High levels of regulatory compliance

IFCs succeed because people trust their legal institutions and regulatory frameworks.  That can only happen if investors from around the world recognise that processes in IFCs adhere to the very highest standards.  IFC Forum fully supports the rigorous enforcement of internationally-applied standards, and has called for their universal adoption.

Compliant and non-compliant ratings in FATF third Mutual Evaluations by jurisdiction

Like other countries, IFCs are graded by international standard-setting bodies according to their compliance with those international standards.  The ‘gold standards’ are the Financial Action Task Force (FATF) recommendations on anti-money laundering and terrorist financing.  IFCs perform very well – outperforming the major onshore centres on transparency, tax compliance, and law enforcement.

IFCs are also rated by the OECD Global Forum on Transparency and Exchange of Information to rate their compliance with OECD’s Recommendations on exchanging tax information with other countries to combat tax evasion and money-laundering.  IFCs perform well – with none of them falling behind the UK, US, or Germany.

 

Proportion of Corporate Service Providers that require ID to form companies

Overall, IFCs are much higher-rated for compliance with prevailing standards than OECD member countries.  In the World Bank’s report on the subject – The Puppet Masters by Willebois et al – it was found that no IFCs allowed the establishment of a company without providing proper identification.  Meanwhile, three-quarters of OECD countries allowed it, despite its prohibition under international standards. 

 

 

 

 

 Source: Puppet Masters (World Bank)

Compliance with international KYC standards by CSPs

Studies have been conducted to examine transparency and, in particular, jurisdictions’ requirement to disclose beneficial ownership.  In the leading study - Global Shell Games by Findley, et al – IFCs were found to all rank among the most exacting jurisdictions for demanding the verification of customer identity: ensuring financial institutions know exactly who they’re dealing with and on whose behalf.  Meanwhile, the most popular onshore jurisdiction, Delaware, was found to have the lowest compliance rate in the world, with ID required to establish a company just 6% of the time.

 

 

  Source: Global Shell Games (Sharman et al, 2014)

IFCs comply with the highest international standards because it’s in their interests to do so.  Abiding by the highest standards means legitimate investors make IFCs their first choice, as it shows that prospective co-investors and creditors can trust you.  IFC Forum works to support and encourage the adoption of applied international standards globally, so that every country is held to the same high standards.

Overall, IFCs are much higher-rated for compliance with prevailing standards than OECD member countries. They comply with the highest international standards because it’s in their interests to do so. Abiding by the highest standards means legitimate investors make IFCs their first option, as it shows prospective co-investors or creditors can trust you.