We were delighted to be able to return to a ‘physical’ rather than virtual Manx State of the Nation event this year.
Held on the 4th February in the garden room at the Nunnery, it was great to see the event over-subscribed with over 250 attendees.
2021 saw a change in our Chief Minister and also the FSA Chief Executive Officer, both who attended the event and spoke.
There were also a variety of other guest speakers including several from the UK.
In this blog we will take a deep dive into the 2022 Manx State of the Nation event, with a summary of the programme and key topics.
Paradise, Panama, Pandora – Cutting through the noise
James Quarmby, Partner at Stephenson Harwood LLP is a renowned commentator on offshore matters. He shared his views on the real risks behind such leaks as The Paradise, Panama and Pandora papers.
James covered the following key points:
- The boundary between tax avoidance and tax evasion is not understood or respected.
- Increased global cooperation will make it harder for International Financial Centres (IFCs) like the Isle of Man to be tax competitive.
- IFCs will need to respond by changing their business model and focusing on their core skills, rather than relying on zero-tax regime.
- The conclusion was that the Isle of Man as an IFC should not to give up.
Key Developments at the Financial Services Authority in the areas of AML/CFT, Supervisory Practices and Innovation
Chief Executive Bettina Roth, Head of AML & CFT Ian Spence and Head of Supervisory Practices & Innovation Ros Lynch shared the FSA’s strategic plan for 2021-2024.
The headlines were:
- Authority Funding Model – Licence fees increasing by 20% from 1 April 2022
- Supervisory Methodology – Framework to be completed by October 2022
- Data Management & Analytics
- Maintain & update their framework
- Crisis Management
- Updated approach to AML/CFT.
Transparency and Accountability continue to be the central themes. The IOMFSA will strive to provide clarity on their compliance expectations and will engage stakeholders early and often in various formats including providing quarterly KPI metrics to stakeholders.
Enforcement action is only taken where it is considered proportionate, reasonable and appropriate.
The preferred option is to work with firms so that they return to a compliant position. The FSA remediation tools cover a broad range and Treasury receive any Discretionary Civil Penalties.
The Supervisory Practices and Innovation Division was created in June 2021. It is responsible for:
- External and Internal innovation including collaboration with Digital and Finance Agencies, Fintech, developing an innovation website and a regulatory sandbox
- Collaborating with domestic and international regulatory bodies and innovation hubs
- Cross Divisional remit
- Supporting economic recovery and Island plan strategy.
Panel session – Using the AML/CFTY Handbook in Practice
Impact’s very own Nick Wait moderated a panel of experts who shared their views on working with the Isle of Man Financial Services Authority’s new AML/CFT Handbook in practice.
Nick was joined by:
- Kevin Taylor Chair of the Compliance Sub-Committee Isle of Man Insurance Association
- Pat Brogan Head of compliance at Dohle Corporate and Trust Services Limited
- Claire Whitelegg Head of Compliance and Risk at FIM Capital Limited.
The Key message was that as a result of the new risk based focus everyone should guard against complacency rather than simply carrying on doing what they have always done.
‘Doing nothing’ is not an option.
If you’re interested to learn more about the revisions to the AML/CFT Handbook, you can download our free guide to the high level changes here.
Isle of Man Cabinet Office – The Anti-bribery and Corruption Project
Erica Humphries, Anti-Bribery and Corruption Project Manager in the Isle of Man Government Cabinet Office shared the latest news on the Anti-Bribery and Corruption (ABC) project.
The ABC project is reviewing the legislation, regulation and policies. It is important that they are:
- Clear and unambiguous
- Up to date
- Easy to find
- Communicated widely
- Supported with good training
- Based on best practice
- Fit for purpose
- Relevant and local.
Erica reminded attendees that ABC is everyone’s responsibility regardless of their role. She asked can everyone in your organisation, from the most junior to the most senior member of staff, describe and explain how your organisation prevents and responds to bribery and corruption?
Automatic Exchange of Information – Is your Data your Weak Point?
Neil Higgins from PWC, the event’s main sponsor, considered how data could be undermining companies’ ability to cope with AEIOI requirements.
Account holder onboarding + Due diligence processes and financial data = Reported data.
Large volumes of accounts both reportable and non-reportable carry the risk that somewhere along the line the processes may not have worked as they should.
Tax authorities are interested in the non-reportable populations and how they are identified and reviewed.
- A higher % of entity accounts raises questions about classifications and reporting of non-reportable entities such as local government entities or other Financial Institutions
- A large number of passive NFEs brings challenges around correct identification of controlling persons
Questions to ask yourself:
- What % of accounts do not have a TIN or are being treated using a default value as a replacement?
- Are you actively seeking to reduce this number and what progress is being made?
- Do the jurisdictions being reported make sense from a business point of view?
- Are you reporting accounts as undocumented? If so are you applying the term correctly?
Update On The Work of the FIU
Iain MacMillan, Operations Manager in the Isle of Man Government Financial Intelligence Unit updated us on what can be expected in the year ahead.
The FIU working together with the AICP has set up a forum for MLROs, with the next event being held on the 22nd March.
There will be a focus on Themis and ongoing developments include:
- Section 15 & 18 requests now delivered through Themis
- Improved email messages to users
- Internal developments allowing additional statistical collation
- Improved user experience in terms of uploading files and materials to the FIU.
Panel session – Data Protection by Design and Default – Making it Happen in Practice
Sinead O’Connor, Head of Regulatory and Compliance Services at DQ Advocates Ltd moderated an interesting session. Sinead was joined by:
- Lisa Kelly, Data Protection / Information Officer at Manx Utilities
- Simone Edwards, Quality and Standards Manager at PDMS
- Gavin Quiggin, Head of Operational Resilience & Technology Risk at Nedbank
- Robert Bond, President of the Society for Corporate Compliance and Ethics.
Key messages were:
- Companies need to have Data Protection buy in throughout the business starting at the top and to include effective and engaging training.
- Companies need clear and comprehensive policies and procedures that are regularly reviewed.
- Data Protection needs to be at the forefront of everyone’s mind including the use/consideration of Data Protection Impact Assessments.
Data Subject Access Requests (DSAR) – Common Issues and How to Address Weaponised Requests
Robert Bond, President of the Society for Corporate Compliance and Ethics is an eminent speaker on all things data protection. During this session Robert shared his wisdom on DSARs and how best to deal with them.
DSAR challenges:
- Being able to recognise a DSAR within the organisation
- DSARs are time consuming, particularly complex HR requests
- Important to include email searches
- Deciding what to redact and how to do it
- Accessing all systems across the organisation
- The sheer volume of records
- For complex DSARs the timelines are short
- The scope is too wide
- DSARs have become weaponised.
Important to remember:
- Have a robust Individual Rights Procedure and Plan
- Be as helpful as you can
- Consider resolving requests informally
- Ensure you have a centralised approach
- Make sure you now your data estate and provenance
- Keep the plan fresh.
In summary…
Thanks to the AICP for planning such an interesting and relevant programme. There was certainly something for everyone and it was wonderful to be amongst our supportive community again in real life. The Impact team were delighted to be able to sponsor the breakfast and morning coffee and most of all chat to some of you in person.
