Thomson Reuters: Cost of Compliance Survey 2012

Thomson Reuters Governance, Risk and Compliance surveyed more than 500 compliance practitioners from financial services firms around the world between November 2011 and January 2012 to canvass their views on the costs of compliance and their greatest challenges for the year ahead. The results reflect the continued focus on regulation and compliance in the aftermath of the global financial crisis and the ever-increasing complexity and volume of requirements.

This essential report covers 7 key themes:

• Tracking, analysing and influencing regulatory change
• Updating policies and procedures
• Reporting
• Alignment with other control functions
• Liaison with regulators
• Managing regulatory risk
• Financial costs and budget

Further, the Cost of Compliance Survey Special Report looks ahead to examine the greatest challenges compliance officers anticipate in 2012 and the likely impact of the regulatory change to come.

Shadow Banking and Financial Instability: Lord Turner speech to the CASS Business School

In a speech to the CASS Business School the Chairman of the Financial Services Authority (FSA), Lord Turner, set out how the ‘shadow banking’ sector contributed to the financial crisis, the risks it still poses to financial stability and the importance of a sufficiently comprehensive and radical policy response.

He highlighted that the 2007-08 financial crisis was not one simply caused by high street banks but one where shadow banking activities played a major role. He described how the shadow banking sector is not simply a standalone system running parallel to the regular banking system but is linked to the banking system in complex and difficult to discern ways that can make the whole system less stable.

He stressed that major reforms had been put in place in the wake of the crisis for ‘normal’ banks including increased capital and liquidity requirements and better supervision, but said there had yet to be a similar response to the ‘shadow’ sector and that this needed to be addressed urgently.

He said:

“In autumn 2008 the developed world’s banking system suffered a severe crisis. And since then the world’s regulators and central banks have focused on building a more stable banking system for the future: less leverage, more liquid, better supervised and with even the largest banks able to be resolved without taxpayer’s support.

“But it’s striking that the crisis did not initially seem to be one of banks themselves, but rather of an apparently new phenomenon: shadow banking. So we need to ensure that our regulatory response appropriately covers shadow banking as well as banks.”

Lord Turner described shadow banking as covering multiple specific institutions and activities including securitised lending, hedge funds active in credit markets, investment bank trading of credit securities, the issuance of asset backed commercial paper and the ‘repo’ market. He set out how money could move through the system in long and complex chains which in combination performed the same role as banks, which involved the same risks, but which fell outside the framework of controls with which regulators seek to make the banking system safe. Estimates of the size of the shadow banking system were, Lord Turner stressed, very uncertain because of the sheer complexity of the system, but some researchers have suggested figures of around $20tn for shadow banking activity in the US in 2007 and around $13tn in Europe.

He argued that some of the particular forms which shadow banking took in the pre-crisis period had declined in importance, but that the underlying factors which drove shadow banking development were still present, and unless checked by appropriate regulation, would produce instability in future. These underlying factors include:

The desire of investors to hold more liquid short term assets than the private financial system can safely provide;

The tendency of financial innovation continuously to create additional complexity and opacity, and to make the system more interconnected and vulnerable to shocks; and

The increasing role of short term secured financed – such as the repo markets, which when combined with mark-to-market accounting and continuous revaluation could “hardwire” potential instability into the financial system.

Lord Turner said:

“We need to understand shadow banking not as something parallel to but separate from the core banking system, but deeply intertwined with it.

“The way in which shadow banking contributed to financial instability reflected and still reflects fundamental developments in our financial system which are relevant to banks as much as to shadow banks, which remain important today and which could produce new problems in the future.

“We should not take the decline in some specific indicators of shadow activity which has occurred since 2008 as suggesting that the risks have gone away.”

He reaffirmed the determination of the Financial Stability Board (FSB) to get to grips with shadow banking issues, ensuring that adequate responses to the risks involved were put in place. He stressed that any response would need to be flexible because in a complex financial system, individual firms will continually innovate new products and new relationships between firms which reduce the risks to the individual firms but which can make the system as a whole more risky.

