Privatising security in finance: measures against the money threatening society

The privatisation of security in the domain of global finance has emerged over the past three decades out of a process engendered in the production of money laundering as a crime and in the increased application of economic sanctions as a tool for maintaining global peace and security. Consequently, financial firms and a variety of non-financial economic actors are now responsible for surveillance against money laundering and terrorist finance along with the enforcement of economic sanctions, particularly US economic sanctions. This chapter considers the consequences from the transfer of this obligation to protect society from state actors to financial actors. One consequence is the enforcement costs experienced by financial firms, along with any fines or penalties imposed for the firm’s failure to adequately implement the surveillance mechanisms. A rational response to state regulatory action pursued by financial firms is to identify those activities and actors that represent a high risk for future sanctions and then to terminate all business with them. In turn, this rational action produces an unintended consequence when it forces these activities and actors beyond the scope of the global financial surveillance system. As a result, the privatisation of security in the financial domain may be forcing illegality beyond the view of these surveillance mechanisms and thereby circumventing their original objective.