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Looking ahead to 2023 and beyond

As the clock ticks down towards the end of 2022, it is a good time to not only reflect on the past 12 months, but also to look ahead to 2023 and beyond.

There can be no doubt that we have all experienced another challenging year, punctuated by the war in Ukraine, a cost of living crisis, and volatility in financial markets.

While recent events have tested our collective resilience, they have also highlighted the strength of the working relationship between the Isle of Man Government, the financial services sector, and the Authority.

We share a common goal – to develop a strong, diverse and well-regulated economy that enables the Island and its people to flourish.

Collaboration has been a central theme of the Authority’s engagement with stakeholders over the past year. I look forward to enhancing those links in 2023, in particular as we transition to a new supervisory methodology.

We are committed to being an open and transparent regulator, and always pay close attention to what you are telling us about the issues impacting your businesses.

With that in mind, we have commissioned Island Global Research to conduct an independent survey of our stakeholders.

We want to hear from you about your relationship with the Authority, the areas for improvement, and the things you believe we do well.

The survey will be circulated in January 2023 and I would encourage you to take part, as your feedback plays a crucial part in shaping our future plans.

I hope you find the contents of this bulletin useful, and would also like to take this opportunity to wish you all a Merry Christmas and a Happy and Healthy New Year.

Bettina Roth, CEO

GIFCS Plenary and Colleges

The Authority participated in a Group of International Finance Centre Supervisors (“GIFCS”) Plenary and College meetings during November.

The Head of Fiduciaries, supported by the Fiduciary Services Division, chaired one college and participated in another college. This involved consideration of two large multi-jurisdictional financial services groups. The colleges were well received and will benefit all participating GIFCS regulators.

The GIFCS plenary meeting was interesting, particularly understanding the Mauritian FSC’s strategy to ensure their removal from the MONEYVAL grey-list, and learning more about their new crypto assets regime.

Progress on the GIFCS Isle of Man evaluation was shared with participants at the plenary.  We are currently awaiting the issuance of the GIFCS draft report regarding the Isle of Man’s TCSP assessment against international standards.

Members of the GIFCS assessment team attended the plenary and highlighted how valuable the review process was for their own jurisdiction’s self-assessment.

Feedback on fees legislation

We recently invited feedback on the legislation that will implement the Authority’s proposed new fees structure.

A total of 12 responses were received from regulated entities, associated groups and designated businesses to the consultation on the Fees Orders and Regulations 2023 ahead of the deadline on 29 November 2022.

Overall, no major issues were raised in respect of the draft secondary legislation. The majority of respondents sought clarification around the application of fees for their particular businesses. Some respondents queried certain aspects of the fee structure.

We are currently considering refinements to the final draft legislation and expect to publish a summary of responses and next steps within the next few weeks.

PEP thematic update

Our AML/CFT Division has now completed all 29 on-site inspections as part of the thematic review of foreign Politically Exposed Persons ("PEPs").

A total of 25 draft or final inspection reports have been issued, with the full thematic report scheduled for publication during the first quarter of 2023.

Data captured during the review will inform our future risk assessment of relevant persons, sectors and industry, as well as helping to identify areas of best practice, or any weaknesses that may pose a threat to our regulatory objectives.

In addition to the final report, we are planning to host a webinar to talk through the key findings, as our inspections have produced some interesting insights into how firms deal with foreign PEPs in areas such as on-boarding, risk assessing and screening.

AML/CFT sector reports (2021 data)
New AML/CFT sector reports including the 2021 data are now available in respect of banks, investment firms, and financial advisory firms. Reports for fund managers / administrators, and TCSPs will follow early in the New Year.
View the sector reports published to date

AML/CFT statistical returns
A review of the annual AML/CFT return has been carried out, with a view to improving its usability and removing duplication. The new template and associated guidance will be issued in the New Year.

The new template will be applicable for the reporting period ending 31 December 2022, and the previous templates and guidance will be removed from the website.  We will be issuing further, more detailed communication in due course.

