In his address, Mr O'Neal said that the year 2000 had been one of mixed blessings for the BVI. He was referring, of course, to the external scrutiny that the BVI and many of its fellow offshore financial centres have been subjected to in recent months. He reeled off a whole raft of current initiatives to which the BVI has fallen prey to, citing the OECD harmful tax initiative, the FATF campaign against non-cooperative territories over money laundering, the Financial Stability Forum's three-pronged categorisation of offshore financial centres and the United Nations' global anti-money laundering programme.

The Finance Minister said to Parliament: 'Mr. Speaker, dealing with the plethora of international initiatives has been a daunting, taxing and time consuming process. It has caused us to re-examine the relevance and probity of all our industry related policies, programmes and legislation, with a view to refining, updating and re-engineering where necessary.'

However, he said that the uncertainties caused by the G-7 crackdown had not had too adverse an effect on the BVI's financial services sector: 'Significant growth and increased activity being recorded in all segments of the industry is testimony to the maturisation of the industry,' he said.

Mr O'Neal drew particular attention to the growth of the mutual funds industry in the BVI, estimated to be around 20 per cent annually. Since the implementation of the Mutual Funds Act of 1996, over 2,000 mutual funds have been placed on the Mutual Funds Register in the BVI. In the New Year, the BVI is to issue a a Mutual Funds Code of Practice which will help to supervise investment business and investments intermediaries.

According to Mr O'Neal, the Financial Services Department is committed to making the BVI a centre for growth and will do all it can to preserve its financial services sector. He said: 'We will ensure that all financial sector related programmes, legislation, regulatory and supervisory practices fully comply with established international standards of prudential supervision and industry best practices.'

Already, the Financial Services Department, acting through its consultative committees (the Mutual Funds Advisory Committee, the Financial Services Legislation Advisory Committee and the Harmful Tax Competition Task Force), has been collaborating with the BVI Society of Trust & Estate Practitioners, the Association of Registered Agents and the BVI Bar Association on diversification of the industry to make it more internationally competitive. Several legislative amendments are expected to be brought to the House during the course of 2001.

Mr O'Neal said that the BVI would use the recently published KPMG Independent Review of Financial Sectors in the Caribbean Overseas Terriotries as the blueprint for charting the way forward. He said: '...the comprehensive KPMG Report must be considered the watershed for the BVI financial services industry.' He noted that the report makes positive noises as far as the BVI's success in achieving international regulatory standards is concerned and said that many of its recommendations have been under active consideration by the government for some time.

According to the Finance Minister, the three recommendations of the KPMG report which require immediate attention are the establishment of an independent regulatory authority, enhancement of laws and systems for combating money laundering and the enactment of compulsory investigative powers legislation to enable regulators to obtain and to share vital information with overseas regulators. Mr. O'Neal said the BVI has technically satisfied the latter two recommendations. However, he said substantial work would have to be done before a properly sourced independent regulatory authority (The Financial Services Commission) can be established by September 2001. A relevant bill is expected to be brought before Parliament sometime in 2001. The BVI also plans to maintain constructive dialogue with the OECD, and strategies aimed at reconciling their differnces are being worked on by the Ministry of Finance and the Financial Services Department.