Offshore Financial Centers
The Assessment Program
A Progress Report and the Future of the Program
Supplementary Information

Prepared by the Monetary and Financial Systems Department
(In consultation with other Departments)

Approved by Stefan Ingves

November 3, 2003

1. This supplement provides an update on developments since the issuance of the paper (SM/03/269, 8/4/2003) and reports on the Financial Stability Forum's (FSF) discussion on offshore financial centers (OFCs) at its meeting held on September 10, 2003. The supplement does not affect the policy proposals in the paper.

2. Since the issuance of the paper, assessments of a further seven jurisdictions have been initiated bringing the total number of jurisdictions assessed or in the process of being assessed to 40. With the visit to the Cayman Islands in October, all major jurisdictions have now been assessed. Reports of six jurisdictions that were under review have now been completed. Staff have also received from four jurisdictions confirmation of requests to publish their assessment reports. A request for technical assistance in lieu of an assessment has also been received from the one remaining jurisdiction and one follow-up visit was undertaken. Assessment status is summarized below (see Tables 1 and 2 for details).

3. In the absence of objections by Directors, the paper was circulated to the FSF prior to its meeting. The FSF broadly supported the proposals in the paper (see attached extract from FSF's press release following its meeting). Nevertheless, to take into account the discussion of the Executive Board on the future of the Fund's OFC program, the FSF decided to postpone any decision on its overall OFC initiative until its March 2004 meeting.

Extract from the FSF's press release following its tenth meeting on
September 10, 2003¹

"Offshore Financial Centers (OFCs)

The FSF reviewed the Offshore Financial Centers (OFCs) initiative it launched in May 2000, based on a report prepared by IMF staff on their OFCs assessment program. The IMF's first round of OFC assessments is now nearing completion. The Forum welcomed the improvements that have occurred in supervisory and regulatory arrangements in many OFCs, as well as in offshore/onshore supervisory and regulatory cooperation.

Given the growing integration of financial markets, the FSF, recognizing that individual progress differs widely, continues to stress that OFCs need to progressively strengthen their supervisory, regulatory, and information exchange arrangements. To this end, it supports making the monitoring of OFCs an integral part of the IMF's financial sector surveillance work. The FSF attaches particular importance to the publication of the IMF assessments as a means of enhancing transparency and enabling the position of individual OFCs to be evaluated by all concerned parties.