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FSC Report Praises Isle Of Man E-Strategy But Urges Caution For Electronic Transactions

Mandy Robinson, Tax-news.com, London

20 December 2000


The Isle of Man's Financial Supervision Commission (FSC) has released its 1999/2000 annual report, in which it highlights the government's strategy for promoting the island as a centre of excellence for e-commerce, but it also urges caution with regards to the security of electronic transactions at such a crucial stage of the island's e-commerce development.

The FSC supported the government's commitment to cement the Isle of Man's reputation as an e-commerce hub with particular regard to electronic security in the form of the new Electronic Transactions legislation, which it believes is vital in attracting e-businesses to the island.

In the report, the FSC recognises that the 'principles of its regulations and much of its supervisory guidance are set at a relatively high level' but the FSC continues on a cautious note: 'Nevertheless the ability to transact business electronically and in a paperless manner presents many new risks, some of which management may not have recognised or even fully understood. At this evolutionary stage of e-business there is scope for errors or losses to occur well before they become apparent, and licence holders must be watchful for this.'

FSC chief executive John Aspden says the infrastructure required to develop the island as an innovative centre for offshore e-financial services is now in place. In the introduction to the report he states: 'The Commission has worked closely with licence holders as their plans in this area have developed, and responds positively to soundly based proposals.'

A further issue related to e-commerce is money laundering. The report noted that 'much reliance is placed on physical documentation to "Know Your Customer" and evidence a person's true identity.' The FSC disclosed that it is currently analysing methods which might streamline this process 'in a manner which continues to protect the integrity of the preventative measures but at the same time makes it easier to process the transaction electronically.' The Commission also aims to look at the way in which certification authorities may assist in this respect.

Finally the FSC pledged its responsibility to encourage a sound environment for a successful and thriving e-commerce sector on the island: 'The indications are that electronically transacted business will form a key part of the island's future success. The Commission will make sure that its regulatory approach is pragmatic and takes full account of the international standards in this area,' said the report.

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