{
  "title": "Public Information Notice: IMF Executive Board Integrates the Offshore Financial Center Assessment Program with the FSAP",
  "publication": "IMF News, July 9, 2008",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn0882",
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  "summary": "Each Public Information Notice contains a background section, a table of selected economic indicators, and an Executive Board assessment.",
  "publishDate": "2008-07-09",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Publication date: July 9, 2008\n- PIN No.: 08/82\n- Main decision: On May 30, 2008, the Executive Board agreed to integrate the offshore financial center (OFC) assessment program with the Financial Sector Assessment Program (FSAP).\n- Aims of integration:\n  - Facilitate a more uniform and risk-based approach to financial sector surveillance and improve coordination of Fund analysis across jurisdictions.\n  - Provide for a better allocation of Fund resources, with a specific focus on the small number of OFCs that account for the overwhelming volume of offshore activity and could be expected to pose major financial system risks.\n  - Eliminate the need to maintain a potentially discriminatory list of OFC jurisdictions."
    },
    {
      "heading": "Background on the OFC Program",
      "content": "- Inaugurated in 2000.\n- Of the forty-four jurisdictions that were initially contacted, 42 were assessed and two jurisdictions received technical assistance in lieu of assessment.\n- First phase of assessment completed in 2005.\n- Typical assessment coverage: compliance with supervisory standards in banking; AML/CFT; and, where applicable, supervisory and regulatory standards in the insurance and securities sectors.\n- Publication of results: All but one jurisdiction assessed in the first phase published the results of their assessments."
    },
    {
      "heading": "Second-phase assessments and results",
      "content": "- Second-phase assessments began in 2005; a total of 14 second-phase assessments have been completed, three more are underway, and ten have thus far published their reports.\n- Focus areas:\n  - Progress in addressing weaknesses identified in previous assessments.\n  - Issues of cross-border cooperation.\n  - Relevant areas not covered in previous assessments.\n- Findings:\n  - Results suggest improvement in compliance with supervisory standards in the banking, insurance, and securities sectors (based on a limited sample).\n  - Progress achieved on prudential cross-border cooperation and information exchange issues.\n  - OFCs' compliance with the 2003 FATF 40+9 Recommendations for AML/CFT remains a source of concern.\n  - Based on a sample of 21 OFCs, compliance with AML/CFT is generally comparable to non-OFC jurisdictions, but relatively low compliance was shown in certain key areas such as customer identification, the monitoring of transactions, and international cooperation."
    },
    {
      "heading": "Data collection initiative",
      "content": "- Initiated in 2004 to help jurisdictions in data dissemination efforts and to provide the Fund with information for ongoing monitoring of financial developments in OFCs.\n- Participation: Twenty eight jurisdictions are contributing data to the initiative and another seven are planning to participate.\n- Findings from the initiative: The majority of offshore transactions are conducted in relatively few centers, although there are a large number of centers with low volumes of activity."
    },
    {
      "heading": "Executive Board assessment and guidance",
      "content": "- Directors welcomed progress implementing the four elements agreed in 2003:\n  - (i) monitoring of activities and compliance with international standards;\n  - (ii) enhancing transparency;\n  - (iii) technical assistance;\n  - (iv) cooperation with standard setters and other agencies.\n- Directors encouraged further improvements, particularly in lower- and middle-income OFCs.\n- Directors noted remaining weaknesses in AML/CFT frameworks and encouraged early and effective action by OFCs to address these issues.\n- Publication and transparency:\n  - Directors welcomed that most OFC jurisdictions had published their assessment reports and encouraged all jurisdictions to publish their reports.\n  - Directors commended the 28 jurisdictions that have submitted data as part of the Information Framework Initiative and encouraged remaining jurisdictions to submit their data."