He noted that some of the risk had been apparent in the earlier 1998 failure of the huge hedge fund Long Term Capital Management, that some of the reforms now being discussed had been considered in its aftermath, but that the action had not been taken once the crisis receded. He added “This time around we need to ensure that we maintain the momentum of reform, and that our response is sufficiently radical”.

IFS Goes Live With Multifonds Fund Accounting

Multifonds a leader in single-platform multi-jurisdictional investment fund software, today announced that International Financial Services Limited (IFS) has successfully implemented Multifonds' Fund Accounting (MFFA) platform and has begun migrating client funds.

IFS is a leading management company incorporated in Mauritius and licensed by that country's Financial Services Commission (FSC) to provide advisory and management services for international businesses. IFS services major global institutions and administers funds for global asset managers such as BlackRock, Invesco PowerShares, New York Life, TATA and Birla Sunlife.

IFS chose Multifonds after a competitive external selection process that included a rigorous proof of concept in Mauritius. The project took just six months to implement from start to finish, and was supported by a small on-site team from Multifonds.

To date, IFS has migrated most of its daily funds onto the new Multifonds platform, and expects to complete the migration of all its weekly and monthly funds by the end of Q1 2012.

Yash Beeharee, Senior Manager at IFS commented, "Thanks to the scalability and functionality of the Multifonds platform, we now have the capacity to increase the number of funds and clients that we are able to take on and service. The Multifonds platform has enabled us to significantly improve our levels of efficiency and rationalise our processes."

Oded Weiss, CEO at Multifonds added, "We are delighted that IFS chose the Multifonds platform. We have been working very closely with them to ensure that the fund accounting process is as streamlined and efficient as possible. With so many different types of funds available today, being able to use one secure fund accounting platform saves time and associated costs."

Multifonds' back-office solution is now being used around the world by institutions handling assets totalling over US$3 trillion.

Jersey figures show modest fund sector increase year on year but similar drop in banking deposits with some positive indicators for 2012

Jersey’s Finance Industry recorded a 2.5 per cent increase in the size of the funds sector during the whole of 2011 though the global slowdown has caused a further reduction in the level of bank deposits.

Banking and funds industry figures for the final quarter of 2011 also showed a decrease compared to the previous quarter, though again the number of funds in the same period increased.

The latest statistics, collated and prepared by the Jersey Financial Services Commission, are for the three month period ending 31st December, 2011 and include year on year comparisons. The headline figures are as follows:

- The total sterling value of banking deposits held in Jersey decreased by £9.2bn from £167.3bn to £158.1bn during the last quarter of 2011. Currency movements accounted for £1bn of this decrease. During 2011 the value of banking deposits decreased by £3.5bn (2.2%) from £161.6bn to £158.1bn.

- The net asset value of funds under administration decreased by £4.3bn from £193.7bn to £189.4bn during Q4 2011. The total number of funds increased by 27 from 1,365 to 1,392 over the same period. During the year 2011 the total value of funds under administration increased by £4.7bn (2.5%) from £184.7bn to £189.4bn. The total number of funds increased by 68 (5.1%) during the year 2011.

- The total number of unregulated funds increased by 6 to 153 during the last quarter of 2011. The total number of unregulated funds increased by 31 (25%) during 2011 from 122 to 153.

- The value of total funds under investment management remained at £20.8bn during the last quarter of 2011.

- The total number of live companies stood at 32,508 at the end of December 2011.

Geoff Cook, Chief Executive of Jersey Finance, commented:

These figures are not unexpected given the continuing slowdown in the EU and the US and the view from economic commentators that, in the aftermath of the financial crisis we will continue to see slow and halting growth for sometime to come. Against this backdrop of economic uncertainty it is not surprising that we have seen some peaks and troughs in the performance of our key sectors.

Bank deposits are inclined to fluctuate from quarter to quarter but over the year the 2.2 per cent fall in deposits has been modest and more encouragingly we have welcomed a new banking entrant from the Gulf in the form of Abu Dhabi Commercial Bank while US based State Street, already a major brand presence in Jersey, also broadened its service offering into banking.

