Offshore Financial Centres Object To IOSCO Report
St. Vincent and the Grenadines, represented by IFSA’s Executive Director,
attended a meeting of
the International Trade and Investment Organisation (ITIO) in Barbados on March
March 17-18, 2005. The Barbados meeting formally established its Secretariat’s
headquarters in Barbados and appointed as its Executive Director Ms Francoise
Hendy. The ITIO is an organization which was founded to represent the interests
of smaller jurisdictions after they were attacked by the OECD and the FATF in
2001.
The meeting expressed concern with the International Organisation of Securities
Commissioners’ (IOSCO) endorsement of the Financial Action Task Force’s
(FATF) past work that led to the labelling of a number of countries as non-cooperative.
This support appeared in IOSCO’s February 2005 report, ‘Strengthening
Capital Markets Against Financial Fraud’, and is of concern in the light
of what is now known and accepted about the unfairness of the earlier FATF process.
Once again there is disproportionate focus on the offshore financial centres
(OFC) reminiscent of the spate of blacklistings in 2000. This is despite the
acknowledged improvements by OFCs, which in many cases have better regulatory
frameworks than onshore jurisdictions. The meeting also noted that in tandem with this development the Financial Stability
Forum (FSF) announced on 11 March, 2005 its intention to use the same discriminatory
processes to advance the initiatives of FSF members, including the OECD, the
IAIS, and IOSCO. The FSF is proposing to rely on reports by the IMF, IOSCO as
well as other unidentified ‘bodies’ and complaints by its member
national authorities when taking action against an OFC. The FSF proposes to
use varying bullying tactics including publishing the names of what it perceives
as non-cooperative OFCs. Once again the focus and negative presumptions are
on the OFCs being potentially problematic, without any corresponding consideration
of, or process for dealing with, violations by its own members. According to ITIO Chair, Ms Deborah Drummond of the Cayman Islands “the
principles of fairness, transparency and non-discrimination that should characterise
a level playing field continue to be absent from the processes that are proposed
by the IOSCO and the FSF initiatives.” The ITIO also examined the implications of these new developments for the progress
achieved thus far at the OECD Global Forum level. According to Ms Mitchell, St. Vincent and the Grenadines welcomes the establishment
of the ITIO Secretariat in Barbados and anticipates that the ITIO will play
an enhanced role in achieving fairness, transparency and non-discrimination
in the setting of global standards now that it has a dedicated Secretariat. .
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