    },
    {
      "heading": "Decisions, implementation, and operational details",
      "content": "- Most Directors supported integration, with emphasis that it should not result in a less rigorous assessment of OFCs.\n- Expected benefits of integration:\n  - Permit a more risk-focused approach to assessments.\n  - Eliminate the need for a separate list of OFCs.\n  - Broaden the range of issues covered compared with OFC assessments, strengthening Fund financial sector surveillance.\n  - Tailor analysis to the risk profile of each jurisdiction, including focus on cross-border issues as appropriate.\n- Resource prioritization and frequency:\n  - Directors generally concurred to assess the nine or ten OFCs that account for the overwhelming volume of activity about every 5-7 years, and that smaller jurisdictions should be assessed less frequently.\n  - Frequency should remain flexible to respond to changing risks and information collected through continuous monitoring (or the non-provision of information).\n- AML/CFT assessments:\n  - Integration would not affect the scope or cycle of AML/CFT assessments or the range of jurisdictions to be assessed, either in the context of an FSAP or on a stand-alone basis.\n- Publication policy and monitoring:\n  - Under the integrated program, the publication policy would continue to be voluntary and guided by FSAP policies.\n  - Participation in the Information Framework Initiative would contribute to transparency.\n- Timeline and treatment of existing work:\n  - All OFC assessments to be undertaken as part of the FSAP starting in FY2010.\n  - Jurisdictions scheduled to be assessed under the second-phase of the OFC program prior to FY2010 could receive a Module 2 assessment or FSAP.\n  - Jurisdictions already assessed under the OFC program would be treated as FSAP updates under the FSAP.\n- Coverage extension:\n  - FSAP coverage would be extended to encompass the four non-member jurisdictions presently covered by the OFC program.\n  - The Board retains the option to request discussion of non-member assessments and to invite non-member representatives to attend the Board meeting.\n  - Some Directors suggested consideration of non-member financial contributions to cover the Fund's administrative expenses for such exercises.\n- Technical assistance:\n  - Technical assistance would continue to be provided to strengthen supervision of the financial sector and address AML/CFT risks, including in non-members, while recognizing the need for prioritization within a tighter resource envelope.\n- Continued monitoring:\n  - In addition to Article IV consultations, member countries could also be monitored outside the assessment cycle.\n  - Other jurisdictions will continue to be monitored by the staff, including through the Information Framework Initiative.\n  - Directors encouraged jurisdictions to continue to work with the Fund to improve data collection, compilation, and dissemination.\n- Coordination with other bodies:\n  - As part of global arrangements for AML/CFT assessments involving the IMF, World Bank, FATF and FATF-Style Regional Bodies, attention will continue to be paid to money laundering and financing of terrorism vulnerabilities posed by OFCs.\n\nInternational Monetary Fund — Public Information Notice No. 08/82 (July 9, 2008).\n\n---\n\n Content in this bundle\n\n- 050808apdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- 050808pdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Public Information Notices\n- http://www.imf.org/external/np/fsap/fsap.aspcp\n- http://www.imf.org/external/np/sec/nb/2000/nb0062.htm\n- http://www.imf.org/external/np/sec/pn/2003/pn03138.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/pn0882"
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    "Published: July 9, 2008",
    "Publication date: July 9, 2008",
    "PIN No.: 08/82",
    "Main decision: On May 30, 2008, the Executive Board agreed to integrate the offshore financial center (OFC) assessment program with the Financial Sector Assessment Program (FSAP).",
    "Aims of integration:",
    "Inaugurated in 2000.",
    "Of the forty-four jurisdictions that were initially contacted, 42 were assessed and two jurisdictions received technical assistance in lieu of assessment.",
    "First phase of assessment completed in 2005.",
    "Typical assessment coverage: compliance with supervisory standards in banking; AML/CFT; and, where applicable, supervisory and regulatory standards in the insurance and securities sectors.",
    "Publication of results: All but one jurisdiction assessed in the first phase published the results of their assessments.",
    "Second-phase assessments began in 2005; a total of 14 second-phase assessments have been completed, three more are underway, and ten have thus far published their reports.",
    "Focus areas:",
    "Findings:",
    "Initiated in 2004 to help jurisdictions in data dissemination efforts and to provide the Fund with information for ongoing monitoring of financial developments in OFCs.",
    "Participation: Twenty eight jurisdictions are contributing data to the initiative and another seven are planning to participate.",
    "Findings from the initiative: The majority of offshore transactions are conducted in relatively few centers, although there are a large number of centers with low volumes of activity.",
    "Directors welcomed progress implementing the four elements agreed in 2003:",
    "Directors encouraged further improvements, particularly in lower- and middle-income OFCs.",
    "Directors noted remaining weaknesses in AML/CFT frameworks and encouraged early and effective action by OFCs to address these issues.",
    "Publication and transparency:",
    "Most Directors supported integration, with emphasis that it should not result in a less rigorous assessment of OFCs.",
    "Expected benefits of integration:",
    "Resource prioritization and frequency:",
    "AML/CFT assessments:",
    "Publication policy and monitoring:",
    "Timeline and treatment of existing work:",
    "Coverage extension:",
    "Technical assistance:",
    "Continued monitoring:",
    "Coordination with other bodies:",
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    "[http://www.imf.org/external/np/sec/pn/2003/pn03138.htm](https://www.imf.org/external/np/sec/pn/2003/pn03138.htm)",
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