HISTORIC PRESS RELEASE : Review of financial regulation in the Caribbean Overseas Territories and Bermuda [October 2000]

The press release issued by HM Treasury on 27 October 2000.

The UK and the Caribbean Overseas Territories and Bermuda commissioned an independent review of financial regulation in those territories.  This independent review, carried out by KPMG toassess the extent to which the Overseas Territories comply with international standards and good practice in the way they regulate their international financial sectors, is published today.

The review analysed the position of each Overseas Territory individually in terms of the extent and range of financial business conducted and the strength and effectiveness of their regulatory regimes. The KPMG report is exception-based and largely concentrates on those areas of financial regulation where action is considered necessary to comply fully with international standards.

Welcoming the publication of the review, Melanie Johnson, the Economic Secretary to the Treasury said:

The review provides a rigorous and comprehensive evaluation of how far the Overseas Territories already match international standards and good practice, and makes recommendations for action to improve and strengthen financial services regulation in the Overseas Territories.

I look forward to seeing their plans for implementation linked to a specific timetable which each Overseas Territory has committed to publish by 15 January 2001.

It is evident that some Overseas Territories have more to do than others before they can deliver fully what is necessary.  It is equally clear that not everything can be done immediately. It has been mutually agreed that the Overseas Territories, where applicable, will give priority to three particular recommendations made in the KPMG report.  The three priorities for action are legislation for the establishment of independent regulatory authorities; any necessary enhancements to their laws and systems to combat money laundering; and introducing legal powers that would allow regulatory authorities to obtain key information, and share this with overseas regulators in order to assist their investigations. We will be working with each Overseas Territory to put in place suitable measures; and we expect to see the necessary steps substantively in place by 30 September 2001. Prompt and firm action in this regard will demonstrate to the global financial community the strength of the Overseas Territories’ commitment to international standards.”

Baroness Scotland, Parliamentary Under Secretary of State in the Foreign and Commonwealth Office responsible for the Overseas Territories, added her appreciation for the efforts made by all concerned with the delivery and publication of the review:

The Overseas Territories White Paper – ‘Partnership and Prosperity’ – noted that the Overseas Territories’ success in attracting financial services has been built upon, amongst other things, their reputation for sound administration, effective legal systems, and political stability. In an increasingly competitive global economy, maintaining a reputation for seeking to attract only clean and well-regulated business is vital.

I welcome the Overseas Territories’ full participation in the review exercise. It has been a complex process, but one which we believe will deliver real benefits to the Overseas Territories financial sectors. The review has underlined the Overseas Territories commitment to adhering to international standards of financial regulation, and their willingness to co-operate internationally to help ensure a sound international financial system.

In response to the publication of the KPMG report, Hon Victor Banks, Minister of  Finance in Anguilla, said:

The Government of Anguilla welcomes the KPMG Report and recognises the hard work that has gone into its completion. The Report highlights the extent to which Anguilla already meets international standards and practices and serves as an excellent springboard for the continuing solid development of Anguilla’s financial services sector. The comments in the Report on the sound regulatory aspects of Anguilla’s electronic Companies Registry, ACORN, are particularly welcome.  The Report should also assist the Government of Anguilla in dealing with a number of international initiatives currently underway.

The Government of Bermuda issued the following statement:

The Government of Bermuda welcomes the report on Bermuda’s regulatory system. Speaking on behalf of the Government, the Minister of Finance the Hon. C. Eugene Cox said that Bermuda is pleased that in the vast majority of areas, the report confirms that Bermuda’s regulation of financial services conforms to international standards and good practice.

He noted, We are particularly pleased that in areas such as company formation the report recognizes that Bermuda substantially exceeds minimum requirements. We also recognize, as the report does, that some enhancements are always possible. Bermuda remains firmly wedded to meeting and maintaining international standards. As such we generally support and welcome the recommendations for improvement of certain of the present provisions that have been made by KPMG.”

The Chief Minister of the British Virgin Islands, Hon Ralph O’Neal said:

“The Government of the British Virgin Islands welcomes this comprehensive report, which we view most positively. KPMG must be commended on producing such a thorough and useful review. We also commend the approach taken by the British Government in producing the report, which offers an ideal example of how Britain and her Overseas Territories can work together constructively to resolve issues affecting us all.

The report has a double value to the BVI in highlighting the strengths of our existing regulatory regime while helping us prioritise the weaknesses that still exist. Implementing the recommendations is integral to the BVI’s commitment to being in the top echelon of offshore financial service centres. I am tabling it today before the BVI legislature and will circulate it widely within the BVI for public comment. We look forward to continuing to work closely with the British Government as we take the report forward.”

The Government of the Cayman Islands said:

We welcome the independent report of KPMG, which confirms the commitment of the Cayman Islands to operating a well-regulated financial centre which meets international standards. The report identifies a number of areas that we will be addressing to ensure that Cayman’s regulatory framework is further strengthened. The Cayman Islands will continue to play its part in ensuring that its international financial sector is able to meet new international standards as they evolve.”

The Government of Montserrat said:

“Montserrat understands its responsibilities as a provider of Financial Services in the international market.  We therefore welcome the KPMG report since its recommendations provide a basis for action geared to achieving internationally agreed standards of financial regulation.”

The Chief Minister of the Turks and Caicos Islands, Derek Taylor said:

“We welcome publication of the report.  The next step is for us all to consult  within our respective jurisdictions.  We look forward to giving careful and constructive scrutiny to the report”

These comments follow a recent meeting in London attended by Ministers, senior officials and regulators from the Overseas Territories and the UK. This meeting agreed the following conclusions:

• Each Overseas Territory would publish by 15 January 2001 a response to the recommendations addressed to it, together with a timetable for implementation.
• Following appropriate consultation and parliamentary approval within each Overseas Territory, the core recommendations relating to independent regulatory authorities, anti-money laundering regimes and exchange of information would be substantially implemented by 30 September 2001.
• The UK is willing to provide appropriate assistance to Overseas Territories in their bilateral and/or multilateral negotiations with other entities in matters relating to regulation and exchange of information.

Finally, the UK and Overseas Territories expressed their thanks to KPMG for producing a professional report on a short timescale.