issue at one level—the state is the primary beneficiary of regimes of surveillance, and through the state, the people. But consider the effects of regimes of surveillance on the so-called front line institutions. One speaker brought out the economic effects of surveillance regimes on the profitability of banks, for example. She suggested that Section 311(a) of the USA Patriot Act, that requires designated financial institutions to act to correct deficiencies in their anti-money laundering regimes, (See USA Patriot Act), also have commercial effects. In this case, bank reputations, and profitability, can be enhanced by avoidance of designation, an avoidance that banks can exploit in their marketing. On the other hand, designation can ruin the reputation of any financial institution, in one case, we are told, resulting in the withdrawal of about 30% of the deposits of a bank in Macao, deterioration in relations with corresponding banks, all resulting in the sale of the bank. Thus there is as much advantage to be obtained from the new surveillance regimes as there are burdens imposed. Moreover, to the extent that the implementation of elaborate surveillance systems produces a reduction in exposure to liability for the institutions, such systems tend to be cost effective ways of minimizing exposure to liability, especially to third parties (and non state actors, principally depositors, borrowers, employees, etc.). Thus, privatized surveillance coupled with limitations on liability tend to encourage a broadening of surveillance as much as the necessities of state policy in combating crime.
3. The Importance of Seizure: While the burden of surveillance is increasingly privatized, the power over remedies and the form of those remedies has drifted out from the public sector and to the public. Thus for example, though banks might have the primary obligation to gather information, public authorities may have the sole power to seek remedies—from fines, to confiscations, to criminal liability. The state has increasingly taken a monopoly position over remedies, even as it has devolved the obligation to enforce. Among the form remedy often identified as valuable was seizure. Not seizure after indictment and trail, but seizure pending the outcome of judicial proceedings. The idea is a simple yet powerful one—to prevent criminals from exploiting the judicial system by using the fruits of their criminal enterprises to tilt the mechanics of judicial proceedings in their favour.
This is not a new approach. The Americans have been experimenting with this since the early days of RICO. The Americans have extended this notion to state policy within the federal Justice Department, by applying a system of guidelines for the exercise of prosecutorial discretion that essentially coerces corporate employers to breach even agreements to advance the costs of litigation and investigation defense pending trial, Larry D. Thompson, Principles of Federal Prosecution of Business Organizations, January 30, 2003, the so-called Thompson Memo ("The Thompson Memorandum sets forth nine factors that federal prosecutors must consider in determining whether to charge a corporation or other business organization."). But even this approach may have limits in the United States. See U.S. v. Stein, No. S1 05 Crim. 0888 (LAK) (S.D.N.Y.) slip opinion June 26, 2006, in which a federal district court determined that this practice violated the American Federal Constitution.
But seizure is not limited to things. It also includes the seizure of persons. The idea is that the faster and more often the players in the fields of international economic and financial crimes are removed from active participation in this field, and the more often goods in such commerce are removed from the stream of illicit commerce, the more difficult it will be for stakeholders in these enterprises to successfully maintain their operations. More likely, it suggests that the affect will not be on the viability of the operations as on their profitability. And in this light, there is an intimate connection between seizure as a methodology of fighting economic and financial c rime, and interruption as an object of such endeavors.
4. Interruption. All of this elaboration, however, has not lead conference participants to harboring false expectations. Conflation of criminal activity, expansion of surveillance, and seizure as a proactive tool may serve policies of interdiction. But few of the conference participants supposed that such strategies could actually overcome economic and financial criminal activity, and particularly politically motivated financial crime. As a consequence, the focus of law enforcement, however implemented, is not on “victory” but on interruption. The idea is that prevention is unrealistic, and recovery is only partial. Interruption is the most effective means of affecting financial and economic crime. The reason is simple—interruption is meant to target the costs of crime. To the extent that public authorities can affect the cost of producing illicit economic activity, it may reduce its incidence. If the cost of crime is significantly increased, then there may even be a significant reduction in the rate of such crime. More importantly, it seems, interruption targets political crime. Drug cartels and other economic criminal activity, like other businesses, is not overly constrained by timing issues (except for example with respect to things like harvesting crops etc., perhaps). But politically motivated crime is usually much more likely to be dependent on timing issues. The ability to engage in specific acts of terror, for example, may depend on getting funds or other goods to the right peoiple at the right time in order to affect an act in the right place for maximum effect. Windows of opportunity may open and close quickly. Thus, to the extent that interruption becomes more effective, planning for political activity becomes more difficult.
In any case, one comes away from the 24th annual Cambridge International Symposium on Economic Crime with the sense that the international elites charged with meeting the challenges of trans-border economic and financial crime have come closer to adopting a unified position—at least with respect to policy issues—touching on the foundational approach to combating such activity. That unified position will increasingly conflate economic and political crime, privilege surveillance even as the mechanics of surveillance are privatized, and rely increasingly in seizure (before trial) and interruption as means and goals of the system. . It will be interesting to see whether or to what extent this sort of policy is effective.
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