Our funds sector performed well year on year and reported a 2.5 per cent increase in the net asset value of funds under administration and a 5.1 per cent increase in the number of regulated funds. We also saw the number of unregulated funds increase strongly by 25 per cent during the year. In the context of the financial crisis therefore which has inevitably had a sustained impact, our industry continues to hold up well overall with several positive indicators for growth in place for 2012.’

US: Levin, Conrad, Whitehouse Lead Senate Passage of Amendment to Combat Offshore Tax Abuses

The Senate today adopted an amendment offered by Sens. Carl Levin, D-Mich., Kent Conrad, D-N.D., and Sheldon Whitehouse, D-R.I., that will add powerful new tools to America’s fight against offshore tax havens and help reduce the deficit.

The amendment, which the Senate adopted as part of the surface transportation bill now under consideration, will allow the Treasury Department to take a range of measures against foreign governments and financial institutions that significantly impede U.S. tax enforcement.

“I have fought against offshore tax havens for years, and I am glad the Senate has taken a strong step in the fight against foreign governments and offshore banks that help privileged individuals and corporations dodge taxes while the rest of Americans have to shoulder the extra tax burden,” said Levin, who as chairman of the Senate Permanent Subcommittee on Investigations has conducted lengthy investigations of the damage done by offshore tax havens. “Enactment of our amendment would help make our tax system more fair and would help reduce the deficit.”

"This legislation will grant the Treasury Department a new tool to stop offshore tax havens and financial institutions from gaming the system. More must be done to clamp down on these tax havens and other schemes solely designed to get around current tax laws. This amendment is common sense and could raise nearly $1 billion to help tackle the nation's deficits and debt," said Conrad, the chairman of the Senate Budget Committee.

“It’s time to put an end to offshore tax abuses that allow tax cheats to profit at the expense of honest taxpayers,” said Whitehouse. “I’m proud to support Senator Levin’s amendment, which will give the U.S. Treasury greater powers to crack down on offshore tax abusers and the banks that aid them.”

Under Section 311 of the Patriot Act, Treasury can take a range of measures against foreign governments or financial institutions that engage in money laundering. The senators’ amendment gives Treasury the same tools to combat foreign governments or financial institutions that significantly impede U.S. tax enforcement. For example, Treasury could prohibit U.S. banks from accepting wire transfers or honoring credit cards from banks found to significantly hamper U.S. tax enforcement efforts.

The amendment’s provisions had previously been included in the Cut Unjustified Loopholes Act, or CUT Loopholes Act, which Levin and Conrad introduced in February. According to the Joint Committee on Taxation, a similar, earlier version of the legislation would reduce the deficit by $900 million over 10 years by restoring revenue lost to offshore tax havens.

A vote on final passage of the surface transportation bill is expected next week.

Orangefield Group received its ISAE 3402 Type II Report

Orangefield Group is proud to announce that it has received its ISAE 3402 Type II Report (formally SAS 70 Type II) for the year ended 31 December 2011.

The ISAE 3402 Type II Report is essentially a report on the effectiveness of a service organizations business procedures and internal controls.

In essence, the report describes the effectiveness of a service organisations’ internal control over financial reporting which requires an organisation to define their business processes and internal controls. An external auditor then checks: (i) that the designed processes are sufficient to achieve the stated control objectives; and (ii) tests if the actual operation of the processes and controls in the day-to-day business has been consistently compliant with those which were initially set out.

The ISAE 3402 Type II report covers the period from January 1, 2011 through December 31, 2011 and consisted of an evaluation of the description of controls together with extensive testing related to fund accounting (which includes new fund set up, transaction processing, cash and position reconciliations, valuations, cash receipts and disbursements, NAV calculations, performance and management fee processing and financial statement reporting), investor services and information technology (which includes logical and physical access security, change control management, and system back-up and recovery processes).

The International Auditing and Assurance Standards Board (IAASB) and the Auditing Standards Board (ASB) in the United States have undertaken to develop new standards for reporting on controls in service organisations with a truly global constituency in mind. As the importance of effective controls and reporting processes becomes more critical than ever, globalisation and regulatory changes have prompted the issuance of two new very similar standards that will effectively replace SAS 70. These new reporting standards are known as ISAE 3402 (International) and SSAE 16 (USA).

