Security and Cross-Border Capital Movements in North America

Abstract

The need to stem the international capital flows associated with terrorist financing can increase the transaction costs for legitimate capital flows in the NAFTA region. This article focuses on the cross-border movement of capital in the NAFTA countries, which is at once the lifeblood of commerce and transnational crime. The increasing integration of the financial services sector facilitates both capital flows and security measures. Moreover, the participation of all three NAFTA countries in multilateral organizations and international conventions provides a solid basis for harmonizing efforts in this area, particularly with respect to money laundering and terrorist financing. However, the growing volume of capital flows among the NAFTA countries increases the difficulty of detecting illicit transfers of money across borders. Moreover, differences remain among the three countries with respect to the regulation of financial transactions.

Keywords: capital movement, North America, terrorism, NAFTA, financial sector, banking

JEL Classification: F2, E22, E32