International Profile
As a reputable international financial centre with full access to global markets, it is essential that the Island retains the confidence of its counterparties through the adoption and implementation of high regulatory standards. The Commission therefore attaches great importance to making sure that its policies and procedures conform to internationally accepted best practice.
The Island is a member of the Offshore Group of Banking Supervisors (of the Basel Committee on Banking Supervision) and of IOSCO . The Basel Committee and IOSCO are the main bodies responsible for the setting of international standards in the banking and securities sectors respectively.
A number of official international organisations have devoted much time to the assessment of offshore centres generally. This has been mainly to assess their practices against global standards to ensure that they do not present a weak link in the financial system generally. The Island welcomes this scrutiny, and indeed has benefited from the subsequent findings.
In 2002 the IMF conducted an assessment of the Island's regulatory arrangements under its OFC programme. The IMF's Report confirms that the Island "complies well" with international standards for the regulation and supervision of financial services. It concludes that the Isle of Man has a "high level of compliance" with international standards in such areas as banking, insurance, securities, anti-money laundering and combating the financing of terrorism.
It commends "the proactive approach of the regulators to achieve high standards in the financial services sector".
Following the independent report prepared in 1998 by Mr Andrew Edwards on the three Crown Dependencies, which commented favourably on regulatory practices in the Island, the Financial Action Task Force has completed its own review of the Island’s defences against money-laundering. Its positive report concluded that the Island is a co-operating jurisdiction with measures in place which are close to full adherence with FATF recommendations. The Island has in place Memoranda of Understanding with a number of jurisdictions to underpin this, and wider issues of, co-operation.
Meanwhile the Financial Stability Forum has also considered the effect which offshore centres generally can have on global financial stability and in April 2000 issued its Report of the Working Group on Offshore Centres. It canvassed opinion among major countries on the strength of regulatory practice in the different centres, and it was very pleasing to note that the Isle of Man was placed in the top group of centres reviewed. This type of independent confirmation of how the Island’s regulatory system is perceived to be working in practice, is an important test of effectiveness and compliance.
The Island has also worked closely with the United Nations Office for Drug Control and Crime Prevention, particularly in support of its Offshore Initiative.
More recently the Island has been conducting discussions with the OECD about its tax practices, in particular to ensure that the Island is not regarded as a tax haven with harmful tax practices. Those discussions have now been completed and it is very pleasing to note that the Island does not appear on the OECD’s blacklist of tax havens. A far reaching, five year fiscal strategy for the Island was announced in the Summer of 2000 and played a major part in addressing many of the concerns raised by the OECD and in achieving such a positive outcome.
The Island has received confirmation that it has been moved to a list of countries approved by the US Internal Revenue Service under its new Witholding Tax legislation. Broadly, the legislation requires local financial institutions to apply for Qualified Intermediary Status if they wish to invest in US securities and claim exemption from US Witholding Tax for their clients.
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