Among international standard-setters everyone has heard of Basel, IOSCO (the International Organization of Securities Commissions) for investors and the IAIS (the International Association of Insurance Supervisors) for insurers. You might not have heard of the GIFCS – the Group of International Financial Centres Supervisors, which has 18 member-jurisdictions: Guernsey, Jersey, the Isle of Man, Gibraltar, Macao, Bermuda, and some Caribbean islands. They have been around for 15 or 20 years now.

They have observer status with the Basel committee of banking supervisors and with the Financial Action Task Force (FATF) and attend its 'plenary meetings' about 3 times a year in Paris. They have been taking and setting up for the first time an international standard for the regulation of trust and corporate service providers. It is particularly important for bankers because in a way, when you are opening accounts and there are corporates involved, the fact that a gatekeeper is there and the gatekeeper is regulated should give you added assurance that the person coming to see you comes with some element of approval and/or oversight because they are provided to you by trust and company service-providers (TCSPs) who are themselves regulated and subject to enforcement action. Regulators are on hand to ensure that they have appropriate procedures and controls, and not just for money-laundering and terrorist finance.

The first piece of work that the GIFCS undertook was in 2002, when (under its former name) it issued a statement of best practice for TCSPs. The International Monetary Fund has used this around the world in assessing jurisdictions that have TCSPs.

We all know that practice evolves and supervisory trends change. Bankers know that Basel I and Basel II happened, then we had Basel III and somehow we have bits of Basel I back again. Best practice changes and sometimes the old is shown to be as useful as the new.

Initial discussion about a standard

The GIFCS started looking at and verification of information (VOI) count here. On top of that, there are other requirements to do with 'source of funds' and knowing exactly what is going on.

IT systems

If you need to be in that position, you need to have proper systems in place. You need proper IT. That does not just happen; that requires capital. If you are holding beneficial ownership information, which is customary in offshore centres, then you have to have systems that work. You must have the liquidity to train your staff. You must have the cash-flow to be able to make sure that, if the regulator comes knocking and says “right, I want the beneficial ownership of that company,” it is not sitting in a box in the archives somewhere. It has to be readily accessible.

Financial crime

The standard falls into two parts over financial crime: ML/TF; and bribery and corruption. This is because of the direction of travel from the World Bank and the International Monetary Fund, which helped in the drafting of the standard. It is, like all international standards, necessarily vague, but it does address an important area that influences money-flows. As a body, the Group of International Financial Centres Supervisors does not have the same international acclaim as Basel or IOSCO and does not trip off the tongue as easily, but it is one model.