The Isle of Man's continuing high level of compliance with global standards of financial sector regulation and supervision - including international co-operation and the combating of money laundering - has been confirmed by the International Monetary Fund (IMF).
A report published today by the IMF shows that the Island is amongst the top countries in the world in terms of implementing the recommendations of the Financial Action Task Force (FATF) to counter money laundering and terrorist financing.
The report has been produced following a thorough assessment by an IMF team, which visited the Island in September last year as part of an international programme of inspections. In addition to the Island's defences against money laundering and terrorist financing (AML/CFT) the IMF looked at the regulatory and supervisory system, the soundness of the financial system and its ability to cope with stress situations.
The report concludes that '.... the Isle of Man is broadly compliant with most aspects of the FATF recommendations ....', having continued to upgrade its requirements significantly. The report further states that 'the quality of implementation of AML/CFT measures by financial institutions was found to be mainly of a high standard. In meetings with financial institutions (as well as in some cases their auditors and legal advisors) the assessors found a very high level of awareness of AML/CFT risks and requirements'. Most of the recommendations noted are technical in nature.
The report says the Island has a general high standard of financial sector regulation and supervision, and a 'very high standard of compliance' with the Basel Core Principles for effective banking supervision. The IMF found that the Manx banking system had a limited exposure to market shocks, with a 'very sound' level of capitalisation. The insurance sector was found to be similarly well regulated, also with 'considerable resilience against shocks'.
The report goes on to say that 'the Isle of Man authorities take their responsibilities in the area of international co-operation seriously', citing supervisory co-operation, mutual legal assistance and tax information exchange agreements.
The report notes that the coverage provided by the Isle of Man's Depositors' Compensation Scheme is 'unusually extensive for a small, internationally-oriented jurisdiction.'
The IMF first gave the Isle of Man a regulatory clean bill of health in 2003, when it reported that the Island complied well with international standards for the regulation and supervision of financial services.
Welcoming the latest report, Chief Minister Tony Brown MHK said: 'This report from the International Monetary Fund is a comprehensive, independent and expert endorsement of the quality of the Isle of Man's financial services regime. We in the Isle of Man have always worked hard to achieve a high level of compliance with international standards, and will continue to do so as the standards evolve.'
The IMF reports shows a level of compliance with the FATF recommendations to combat money laundering and the financing of terrorism that puts the Isle of Man in the upper levels of the 106 countries that have been assessed so far.
Key quotations from the IMF report on the Isle of Man:
Executive Summary of the Detailed Assessment Report on Anti-Money Laundering and Combating the Financing of Terrorism
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Standards of governance and transparency appear to be high. |
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...a political commitment has been given by the IOM authorities, in correspondence with the FATF and in public statements, to adhere to the principles of the FATF Recommendations. |
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The range of mutual legal assistance that can be provided by the IOM is broad. MLA requests are frequent and make up a substantial part of the workload of the Attorney General's (AG) Chambers and the FCU and are dealt with constructively and efficiently. ...... ...there have been no refusals on record since 2004. Overall, the IOM authorities take their responsibilities in the area of international cooperation seriously, including in the FIU (applying Egmont Group principles) and in the financial supervisory area, most notably under the terms of the IOSCO multilateral MOU. |
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The quality of implementation of AML/CFT measures by financial institutions was found to be mainly of a high standard. In meetings with financial institutions (as well as in some cases their auditors and legal advisors), the assessors found a very high level of awareness of AML/CFT risks and requirements. |
Financial System Stability Assessment Update
Executive Summary and Policy Agenda
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Financial Sector regulation and supervision are generally of a high standard, and supervisory efforts are concentrated in those areas most relevant to the activities of the financial institutions on the IOM. The mission conducted detailed assessments of observance of the Basel Committee Core Principles for Effective Banking Supervision (BCP), the International Association of Insurance Supervisors Insurance Core Principles (IAIS ICP), the FATF 40+9 Recommendations on AML/CFT. The level of observance of these principles is high in terms of laws and regulations, supervisory implementation, and the practices of financial institutions. |
Financial System Stability Assessment Update
Annex – Observance of Financial Supervision Standards and Codes – Summary Assessments
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The IOM's compliance with the international supervisory standards is generally high, and most of the issues raised in the 2003 assessment have been addressed. |
Financial System Stability Assessment Update
