Guernsey Banking Sector Secure Despite OECD Criticism

Mandy Robinson, Tax-news.com, London

07 September 2000

Despite strong criticism from the OECD in its crackdown on jurisdictions with so-called "harmful" tax practices, Guernsey continues to enjoy its status as a leading banking jurisdiction, according to Chairman of the Association of Guernsey Banks

In yesterday's Guernsey Press Online, Peter Le Noury said: 'I know from my colleagues here and across the banking sector in the island that we are seeing no reductions in the numbers of people wanting to bank in Guernsey, on the contrary, despite adverse media comment and scare stories, business is very vibrant. What has happened so far has certainly not driven any business away. The OECD initiative is entirely political, there are offshore problems right across Europe and the EU but, for some reason, the OECD has chosen to focus on us.'

Furthermore, Mr Le Noury applauded Guernsey's cautious approach to the conditions the OECD insists the Government must meet before its removal from the Paris-based organisation's blacklist. He stated: 'we cannot sign something blindly, and the Guernsey Financial Services Commission (GFSC) and the Advisory and Finance Committee have the right attitude to this ... some jurisdictions are signing letters of intent which promise everything and agree to nothing - what on earth does that all mean? Guernsey is showing a maturity that many other centres lack.' He also praised the GFSC for 'doing a good job in dealing with this interference from outside.'

Mr Le Noury, who is also managing director of Bank of Bermuda (Guernsey) Ltd, said that the island's banks were in a very secure position with an average of 8% profit increases: 'the increased profits are significant and the underlying capital strength of our banks here is really impressive ... when you look at the weighted risk asset ratio for Guernsey and see that it is 20.3%, and authorities are looking for 10%, you can see that we are on a very sound footing.'

He also complimented the impending fiduciary laws that will regulate trust companies and said he is looking forward to the positive impact the legislation will affect on the island's business sector: ''we are at the pinnacle of economic history, presiding over burgeoning wealth worldwide... there is going to be increasing demand for banking and financial services, but buttressed by a sophisticated regulatory framework.' In addition, Mr Le Noury commented upon the GFSC's aim to visit local banks: 'again, this is very good news and it is impressive, the way that the GFSC has forged ahead with these visits, telling the banks that best practice is going to be construed as the minimum standard in future is a clear indication of the approach Guernsey is taking to financial supervision and regulation.'

Mr Le Noury is of the opinion that the new regulatory procedures will herald crucial changes: 'the acceptance of the bona fides of a client from a known intermediary will no longer be acceptable, unless the intermediary can confirm that he has been through the same “know your client” procedures as we do.' He added: 'a lot of clients see what we now have to do as an invasion of their privacy, that is certainly a problem but it is something we have to overcome.' Inevitably, he said, 'the old school ways of doing business are over, now all the dots and crosses have to be in place if we want to be able to prove to an ever-intrusive outside world that we care about putting in place proper protection against financial crime.'

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