Many of us are still wondering where the current global financial crisis began; did it begin because of weak regulatory practice onshore in London, was it as a result of greedy bankers in New York, or were offshore tax havens like the Isle of Man perhaps to blame for allowing wealthy individuals to shield their wealth from taxation?
Well, a review into what exactly caused the economic breakdown that is affecting the world at the moment was commissioned and has been completed by Lord Turner, who’s the UK’s Chairman of the Financial Services Authority. He has looked right into the heart of the issue to determine how we have ended up in this mess, and how we can protect ourselves from ever falling foul of such a crisis again.
And the good news is, (if there is any at all!), that offshore tax havens are actually innocent in terms of the global financial crisis. Whilst certain financial institutions within offshore tax havens have collapsed and/or added to the global crisis - Kaupthing Singer & Friedlander, Isle of Man (KSFIOM) most notably – the havens themselves are not central or even contributory factors to the dire economic state we are now all in, apparently.
The report commissioned to try and determine how this global economic situation has arisen is entitled the ‘Review of Global Banking Regulation;’ as stated, it was completed by the UK’s own Lord Adair Turner, and his findings are probably what we all expected to read. “Many of the problems arose from the inadequate regulation of the trading activities of banks through onshore legal entities in major financial centres such as London or New York.” He goes on to explain quite clearly that “it is important to recognise the role of offshore financial centres was not central to the origins of the current crisis.”
Therefore, those who continue to muck rake and slate offshore tax havens for corrupting economies of the world and for causing great disharmony economically speaking, clearly do not have a leg to stand on! The findings of Lord Turner’s review do go on to insist that greater regulatory harmony will have to exist between onshore and offshore havens in the future – but thanks to the OECD and G20 nations, this is already coming into effect. Exchange of taxation information for individuals between nations is already happening – and so it is up to the financial institutions themselves to be clearer about what they and their employees are up to with our money, rather than what we as individuals are doing to get the best returns on our saved capital.
At Shelter Offshore we couldn’t be more pleased that this review has taken place and attempted to lay blame clearly where it is due. I.e., at the feet of those who failed to regulate financial institutions effectively, and also at the feet of those who exploited the lack of regulations for their own gains.