B. International Association of Insurance Supervisors Insurance Core Principles
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The IOM has maintained and improved on the generally high standard of compliance with the ICPs, which was noted in the previous assessment. The IPA is commended for its proactive stance in establishing and enforcing high standards for supervision, which have contributed to the maintenance of the IOM's good reputation as an international financial centre. |
General Body of the Detailed Assessment Report on Anti-Money Laundering and Combating the Financing of Terrorism
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The Constabulary has operational independence and is free from undue political influence or interference. The Isle of Man Constabulary is committed to ensuring that the Isle of Man is not seen as a safe haven for the laundering of money or the financing of terrorism. |
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Overall, the statutory sanctions for the money laundering offenses seem to be effective, proportionate and dissuasive. |
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For their part, the IOM authorities have been active in sharing relevant information with foreign counterparts to facilitate investigations and prosecutions conducted abroad. |
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Overall, the IOM authorities take their responsibilities in respect of international cooperation seriously and adapt an overall constructive approach to all appropriate mutual legal assistance requests. |
Financial Sector Assessment Program Update – Aide-Mémoire
Executive Summary and Policy Agenda
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Financial sector regulation and supervision are generally of a high standard, and supervisory efforts are concentrated in those areas most relevant to the activities of financial institutions on IOM. ....... The level of observance of these principles is high in terms of both laws and regulations, and supervisory practice. |
General Body of the Aide-Mémoire
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The coverage of the IOM's DCS is unusually extensive for a small, internationally-oriented jurisdiction. |
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The BCP assessment undertaken by the mission confirms the high standard of prudential regulation and supervision found in the 2003 assessment. The FSC has continued to strengthen supervisory practice, for example, by establishing a comprehensive but risk-based system of on-site visits and meetings with bank management. Good progress has been made in the implementation of Basel II. ...... Close cooperation with home supervisors has been established, buttressed by numerous MOUs. |
Detailed Assessment of Compliance with the Basel Core Principles
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The IOM has maintained and improved on the generally very high standard of compliance with the Basel Core Principles, which was noted in the previous assessment. The FSC is commended for its proactive stance in establishing and enforcing high standards for banking supervision, which have contributed very substantially to the maintenance of the IOM's good reputation as an international banking center. |
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The FSC cooperates very closely with supervisory authorities of the relevant home countries. The cooperation covers the exchange of information and supervisory reports as well as supervisory visits. |
Assessment of Observance of the Insurance Core Principles
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The IOM has well-defined, transparent and effective policy, legal and institutional frameworks for insurance business and access to well-functioning financial markets. The jurisdiction benefits from the good availability of professional services locally and through access to the resources of major practices in the United Kingdom and elsewhere. |
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The IPA conducts its functions in a transparent and accountable manner. Comprehensive information on its activities is provided to government, Tynwald, and the public through various means. The IPA is well-apprised of the importance of exchanging information with other supervisors, particularly given the significant presence of international groups on the IOM. |
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The IPA conducts its functions in a transparent and accountable manner. |
Technical Note on Stress Testing: Banking and Insurance
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Stress tests confirmed that the Manx banking system exhibits limited exposure to market shocks |
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The results indicate a very sound level of capitalization, which is encouraging. |
Anti Money Laundering and Countering the Financing of Terrorism
Report on the Observance of Standards and Codes (ROSC) for the FATF 40 recommendations for Anti-Money Laundering and 9 Special recommendations for Combating the Financing of Terrorism
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The IOM is broadly compliant with most aspects of the FATF Recommendations, having upgraded its requirements significantly, particularly in the second half of 2008. Most of the deficiencies noted are technical in nature. |
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With the latest revisions, the IOM has brought its AML/CFT preventive measures largely into compliance with the FATF Recommendations. |
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With regard to the effectiveness of implementation, the assessors found a high level of awareness of AML/CFT risks, typologies, and international and IOM requirements across all financial institutions interviewed. |
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