FSA warns offshore financial centres

Howard Davies told an Isle of Man audience:

The political temperature of the offshore centre question has risen sharply in recent months. Political leaders in the G7 economies, in particular, are very concerned by what they see as dangerous gaps in the worlds defences against financial crime and financial instability. The tragic events in New York two weeks ago, and the issue of who financed the terror which created them and where have accentuated that concern.

The US decision on Monday to freeze the assets and transactions of international banks which fail to co-operate with the campaign against terrorism raises the stakes further. It will cause banks to look even harder at whether their branches around the world, and especially in offshore centres, are fully compliant with money laundering best practice.

Those responsible for the governance and regulation of offshore centres would do well to be aware of the challenges they face. In short, offshore centres will need to do much more in the coming years to demonstrate that they can and do meet international standards of best practice. If that does not happen, then the future is bleak.

Notes for editors

1. Howard Davies was speaking at a dinner hosted by Isle of Man Financial Supervision Commission. The full text of his speech is on the FSA Website at www.fsa.gov.uk.

2. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime.

3. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.