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Expat Investor : November 2007
The regulators of Guernsey, Isle of Man and Jersey provide an insight into the financial centres' latest developments in their supervisory role and looking after expat investments and savings. Meet the regulators expatinvestor.com 16 EXPAT INVESTOR November 2007 OFFSHORE ISLANDS GUERNSEY Peter Niven, Chief Executive, GuernseyFinance 2007 has seen Guernsey maintain its pre-eminent position as a leading international finance centre. Across the board -- banking, funds, trust and insurance -- there has been continued growth in business flows, from both institutional and private investors, which now stand at record levels. This success has been, in part, facilitated by the Guernsey Financial Services Commission's (GFSC) robust yet pragmatic approach to regulation. The Guernsey environment provides investors with the widest range of products and services, transactions are made simpler and quicker because there is no unnecessary bureaucracy and yet they can be assured that the Island's financial services businesses are working to high international standards -- there is safety and security. Guernsey's parliament -- The States of Guernsey. When it has been brought into force, this law will establish an enabling framework for the AML/CFT supervision of non- financial services businesses such as lawyers and accountants. In July this year, The States of Guernsey agreed to the updating of the laws relating to investment business, including the amendment of the Protection of Investors Law to cover closed-ended as well as open-ended funds and the distinction between regulated and registered funds -- with the streamlined consent process already introduced for registered closed-ended funds in February this year. The States of Guernsey has also now approved amendments to the Trust Law, which include abolishing the personal liability of directors in Private Trust Companies (PTCs) as a way of encouraging greater use of such entities and introduction of Purpose Trusts. Royal Assent is expected from the Privy Council at the beginning of 2008. The Island also continues to work on the introduction of Foundations. This year the final proposals from a review of the Guernsey Companies Law should also go before the States of Guernsey. The changes will place trust companies as the gatekeepers to a more streamlined company incorporation process that, from the summer of 2008, will be facilitated by a modernised, automated Company Registry and where, for example, annual returns will be replaced by annual validations. All these measures are part of Guernsey's on-going work to ensure that, as a whole, its robust yet pragmatic approach to regulation provides investors with the widest spectrum of products and services, transactions are simple and quick to carry out because there is no unnecessary bureaucracy and there is a safe and secure environment for conducting business. This has been reinforced by a commitment from local politicians to work with the financial services industry to further develop Guernsey's legal infrastructure and promote the Island globally as a leading international finance centre. www.guernseyfinance.com ISLE OF MAN John Aspden, Chief Executive, Financial Supervision Commission (FSC) The Isle of Man has drawn up legislation to provide new incentives for hedge and alternative investment fund managers to use the Island as a base for their future offerings. A new specialist investment fund, which can be administered either on or off the Island and has a minimum subscription level of US$100,000, offers a straightforward and flexible structure which can be established with the minimum of formality. The Island's regulator is also offering a fast-track opportunity for fund managers with presences elsewhere, to obtain a local manager's licence. Initially, this need not require a full physical presence, where the manager can be 'managed' by an existing local licence holder. Accompanying this initiative will also be a new qualifying investment However, Guernsey is far from resting on its laurels. A series of measures are in the pipeline to ensure that the Island's attractive environment for conducting business is maintained into the future. The GFSC has prepared revised regulations for financial services businesses on anti-money laundering (AML) and combating terrorist financing (CFT), which will be contained in a new handbook. This will result in businesses taking risk into account more when determining the extent of their customer due diligence measures (for example, Know Your Customer procedures). The approach will avoid disproportionate demands on low risk customers. On the other hand, high risk customers, products and transactions will be subject to enhanced due diligence and monitoring. These measures are expected to come into effect at the end of the year. Additional steps are also being taken with regard to AML/CFT. The first relates to unregulated businesses such as bureaux de change and non-bank lenders. Currently, they are subject to a legal framework under which they must notify basic information to the Commission. New legislation, expected to come into force next year, will make them subject to a registration system. Secondly, an amendment to the main existing primary legislation for AML/CFT has been agreed by fund which offers a greater level of protection potentially for smaller investors. This will take over from the previous experienced investor category of fund. The Island will also soon complete a major project to consolidate most of its financial services legislation into two new Acts: consultation is presently proceeding on a Financial Services Bill and a Collective Investment Schemes Bill. Apart from modernising and bringing together the law into a more user friendly format, the Financial Services Bill introduces new standards of transparency and accountability for the Financial Supervision Commission. Other legislation being worked on includes regulations and guidance to accompany the new Acts referred to above, as well as amendments to companies' legislation. The Island's depositor and investor protections schemes remain unchanged. A revised Anti-Money Laundering Code has been introduced. In particular, this is to ensure that the Island's arrangements for preventing money laundering and the financing of terrorism meet the revised recommendations of the FATF, although existing standards mean that there is unlikely to be any major change of AML/CFT practice at the front end. Accompanying rules and guidance will also be brought into effect. The measures which banks and other financial intermediaries take to carry out this due diligence on their business benefit all users of financial services. Once regarded as something of a necessary bureaucracy, they now "The Guernsey environment provides investors with the widest range of products and services, transactions are made simpler and quicker because there is no unnecessary bureaucracy and yet they can be assured that the Island's financial services businesses are working to high international standards -- there is safety and security." "The Isle of Man has drawn up legislation to provide new incentives for hedge and alternative investment fund managers to use the Island as a base for their future offerings"