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Bermuda welcomes UK report on offshore centres
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| Published on Saturday, October 31, 2009 | Email To Friend Print Version
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HAMILTON, Bermuda -- Bermuda's Deputy Premier and Minister of Finance, Paula Cox, said that the government of Bermuda welcomed the independent review of British offshore financial centres produced by Michael Foot and released on Thursday by the United Kingdom government.
Cox said: "We welcome the report as it provides an outside assessment of where Bermuda stands with respect to many important benchmarks including managing economic risks, the role of tax in sustaining business models, delivering effective regulation, financial sector crisis management and fighting financial crime.
"On balance, our belief is that Bermuda has fared relatively well. We have a diversified tax structure based on a consumption tax model but accept the point that further diversification lowers the risk of sharp revenue declines during downswings in the economic cycle.
"Mr Foot had an immensely difficult challenge in producing this review given the diversity in levels of development, both constitutional and economic, amongst the Overseas Territories and the Crown Dependencies. He visited Bermuda earlier this year to gain an understanding of the nature of our economy, its drivers, and the quality of our regulatory framework for supervision of financial services.
"Bermuda has a strong record on tax transparency and is counted amongst the G7 and other jurisdictions that have substantially implemented the agreed international standard with respect to cooperation in tax matters. Bermuda has exceeded the OECD standard of 12 TIEAs or Tax Information Exchange Agreements.
"In addition, Bermuda has a long and successful `know your customer` or "KYC" regime which has served to minimize the presence of rogue companies or individuals that do not adhere to good governance or best business practices.
"On the other hand, there are areas where there is a clear need for strengthening oversight and supervisory regimes in the financial service sector, in particular, fighting financial crime in its many facets. These weaknesses were acknowledged during the last IMF review and are being remedied. Government has completed key legislative initiatives and implementation is well underway. A dedicated team has been established and the team is focused on ensuring that Bermuda is playing its role effectively in the fight to combat money laundering and financial crime. These significant steps have been recognised already by regional and international bodies.
"Our task now is to study the report in depth and to develop a plan and timetable for timely implementation of enhancements in those areas where they are required. In the interim, while the more rigorous action plan is developed by the various Government agencies and regulatory authorities, I think that it is important to note and underscore that complacency has never been our mantra. The Foot Review echoes this and up-front and throughout the Report states: "A number of the jurisdictions I have reviewed have a good story to tell, but there is no room for complacency".
Cox continued: "The Review states that in order to deliver effective regulation and for better compliance with international standards there needs to be the appropriate manning levels. It was acknowledged that Bermuda and Gibraltar have more than doubled the number of staff they have employed since 2002. The Report also notes the work that has been achieved in order to meet the OECD standard and indicates that the attainment of the benchmark of twelve Tax Information exchange Agreements should not be the end-goal and that the jurisdictions should continue to increase the number of TIEAS. This Bermuda has done as we now stand at 18 TIEAs.
"Mr Foot was clear in stating that the UK Government should give due recognition where there had been inroads made. In some ways, the Foot Report debunks some of the longstanding myths and pre-conceived notions about British offshore financial centres as tax havens. The Report notes that while many of the nine jurisdictions covered by the Review have successfully developed niche positions within the global financial services market, their importance in global terms, as measured by banking flows, is relatively modest. The Foot Report further notes that the UK has consistently been the net recipient of the funds flowing from the nine jurisdictions with a large regular inflow from the Crown Dependencies.
"While the Ministry of Finance and the Bermuda Monetary Authority, as the independent regulator, are taking active steps with reference to enhancing the financial rubric in order to protect depositors, it was gratifying to see the direct and flattering reference to the actions taken by the Bermuda Government to underwrite a preference share issue of a local bank. Our prompt actions were noted and it was ascribed to the importance of close regulatory oversight and decisive action.
"We also seem to be ahead of the curve given our appointment of an independent non-Bermudian to serve on the Board of the Bermuda Monetary Authority in the person of Mr Walter Bell. The Foot Review notes that it is important as part of the governance framework to have independent non-executive board members not linked to local financial services serving on the board.
"The Financial Secretary in his earlier communication with Mr Foot today highlighted an inaccuracy in 1.18 which stated that Bermuda required UK sign-off in order to borrow. Mr Foot, in acknowledging that the Report had already gone to print, undertook to correct in his public utterances this inaccuracy -
Bermuda and Gibraltar are the two exceptions.
"On behalf of the Government of Bermuda, I would like to thank all of the public sector officials who liaised with Mr Foot during the conduct of his work on this review, as well as the private sector stakeholders who also had an opportunity to provide both input and insight on the workings of Bermuda`s international business sector and our regulatory framework.
"We have a collective responsibility to undertake the further work that is ahead of us and Government is confident in its outcome." | | | | Reads : 389 | | | |
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