UK Tory MP backs offshore finance centres
(CNS): A conservative MP in the UK has spoken up for the world’s international financial centres (IFCs) in a debate in the British parliament this week. Mark Field, the Tory MP for the Cities of London and Westminster has argued that small international financial centres (IFCs) have endured unwarranted “political attacks and misguided criticism as major governments seek to understand the cause of the global financial crisis”. Field said initiatives currently being driven by the OECD, the G-20, the Financial Action Task Force, the EU and national governments run the risk of inaccurately pinpointing small IFCs as a scapegoat for the recent shortcomings in financial markets obscuring the real causes of the financial crisis.
According to a release from the International Financial Centres Forum Field said: “Small IFCs were not the cause of the global financial crisis. While it is convenient to blame far off countries for causing the financial crisis, even those who work in the financial markets do not accept that small IFCs were a major cause of the crisis.”
In response to the debate, Mark Hoban the Financial Secretary to the UK Treasury acknowledged the important contribution played by small IFCs to market liquidity in the UK, as well as the important link to the UK retail financial services market. He said it was crucial that the small IFCs were fully engaged in the process of raising global standards on regulation and transparency on issues such as prudential standards, anti-money laundering and the financing of terrorist activities. He recognised the efforts made by small IFCs to date and welcomed further efforts towards progress in this area. He also supported the call for a balanced debate in arguing that it was important that the UK government, the EU and the G-20 proceed on an evidence-based approach.
Grant Stein, global managing partner with Walkers here in the Cayman Islands welcomed the debate and the government’s response. "It is encouraging to see that the UK government is taking a more evidence-based look at the role of small IFCs. We are also pleased to see that there is growing recognition among law makers in the major economies of the positive role that the small IFCs play in the global economy and the contribution which these small IFCs make to the economies of many of the G20 and other countries."
During his debate Field cautioned against recent attacks on zero-ten tax regimes. He said that they reveal a worrying trend which not only undermines the sovereignty of independent states to set their own tax rates, but which also sees high tax countries seeking to export their high tax rates around the world. He welcomed the UK government’s decision to cut corporation tax from 28% in recognising the need to keep the UK competitive rather than attempting to defend high tax rates by criticising any tax competition.
He highlighted conclusions reached by the Foot Review on the UK’s relationship with its Crown Dependencies and Overseas Territories saying there was limited impact on the UK’s tax base as a result of so-called ‘tax havens’.
The UK’s Trade Union Council has argued that the tax gap created in UK government tax receipts as a result of offshore centres is £25 billion but Field said that a Deloitte Report, commissioned by the UK Treasury at the time of the Foot Report, showed that only £2 billion is potentially lost in tax leakages per annum.
Field said many small IFCs are able to offer stable, well-regulated and neutral jurisdictions through which to facilitate cross-border business for the benefit of the global economy pointing out that a number of academic studies have concluded that small IFCs create jobs within financial centres and in domestic economies; and can help poverty alleviation in developing countries. He argued that as a major net recipient of capital flows from small IFCs, the UK would suffer if its firms were to find it more difficult to access capital via the international markets.
It was also stressed that the Financial Action Taskforce gives many small IFCs a positive assessment in meeting its 49 recommendations – including measures to avoid concealing financial crime and terrorist financing. Backing arguments made by many in Cayman’s offshore sector Field argued that the OECD do not operate with the sort of transparency that they would expect of others and called for the government to outline measures it can take to ensure that the G-20 process is more inclusive.
Category: Business
The problem is not so much more laws and regulation but better and quicker enforcement of those that we have. This is the "effectively implemented" test that international standard setters are now focusing on. And Cayman is at some risk when this spotlight is turned on.
It should be noted that CIMA has no criminal prosecutorial powers (which in my view is the correct position). Those powers rest with the Cayman Islands Government and, in particular, with the Attorney General’s Department. Typically, when CIMA concludes that there is prima facie evidence of a criminal offence, it refers the matter to the Financial Crimes Unit of the RCIPS for formal investigation and /or the Attorney General, depending on the circumstances. Unfortunately, in the area of financial crime both the RCIPS and the AG’s department are sorely underresourced.
The recent amendment to the Monetary Authority Law that increases the administrative fines that CIMA can levy is a welcome move. But to seriously and meaningfully address the slowness in which financial crimes cases are pursued requires significantly better and more expensive resourcing of the RCIPS and the AG’s department. In my view, the financial industry should be asked to pay for this resourcing through dedicatedfee increases for such purposes. It is in everyone’s long term interest that criminals are prosecuted effectively.
What has Mark Field been smoking?
Wha he want now? we don’t have no money because Cousin Julie spending it on a center of Opulence on the bluff he can get a room deh when she done though.
I welcome the comments of Mr. Field and Mr. Hoban in general. However, Mr. Hobans remarks still contain the suggestion that small IFCs’ standards of regulation fall short of international standards notwithstanding that we have jumped through over every hoop demanded of us and it is absolutely clear that our standard of regulation is more effective than major onshore financial centres. This is somewhat concerning as it means that we remain a target even under a Conservative-Liberal Coalition govt.
Our standard of regulation and transparency falls well below that of other international financial centres, It needs significant improvement, particularly our Companies Law. We cannot continue to bury our heads in the sand.
CIMA only a week ago confirmed that they are not compliant with the requirements of the financial regulation laws.
The MP is correct and Mr. Johnson is correct he knows because he liquidates more financial compnaies than should be liquidated – all becasue by the time CIMA wakes up it is too late to save the companies and people loose millions unnecessarily.
CIMA has informed government that they are not doing their job becasue they are understaffed, but government is still not authorizing the sufficient staffing level for them to do their job as the laws require.
The non implimentation and enforcement of the financial laws has and will be detrimental to our very important fragile financial industry.
Thanks Mr. Johnson for your statement made from within the financial industry "cleaner uppers".
Now government take your head out of the swamp, listen to CIMA and correct the problems at CIMA, they are begging for help.
Good stuff, finally someone in the UK seeing the truth of the matter.