Impossible To Please

Given the high regulatory standards that now exist in recognized OFCs, why does the negative campaigning continue?

The OECD claims to seek a level playing field for the financial regulation of all jurisdictions, but it is unlikely to be an impartial referee when 80% of the market is dominated by OECD members.

The report titled "Towards a Level Playing Field," prepared last year by the international law firm, Stikeman Elliott, gives substance to a view widely held in the offshore financial centres; that the OECD and the FATF-both of which are agencies of the G7 countries-are simply applying a double standard.

The report makes it clear that not only is corporate transparency in the offshore financial centres already at a far higher level than that applicable in most OECD jurisdictions but, further, there appears to be no pressure from the OECD jurisdictions to improve their own transparency to a similar level.

While the new report focuses on the transparency of corporate vehicles, partnerships and trusts in the offshore financial centres, similar conclusions can be drawn with regard to the standards of transparency, Know Your Client due diligence and anti- money laundering legislation across the board in each of the recognized offshore financial centres.

No doubt should exist that these new standards of transparency have resulted from the highly successful OECD initiatives and in part from the pressure applied by the FATF with regard to money laundering.

But given that those standards have now been introduced, why is it the case that no one has yet turned off the spigot that controls the negative information used to shape public opinion prior to these initiatives?

WHERE IS THE RECOGNITION?

Few in recognized offshore centres had supposed that aiding and abetting crossborder tax evasion was either sensible, sustainable or permissible in light of the suspicious activity reporting obligations introduced in the mid 1990s. Yet press releases that emanate from treasury departments still relentlessly press on the subject of the offshore money laundering scourge.

If this were an even-handed and objective debate, the offshore jurisdictions should now be anticipating from the OECD a more mature recognition of that which has been achieved. Indeed, if there were any degree of probity in the debate, some pause for reflection of that sort would be appropriate to allow the onshore jurisdictions, the United Kingdom apart, time for their legislation to catch up.

But it seems that the offshore financial centres are entitled to no such recognition from the G7 countries nor their treasury departments. A charitable response might suggest that, notwithstanding the OECD commitment letters signed by the major offshore financial centres, there is still some time to go before the bilateral agreements pursuant to that commitment are in place, country-by-country.

Perhaps there is also doubt remaining within those treasury departments as to whether or not the OECD has successfully moved the goal posts to include tax offences within the definition of money laundering. Perhaps that explains why the negative campaigning continues relentlessly. However, even if doubt does remain, it is hard to justify continued criticism on the point; similar...