BVI Government Welcomes IMF Decision On Offshore Financial Centres

by Amanda Banks, Tax-News.com, London

07 August 2008

The BVI Government has welcomed the recent International Monetary Fund (IMF) decision to halt its discrimination between onshore and offshore financial centres.

Announcing last month that "the distinction between OFCs and other financially active jurisdictions has been blurred by globalisation," the IMF has combined its assessment programs for OFCs and its broader FSAP program.

Applauding the decision, the BVI International Finance Centre (BVIIFC) says that it will create a more level playing field on which financial centres will be judged based on their regulatory standards rather than geographic location or size.

According to a comment released by the BVI Government Information Service, the traditional distinction between onshore and offshore financial centres meant that territories such as the BVI with significant offshore financial activity were unfairly stigmatised and often regarded as tax havens that support tax evasion, money laundering and other illicit financial activities.

Executive Director of the BVIIFC Mrs. Lorna Smith said: "We have long made the point that it is not a question of onshore or offshore, it is a question of sound or weak regulation and we are delighted that the IMF has recognised this."

In a statement announcing its decision, the IMF acknowledged that globalisation has "increased the range of cross-border transactions and intermediation in many countries, as well as by the active efforts of a number of countries to build or promote offshore business."

The BVIIFC Executive Director assured that there are strict regulations in place guiding the operation of the financial sector in the Territory.

"We have a robust regulatory system and, as the recent IPOC case proves, we will take action if there is non-compliance," Mrs. Smith told the Department of Information and Public Relations.

The IMF also revealed plans to adopt a more standardised surveillance of the financial sector. In making its recent announcement, the IMF conceded that "adopting a unified approach would blunt concerns that jurisdictions are being unduly targeted, while also underscoring the expectation that offshore financial centres should meet commonly agreed international standards."

The BVIIFC is now hoping that other international organisations will emulate the example of the IMF.

"We hope that the IMF's recognition that this distinction should end will now extend to other international bodies and regulatory organisations," Smith said.

The BVIIFC is responsible for the marketing and promotion of the BVI's financial services industry. It is also responsible for managing the reputation of the BVI as a finance jurisdiction.

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