Following the Outlook for Financial Services Regulation Conference, which concluded in the British Virgin Islands recently, the members of the Overseas Countries and Territories Association of the European Union (OCTA) concluded that building good centres attracted good business and was important because international finance centres play a key role in the stabilisation of the world economy.

The conference was organised by the BVI International Affairs Secretariat with assistance from OCTA and funding from the European Commission. The conference aimed to encourage discussion and understanding between international organisations and overseas countries and territories with finance centres, and those considering establishing such centres.

However, conference participants noted that different standards were still being applied to so-called “offshore” centres such as the British Virgin Islands and the Cayman Islands from the standards set for “onshore” centres such as the United States and the United Kingdom. The territories maintain that their centres are in some cases more compliant in meeting international regulatory standards set by bodies such as the Organisation for Economic Cooperation and Development (OECD), but often they are not given the recognition they deserved for such compliance.

Recent reports examining the regulation of offshore financial centres would appear to back up these conclusions. A study undertaken by Camille Stoll-Davey of Oxford University based on an analysis of objective data compiled by the OECD and published recently by the Commonwealth Secretariat, found that in key areas such as a willingness to exchange tax information or to identify who is behind companies or trusts, OECD member countries do not operate to a higher standard than offshore financial centres and in some cases they operate to a lower standard.

Another report, by the Centre for Freedom and Prosperity, has criticised a new campaign against tax havens by the US Congress. In it, Andrew F Quinlan points out that the US Senate's hearing on offshore tax evasion included not a single person representing the interests of taxpayers, and was designed to blame so-called tax havens for the tax gap. Offshore jurisdictions are routinely vilified, he says, largely because they are perceived as a threat by politicians.

"To be sure, there doubtlessly is some evasion, and it probably is assumed in one or more of the other categories in the IRS estimates, but the supposed problem is relatively trivial," the CFP study said.

All participants at the BVI conference emphasised that undertaking the business of international finance, whether offshore or onshore, comes with obligations and responsibilities. However, they suggested that there is an uneven playing field between small, offshore territories and large onshore economies. Without a level playing field, the territories said, they were at a competitive disadvantage, and the very objectives that regulatory standards seek to achieve were undermined.

The conference was attended by representatives from Anguilla, Aruba, Bermuda, BVI, Cayman Islands, French Polynesia, Greenland, Isle of Man, Mayotte, Montserrat, Netherlands, and the Netherland Antilles, and from the Commonwealth Secretariat, the International Organisation of Securities Commissions (IOSCO), the Financial Action Task Force (FATF), the International Monetary Fund, the UK Foreign and Commonwealth Office and Financial Services Authority and the Netherlands Central Bank and Finance Ministry.