On Monday Lansons CEO Tony Langham attended and took part in the International Financial Services and Small States Conference. Wilmer Cutler Pickering Hale & Dorr LLP and the Centre for Small States, Queen Mary University of London, with the support of Fran Hendy Attorneys hosted the conference which discussed the role of Small States’ Financial Centres. The conference took place at the premises of Wilmer Hale in London.
Tony joined a panel comprising:
Chair: Maya Forstater—Visiting Fellow, Center for Global Development
Geoff Cook—Jersey Finance
Richard Hay—Stikeman Elliott (London) LLP
Jack Marriott—Maples and Calder
The panel discussed the central role of SS IFCs in the international financial services sector using case studies. There discussion spanned across a number of international financial services, innovation and regulatory matters and the success of SS IFCs in dealing with change and innovation.
This article expands on Tony’s views from the conference:
International Finance Centres (IFCs) and Small States (SSs) have fared better than anyone dared hope in the years since the financial crash of 2007/08. Despite a tidal wave of NGO and EU rhetoric and US FATCA and subsequent FATF – and a host of “scandals” from #LuxLeaks to #PanamaPapers – this vital part of the global financial plumbing is still going strong. However, there are storm clouds ahead, not least because the UK will ultimately be unable to provide protection from inside the EU. If IFCs and SSs are to navigate the next ten years as successfully as the last, they will have to demonstrate further, quantifiable improvements in governance and transparency – and increase the impact of their international communication.
In the international debate, IFCs and SSs need to disentangle the reasonable requests of the EU, NGOs and others, from the unreasonable. It is reasonable to be concerned about organised crime and terrorist financing. IFCs have relied on meeting OECD criteria for transparency but, increasingly, MONEYVAL reports are focusing on the quality of enforcement of laws and regulations. IFCs will need to demonstrate they’ve responded – not just in their investment in financial crime expertise – but also in terms of incidences located and convictions secured. Conversely, it is unreasonable for sovereign states to influence rates of taxation in rival states – and on this, IFCs will need help from their “fellow travellers” inside the EU, including Netherlands, Luxemburg, Estonia and Malta, as the UK withdraws.
In terms of transparency, from beneficial ownership registers to the introduction of FATCA/FATF to meeting OECD standards, IFCs and SSs have mostly responded admirably, but have won over relatively few of the doubters. Ultimately, this will have to change. Vastly enhanced reporting of economic statistics by IFCs and SSs, to demonstrate how their economies work, would help their arguments. Greater investment in international communication is also required. Without this, the central IFC and SS argument – that they are a valuable and integral part of the world’s financial eco system – will not be properly heard.
The missing voice in the international IFC and SS debate is often that of the private sector. IFCs appear to lack allies – and global businesses are silent in their support. Over time, mobilising the support of mainstream international financial and professional trade bodies, and the major businesses in these sectors, is also crucial to the long term health of IFCs and SSs.