I. INTRODUCTION (1)
During the last decade a major public policy issue in the United States--and indeed the world--has concerned the appropriate strategy and means to prevent and punish international crime. In the 1970s and 1980s, the United States led the effort in counter-drug policy. An instrumental part of the strategy is the anti-money laundering and asset forfeiture laws enacted in the mid 1980s. This policy was exported to the international community and became enshrined in the 1988 Vienna Convention against the trafficking of narcotics and psychotropic substances. (2) During the Clinton Administration, the focus of this policy expanded to combating transnational organized crime (TOC), including the use of economics sanctions against TOC, which became embodied in the U.N. Palermo Convention. (3) The policy focus under George W. Bush was counter-terrorism and the use of the "war" paradigm. Similarly in 1977, the United States enacted the Foreign Corrupt Practices Act (FCPA) and has led the crusade against transnational corruption. These policies are embedded in about five international anti-bribery conventions. Currently, under the Obama Administration, the United States has prioritized making strategic revisions in U.S. international criminal policy.
This article discusses developments in the United States and international policy with respect to international white collar crime, as well as the interaction between international criminal law, especially counter-terrorism, and international human rights law. One question is whether the U.S. government and lawyers will play a leadership role in international enforcement policy and law.
II. THE RISE, AND CHALLENGE OF, INTERNATIONAL WHITE COLLAR CRIME
The modern economy, globalization, and new technologies facilitate the spread of transnational crime, especially economic crime. The fact that new types of substantive international crimes emerge every decade, such as cybercrimes and money laundering, is a recent phenomenon. Just as importantly, the procedural aspects of international criminal law continue to grow. (4) For instance, the interplay of free trade and economic integration is a double-edged sword. On the one hand, to the extent free trade agreements (FTAs) and economic integration do not confront criminal cooperation and justice, they facilitate the growth of transnational crime. On the other hand, to the extent FTAs and economic integration do confront these issues within the agreement, as is the case with the pacts governing economic cooperation within the European Union, they become a laboratory for cutting-edge international criminal cooperation and criminal justice developments.
Another essential and dynamic component of international criminal law is the evolving framework of institutions. The dramatic growth of broad criminal justice agendas within traditional international institutions like the Organization of Economic Cooperation and Development (OECD) and multilateral development banks led by the World Bank Group continues to make criminal law a growth sector. Concomitantly, the international community is increasingly establishing informal groups, such as the G8, G20, Financial Action Task Force, and the Egmont Group, to deal with various international criminal groups. (5) Just as important has been the rise of national institutions throughout the world, such as counter-drug enforcement agencies, financial intelligence units, and asset forfeiture agencies. (6)
A. Environment Giving Rise to International Economic Crimes
Contemporary transnational criminals take advantage of globalization, trade liberalization, and emerging new technologies to commit a diverse range of crimes, and to move money, goods, services, and people for purposes of pure economic gain or political violence. (7) A key component facilitating international white collar crime is trade liberalization, especially FTAs. The problem is that the lack of foresight, leadership, and favorable politics prevents trade negotiators from providing for comprehensive enforcement mechanisms. These comprehensive enforcement mechanisms are consequently completely omitted or treated as isolated subjects.
For instance, in the North American Free Trade Agreement (NAFTA), there is a section on intellectual property enforcement and a handful of provisions on customs cooperation and enforcement. (8) Customs enforcement is a subject that FTAs normally cover. However, the coverage of intellectual property (IP) enforcement reflects the strong influence in the United States of IP groups. As a result of failing to include comprehensive enforcement provisions in FTAs, criminals, including individuals and organizations, are able to take advantage of FTAs to conduct their criminal activities. FTA members usually became aware of the growth of criminal problems arising out of FTAs several years later. (9) They then try to develop ad hoc enforcement agreements and arrangements. These agreements and arrangements usually have a narrower scope than the FTAs, usually lack institutional support, and sometimes overlap. (10) As a result, the international enforcement architecture arising out of FTAs cannot sustain enforcement needs.
