Abacha, former Nigerian dictator, 346
accumulation and maintenance trusts, 70
advance commitments, 312
advisories, 290
Al-Qaeda, 407
alternative remittance systems, 217
Andersens, 158
Anjouan, 449
anti-competitive behaviour, 119
anti-money laundering (UK), 394–395, 397–399
arbitrage, regulatory, 46, 172–173
Article IV consultations, IMF, 269, 273
Aruba, 376
assessment program, OFCs, IMF, 268–271
asset management, 64
asset protection trusts, 70
Assets Recover Agency, 228
asymmetry of information, 117, 147–149, 466
auditors, 157–160
Australia, 180
avoidance of tax, see tax
back office, 77
Bahamas, 377
Bank for International Settlements, definition, 230
Bank of Ireland, 440–441
Banking Act 1979 (UK), 163
banking, 59–60
parallel banks, 336
shell banks/branches, 336, 344
underground banking, 217
Barbados, 377
Barings, 157–161
Basel 1, 144
Basel 2, 141–143
Basel Committee, definition, 231
overview, 234
BCCI, 159, 166, 337–340
bearer shares, 357
Bermuda, 377–378
Best Practice Paper, OGBS, 61, 156, 252
Bin Laden, 407
black market peso exchange mechanism, 217–218
boards, 191
British Virgin Islands, 378
business process outsourcing, 77, 80
capital
capital adequacy, 139, 141–145
capital flight, 56, 429
long-term capital management, 67
Caribbean
Caribbean Court of Justice, 460
Caribbean Regional Technical Assistance Centre, 460
Caribbean Securities Exchange, 460
Caricom, 460
single market and economy, 460
Cayman Islands, 379
Center for Freedom and Prosperity, 323–324
Centre for European Policy Studies, 358
Citigroup, 401–406, 416–417
civil law, 404
code of conduct, 83, 97, 98, 100, 109
codes, 446
collective investment schemes, 59, 64–66
closed ended, 65
open ended, 65
comitology, 237–238
commitments, specific, 93
Committee of European Securities Regulators, 182, 236–237
definition, 236
Committee on Fiscal Affairs, OECD, 312
common law, 68, 72–74, 404
companies
controlled foreign companies, 113
exempt companies, 61
international business companies, 61–62
numbers of, by jurisdiction, 157
and trust service providers legislation, 156
see also corporate vehicles; corporate veil; special purpose vehicles
competitive neutrality, 146
compliance, 162–169
offsite, 167
onsite, 167–168
voluntary, 45
components of a good reputation, 470
concordat, 232–235
conduct of business, 117–120, 147–154
confidentiality, 46–48, 52
conglomerates, 130–131
consolidated supervision, 161, 165–166
constituents of success, 471
consumers, 58–59
consumer protection, 117–118
contagion, 165–167
contractual collective investment scheme, 149
controlled foreign companies, 113
Cook Islands, 379
Coopers & Lybrand, 158
Coordinated Portfolio Investment Survey, 35
Core Principles for Effective Banking Supervision, 235
corporate governance, 347–350
Cadbury Report (UK), 348
Combined Report on Corporate Governance (UK), 348
Greenbury Report (UK), 348
Hempel Report (UK), 348
corporate inversion, 84–85, 414
corporate service providers, Statement of Best Practice, OGBS, 63, 156, 253
corporate vehicles, 326–327, 330
report on misuse for illicit purposes, 327
corporate veil, behind the corporate veil, 325–329
cost/benefit analysis, 120, 121, 123–124
crises and regulation, 148
critical mass, 361, 365, 371
critical success factor, 5, 171
cross-border cooperation, 422–423
Crown dependencies, 391
customer due diligence, 218, 251
definitions, 13, 15–16, 34
Delaware, 380, 407–408, 409–410
dependent territories, 390–393
deposit interest example, 90
direction, 192
discretionary trusts, 70
domino effect, 132
dual criminality, 48
Edwards Report, 390–391
Egmont Group, 216
enforcement, 192
