Money has no national loyalty, warns regional regulator

With international pressure mounting on the financial services sector, local officials have been warned that it will require both tenacity and tact to stay in the game.

This caution has come from managing director and chief executive officer of the British Virgin Islands Financial Services Commission Robert Mathavious.

He pointed to a range of international occurrences, including Brexit, the election of Donald Trump as President of the United States, the implementation of the Foreign Account Tax Compliance Act and other tax avoidance strategies, as well as the naming and shaming of jurisdictions in certain matters, stating that “we are living in interesting times”.

The regional regulator also warned jurisdictions like Barbados that while they seek to comply with international standards and best practices, it should not be seen as over-regulation or an unnecessary bureaucratic burden that stifles innovation, hampers success and destroys business.

“In today’s increasingly globalized world, money and the management of wealth are the world’s most fungible commodities. Squeeze them too tightly in any one jurisdiction and you cause them immediately to shift to another jurisdiction where they can better exploit opportunities. Money has no national loyalty,” he cautioned.

“So good regulation requires a balanced and differentiated approach – supervisory resources must focus on those firms and activities that pose the greatest reputational risk to the jurisdiction,” he added.

Mathavious was delivering the annual lecture of the Barbados Financial Services Commission on Thursday evening at the Grande Salle, Tom Adams Financial Centre, under the theme Financial Services for the Future: Courage, Candour, Common Sense.

Pointing out that the financial services sector had undergone a “massive evolution” over the past decade, he warned that there would be no slowing down in changes any time soon.

He said therefore if regulators failed to keep apace they could be left out of the game.

Using a sporting analogy, Mathavious said like a good umpire or referee, a good supervisor should “constantly be on the pitch, keeping up with what is going on”, be tough when necessary, effective, alert and ready to “take whatever action is appropriate in the interests of the game as a whole”.

“Looking to the future, it is clear that the regulation of financial services will require even more courage, candour and common sense. It will require tenacity and tact, not timidity and tentativeness,” said Mathavious.

“This is especially so in the non-bank arena where, thanks to globalization and information technology, activities are becoming more complex, more sophisticated and more diverse in nature,” he pointed out.

The regulator said he was aware that throughout the region there was a considerable amount of “jitteriness and anxiety” about the viability of the sector.

However, he advised that while some jurisdictions were becoming early adopters of new standards and best practices as they complied with international demands “that add nothing to our bottom line”, they should remain alert to the impact that those reforms could have.

“But I would strongly suggest that none of us can allow ourselves to be found on the wrong side of the global arguments around standards of control, transparency and the exchange of information. If we are on the wrong side don’t underestimate the resolve of the big countries. They would like nothing better than to see us out of the game. So we have to do what is necessary to stay within the game. We have to stay engaged with them . . . and ensure that our voices are heard,” he stressed.

“The urgency of now for Caribbean centres engaged in cross-border financial services activity is to ensure both individually and collectively, that we are credible, compliant, transparent, cooperative, competitive, vibrant and clean. Now more than ever, we are all required to act decisively, proactively and with common sense to move our financials services sectors forward in a way that neither threatens them nor places them at risk of becoming collateral damage,” he said.

He also urged regulators to review, recalibrate and refresh their regulatory and supervisory approaches periodically in the form of regulations, codes and guidelines.

Mathavious also called on regional jurisdictions to remove red tape, identify new market needs and trends and to exploit them as they incorporate greater use of technology.

“There is simply no way that we can hope to insulate or isolate our financial sectors from stress and turbulence in international markets. Instead, we have to become more able to absorb shock and bounce back. We must strengthen our resilience through higher prudential standards, governance, internal control systems and through smarter and more effective supervisory and regulatory oversight,” he said.

marlonmadden@barbadostoday.bb.

One Response to Money has no national loyalty, warns regional regulator

  1. jus me April 22, 2017 at 2:27 am

    FATCA is the total opposite of a TAX AVOIDENCE STRATEGY.

    It is an American organised, 197 country wide, money surveillance scheme.
    To make sure NO ONE has ONE CENT the Authorities don’t know about.
    Your financial details WORLDWIDE are report back to your country of DOMICILIATION.

    Reply

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