Transnational criminal groups and criminals live and operate in a borderless world. Increasingly, transnational criminals are diversifying their crimes, instrumentalities, markets, and networks. Their intelligence networks and the coincidence of economic and political power enable them to quickly adapt and operate in "gray areas" where governments do not effectively control their territories, such as Afghanistan and parts of Pakistan and Yemen. (11) Transnational criminals can also operate surreptitiously through the use of sleeper cells. (12) While national governments have determined that transnational organized crime and terrorism are national security threats and have implemented various initiatives to combat them, (13) they are continuously and actively seeking more significant political and legal initiatives to establish effective international enforcement regimes. Some policymakers believe that effectively combating new transnational crimes requires significant transformations in national legal systems. (14) In fact, the international community and individual countries such as the United States have enacted a substantial amount of new legislation and developed initiatives to combat new transnational crimes, in areas such as cybercrime, intellectual property, international tax, terrorism, and organized crime. (15)
Cybercrime exemplifies the difficulty of trying to keep pace with the tremendous changes in technology that have enabled criminals to perpetrate diverse crimes, such as financial fraud, identity theft, pornography, hate crimes, and a vast range of other offenses. The international community is struggling to develop an enforcement regime that can use the new technology to assist in the identification, investigation, and prosecution of cybercriminals. In this regard, the proposed Council of Europe Convention Against Cybercrime provides a strong potential mechanism. (16)
Intellectual property and counterfeiting crimes have also grown tremendously in recent decades. Criminals counterfeit everything from software to cosmetics and clothing, including nearly every product that is sold internationally. The international community and governments have tried a combination of international trade law, such as Trade in Related Intellectual Property Services (TRIPS) and NAFTA, to criminalize violations of transnational intellectual property. (17) For instance, the U.S. trade associations such as the International Intellectual Property Association and the Motion Picture Association of America have pressured the U.S. government to bring an action against Mexico because of the alleged lack of criminal action by the Mexican Government against persons who intentionally violate intellectual property law. (18) Indeed, these same U.S. trade associations succeeded in persuading the NAFTA signatories to include provisions requiring criminal prosecution and civil action against violators of intellectual property law--the only part of NAFTA that allows for criminal sanctions. (19)
Money laundering is an example of the type of crime that governments and the international community have only criminalized since the mid-1980s. Through international conventions, such as the 1988 U.N. Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances and the 1990 Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, the international community has extended the use of a new anti-money laundering enforcement regime to the entire world. (20) Signatories are required to criminalize laundering offenses and initiate asset forfeiture and confiscation as remedies. These conventions require a broad range of international enforcement cooperation, including evidence gathering and extradition, and also suggest a range of more customized bilateral cooperation agreements. (21) Institutionally, the new crime of money laundering has spawned the establishment of financial investigative (or intelligence) units (FIUs) around the world and the Egmont Group, an association of FlUs that meets regularly to facilitate cooperation among FIUs and develops uniform approaches to core issues. Anti-money laundering has also given rise to new organizations and groups, such as the Financial Action Task Force on Anti-Money Laundering (FATF). Growing out of the G8 meetings, FATF has developed cutting edge requirements on legal, financial, and external relations with respect to anti-money laundering. (22) Unfortunately, the erosion of bank and financial privacy has been among the many legal transformations brought about by anti-money laundering laws. (23)
In the aftermath of September 11, 2001, the emphasis of the U.S. government and the international community on counterterrorism financial enforcement has increased. (24) The U.S. government has initiated a comprehensive financial strategy aimed at detecting and preventing, through financial movements, transnational terrorist movements and plans. The strategy is designed to investigate, prosecute and seize terrorist assets by applying the anti-money laundering due diligence requirements commonly used by the private sector to counterterrorism. Simultaneously, the United States is applying economic sanctions to terrorists. (25) The U.S. strategy seeks to develop a comprehensive, international counterterrorism financial enforcement regime.
While the international community has engaged in tax enforcement cooperation for many years through exchange of information provisions in income tax treaties and standalone exchange of information agreements, many national courts have traditionally taken the position that individual countries will not help collect the taxes of other countries. As a result, courts refused to enforce foreign tax judgments and even requests for assistance. (26) During the last two or three decades, however, the international community has developed multilateral conventions, such as the 1983 Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters, to overcome the traditional judicial reluctance to help foreign tax authorities. (27) Increasingly, international organizations of tax authorities have met regularly to develop uniform approaches, networks, and conventions to reduce gaps in tax laws and strengthen enforcement cooperation. Additionally, national governments have criminalized tax fraud and evasion and have imposed extensive and draconian reporting regimes that include administrative penalties for non-compliance. (28) The international community has developed offshore blacklisting as a means of accelerating compliance with new financial "soft laws." In 1999 and 2000, governments and international organizations continued their active efforts to increase regulatory and criminal enforcement to stem the tide of transnational crime. These efforts resulted in the criminalization of various business and financial transactions, the imposition of new due diligence measures on the private sector and the concomitant weakening of privacy and confidentiality laws, strengthened penalties for non-compliance with regulatory efforts, and new law enforcement techniques like undercover sting operations, wiretapping, expanded powers to search homes and businesses, and controlled deliveries. (29) A major development in 2000 was the almost simultaneous issuance of several blacklists against non-compliant organizations. Within a one-month period, OECD issued its harmful tax competition initiative with a list of tax havens that did not agree to publicly commit to bring their practices into compliance; the Financial Stability Forum (FSF) issued its report on offshore financial centers (OFCs), classifying OFCs into three levels of compliance with international standards; and the Financial Action Task Force on Anti-Money Laundering (FATF) issued its list of 15 Non-Cooperative Countries and Territories. (30) The simultaneous issue of blacklists is an attempt to jumpstart the anti-money laundering enforcement regime and confer on soft laws a greater status in international law and politics. The October 2005 FATF decision to continue blacklisting fifteen non-cooperative countries, together with the lack of any new commitments by the OECD harmful tax competition initiative and the decision by the International Monetary Fund (IMF) to take over the OFC work of the FSF, has meant that some companies, businesses, and investors are reconsidering the structure of their investments. (31) The convergence of these initiatives also show a determination by intergovernmental organizations to combine development of an international financial enforcement sub-regime, which includes international tax and anti-money laundering policy, with the new international financial architecture, particularly the work on the FSF.
