Offshore Financial Sector: BVI Attends Special Meeting On G-7 Initiatives
A special CARICOM meeting on G-7 initiatives against offshore financial centres held in St. Kitts and Nevis over the weekend has come up with a number of recommendations for coordinating and overseeing the effective regulation and supervision of the Caribbean financial system in accordance with international best practice. Director of the Financial Services Department Mr. Robert Mathavious represented the BVI at this meeting.
Heads of Government of the Caribbean Community agreed at the Twenty-First Meeting of Conference in Canouan, St. Vincent and the Grenadines July 3rd-5th, 2000, that the Caribbean jurisdictions affected by the various G-7 initiatives targeting offshore financial centres and other interested jurisdictions, would meet to finalize a coordinated response. The primary objectives of the meeting would be to refine the strategy for response to the three initiatives by the G-7, finalise the terms of reference for the legal opinion on the options for redress available to Caribbean offshore jurisdictions and determine how this task will be financed and managed and agree on actions to strengthen the regulation and supervision of International Financial Centres in the Caribbean. "I was glad for the opportunity to attend at the invitation of the Prime Minister of St. Kitts/Nevis," Mr. Mathavious told the Island Sun. "The BVI played a significant role in developing strategies on how to handle various initiatives."
Prime Minister, Dr. the Hon. Denzil Douglas chaired the nine agenda July 15th-16th meeting, held at the conference room of the Eastern Caribbean Central Bank. "Coming out of this meeting, we would be better able to come up with a strategy as to how in defence of what we have built up over the years and in strengthening of the specific areas in the financial services sector, not only for our people, but also the international community," he said in bringing the meeting to a close Sunday afternoon. The St. Kitts/Nevis Attorney General Hon. Delano Bart said the listing of the 35 countries as tax havens by the Organization for Economic Cooperation and Development (OECD), the listing of the 15 countries by the Financial Action Task Force as non-cooperative jurisdictions and the classification of certain jurisdictions including some from the Caribbean by the Financial Stability Forum (FSF) as offshore financial centres, represents a "careful and determined effort by the Group of 7 countries to curtail the efforts of small jurisdictions to develop a financial services centre." CARICOM is of the view that these activities, which they describe as unilateral and inconsistent with international practice, are designed to impair the competitive capacity of Caribbean jurisdictions in the provision of global financial services. CARICOM, in a statement at the Heads of Government Meeting, said leaders analysed in detail the 26 May 2000 Report of the Financial Stability Forum created by the G7 in 1999 to enhance market supervision and surveillance following the financial crises in Asia, Brazil and Russia. They expressed alarm at the fact that the Forum adversely categorised Caribbean jurisdictions with Offshore Financial Centres, based on their unilateral evaluation of the quality of supervision of these jurisdictions, even as its report found that "Offshore Financial activities are not inimical to global financial stability." The Caribbean leaders also studied the 22 June 2000 Report of the Financial Action Task Force which listed some countries as "non-cooperative jurisdictions" in the prevention of money laundering. They deeply regretted that this listing was made even though the Caribbean Financial Action Task Force, the regional counterpart organisation to the Financial Action Task Force, had advised that Caribbean jurisdictions were making significant progress in tightening their money laundering regulatory and legislative framework. The Heads also reviewed the OECD Report of 26 June 2000 which listed jurisdictions as tax havens because these countries have competitive tax regimes and had not agreed to bind themselves to the elimination of policies and practices which the OECD unilaterally determined to be "harmful" to its members.
They took note that each of the reports was prepared by bodies in which the Caribbean has no representation and was based on incomplete information and on standards set unilaterally by these bodies. They deplored the fact that the lists were published with the objective of tainting jurisdictions in the eyes of the investment community and the international financial market. They condemned the actions of the OECD in particular as contrary to the tenets of a global market economy promoted by G7 countries. They reiterated that the proposed OECD actions have no basis in international law and are alien to the practice of inter-state relations. The Heads remained convinced that international rules and practices must evolve from genuine consultative processes and in international forums in which all interests are represented. They affirmed that international rules must be made and applied democratically based on accepted principles and norms. In this regard, Heads of Government again expressed their readiness to address any concerns of the OECD in the appropriate multilateral forum, based on such accepted principles and norms. The St. Kitts/Nevis Attorney General said the officials, during last weekend's meeting, totally committed themselves to ensure that money launderers or other criminals do not use their jurisdictions. He said it was agreed to give priority to getting jurisdictions that are on the FATF list off and to keep those jurisdictions that are off the FATF list off. It was further agreed to cooperate with each other and to exchange information to prevent any abuse by criminals and to work towards strengthening the supervisory and regulatory framework for all aspects of the financial services industry.
The meeting was attended by Barbados Prime Minister, the Right Hon. Owen Arthur and his Attorney General, Hon. David Simmons; Dominica's Prime Minister Hon. Rosie Douglas; St. Vincent and the Grenadines Minister of Finance Hon. Arnheim Eustace and senior government and Central Bank officials from Antigua/Barbuda, Belize, Grenada, St. Kitts/Nevis, Barbados, St. Vincent and the Grenadines and Trinidad and Tobago. Governor of the ECCB Mr. Dwight Venner also attended.