Doing Due Diligence: Forms of Moral Judgment in the Regulation of International Finance

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This project focuses on the effect of moral sanctions on the regulation of international finance. In particular, it explores the operationalization of moral sanctions on the ground, as persons in the offshore financial services industry make judgments about potential clients that are meant to mitigate financial crime and money laundering. Since the 1990s, Caribbean states have attempted to bring state law regulating financial services into compliance with global norms proclaimed in international "soft law:" non-binding international principles, recommendations, and rules of conduct. The proposed research examines what happens after compliance has been achieved, by investigating potential transformations of global norms when local actors bring their own normative systems and judgments to the practices that constitute compliance and as they get incorporated into larger communities of interpretation. The PI hypothesizes that differently positioned agents muster different moral discourses and interpret emerging international norms differently as they go about the daily work involved in post-compliance regimes, and that this has the potential to reshape those international norms and the broader community that promulgates them. In particular, it hypothesizes that, in the Caribbean, a longstanding cultural form of moral evaluation -- the respectability/reputation dichotomy -- is shaping compliance with and transforming global discourse on tax competition. The proposed research will contribute to three areas of scholarly debate: a) the relevance of international soft law, transnational issue networks and global ethics to globalization; b) the comparative study of financial centers; and c) the anthropology of bureaucracy and finance. The proposed research will also contribute to policy debates about the regulation of finance, the fostering of global norms and moral sanctions when states resist international "hard law" in the name of national sovereignty, and money laundering interdiction. It will also advance teaching and training through the use of graduate research assistants who will learn archival methods and statistical procedures. The PI will also conduct a conference on new forms of regulation for international finance, to be held after the completion of this project, in order to facilitate multidisciplinary dialogue among scholars and policy advisors who conduct research on and are attempting to mitigate harmful tax competition.