The Isle of Man has earned a reputation as a well-regulated financial centre, with an infrastructure that complies with international standards, and yet is also capable of facilitating a wide range of international transactions.
The history of regulatory development.
In 1998 an independent report prepared by Mr Andrew Edwards on the three Crown Dependencies (the Isle of Man, Guernsey and Jersey), commented favourably on regulatory practices in the Isle of Man. Following on from this Financial Action Task Force ["FATF"] completed its own review of the Island’s defences against money-laundering.
The FATF 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 also has Memoranda of Understanding in place with a number of jurisdictions to underpin this, and wider issues of, co-operation.
The Financial Stability Forum also canvassed opinion among major countries on the strength of regulatory practice in the different centres, and it was 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 regime, 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 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, which played a major part in addressing many of the concerns raised by the OECD and in achieving such a positive outcome.
The Isle of Man and the IMF
The IMF conducted, in October 2002, 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.
The Report commends "the proactive approach of the regulators to achieve high standards in the financial services sector".
A copy of the full report is available for download here.
Anti money laundering issues
The Isle of Man introduced its first anti-money laundering legislation in 1987 with the Drug Trafficking Offences Act. This was followed by other legislation such as the Prevention of Terrorism Act 1990, the Criminal Justice Act 1990 and the Criminal Justice Act 1991. A full list of the Island's anti-money laundering legislation is given below.
All financial services businesses based in the Isle of Man have obligations under the above legislation. In addition the Authority issues anti-money laundering regulations and guidance to its licence holders which clarify policy in relation to know your customer and anti money laundering checks.
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