Tax havens announce plan to tighten up regulations

Three offshore tax havens that have been linked with money laundering have announced plans to tighten up financial regulations.

Three offshore tax havens that have been linked with money laundering have announced plans to tighten up financial regulations.

The financial services commissions of Guernsey, Jersey and the Isle of Man said they were taking steps to ensure greater transparency among their financial institutions.

In line with recommendations made by the Financial Action Task Force, banks and other finance firms operating on the islands will need to have greater knowledge of their customers, especially small companies and trusts, and of their backers and beneficiaries.

The banks will also have to make their own background checks on customers rather than rely on checks carried out by other institutions.

They will be required to meet certain criteria on what they know about all their clients. Previously these rules had only applied to new clients, but firms will now have to review files for all their customers to ensure they have relevant details on them, starting with the riskiest ones.

A joint statement by the islands' financial authorities said: "We are determined to ensure that the success of our financial centres in attracting honest money does not open up opportunities to criminals, terrorists or corrupt leaders and their associates. By establishing a common platform between our three jurisdictions, we demonstrate our determination to ensure that our financial industries continue to meet international standards."

A spokesman said the reforms were not prompted by calls from the Organisation for Economic Co-operation and Development for offshore financial centres to improve their transparency. The Isle of Man has already agreed to co-operate with the OECD, and Jersey and Guernsey have until Thursday to say if they also intend to implement its recommendations.

The financial centres face sanctions if they do not improve security following the 11 September attacks on the US.