Global Standards in Action: Insights from Anti-Money Laundering Regulation

Abstract

As organizations have come under the increasing influence of global rules of all sorts, organization scholars have started studying the dynamics of global regulation. The purpose of this article is to identify and evaluate the contribution to this interdisciplinary field by the `Stockholm Centre for Organisational Research'. The latter's key proposition is that while global regulation often consists of voluntary best practice rules it can nevertheless become highly influential under certain conditions. We assess how innovative this approach is using as a benchmark the state of the art in another field of relevance to the study of global regulation, i.e. `International Relations'. Our discussion is primarily theoretical but we draw on the case of global anti-money laundering regulation to illustrate our arguments and for inspirations of how to further elaborate the approach.

The Marine Stewardship Council (MSC) and the Making of a Market for ‘Sustainable Fish’

“…It covers both content and procedures (ibid., 48). Experts from this point of view are not influential because they can present arguments that persuade, but because they can avoid argument by virtue of their expert status (Hüllse and Kerwer 2007). Focus in this literature has been mainly on what knowledge is used to create standards and provide them with legitimacy, but more recent contributions have also attempted to understand how that happens (Hallström and Boström 2010).…”

Standardization as Spaces of Diversity

“…Another group of scholars have highlighted actor and process diversity in new types of standards (e.g., process, performance), which devise operations at the local level rather than inscribe them in detail in the standard (Brunsson and Jacobsson 2000;Brunsson, Rasche, and Seidl 2012). We see movement towards greater autonomy for potential rule takers, intermediaries, users and certifiers, thus eliciting their consent and ensuring the wider applicability of the standard (Brunsson 2000;Brunsson and Jacobsson 2000;Botzem and Dobusch 2012;van den Ende et al 2012;Abbott, Levi-Faur, and Snidal 2017;Cashore 2002;Botzem and Quack 2006;Djelic and Sahlin-Andersson 2006;Quack 2010;Boström 2006;Hülsse and Kerwer 2007;Hülsse 2008;Black 2008;Tamm Hallstrom and Boström 2010;Ransom et al 2017).…”

Re-thinking FATF: an experimentalist interpretation of the Financial Action Task Force

“…In it, members elaborated on the standards for exemptions from FATF's Recommendations for an individual or sector. It notes that BCountries that opt for such an exemption must be able to make and demonstrate the correlation and cause and effect relationship between, on the one hand, the very limited and occasional nature of the financial activity and, on the other hand, the assessed low level of ML and TF risk^ (20). It also highlights, however, that based on the mutual evaluations, BIn most countries, the current exemptions are essentially based on a 'perception' of low risk because of the size of the activity or its nature…with no or very little evidence to support the risk ranking^ (21).…”

“…Abbott and Snidal [19] argue that Ba significant degree of convergence^has occurred because soft law accommodates national diversity, creates expectations of political costs for non-compliance, legitimates third-party influence, and invokes a legal discourse. Hülsse and Kerwer [20] write that FATF's experts generate legitimacy by marketing practical knowledge as the correct, impartial solution, which grants experts rule-making authority that is further enhanced by third-party endorsement. Jakobi [21] writes that the US has put itself at the center of the global AML network and adopted what might be described as a Gramscian strategy, such that other actors begin to accept the US' preferences as their own.…”