On December 15, 2000, 124 countries signed the U.N. Convention on Transnational Organized Crime at a conference in Palermo, Italy, signifying the start of the construction of an international enforcement regime against transnational organized crime. (32) The Convention's three protocols--one to prevent, suppress, and punish trafficking in persons; a second against the smuggling of migrants by land, air and sea; and a third on the illicit transfer of firearms--represent a new effort to attack transnational organized crime activity. (33) The Convention, effective as of the start of 2006, employs some of the same methods of the U.N. Counterdrug Convention, including using anti-money laundering and asset forfeiture against transnational organized crime. (34)
The challenges of transnational criminality are substantial. Unless nation-states become better at networking and cooperating, they will lose ground to transnational criminals who operate in a borderless world. In order to gain and maintain respect for their democracies, states must develop international enforcement regimes that are balanced and maintain fundamental and international human rights. To achieve success in combating transnational crime, criminal justice professionals must become more adept at working with non-criminal legal professionals, diplomats, international relations professionals, and a host of others. For instance, criminal justice professionals must study international organization theory and chart the start, emergence, and evolution of international enforcement regimes. Indeed, new transnational crimes and responses in the context of globalization will continue to pose a mighty challenge to the legal and law enforcement professions.
B. The Scope of International White Collar Crime
International white-collar crime, as a field of expertise, embraces a number of the problems in the areas where criminal, business, economic, and international law overlap and interact. (35) Economic crime and financial crime are ambiguous terms, referring to diverse activities that cannot be included under a homogenous rubric. The newness of the field and the overlap of criminal and administrative penal law, as well as the scope of economic and financial law, and the divergences among legal systems also make an accurate definition elusive. (36) The area is undergoing tremendous change and growth as a result of globalization and the increasing use of criminal and administrative penal sanctions to enforce international business norms.
One dynamic aspect of international white-collar crime is that economic crime reacts to systemic economic changes caused by new combinations of productive factors. For example, banking and computers have led to cyberbanking and cyber financial products like Internet gaming. Deviant entrepreneurs introduce new combinations of productive factors while devising deviant adaptations to economic changes to pursue legitimate goals through illegitimate means. White-collar criminals also innovate by repelling the criminal label from their activity while directing it to competitors. Innovation in international white-collar crime therefore requires changes in the perception of business, whereby persons who innovate successfully claim their activities and practices to be ethical and those of competitors to be unethical. (37)
Some background on international criminal law (ICL) is also required to understand international white-collar crime. ICL is largely a mix of the "penal aspects of international law and the international law aspects of criminal law." (38) The international aspects of national criminal law consist of extraterritorial jurisdictional norms, conflicts of criminal jurisdiction between either American states or between a state and an international organization, and the international sources of law applicable to modalities of international cooperation in penal matters, or the indirect enforcement system. (39) The latter are found in multilateral and bilateral treaties, customary international law, and norms applicable to national legal proceedings. (40)
The penal aspects of international law arise out of "conventions," "customs," and "general principles of law," all of which are among the sources of international law as set forth in Article 38 of the International Court of Justice's statute. (41) However, the sources are subject to the principles of legality which derive from general principles of international law. The penal aspects of international law include: international crimes, elements of international criminal responsibility, the procedural aspects of the direct enforcement system of ICL, and certain aspects of the enforcement modalities of the indirect enforcement system of ICL. Increasingly the penal law aspects of international law have expanded and now overlap with the international law aspects of national criminal law. (42)
The importance of national security law must be added to this background analysis. Indeed, some of the coverage of national security law overlaps with that of international criminal law. Additionally, proper architecture of international enforcement policies requires a consideration of international relations, especially the role of diplomacy, soft power, and the creation and development of international regimes and regime theory.
