Bourree Lam: First off, tell me about what you do and how the book came about.

Stephen Platt: I head up a firm that specializes exclusively in conducting regulatory investigations of financial services businesses on behalf of regulators, governments, and financial institutions compelled to appoint us. In that capacity I have examined a wide range of businesses in different parts of the world. I was motivated to write the book because every time I read an article about harmful behavior in the finance industry it was being reported in isolation when in fact I knew that all of the behaviors were causally linked and existed on a spectrum of harmful conduct ranging from excessive risk taking through market rigging, mis-selling, sanctions evasion, money laundering all the way to criminal facilitation. My contention is that criminal facilitation is the worst symptom of the malady affecting the finance industry, and that in order to find a cure to avoid a repetition of the 2008 financial crisis, we have to understand that. It’s rather like going to the doctor and saying "I'm ill." He can only prescribe the right medicine if he understands the worst of your symptoms.

Lam: You mentioned quite a few of the problems in our current banking system: excessive risk taking, market rigging, etc. Is there a worst offender? And what are the consequences of these practices?

Platt: Well it's difficult to to place the behaviors into some sort of order of harm. It depends on whether you adopt a consequentialist or categorical view. If the former you’d say excessive risk taking—just look at the harm caused by the crisis, but on a categorical view you’d be hard pressed not think that criminal facilitation was the most egregious.

Lam: Can you explain what you mean by criminal facilitation?

Platt: Of course. It is distinct from money laundering which relates to conduct that post-dates predicate criminality. Criminal facilitation is the act of assisting a criminal to commit an act of predicate criminality such as the payment or receipt of a bribe or an act of tax evasion.

Lam: The recent HSBC leaks shows that the bank was very eager to help their clients remain anonymous and evade taxes. Are the incentives too high to just take the money?

Platt: The HSBC Swiss leaks story is old news. I think seasoned banking observers have been surprised that it has garnered as much attention as it has. The revelations relate to conduct that is eight years old, and I think in fairness both to the bank and to Switzerland a great deal has probably changed in the intervening period. The idea that HSBC was some sort of rogue institution acting on a limb from the rest of the private wealth management industry is nonsense. There was, and to an extent still is, a huge industry dedicated to assisting people to mitigate their exposure to on-shore taxes. What has been missed in all of the reporting is the central question: Why was this taking place in Switzerland? And the answer is simple—because the laundering of the proceeds of foreign tax evasion was not illegal in Switzerland. This is in stark contrast to the position in many smaller "offshore jurisdictions" that nevertheless continue to be given such a hard time by the international community. Most financial institutions take advantage of regulatory arbitrage opportunities and that continues to this day, which is why we see books of business moving wholesale between jurisdictions as laws are tightened.