ABSTRACT
This chapter explains the nature of the offshore business model. It outlines the concept of first- and second-order consequences arising from a global financial governance activity. First-order initiatives are intended to counter the advantages experienced by the offshore financial centres (OFCs) through the arbitrage opportunities exploited in the offshore business model. The second-order impact is more insidious as the direct action initiatives involved are not targeting the OFC. Instead, the targeted actors' response to the initiatives produces consequences which impact the OFC because of those actors' interaction with an offshore jurisdiction. Compliance with global financial governance, and the United States extraterritorial juridical enforcement of its domestic implementation of these governance measures, may lead transnational financial firms to eliminate from their customer base potentially risky customers. De-risking action serves to produce the second-order effect as the financial firm reduces perceived risk in reaction to the first-order governance action. The chapter provides some concluding thoughts on global financial governance and Euro-Caribbean territories.
