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Lecture 8: Legal and Regulatory Risks of International Business
Regulatory Risks * Potential difficulty in compelling overseas counterparty to fulfil obligation under contract only one risk. * Even more serious risk: international business activities attracting criminal liability.

Money Laundering * Few would defend open laundering of domestic crime * But historically, more relaxed approach taken to property derived from overseas crimes. The attitude has been taken: * “What happens in X, stays in X”

* Definition of “criminal property” in UK extends to property derived from act committed abroad which would be a crime if it were committed in UK. * Proceeds of Crime Act 2002, s.340(2)(b) * Very limited “double criminality” rule – essentially it states that the Secretary of State may if she chooses put in a double criminality rule or may not. If it would attract a maximum prison sentence of 1 year or less then in order for the proceeds to be covered by the AML rules – it must also be a crime in the jurisdiction where it was committed. But if it’s more than a year- no double criminality.

* US Federal laws definition of predicate offences for purpose of money laundering similarly extends “unlawful conduct” to include list of overseas crimes * 18 U.S.C. §1956 (§ - section) - up to 20 years * Definition applies also to wider “money spending” offence in §1957 – up to 10 years. * ML – with intent to disguise the origin, to facilitate a criminals benefitting from the proceeds of crime, with intent to defraud the US tax authorities. If you engage in this, but it cannot be proven that you had a specified intent when you did it – ‘money spending’.

Different jurisdictions have different approach * The fact that an act is not criminal in one jurisdiction does not make it legal in another * Moderate-scale insider

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