Gibraltar Hosts IMF Workshop

by Jason Gorringe, Tax-News.com, London

10 May 2005

The International Monetary Fund held its annual workshop on the Co-ordinated Portfolio Investment Survey (CPIS) for Small Economies with International Financial Centres (SEIFiCs) in Gibraltar last week.

The workshop, funded annually by the Government of Japan, was last held in Guernsey in May 2004. In previous years it has been held in the Cayman Islands, Bermuda (twice) and Jersey.

National compilers from eleven countries and territories participated in the workshop in Gibraltar, namely: Aruba, Bahamas, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, Guernsey, Isle of Man, Jersey, and the Netherlands Antilles.

The IMF compiles and publishes global balance of payments statistics showing flows of funds between countries. In recent years, this exercise has included collecting data on portfolio investment, which has been growing in size and importance in the world economy. Initially these surveys covered only the major economies, but the IMF concluded that a more accurate and complete picture could only be achieved by including the Small Economies with International Financial Centres.

From 2001 onwards, SEIFiCs were invited to submit data on an annual basis. The objective of the survey is to collect information on the level of investment by each country or territory in equity and short- and long-term debt securities issued by unrelated nonresidents.

The CPIS data collection exercise forms part of the IMF's Offshore Financial Center (OFC) Program which provides an overview of financial regulation and supervision, and of arrangements to counter money laundering and the financing of terrorism in the jurisdictions.

In 2003 the IMF said:

"Assessments suggest that the observance of supervisory and regulatory standards in the OFCs assessed to date is broadly similar to that encountered in other financial supervisory assessments. The major centers have also focused their supervisory systems on the specific areas required to address their main reputational risks. These centers have given priority to regulatory and supervisory areas most relevant to the cross-border nature of their business and to their niche markets (such as company services), so as to safeguard their reputations as financial centers.

• Banking: Overall compliance with the Basel Core Principles was generally appropriate to the nature of the business conducted, especially in important jurisdictions where compliance was found to be broadly in line with that in
  advanced economies. However, in these significant jurisdictions, weaknesses were found in on-site and off-site supervision, and less material weaknesses were also found in credit supervision and market risk;
• Anti-money laundering and combating the financing of terrorism (AML/CFT): The main shortcoming to compliance with the FATF 40+8 standards seems, based on preliminary findings, to be insufficiently strong on-site supervision. Other areas that would require strengthening include domestic and cross-border inter-agency cooperation, and criminalization of the financing of terrorism;
• Insurance: Overall observance with the IAIS standards was also generally appropriate to the nature of the cross-border business conducted, with weaknesses identified in on-site inspections;
• Securities: Implementation of the IOSCO principles was assessed in the relatively few jurisdictions where the sector was significant. Some shortcomings were identified in the regulators’ powers and resources, cooperation with foreign supervisors, and information sharing;
• Company and trust service providers: The main risk in this sector arises from financial abuse, and it is therefore being assessed through use of the AML/CFT methodology, focusing on the service provider’s role in customer identification."

Recommended