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Trusts and Private Clients Seminar – “ The regulatory environment”

Trusts and Private Clients Seminar – “ The regulatory environment”. Marcus Killick, Financial Services Commissioner Manchester - Thursday 24 February 2005.

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Trusts and Private Clients Seminar – “ The regulatory environment”

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  1. Trusts and Private Clients Seminar –“The regulatory environment” Marcus Killick, Financial Services Commissioner Manchester - Thursday 24 February 2005

  2. The Financial Services Commission (FSC) Mission Statement“To supervise and regulate Gibraltar’s financial services to protect the public and enhance Gibraltar as a quality financial centre."

  3. The Financial Services Commission (FSC) • Created under the Financial Services Commission Ordinance 1989, therefore • One of the oldest independent regulatory bodies offshore • Unitary regulator • Commitment to transparency of approach • Policy of consultation • Risk-based, case-by-case approach rather than “one size fits all”

  4. Regulatory scope • Banking • Insurance • Investment Services • Mutual Funds/Collective Investment Schemes • Fiduciaries/Company service providers

  5. FSC structure • Commissioner plus 18 staff • Divided by sector (Banking, insurance, investment services, fiduciaries) together with support staff • Sector specialisation allows for better understanding of and relationship with industry

  6. Obligations on FSC regarding supervision • Subject to EU directives and regulations • Commitment to continuing to meet relevant international standards • Statutory obligation to “match” UK in supervisory standards • FSC has also adopted regulatory objectives and principles of good regulation similar to the FSA’s

  7. Quality control on the FSC • The FSC has been the subject of three recent independent reviews • IMF 2001 • FATF 2002 • Statutory review 2004/5 • Each has been positive. • "Gibraltar has in place a robust arsenal of legislation, regulations and administrative practices to counter money laundering". [FATF] • “Supervision is generally effective and thorough and that Gibraltar ranks as a well-developed supervisor".[IMF] • “a regulatory regime developed to a good standard and staffed by competent regulators with a manifest determination to improve performance further”[Statutory Review]

  8. Fiduciaries In Gibraltar

  9. Regulation of fiduciaries • Regulated since 1991, first jurisdiction to regulate activity • Activities covered (by way of business) are: Company Management • Formation, management or administration of companies, partnerships or other unincorporated bodies • Provision of directorships • Provision of company secretary or other officer (other than director) of a company, partnership or other unincorporated body • Nominee shareholdings • Registered office Professional Trusteeship • Holding out or soliciting for business as a professional trustee

  10. Regulation • Fit and proper requirement • Subject to conduct of business regulations • Subject to anti money laundering/ combating the funding of terrorism obligations • Ongoing supervision, including on site visits

  11. Conduct of business obligations • High standards of integrity and fair dealing/conflicts of interest • Due skill, care and diligence • High standards of market practice • Know your customer • Handling of customer assets • Maintenance of adequate financial resources • Proper internal organisation • Relations with the Commissioner

  12. Anti money laundering/CFT • For fiduciaries Gibraltar is fully 2nd Money Laundering Directive Compliant “Gibraltar’s standards with respect to the application of the [Second Money Laundering] Directive to professional trustees and company managers exceed those in the UK”. Statutory Review Para 4.28 • Gibraltar also already meets likely obligations to be imposed under the Third Directive. Therefore, • No “evolutionary jump” issues when 3rd Directive enters into effect, this provides stability.

  13. Impact • Reduction of abuse and incompetence • No “nominee” directors • No promises of “guaranteed” bank accounts, • No “no records kept in jurisdiction” promises • Policy re bearer shares (originals to be kept under safe custody); • Policy re unlimited Powers of Attorney (in scope and time). • Result • Better professionalism, • Better reputation; • Greater client confidence.

  14. The future • “Approved” persons regime, also covering, • Corporate Governance • Role of non executive directors • Enhanced Training and Competency requirements

  15. Conclusion • Mature regulatory environment • Transparent • Known • Independently verified • Offering good client confidence, with • Good industry/regulator relationship

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