Revisiting the Arguments for a National Financial Crime Registry

At the North American Securities Administrators Association’s annual meeting in San Diego, California, on September 11, 2023, Christy Goldsmith Romero delivered the opening remarks. In her speech, Goldsmith Romero, a commissioner on the Commodity Futures Trading Commission (CFTC), reintroduced the idea of a National Financial Fraud Registry. She first created this initiative in late 2019 in her previous role as the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).  

According to its website, SIGTARP’s mission is “to prevent and detect fraud, waste and abuse … [in relation to] the Emergency Economic Stabilization Act (EESA) and … the Consolidated Appropriations Act of 2016.” SIGTARP conducts investigations and audits into suspected cases “to promote economy, efficiency, effectiveness and accountability in these economic stability programs.”  

In 2019, under Goldsmith Romero’s direction, SIGTARP created a Financial Institution Crimes and Fines Database of those who have been criminally convicted or fined directly by the organization or indirectly by other agencies as a result of SIGTARP investigations. The database was intended to create a centralized location for this information, so it is easier for public access. Additional goals were to increase transparency to the public, decrease the amount of fraud loss and ease in the identification of repeat offenders. As of September 14, 2023, the database includes around 400 defendants. 

In the proposal for a national registry, Goldsmith Romero suggested that all federal law enforcement agencies should submit information about their financial crime sanctions, to be combined into a database. Ultimately, state and local agencies would be invited to submit their records as well. While the 2019 initiative appears to have not taken off, the discussions continue about the merits of a registry. 

Arguments for a national white collar crime registry often cite the worldwide prevalence of other crime registries. Many countries maintain sex offender registries, but most are not accessible to the public (the United States is an exception). Other entities maintain statewide/regional sex offender registries, including California, Texas, Oklahoma and Montana, among others. Several of these registries combine sexual and violent offending, both in the United States and the United Kingdom. 

Arson registries are slowly spreading across the United States. California’s registry also includes arson offenders, while Louisiana and Ohio maintain separate registries specifically for arson cases. The arson registries in all three states are restricted to fire and law enforcement agencies. (Note that Ohio’s arson registry is currently being challenged in the Supreme Court of Ohio in Case No. 2022-0603, State v. Daniel, on the grounds that it is unconstitutional.)  

Additionally, the U.K. has a Children's Barred List (formerly referred to as the List 99) and an Adults’ Barred List, maintained by the Disclosure and Barring Service. The lists maintain records of individuals who have committed crimes while working with children or other vulnerable populations. While not openly accessible to the public, individuals who are in relevant industries can use the barred lists for pre-employment background check purposes. 

Examining the current use of financial crime registries, Utah became the first in the United States to create a statewide registry in 2015. According to Bourree Lam in an article in The Atlantic, Utah legislature created the Utah White Collar Crime Offender Registry to protect the state’s vulnerable populations, namely Mormons, who are more susceptible to scams perpetrated by those professing to also be Mormon. The religion is characterized by people who consistently support and trust each other, making a good target for those willing to take advantage of that trust.

Utah law requires those who have been convicted anywhere within the state of a second-degree felony to submit their information to the registry. Those offenses include securities fraud; theft by deception; unlawful dealing of property by fiduciary; insurance fraud; mortgage fraud; communications fraud; money laundering; and pattern of unlawful activity. First time offenders are required to be listed for 10 years, second time offenders for an additional 10 years, and those with three offenses are registered for life.

The goals of crime registries of any variety are typically three-fold: 1) increase awareness generally to the existence of the specific crimes; 2) increase awareness to the presence of specific violators; and 3) deter potential violators from committing the crime because of the desire to not appear in a public crime registry. Ideally, registries will result in reduced crime and victimization when pursuing these goals. 

Despite the potential benefits, many have identified problems with registries generally and financial crime registries specifically, using Utah as an example. Articles in Fraud Magazine from Chelsea M. Dye, J.D. and Ronald Mano, Ph.D., CFE, CPA, and Tom Harvey in the Salt Lake Tribune, among others, describe some of the arguments. These include: 

1. Registries contain information on convictions only. Since many financial crime offenders are not criminally charged and even fewer are convicted, Utah’s registry is misleading and certainly not exhaustive of financial crime offenders. Additionally, the information in the registry may be inaccurate because it is derived from public records. 
2. Registries offer a false sense of security. Residents who use the registry may believe that they can trust people who are not listed. They may become victimized by over-relying on the registry to make decisions about who to trust with their financial matters without conducting any other due diligence measures. 
3. Registries may not contain the most dangerous offenders, and it would be especially difficult to include the most dangerous financial crime offenders in a state-level registry. Some argue that the categories of inclusion in Utah’s registry are overly broad, namely communications fraud, which can encompass a variety of violations of various severity. Combined with the fact that major financial crime violators are charged and convicted on the federal level rather than the state level, this leads to a large number of lower-level offenders being included on Utah’s register.  
4. Registries are unnecessary because criminal records are already publicly available. Creating another database for specific criminal convictions is redundant, requiring time and resources that could be better used for other initiatives. 
5. Appearing on a public registry negatively affects offenders’ reintegration post-conviction. Regardless of whether a person was incarcerated, a criminal conviction can negatively affect a person’s access to housing, employment, social services and education, among others. Since most offenders do not serve life sentences, especially for financial crimes, it is important to consider how appearing on a publicly accessible registry can exacerbate the detrimental effects of a criminal conviction on a person’s future.  
6. A common argument against registries is the assumption that they are useful as a crime deterrent. Studies of the effectiveness of sex offender registries have found mixed results, and those that show a deterrent effect show only small results. One meta-analysis published in the Journal of Experimental Criminology systematically combined and examined 18 research studies, finding that sex offender registries had no statistically significant overall effect on recidivism, as measured by either arrest or conviction. Many argue that registries are expensive and ineffective, providing little deterrence to would-be offenders. 

As the discussions continue, the question remains: do the potential benefits of a national financial crime registry outweigh the potential costs?