Enron, 79, 158, 340–341
Ernst & Young, 159
ethos, 452
EU
and anti-money laundering, 222–228
Capital Adequacy Directive, 141–144
European Central Bank, 172
European Investment Bank, 349
European Parliament, 349
First Banking Directive, 141
Investment Services Directive, 139
Money Laundering Directives, 223, 395
Savings Tax Directive
agreement, 99–103
background, 98
summary, 99
and Switzerland, 99, 104
and the USA, 102
Securities Commission, 237
UCIT Directive, 65
evasion of tax, see tax
exchange of information, 317–319, 323–325
on tax matters, 92–96
exempt companies, 61
FATF
definition, 240
Forty Recommendations, 240
review, 289, 330
membership, 302, 306
negative comment, 294
neutral comment, 296
positive comment, 295
role of, 297–298
FATF-style regional bodies, 302–303, 306
and the USA, 406, 407
Federal Deposit Insurance Corporation (USA), 401
Financial Action Task Force, see FATF
Financial Intelligence Units, 214
definition, 241
Financial Sector Assessment Programs, 268–269, 273–274
results, 280
Financial Services and Markets Act 2000 (UK), 160, 165
Financial Services Authority (UK), 163–165
financial services, evolving, 178
Financial Stability Forum, see FSF
fiscal excuse, 240, 241
fishing expedition, 442–443
‘fit and proper criterion’, 136–137, 482
FIUs, see Financial Intelligence Units
flight capital, 56, 429
forced heirship, 73
foreign grantor trusts, 70
Forty Recommendations (FATF), 240
review, 293, 306
foundation, 7
France, parliamentary reports, 346
fraud
examples of, 337
Offshore, common features, 336
fraudulent conveyances, 74
fringe banks, 164
FSAPs, 269, 281–282
results, 281
FSF, 242
report, reactions, 266
role of, 264
FSRBs, 303
functional regulation, 130, 153
future, and supranational authorities, 442
G7/8, definition, 241–242
G20, definition, 243
Gibraltar, 380
global financial stability, 422–423, 431–432
Global Forum Working Group on Effective Exchange of Information, 328
governance, see corporate governance
Guernsey, 380
guidelines, 446–447
Hague Convention, 68, 71–73
harmful tax competition, 308–310, 320, 323
Harmful Tax Initiative (OECD), and the USA, 410
hawala, 217
hedge funds, 59, 65–68
home and host states, 89
Hungary, 448, 450
IMF, 242–247, 253, 255
Article IV consultations, 273–274
assessment program, OFCs, 273, 274
background, 265
Module 2 assessments, 271–272
and OFCs, 283–286
independence, regulatory, 173
information sharing, 317–318, 326
information exchange treaties, 414
Ten Key Principles for the Improvement of International Cooperation Regarding Financial
Crime and Regulatory Abuse, 318
institutional supervision, 130
insurance, 61
interest rates, negative, 178
International Accounting Standards Committee, definition, 242–244
International Association of Insurance Supervisors, 242–244, 251
international business companies, 61
International Monetary Fund, see IMF
International Organization of Securities Commissions (IOSCO), 247
International Trade and Investment Organization, definition, 250
Ireland
Bank of Ireland, 440–441
Irish Financial Services Regulatory Authority, 180
not a tax haven, 29
Isle of Man, 381
Jersey, 382
Johnson Matthey, 148, 165
Joint International Tax Shelter Information Centre, 88
‘know your customer’, 406, 410, 412
criterion, 136–138
KPMG, report on Crown dependencies, 393–394, 397
Lamfalussy, 182, 237–238
legislation
primary legislation, 446
secondary legislation, 446
legitimacy, 40–41
licensed deposit taker, 339
licensing, 133–136, 167
Liechtenstein, 383
life interest trusts, 70
lifeboat, 164
limited liability company, 76
limited liability entity, 76
limited liability partnership, 76
