02 May, 2008

Offshore Finance

Treasury Crackdown on International Financial Services. Are the British Overseas Territories being unfairly targeted again? I ask that question because the UK Treasury Department has just announced another investigation into our international financial services industry. You can read all about it for yourself on Parliament's website.

Does this initiative derive from the recent National Audit Office report? If so, we are in for a rough ride. I previously wrote about it here, and here, and here.

I never was able to understand. Why does not parliament similarly investigate British bankers, insurers and money managers? Why investigate us? We are at the bottom of the food chain when it comes to the international financial services industry. I remember Rodney Gallagher once explaining to a meeting of the Anguilla Financial Services Association that the West Indian financial centres could expect, at most, the crumbs that fall from the financial services table. The reason? We are already so well-regulated, so transparent, so small, and far away compared to Jersey, Guernsey, the Isle of Man, Monaco, Lichtenstein and Z├╝rich, that only the smallest share of the business will ever venture out our way.

Now, the jingoistic British press have taken up the cudgel. See the Guardian article here. The headline reads, “Britain's overseas territories open to fraud and money laundering”. Note the suggestion that we are “open”, as in “welcoming”!

This is typical of the English newspapers when the markets are heading down. Blatant protectionism of the City and its outposts in Jersey and the Isle of Man. They don't even consider that it may well be that regulation in Anguilla and the other BOTs is now so tight that no crimes have taken place. Certainly a possibility in a place as small as Anguilla is.

What is the proportion of regulators to employees in the UK? Is it any better than in the BOTs?

Are the regulatory techniques in Anguilla and the other BOTS any different to those employed in the Crown Dependencies of the Channel Islands?

Does any fraudulent scheme, such as the BCCI fraud, that has the smallest link with a BOT in the Caribbean, not have its headquarters in the City or in the Channel Islands?

Does the British banking system not rely on repackaging debt products in offshore centres such as Anguilla and the Isle of Man? Should Anguilla be shut down to ensure that all the City's offshore business goes elsewhere?

They are all in the game, and it is just a question of where it is played. If the principle is that, “We only like offshore if it is our offshore”, then does not Anguilla qualify?

The problem is that these people run the UK, and it appears that we are going to bear the brunt of their own political nervousness over the forthcoming economic downturn. Same as it ever was!


  1. David Hencke, Westminster correspondent, The Guardian, Thursday May 1

    Britain’s 14 last remaining overseas territories are at risk of becoming centres for
    money laundering because of a dearth of qualified investigators to police their financial systems, the Commons public accounts committee warns today.

    The MPs single out the Turks and Caicos Islands, Montserrat and Anguilla - all in the Caribbean - as most at risk from dubious financial practices because of poor
    quality regulatory standards.
    The MPs warn: “Territories’ financial services lack the investigative capacity to
    scrutinise suspected money laundering activity fully and governors have not used
    their reserve powers to rectify this. In such a sensitive aspect of the global financial
    system it is complacent to allow territories for which the UK is responsible entirely to manage the risk themselves.”

    The report shows that on the Turks and Caicos Islands, where 700 people are employed in financial services, there are only five people qualified to carry out
    investigations into suspect practices.

    In Montserrat and Anguilla, with 150 and 200 people respectively working in the financial sector, there is only one qualified person on each island capable of investigating suspected fraud.

    The report says that with the exception of the Cayman Islands, where there have been two successful prosecutions, no one has ever been successfully prosecuted by local investigators in Bermuda, the British Virgin Islands, Gibraltar, Turks and
    Caicos Islands, Monserrat or Anguilla............"

    Mr.Mitchell- Why are you being so coy? The Financial Services in Anguilla are better regulated than in England.

    Britain does not give Anguilla any aid,so is this a backhand offer to train a few Anguillians or is it simply that the "Old Boys Club" from the Hong Kong days want to come to Anguilla to enjoy the sun?

    Let us be honest!!!

  2. The Independent Newspaper now has the international financial services industry causing the death of 5.6 million children!

    See: http://tinyurl.com/5pahb4

  3. Then, you might like to see another outrageous story in the same Independent Newspaper. It begins, "The tax avoidance industry is the mafia of our times."

    The pressure is on. The hammer is about to come down. The supporters of the City and Wall Street want to ensure that all the business is kept "at home". If they have to destroy the British Overseas Territories in the process, then so be it.

    The Independent of 12 May


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