Statistical returns

We have further developed the data points to be included in our new statistical returns; common data themes include:
  • Breaches
  • Clients' Assets
  • Complaints
  • Financial
  • Outsourcing
  • Professional Indemnity Insurance (“PII”)
  • Staffing
  • Sector Specific
We will be engaging with industry early in the New Year and anticipate requesting data for the majority of regulated entities during 2023.

For Financial Services Act firms, the data points will replace those within the Annual Regulatory Return and PII Return. Both of these returns will continue to be required under the current Rule Book and will essentially be a ‘declaration only’ return (in addition to the existing Annual Financial Return).

Ultimately, this will support our objective to become a more data driven regulator, and enable us to better leverage data to provide more effective and proactive supervision.

Ensure BO database entries are accurate

All relevant parties are being urged to ensure that information recorded on the beneficial ownership database is accurate and up to date.

From 2023, we will be conducting oversight inspections and will consider imposing financial penalties for any failure to comply with legal requirements in line with our powers under the Beneficial Ownership (Civil Penalties) Regulations 2022.

There will be a window of opportunity for nominated officers to review their information on the database and complete or update entries where necessary.

Please be proactive and take the appropriate steps, rather than face potential enforcement action. Beneficial ownership information can be submitted quickly and easily via the Companies Registry portal on the Isle of Man Government website.

Read the full news release

MONEYVAL mock evaluation

We contributed to a mock assessment in November aimed at helping the Isle of Man to prepare for its next formal MONEYVAL evaluation.

MONEYVAL assesses compliance with international AML/CFT standards, and makes recommendations to national authorities in respect of necessary improvements to their systems.

A number of agencies were involved in the recent exercise, which was coordinated by the Cabinet Office and conducted by experienced assessors from outside the Isle of Man.

The report, which is scheduled for publication soon, is likely to set out a number of recommendations for action ahead of the next MONEYVAL inspection, which is expected to take place in 2025.

Compensation Schemes progress

We have started the review of the current Depositors Compensation Scheme to ensure it remains in line with international standards.

Initial meetings have taken place with the banking industry and Treasury, and a public consultation is scheduled to take place during the first quarter of 2023.

The review will include agreeing clear pay out timelines, while another key objective is to provide transparency and clarity to depositors and the banks.

The Insurance Policyholder Compensation Scheme Review is also progressing steadily.

We met the Isle of Man Insurance Association (‘IMIA’) in early November to discuss the design and operation of the current compensation scheme. The closing date for the second industry preparedness exercise was 30 November and we are currently reviewing the submissions. We expect to be in a position to feedback to firms and the IMIA in the New Year.

Annual Report focuses on future-proofing

The Authority’s Annual Report for 2021/22 sets out our commitment to supporting a vibrant, diverse and well-regulated Manx economy.

Carrying the theme of ‘future-proofing the Island’s financial services sector’, the report places a firm focus on innovation and sustainability.

Updates are provided on a range of priority initiatives, including the transition to a new funding model, and the implementation of a more targeted supervisory approach.

Embracing technology and enhancing data management and analytics are identified as key factors in enabling the Authority to maximise the effectiveness of its resources.

The intention is to capture opportunities to work more proactively, streamline processes, and improve the speed to market for lower risk entities.

Read the full news release


HMRC UK property reminder

Do you own UK property through a non-UK company or Isle of Man legal structure?

HM Revenue & Customs is reminding anyone who benefits financially from UK property owned by an overseas entity to ensure that their tax affairs are up to date.

After 31 January 2023, HMRC will receive details of overseas entities including beneficial owners and trust information.

Further information about the UK Government’s Register of Overseas Entities is available on the UK Government website, while disclosures can be made using the Worldwide Disclosure Facility

In Case You Missed It…

Read Bettina Roth’s interview with Business 365 magazine

Funds Bulletin – Quarterly Statistical Data

Movement in Island’s deposit base
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