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Combating Financial Crime: Regulatory Versus Crime Control Approaches

NCJ Number
Journal of Financial Crime Volume: 11 Issue: 1 Dated: July 2003 Pages: 45-55
Hazel Croall
Date Published
July 2003
11 pages
This document discusses key arguments and assumptions involved in the “regulatory debate” and their relevance to financial regulation.
The merits of regulatory and crime control strategies are a major feature of debates over the role of law in relation to financial crime. These debates have moral, political, and ideological dimensions. In practice regulation incorporates compliance and coercive strategies. There is a growing consensus that a balanced range of options that takes account of cost effectiveness and a moral dimension is necessary to ensure effective regulation. A regulatory model is centered around market confidence, public awareness, consumer protection, and reduction of financial crime. Sanctions include withdrawing a firm’s authorization; discipline through public statements and financial penalties; injunctions; prosecution; and the return of money to compensate consumers. Presenting regulatory and crime control strategies as contrasting, and mutually exclusive strategies is an oversimplification. Regulation incorporates a wide range of strategies and works best if backed by the ultimate sanction of the criminal law. Presenting a crime control model as inevitably involving prosecution and punishment fails to recognize that in practice controlling crime involves a range of approaches including mediation, crime prevention, and restorative justice. While a balanced range of sanctions, more clearly targeted at different offenses and offenders, is necessary, any combination of strategies is likely to attract criticism from extreme advocates of either a conservative or a radical persuasion. This indicates that the control of financial, or any other kind of business crime must be seen in its political context. Political will is necessary to develop and implement the kind of sanctions that can be justified not only on the basis of deterrence but also to underline the moral and symbolic role of regulation or control. Regulation may also be adversely affected where there is continuing cultural or subcultural tolerance of offenses. Greater emphasis on the moral aspects of regulation is necessary and may be assisted by more publicity for regulatory activities and more public involvement in the regulatory process. 1 table, 57 references


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