Crown Dependencies - Justice Committee Contents

Appendix 3

Main recommendations of the Final Report of the Independent Review of British Offshore Financial Centres

The Review recognises that the following recommendations will require more substantial action in some jurisdictions than in others.[116]

1. The UK should discuss and consider governance arrangements with the jurisdictions to ensure that there is a shared understanding of respective responsibilities and expectations.

2. The quality and extent of financial planning in the jurisdictions should be aligned with that in the best performers (the Crown Dependencies). In particular, jurisdictions should implement a prudent approach to managing government finances by developing: a diversified tax base to maximise sources of revenue; mechanisms to measure and control public spending; and by building financial reserves during periods of economic growth.

3. The UK should be proactive in satisfying itself that the Overseas Territories in particular have frameworks capable of identifying and responding to external shocks and encouraging local governments to undertake responsible adjustment programmes where these are necessary.

4. To meet international standards, jurisdictions which have not already done so should:

  • meet the international standard on tax transparency set by the OECD and continue, even after meeting the current minimum of 12 [tax information exchange agreements], to negotiate further TIEAs, giving priority to those jurisdictions with which they have significant financial links;
  • set up the administrative procedures necessary to ensure full delivery of the OECD standard, to a level of compliance that will satisfy the peer review process that is being put in place;
  • make an early commitment, with a timetable for implementation, to automatic exchange of tax information under the EU Savings Directive;
  • ensure that the regulatory authorities have the necessary resources and expertise to implement and enforce international financial sector regulatory standards;
  • move to amend laws and procedures as necessary to achieve compliance with the [Financial Action Task Force's] 16 'key and core' Recommendations.

5. At an international level, the UK should press for improvements in 'know your customer' minimum standards and promote moves towards improved transparency of beneficial ownership of companies and trusts and the monitoring of politically exposed persons.

6. All jurisdictions should ensure that:

  • governance arrangements in their regulatory authorities are sufficient to maintain the integrity and independence of all decisions taken;
  • responsibility for promotion of the financial centre is separated from the regulator in both letter and spirit.

7. Those jurisdictions that offer (or propose to offer) protection to retail depositors must ensure that compensation schemes can be understood by those depositors.

8. Jurisdictions that lack an Ombudsman scheme should consider whether one is justified.

9. Any jurisdiction that has not already done so should undertake a thorough examination of the range of powers to resolve a crisis in its financial services sector.

10. Local governments should require the regulator to maintain close oversight of any large locally incorporated financial institutions, the failure of which might lead to requests for financial help from the UK. This should be backed by the option of a periodic independent and external review, paid for by the institution itself, commissioned by the local authorities on their own initiative or at the request of the UK.

11. The UK should discuss with those jurisdictions in need of technical assistance to fight financial crime how that assistance might be delivered and the benefits of assistance secured in the longer-term.

116   Foot, M., (2009) Final report of the independent Review of British offshore financial centres, para 1.6. Available at Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2010
Prepared 30 March 2010