11/01
8 February 2001
REVIEW OF FINANCIAL REGULATION IN THE CARIBBEAN OVERSEAS TERRITORIES AND BERMUDA: IMPLEMENTING RECOMMENDATIONS
The Caribbean Overseas Territories and Bermuda have now each provided a formal response to the recommendations made in KPMG’s review of financial regulation, which was published on 27 October 2000.
Noting the responses of the Overseas Territories, the Economic Secretary to the Treasury, Melanie Johnson, said:
"The Overseas Territories have now explained how they plan to respond to KPMG’s recommendations. I have made it clear that the establishment of independent regulatory authorities, of effective powers to assist investigations by overseas authorities, and of any necessary enhancements to the laws and systems which combat money laundering are essential elements in establishing properly regulated financial centres in the Overseas Territories.
"These overdue measures need to be in place by the end of September 2001. The Overseas Territories themselves agreed when the review was published that these three priorities should substantively be in place by then, and I expect full delivery of their promises.
"I also expect to see KPMG’s other recommendations implemented by the end of 2001. This is essential if the Overseas Territories are to satisfy the international community and standard-setting bodies that they conduct their financial business according to international requirements. The UK fully supports a number of international initiatives which make it clear that counter measures will be taken against persistently non-compliant offshore financial centres."
Baroness Scotland, Parliamentary Under Secretary of State in the Foreign and Commonwealth Office responsible for the Overseas Territories, added:
"I welcome the high level commitments from the Caribbean Overseas Territories and Bermuda to address the KPMG recommendations. Financial services is a competitive sector, and the UK Government is keen that the Overseas Territories will attract quality business seeking a well-regulated environment, based on the prevailing rules, laws and good practice internationally.
"The UK Government will continue to provide advice and assistance to help the six Overseas Territories concerned to achieve full compliance with the principles and guidelines in the KPMG report. There will be a process of regular review and dialogue over the next twelve months to ensure the published implementation plans are substantially implemented by the end of 2001."
NOTES FOR EDITORS
1.The full text of the government of Anguilla's response is available below in Adobe Acrobat Portable Document Format (PDF). If you do not have Adobe Acrobat installed on your computer you can download the software free of charge from the Adobe website. Alternatively, it may be obtained from Liane Farrer, Treasury Press Office, on 020 7270 5192
For alternative ways to read PDF documents and further information on website accessibility visit the HM Treasury accessibility page.
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2.In 1999 the UK and the Caribbean Overseas Territories (Anguilla, British Virgin Islands, Cayman Islands, Montserrat, Turks and Caicos Islands) and Bermuda jointly commissioned an in-depth independent review of financial regulation in those territories. This review, carried out by KPMG and published on 27 October 2000, assessed the extent to which these Overseas Territories comply with international standards and good practice in the way they regulate their financial services sectors.
3.The definition of these international standards and good practices is set out in the Guidance Notes which are published at the end of each of KPMG’s reports, and which were approved jointly by the UK and the Caribbean Overseas Territories and Bermuda. These Guidance Notes in turn are based upon the regulatory package set out in the Government’s White Paper ‘Partnership for Progress and Prosperity — Britain and the Overseas Territories’, published in March 1999.
4.The purpose of KPMG’s review was to assess progress made in meeting international standards and good practice and to make recommendations on how to deal with shortcomings. The UK and the Caribbean Overseas Territories and Bermuda have agreed that the recommendations relating to the introduction of independent and effective regulatory authorities, the introduction of ‘compulsory powers’ to provide overseas regulatory authorities with effective and timely investigative assistance, and the introduction of any necessary enhancements to the laws and systems which combat money laundering should be implemented by 30 September 2001.
5.All the Overseas Territories have made commitments to establish independent regulatory authorities. Bermuda already has an independent regulatory authority, but this does not regulate the insurance sector and a new independent authority will be established for this purpose.
6.Cayman has already introduced the necessary powers to assist overseas regulatory authorities. Montserrat and the British Virgin Islands have introduced legislation in this area, although this requires further amendment. The other Overseas Territories need to introduce the necessary powers within our agreed timescale. Amendments are also needed in some jurisdictions, including Cayman, to the powers available to assist overseas law enforcement authorities.
7.All the Overseas Territories now have the main building blocks in place in order to tackle money laundering. All plan to introduce the further measures required in order to satisfy international standards in this area.
8.Beyond these three priority areas, KPMG’s recommendations set out what is required in order to meet international standards and principles of regulation and good practice in the financial services sector, including in the banking, insurance, investment services, company and trust sectors. The Overseas Territories’ responses explain how they intend to address these recommendations.
9.Progress in implementing KPMG’s recommendations will be subject to regular review and consultation between the UK and the Caribbean Overseas Territories and Bermuda.
10.The Financial Stability Forum and Financial Action Task Force have both identified counter-measures which may be applied to persistently non-compliant offshore financial centres. The UK is a member of both organisations and supports the initiatives taken by these organisations.
11.Media enquiries should be addressed to Liane Farrer in the Treasury Press Office on 020 7270 5192.