Anguilla, like a number of other offshore financial centres in the Caribbean, is being called upon by the Organisation for Economic Cooperation and Development (OECD) to put certain requirements in place in order to be a white-listed or clean jurisdiction for such business operations. So far, the island is well on such a path, according to Mrs. Lorna Smith, a Consultant to the Governments of Anguilla and the Turks & Caicos Islands on Tax Information Exchange Agreements (TIEAs).

Professional persons at the meeting

“Anguilla is well on the way in putting its house in order,” she told The Anguillian. “By the end of this year, Anguilla would have signed 12 Tax Information Exchange Agreements, the threshold for getting on the white list. In fact they would have signed 14 if all goes well.”
Mrs. Smith, who is of Anguillian parentage, but resides in the British Virgin Islands, was among a delegation from Anguilla which recently travelled to Europe and signed a number of Tax Information Exchange Agreements, as an Overseas Territory and offshore financial jurisdiction, as required by the OECD and the G20 nations. On Monday this week, while on a private visit to Anguilla, Mrs. Smith delivered an address to the Society of Trust and Estate Practitioners (STEP) at a luncheon meeting which it hosted at the Community College Development Unit. She spoke on the topic: “The Tax Information Exchange Agreements for Anguilla: The latest developments and the OECD Peer Review Process.”

Mrs. Smith said that at the OECD Global Forum in Mexico in September she stated that Anguilla had “waved a while flag” signifying that it had met the global standard of transparency and exchange of information resulting from the signing of at least twelve TIEAs. “I offered my congratulations to my colleagues, but I warned then and I warn now, that the real test is about to begin," she went on. “The restructured Global Forum is giving the highest priority to the Peer Review Process and the Peer Review Group will begin its work early in 2010. In each of the 91 members of the Global Forum, including Anguilla, a more in-depth look will be taken at the quality and status of Tax Information Exchange Agreements, the domestic legal and regulatory framework and the practical impediments to the exchange of information.”

Mrs. Smith reported that Anguilla was scheduled to be evaluated by an assessment group during the first half of 2011, providing some lead time for “Anguilla to get its house in order.” She told her listeners that it was not expected that they, members of the private sector, would be directly involved in the evaluation exercise but they would be required to provide information to the Government. “Make no mistake, in the final analysis, it is your activities, your performance and your compliance that will be assessed,” she warned.

Mrs. Smith made reference to the 220-page report on offshore financing and banking in Anguilla, and other Overseas Territories, prepared by British official, Michael Foot, published last week Wednesday, October 28.
"The recommendations are not as dire as I had expected,” she commented. “The report does say [however] that, as a pre-condition for continuing to offer financial services, Anguilla must increase the quantum and expertise of [human] resources available to its Financial Services Commission. Anguilla must explain …how and when these resources will be provided. The report continues that delivering these commitments is a necessary pre-condition if these jurisdictions wish to continue to offer themselves as international financial services centres.

“The report says that no regulatory authority can expect to satisfy the requirements of the Peer Review Process unless the quantum and expertise of resources employed are sufficient. Anguilla, according to the report, employs fewer than ten staff to supervise, licensed financial services providers. This, the report says, is below the critical mass that can be effective in implementing prudential and anti-financial crime requirements across the region’s financial institutions. So, my interpretation of the message to Anguilla is put out, or shut up.

Mrs. Lorna Smith

“The issue then comes down to one of increasing resources for the administration’s advancement of financial resources. That is a matter for the Government and I am sure that the Government will do what it has to do.” She said that the report also spoke about separating the marketing arm of the Commission from the regulatory aspects of administration. She was of the view that this should not be difficult as it was done by the British Virgin Islands when she was the first Director of the International Finance Centre.

Mrs. Smith had this message for the financial services private sector: “Be vigilant and keep your eyes on the ball…Your challenges are many. How you respond to these challenges will determine whether you continue to grow…There are certain ways to ensure that you continue to robust including a strong compliance culture, bench-marking against the best international practices, adhering to international standards and striving to get to the stage where you are not only adhering to, but you are part of the setting of these very international standards.”

Earlier Mrs. Smith, founder and Chief Executive of LGS & Associates, commended the members of the STEP branch on the island. She said that since she started working for Anguilla she had noticed that was a tradition of sharing of information among the various branches. “I think this is healthy and I always say that how robust a jurisdiction becomes or continues to be, depends on the sharing of information,” she observed. “It is not the sole criterion but it is an important one for ensuring that the jurisdiction remains robust, because information is power.”

Mrs. Smith’s presentation was preceded by remarks by STEP’s Treasurer in Anguilla, Graham Grabtree. Among other matters, he also quoted the report by Mr. Michael Foot which stated in part that Anguilla, the British Virgin Islands and the Turks and Caicos Islands had recognised that the technical and human resources to fight financial crime also needed to be boosted.

Mr. Grabtree pointed out that the report recommended that the above jurisdictions should not rest on the accomplishment of having signed the required 12 Tax Information Exchange Agreements. They demonstrate an ongoing commitment to the spirit and not just to the letter of the tax transparency standards developed by the Organisation for Economic Cooperation and Development. “The qualitative aspect of the TIEAs now in force is subject to peer review by the OECD, along with a presumably ongoing review of actual compliance,” he continued. “Indeed, it even makes us wonder how we can justifiably claim to be moving away from a status and reputation as a secrecy jurisdiction into a new era of global financial transparency and uniform regulation when we still have the Confidential Relationships Law on our books. As the report says, the jurisdictions ‘must show a commitment not just to the letter but also the spirit of international standards. Effective implementation would be an important test of this and evidence will be provided by the OECD’s global forum through a monitoring and peer review process”’.

Secretary of STEP in Anguilla, Barrister-at-Law, Lisa Bass Browne, was grateful to Mrs. Smith for explaining the Tax Information Exchange Agreements processes. She hoped that Anguilla would be able to meet the minimum standards in as short a time as possible. “As an organisation, we are interested in progressing the discourse of issues which would contribute to the continued professional development of members of the legal and corporate communities in Anguilla,” she added.

The Society of Trust and Estates Practitioners, with headquarters in London, is the leading worldwide body providing members with a local, national and international learning and business network focusing on the responsible stewardship of assets. The Anguilla branch was formed three years ago and has 30 members in various professions and disciplines.

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