logos, 452
London, as an OFC, 390
long-term capital management, 67
Luxembourg, 383
Malta, 383
managed banks, 60
market
market misconduct, 119
quantification of size of, 33
marketplace, 37, 39
Maxwell, 158
medical analogy, 125
memorandum of understanding, 170, 303
Middle East and North African Financial Action Task Force, 305
minimum standards, 233, 235, 248
Minimum Standards for the Supervision of International Banking Groups and Their Cross-Border Establishments, 166
misconduct, market misconduct, 119
Model Agreement on Exchange of Information on Tax Matters, 328
Module 2 assessments, IMF, 271
money laundering
crime, 202–204, 229
jurisdictions at risk, 203
laundered money, quantification, 208
Offshore, 208–210
preventive action, 210, 222–225
threat, 426
and the USA, 405, 411
Moneyval (PC-R-EV Committee), definition, 251
Montserrat, 385
moral hazard, 118
multilateral memorandum of understanding, 250
mutual evaluation, 210, 252
mutual funds, 418–419
mutual legal assistance, 48
name, significance, 466
Nauru, 385
Netherlands Antilles, 385
Nevada, 407
nominees, 74
non-bank financial institutions, 156
Non-Cooperative Countries and Territories, 288–291
OECD, 240–242, 253–255
Antigua and Barbuda withdrawal, 308
Committee on Fiscal Affairs, 309, 313
Harmful Tax Initiative, and the USA, 410
Model Tax Convention, 96
report, harmful tax competition, 308
reactions thereto, 308
tax, 93
uncooperative tax havens, 317–319
OFCs
aspiring OFCs, 448
assessment program, IMF, 271
components of a good reputation, 470
constituents of success, 470–472
evolution, 194–196
name, significance, 466–467
particular OFCs, 341
perspectives, 471
reputation, 465
components, 470
significance, 465
services of OFCs in demand, 362
stability and credibility, 469, 470
success, constituents of, 471
underlying principles, 335
see also Offshore
Offshore Finance Centres, see OFCs
Offshore Group of Banking Supervisors, see OGBS
Offshore Group of Collective Investment Scheme Supervisors, 253–254
Offshore Group of Insurance Supervisors, 253
Offshore
characteristics, 50, 53
comparatives in the USA, 407
continued existence, 433, 438
future projections, 433–434
issues, 422–423
meaning, 3, 12
money laundering, 202–229
v. onshore, 54
‘Offshoring’, 78, 80
origins and development, 18
prospects for the future, 433–446
rationale, 486
standards, 49
stigma, 484–485
and the zero tax option, 109–110
see also OFCs
offsite compliance, 167–169
OGBS, 252
Best Practice Paper, 61, 154, 253
corporate service providers, Statement of Best Practice, 61, 156, 253
Statement of Best Practice, corporate service providers, 156, 251
onshore
onshore finance centres, characteristics, 54–55
problems onshore, 345–358
onsite compliance, 168
Organization for Economic Cooperation and Development, see OECD
outsourcing, business process outsourcing, 77, 80
overseas territories, 391–393
Palermo UN Convention, 48, 205–206
parallel banks, 336
Parmalat, 351–355
Partnership for Progress and Prosperity: Britain and the Overseas Territories, 391
pathos, 452
PC-R-EV Committee, definition, 251, 255
Peillon-Montebourg Commission, 346
perspectives, 471
Ponzi schemes, 337
practice notes, 446
PriceWaterhouseCoopers, 159
principal officers, 212
problem/impact analysis, 120
Proceeds of Crime Act 2002 (UK), 396
protection, 117–122, 147–154, 161–162
prudential regulation, 122, 130–132, 161–162
prudential supervision, 126–132, 161–162
punitive measures, 192–194
purpose trusts, 70–71
pyramid schemes, 337
qualified intermediary status, 410
rationale for regulation, 117
regulation, 43–44, 133
comments, 117, 145
