CORIATS
In Days Gone By

Date of last Update: 06 August 1998

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"Setting the Rules:

THERE surely cannot be many people who doubt that self-discipline is the best kind there is. Resraint imposed by someone else, whether parent, government or any other kind of authority, tends to be resisted because its justice, motivation or validity can be suspect. If you set the rules yourself you are more likely to understand, value and obey them. These thoughts are prompted by the news that the Turks and Caicos Chamber of Commerce has of its own volition established a code of conduct for its members, particularly those engaged in the Islands' growing financial community. This is a commendable action, and a necessary one if, as we all hope, the Islands are to continue to grow as a financial centre of stature and repute.

The code, drawn up by a committee of chamber members, is strict enough to rebut any contention that it is mere window-dressing. For instance, in the crucial area of business from the United States, the code requires that legal advice be sought from that country to ensure that the proposed activity is within the relevant statutory and ethical bounds. And before taking on a new client a chamber member must satisfy himself as to the integrity and business reputation of the client and the legitimacy of his business. Even more severely to the point in an offshore financial centre, any advertising must avoid reference to "tax haven" or secrecy laws.

It is good that at this comparatively early stage of the Islands' rise in the financial world, the community's leaders are doing something to ensure that we do not win a reputation as a place where "funny money" operations are carried on by dubious people with no respect for any laws. Any benefits from allowing such operations here would be fatally short-term.

For the Turks and Caicos at this stage of its progress up the financial league table there are some basic facts of life. One is that while the bulk of our potential clients are likely to come from the U.S., the government of that country is increasingly hostile to "tax havens". Another basic but contrary fact is that as a small and comparatively poor country on its doorstep, we need the benevolence, and may increasingly need the assistance, of that great colossus. We need to remember also that other Caribbean islands have been treading this delicate path of relationship with the U.S., and we can profit by their mistakes.

We cannot expect to escape the interest of the Internal Revenue Service, anxious to block the outflow of tax dollars, but a recent visit by an I.R.S. team provided an opportunity for government to re-state its policy in regard to offshore financial operations. The statement valuably made the point that we have a confidentiality law which will be respected in all matters which are legal according to Turks and Caicos law. This, of course, includes matters of tax planning and tax avoidance, which are not offences here. But it is equally valuable that the U.S. be told that in cases where there is reasonable proof that the Islands are being used for activities which are illegal here, then our government will be prepared to consider applications for information.

In our view, this would include such cases as the recent one in which the Bank of Nova Scotia was compelled by a U.S. court to hand over records from its Bahamian branch on an unidentified South Floridian accused of drug smuggling. Some concern has been expressed in the financial community about the outcome of this case, but our view is that in matters as despicable as drug-smuggling all governments have an equal responsibility and duty. It will be no loss if the word goes out that the Turks and Caicos will not harbour or launder the millions made in the drug trade. That is not the kind of investment we want here."

The above article was written fourteen years ago in a financial world very different from today. Money-Laundering regulations, "Know Your Client" criteria, and Gateway legislation were unheard of. It is however remarkable how much of the foregoing still holds true for 1997...

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