# Regulatory Arbitrage

*Regulation & Compliance — Finicade finance glossary*

Regulatory arbitrage is restructuring an activity to fall under lighter rules while keeping its economic substance intact.

Regulatory arbitrage is restructuring an activity to fall under lighter rules while keeping its economic substance — moving lending off balance sheet, booking through a lighter jurisdiction, relabelling a product. It's the reason regulation tends to displace risk rather than remove it, and why supervisors increasingly write rules around economic function rather than legal form.

**Also known as:** regulatory shopping, jurisdiction shopping

**Related terms:** [Shadow Banking](https://finicade.com/glossary/shadow-banking), [Tax Haven](https://finicade.com/glossary/tax-haven), [Regulatory Sandbox](https://finicade.com/glossary/regulatory-sandbox), [Banking as a Service](https://finicade.com/glossary/banking-as-a-service), [Compliance](https://finicade.com/glossary/compliance)

Source: https://finicade.com/glossary/regulatory-arbitrage