1. Substantive White Collar Crimes
Substantive white-collar crimes refer to legal areas of crime that national and international laws seek to prevent and punish. They can include fraud, computer crimes, securities, commodities futures, antitrust, intellectual property, customs, export control, environmental, money laundering, organized crime, transnational corruption, and taxation. (43) As mentioned above, the amount of substantive international white-collar crimes continues to grow dramatically.
2. Procedural Aspects of White-Collar Crimes
The procedural aspects of international white collar crimes embrace all the national and international features of investigating, prosecuting, and then enforcing sanctions against white-collar crimes. Procedurally international white-collar crime includes jurisdictional inquiries, evidence gathering, asset freezes and forfeiture, gaining custody (i.e., extradition and alternatives), transfer of proceedings, recognition and enforcement of judgments, and transfer of prisoners. One of the expanding areas of the procedural aspects of international white-collar crime is administrative penal procedural law. In particular, recent years have seen a rise in international conventions including, for example, tax information exchange agreements, securities, commodities futures trading enforcement agreements, and anti-trust enforcement agreements. (44)
3. The Role of International Organizations
The role of international organizations, also known as international governmental organizations (IGOs) is critical because these IGOs develop hard and soft-law standards in international white-collar crime and help implement the standards. Some IGOs operate on a universal level while others operate on a regional level. Some IGOs have functional scopes, such as for banks, securities and commodities futures regulators, financial intelligence units. The international financial crisis has exerted pressure on IGOs to develop new international white-collar crime-prevention mechanisms. In lieu of using solely traditional IGOs, such as World Bank Group, the G8 countries have established the G20, an enlarged form of the G8, to create financial regulatory and enforcement policies and laws. (45)
Institutional responses to international white-collar crime are triggered by diverse forces. First, international pressure demands that, wherever possible, legislative loopholes be closed and approaches and laws be harmonized. Second, it is generally known that this type of crime heavily impacts on public finances. Third, the perception exists that international white collar crime encourages the development of more conventional forms of criminal activities that in some places are characterized with the synthetic name "organized crime." (46)
International organizations engaging in important international criminal law work include the United Nations, Interpol, World Bank Group, as well as regional organizations, such as the Council of Europe, the European Union, the Organization of American States, and economic integration organizations.
4. The Role of Non-governmental Organizations
Increasingly, non-governmental organizations (NGOs) are playing important roles in international white-collar crime. Some NGOs, such as the International Committee of the Red Cross, Human Rights Watch, and Amnesty International, focus on international human rights and international procedural issues. (47)
Other NGOs, such as bar associations, have formed committees on international criminal law that focus in part on white-collar crime. For instance, in addition to the American Bar Association's (ABA) crime prevention role in the private sector, the ABA development of rule of law programs has involved diverse work in criminal law, such as anti-corruption, anti-money laundering and terrorist financing, and strengthening judicial and law enforcement institutions. (48) Law enforcement professionals have their own NGOs, such as the International Association of Chiefs of Police and the International Association of Prosecutors. Other NGOs are comprised of business groups, such as the International Chamber of Commerce and various bankers associations. Because international white-collar crime emphasizes the privatization of some of the prevention and related crime-solving roles, business groups have become important partners with governments and IGOs.
5. Constructing International Enforcement Regimes
One of the subjects discussed in this article is the effort to develop international enforcement regimes. The discipline of international relations explains the manner in which international institutions affect collaboration among states. Known as regime theory, the explanation has been an important focus of international relations study for the last twenty to twenty-five years. Regime theory explains the role of international organizations in mediating and defining international relationships. One of the most prominent scholars of international regime theory, Stephen Krasner, has stated that international organizations or regimes "can be defined as sets of implicit or explicit principles, norms, rules, and decision-making procedures around which actors' expectations converge in a given area of international relations." (49) Regimes can take well-defined forms, such as the United Nations, or they can exist more informally, such as through networks. Regime theorists believe that regimes are common mechanisms of international cooperation whose importance is derived because they shape the means through which states relate to one another in ways that theorists who examine states as autarchic entities in an anarchic international system cannot successfully explain. (50)
According to Robert O. Keohane, one of the important theorists of international regime theory, regimes attract the participation of states by reducing the transaction costs of …