Ogier recognises the need for Governments and firms offshore to work with international partners and regulators; we will continued to play our part in implementing tighter regulations and controls in offshore centres in which we operate, as regulation is improved over time in the major onshore centres.
International Initiatives focusing on Offshore Financial Centres
There is a confusing array of international initiatives relating to offshore financial centres. The nature and extent of regulatory changes and the relationships between national and international standards is still to be determined.
Over the past few months offshore financial centres (OFCs) have suffered from significant negative publicity regarding the extent of their contribution to the current global economic crisis. The fact that the International Monetary Fund (IMF), the Financial Stability Forum (FSF), now the Financial Stability Board (FSB) and the Turner report (initiated by the Financial Services Authority in the UK) have all attributed the causes to onshore failings - namely the actions and inaction of financial institutions and regulators - seems to have been overlooked in the ‘blame game’ being played by politicians and bureaucrats.
The initiatives relating to the OFCs represent both a threat and an opportunity to OFCs. As internationally recognised standards and rankings emerge it might be expected that the leading OFCs will cement their position in the infrastructure of global finance whilst those that do not meet stipulated standards of information exchange and regulation will be excluded by the leading economies.
Simultaneous with the focus on the OFCs, offshore funds, for example, have attracted the attention of legislators with trans-national ambitions, seeking increased regulation and transparency. The leading industry associations are broadly supportive of initiatives that will lead to the official documentation of best practices to improve transparency, risk management and corporate governance. There are some overlaps and contradictions between the different initiatives and the position is continually evolving.
G-20 Finance Ministers Meeting OFCs
On 2 April 2009 the Organisation for Economic Cooperation and Development (OECD) published its latest findings on offshore jurisdictions, the report being timed to coincide with the G-20 summit in London. In its report the OECD created three tiers of jurisdictions based on the degree to which each jurisdiction has implemented the agreed international tax standards for information exchange and co-operation. The three tiers are:
- White - those jurisdictions that have substantially implemented the internationally agreed tax standards;
- Grey - those jurisdictions that have committed to the internationally agreed tax standards, but have not yet substantially implemented them; and
- Black - those jurisdictions that have not committed to the internationally agreed tax standards.
Categorisation as White required an OFC to have entered into at least 12 bilateral Tax Information Exchange Agreements (TIEAs). A model TIEA has been developed by the OECD, and grew out of earlier work on harmful tax practices.
BVI, Cayman, Guernsey and Jersey all fared well: Guernsey and Jersey being listed in the White category and BVI and Cayman in the Grey category. Since April both Cayman and BVI have signed an additional number of TIEAs and as such have joined Guernsey and Jersey on the 'White' list.
Click here for the progress report on the Jurisdictions surveyed by the OECD Global Forum in implementing the Internationally agreed tax standard.
IMF review of Jersey
On 14th September 2009 the IMF published its report on Jersey’s anti money laundering and countering of financial terrorism regime, and gave it one of the most favourable reports of all jurisdictions, including major onshore jurisdictions.
The report shows that Jersey complies with:
- All of the core principles for effective banking supervision
- 24 of the 27 insurance core principles that it has been assessed against
- 44 of the 49 FATF recommendations and 15 of the 16 core / key FATF Recommendations
In relation to the last set of figures the USA and Singapore comply or largely comply with 43 and Belgium with 42 of the FATF recommendations. The UK scored 36 in their last assessment and Switzerland 33.
The report, which can be accessed via the JFSC website reflects the detailed research undertaken by the visiting teams that spent a number of weeks on the island questioning the Regulators, Joint Financial Crime Unit and representatives from a wide spectrum of businesses across the island, including Ogier. It represents an endorsement of the strategy adopted by the island’s legislators and Financial Services Commission.
There will undoubtedly be much discussion over the coming months around the content of the report and its recommendations and Ogier will ensure it plays a full part in that debate, reflecting its position as the largest combined Fiduciary / Legal practice on the island.
External Resources
