Balancing anti-money laundering, terrorist financing and proliferation financing (AML/CFT/CFP) compliance and financial sector competitiveness : what lessons can small states teach us?

Abstract

This essay examines the invaluable insights which small states provide regarding balancing compliance with the global anti-money laundering regulations, countering the financing of terrorism, and countering the financing of proliferation (AML/CFT/CPF) regime, with maintaining the competitiveness of their international financial services sectors. Drawing upon small state theory, and insights from a postcolonial theoretical lens, this essay shows, through the case studies of Mauritius and Belize, how some small states’ international financial centres (IFCs) are leading the way in creating robust AML/CFT/CPF frameworks. This occurs in the face of resource constraints, disproportionate international scrutiny, and asymmetrical participation in global financial governance rule-making, while also maintaining the competitiveness of their financial sectors. This essay challenges conventional assumptions about small state and dependent territory IFCs as havens for dirty money, revealing how these jurisdictions balance compliance with financial sector competitiveness.