constituent parts, 180
and crises, 148
Offshore, 154–157
in practice, 149–151
prudential regulation, 122, 130–132, 161–162
rationale, 117
relative newness, 480
self-regulation, 151
regulator, role of the regulator, 124
regulatory arbitrage, 46, 173
regulatory capture, 174
regulatory cycle, 194
regulatory independence, 173
regulatory structures, 179
Canadian model, 185
UK model, 179
reports on the observance of standards and codes (ROSCs), 275–283
reputation, 465
components of a good reputation, 469, 470
significance, 465
Review of Financial Regulation in the Crown Dependencies (‘Edwards Report’), 390–391
Riggs Bank, 419–420
risk-based approach, 169
ROSCs, 275–283
Sarbanes–Oxley Act (USA), 350, 416
savings and loans institutions, 350
Savings Tax Directive, see EU Savings Tax Directive secrecy, 48
securitisation, 464
self-regulatory organisations (SROs), 152–153
September 11, 2001, 296, 413
Serious Fraud Office (UK), 204
service providers, 58, 78
Seychelles, 450
shell banks/branches, 336, 344
shipping, 60, 74–75
single passport, 140, 146
small islands
concentration of business, 371
conducive infrastructure, 363
currency of advantages, 369
dominance of finance, 367
economic expedience, 359
involvement of outsiders, 366
lack of influence externally, 368
natural good fit, 365
uniqueness, 370
value of business generated, 370
‘smurfing’, 337
Society of Trust and Estate Practitioners, 329
special purpose vehicles, 59–62, 79
stability and credibility, 469–470
standards, 49, 262–265, 269–273, 275–279, 281–286
minimum standards, 233–235
Statute of Elizabeth, 74
success, constituents, 471, 476
supervision, 161–172
institutional supervision, 130
suspicious activity reports, 208, 214, 218, 220–226, 395, 397–398
Switzerland, 385
and the EU Savings Directive, 99
systemic instability, 119, 122
tax
amnesties, 111–112
avoidance, 85–94
competition, 91, 94, 97
evasion, 85, 86, 89–91, 429, 431–432, 435, 443
harmonisation, 92, 103
haven, 16, 24–26, 27–28
identified by OECD, 480
information sharing agreements with USA, 96
and Offshore, 96
territorial, 85, 403
worldwide, 85
terrorist financing, 220–222, 240
Tournier v. National Provincial Bank, 47
training and experience, 183–187
transfer pricing, 115
Transparency International, 155, 397, 399, 406
trust and corporate service providers, 155, 253
trust, regulatory/external factors, 190
trusts, 68–74
accumulation and maintenance trusts, 70
asset protection, 70
discretionary trusts, 70, 77
foreign grantor trusts, 70
life interest trusts, 70
purpose trusts, 70
and tax planning, 76
VISTA trusts, 71
Turks and Caicos Islands, 386
‘Twin Peaks’ model, 153–154
UBS AG, 406, 419
UCITS, 65
UK government, White Paper, 391–393
UN
Convention Against Corruption, 424
Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 204, 205
Convention for the Suppression and Financing of Terrorism, 413
Offshore Forum, 255
Palermo UN Convention, 48, 205–206
uncooperative tax havens, OECD, 310–319
underground banking, 217
Undertakings for Collective Investment in Transferable Securities, 65
unit trusts, 65, 71
USA
banking regulation, 402
comparatives to OFCs, 407
and the EU Savings Tax Directive, 87, 98, 99, 102
and ‘know your customer’, 406, 410, 412
legal system encourages OFCs, 404
links to Offshore, 404
as an OFC, 402
USA Patriot Act, 206, 297, 411–415
Vanuatu, 387
Vienna Convention, 48, 204, 206
VISTA trust, 71
‘Wise Men’, 146, 236–237
Wolfsberg Anti-Money Laundering Principles, 218, 405–406
Working Group on Cross-Border Banking, 156, 170, 219
World Bank, 242, 246, 255
and OFCs, 274
IMF, FATF, joint working, 301–302
zero tax, 98, 109