Offshore Investment Supervisors hold meeting in BVI
Registrar of Mutual Funds with the BVI Financial Services Department Mr. Kevin Mann has described the recent meeting of the Offshore Group of Collective Investment Scheme Supervisors as very constructive and very informative. The meeting was held at the Long Bay Beach Resort January 25th-26th.
OGCISS was established in 1997 and has membership from 12 jurisdictions. This was the fourth annual meeting; the last meeting was held in St. Kitts/Nevis in July 1999. A meeting was not held last year. The 5th annual meeting will be held in the Cayman Islands in November this year. Among the aims and objectives of the group is to encourage the application of high standards of supervision and regulation based on international principles with the aim of maintaining adequate protection of markets and market users. OGCISS also facilitates the cooperation and sharing of knowledge, experience and training between offshore regulators and supervisors of collective investment schemes and provides a forum for the discussion of international issues of relevance to the industry.
One of the main issues raised was the development of fit and proper standards for mutual fund business. “This was something agreed to at the last meeting and we were taking it forward at this meeting. We considered a draft standard and hope to be in a position finalize it in the next few months,” Mr. Mann told the Island Sun. He said the delegates also discussed the development of a specific training programme catered specifically for the group. This is to be held in the Cayman Islands in the next few months. The meeting explored the provision of training by the U.S. Securities and Exchange Commission. “We also talked a lot about the importance of regulatory cooperation between jurisdictions and the sharing of information…and we also discussed the various international initiatives, such as the OECD, Financial Stability Forum and KPMG,” Mr. Mann reported.
Speaking at the opening, Deputy Director of the BVI Financial Services Department Mrs. Lisa Penn-Lettsome noted that the BVI serves as the leading corporate domicile for offshore companies in the entire world, with almost half a million such companies incorporated here. “The IBC Act of the BVI (passed in 1984) is continuously acknowledged as the benchmark against which other countries’ IBC legislation must measure up…Due to its flexibility, the BVI IBC is being used for trust, estate planning, international joint ventures, mutual funds and other investment activities.”
Mrs. Penn-Lettsome noted that while attorneys, trust companies
and company managers were forming companies, they needed to be
able to offer quality services in other areas. In 1993, the existing
trust law was amended and modernized. In 1994, a new Insurance
Act was passed and the existing insurance sector was overhauled
and began to be effectively regulated. In 1996, the Partnership
Act was passed and this effectively repealed the archaic laws
of partnerships and introduced into BVI law, for the first time,
the concept of limited partnerships. Also in 1996, the Mutual
Funds Act was passed. “It is the intention of this jurisdiction
to service only quality individuals, business and activity…we
deliberately steer clear of asset protection trusts. We are shy
about granting licenses for offshore banking other than to applicants
of internationally high repute and good standing,” the Deputy
Financial Services Director
stated.
Chief Minister and Minister of Finance the Honourable Ralph
T. O’Neal noted that the world of International Financial
Services now has a very different climate. He noted that the
current trend is towards “regulation that is comparable
with internationally accepted standards”, but he noted that
in many cases, standards have yet to be devised, let alone accepted
by the international community.
“Since the group was first established, Offshore Financial
Centres have increasingly become subject to attack and criticism
by the major economies and their respective interest groups,”
the Chief Minister noted. But he said it is important that Offshore
Financial Centres not bury their heads in the sand and hope that
the storm will pass.
The BVI Leader said a regulatory regime has to be designed
to stand up to scrutiny and he encouraged delegates to collaborate
in the development and introduction of international standards
of regulation. He reiterated that the government of the BVI remains
firmly committed to supporting high standards of regulation and
supervision. “I consistently stress that the BVI is no place
for nefarious or crooked activities and if such activities are
discovered, we are committed to pursuing the culprits towards
justice.”
He spoke to the introduction of a regulatory regime for mutual
funds and all crimes anti money laundering legislation that took
effect in 1998 and the Anti-Money Laundering Code of Practice
that came into effect at the end of the last year. “For
the near future, we aim to continue to move forward by introducing
a code of practice for fund managers and administrators and we
also aim to make portfolio management and other types of investment
business subject to regulation.”
Chief Minister O’Neal said the days of unregulated offshore financial business are over and the way forward is to encourage and facilitate the development of good quality business and high operating standards within a flexible but firm regulatory framework. He said the BVI strives for a regulatory framework that meets international standards and promotes confidence in the BVI’s offshore services and products, but said they are also careful to ensure that the regulatory framework does not dampen business innovation and growth. “There is no point in having regulation that makes it impossible or too costly to do business in the first place,” he declared. According to him, the right legislative framework should not simply be one that seeks to maximize competition without any regard for the safety and soundness of the industry. “The marketplace needs benchmarks and standards and it needs to be supervised.”
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