Damage Limitation For Isle Of Man As Terrorist Attacks Harm Offshore Image

by Robert Lee, Tax-News.com, London

05 October 2001

John Aspden, chief executive of the Isle of Man's Financial Supervision Commission, has expressed his concerns over the backlash against offshore financial centres in the wake of the September 11 terrorist attacks on America. According to reports from the Isle of Man media, Mr Aspden said the US and UK displayed a 'knee-jerk' reaction to offshore centres and hoped that the international pressure felt by the centres would lessen once the US declares hostilities towards the Taliban.

'It has certainly suited the US purposes for the time being to take an immediate swipe at offshore centres. It's something they've had on their agenda for a long while. And it hasn't just been the US, it's been the UK as well. At the moment there is a shortage of news on other fronts ... and as soon as hostilities start, it will be forgotten.'

He added: 'One of the things I am a bit dismayed about is the fact that all of this has thrown the offshore tag back into the melting pot. I think that's a shame because the Crown dependencies have gone a long way to gaining recognition.'

Mr Aspden also said it was likely that in light of terrorists funding their activities through offshore finances, the FATF will review its anti-money laundering recommendations and international standards. He commented: 'It will not happen in the immediate near term because we are going to be guided in particular by the FATF, and the FATF's working parties on some of the key issues.'

Chairman of the UK's Financial Services Authority, Sir Howard Davies, said last week that he expects the Island will adopt more stringent regulations as the political pressure on offshore centres 'to fight terrorism and crime and for more general financial stability reasons' increases. He added: 'The competition among offshore centres is such that a loss of reputation, however caused, may lead to rapid outflow of business elsewhere. So it is preferable to bite the bullet on some of the more tricky issues and to be seen to be taking the lead.'

Meanwhile the IMF has announced plans to conduct an assessment of the Isle of Man and the Channel Islands some time next year and Mr Aspden believes it will considerably enhance the Island's reputation as an offshore financial centre.

A Spokesman for the Island's Association of Licensed Banks (ALB) says the association welcomes the IMF review and aims to 'continue to work closely with government and regulatory authorities to ensure that ... clients are aware we are committed to maintaining our high standards.'

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