Regulation of Offshore Banking Services and Financial Entities

The aim of Project MARC is to meet increasing demand by EU institutions for a crime risk assessment mechanism that proofs legislation against crime at a European Union level, thereby reducing the probability that regulation may provide opportunities for illicit conduct. On the basis of a literature review, case study analysis and interviews, this article intends to provide a list of variables influencing the likelihood that organised crime will ensue from regulation of offshore banking services, company law and financial entity regulation. The variables have been systematised according to the main components of project MARC's central equation: the Legislative Quality Index (LQI), which measures the quality of the law per se on the assumption that an inconsistent, ambiguous, difficult-to-apply item of legislation may by itself produce opportunities for crime, and the Market Vulnerability Index (MVI), which measures the effect of a legislative change on the vulnerability of the market to crimes. The sources reviewed suggest that the LQI can be operationalised in the following indicators: (a) external simplicity, (b) internal simplicity/clarity of structure, (c) external consistency, (d) internal consistency; (e) accuracy/clarity of content and (f) enforceability; while the MVI can be operationalised in: (a) attractiveness (in the sense of profitability), (b) attractiveness (in the sense of the risk of being detected and punished) and (c) accessibility. Each of these indicators can be measured by means of a series of variables, which are discussed in the article with reference to examples coming from the case study analysis.