STEP: Global Outlook for Trust & Estate Business remains positive

The Society of Trust and Estate Practitioners’ (STEP) latest global quarterly confidence survey shows confidence remains high in both the immediate and long term outlooks for the industry.

The STEP Near Term Confidence Index, which looks at the outlook over the next three months, remains at 11, which means this measure has now remained unchanged for four consecutive quarters. This index was -13 at the start of 2009. The STEP Longer Term Confidence Index, which looks at the outlook over the next 12 months, remains steady on 32, resulting in the most positive three consecutive quarters recorded on STEP’s index since the beginning of 2010.

STEP Chief Executive David Harvey said: “These survey results show our membership has confidence about the long term outlook for trust and estate business, but are still wary of changes to the economy in the short term.”

The quarterly confidence survey looks at members’ views across a wide range of jurisdictions and trust and estate businesses.

The Confidence Indices are constructed by taking the balance of survey respondents replying that they expect business to “improve” or “significantly improve” relative to those expecting business to “decline” or “decline significantly”.

Findings of the 1st quarter 2012 STEP Business Confidence Monitor can be accessed online at:

http://www.step.org/confidencesurvey

Cost is the single most common cause of complaints from people about their lawyers, the Legal Ombudsman said today

In a new report published today, Chief Legal Ombudsman, Adam Sampson, says the legal profession must learn the value of clearer pricing information and good customer service or risk falling behind more marketing led companies in the long run.

The report, titled "Costs and customer service in a changing legal services market" uses the stories of real people who came to the Ombudsman with complaints about costs to illustrate difficulties faced by consumers.

Since launching in 2010, 20-25% of the Ombudsman‟s investigations have involved issues related to cost, either where a consumer felt they had been over-charged, confused, or surprised at the costs presented to them by their lawyer.

Introducing the report, Adam Sampson said: “Good service in any sphere includes ensuring that a customer is not bamboozled, but provided with clear information about what is going to be provided and at what cost.

“Our experience tells us that issues around the cost and pricing of legal services are a key driver for complaints in legal services.”

As well as publishing a report, the Ombudsman has produced a guide for consumers, to help them ask the right sort of questions when first enquiring, and a guide for lawyers, to help them prevent complaints or resolve them quickly if a problem arises.

Consumer interest group, Which?, welcomed the guidance. Head of campaigns, Louise Hanson, said: "Too many disputes with lawyers are due to 'bill shock' but people can prevent nasty surprises in their final bill by asking the right questions.

“This guide from the Legal Ombudsman will help anyone planning to use a legal service get the information they need to help manage the costs."

Adam Sampson added: “Some lawyers are as yet still reluctant to recognise that their clients are also customers. The notion of „customer‟ turns the traditional relationship between lawyer and client on its head.

“In most businesses, the customer holds sway and can pick and choose which services to buy from which provider. This type of relationship is increasingly the norm even in the legal sector.”

In recent years the arrival of price comparison websites has begun to swing things in consumers‟ favour. Likewise, larger, more consumer focussed companies are now offering fixed price services, meaning customers know exactly where they stand. The Chief Legal Ombudsman expects the rest of the profession to take heed: “Firms that fail to adapt their approach will ultimately lose customers” he said.

HKEx's Securities Market Growth Strongly Supported by Overseas Investors

Trading by overseas investors attained a compound annual growth rate (CAGR) of 34 per cent in the past decade, strongly supporting overall market growth, according to the Cash Market Transaction Survey 2010/11 released today (6 March 2011) by Hong Kong Exchanges and Clearing Limited (HKEx).

In 2010/11, overseas investors contributed 46 per cent of total market turnover value, similar to 2009/10.  Local investors contributed 42 per cent, down from 44 per cent in the previous year.  Institutional investors contributed 62 per cent of total market turnover value (64 per cent in 2009/10), remaining above 60 per cent for the sixth consecutive year.  The contribution from retail investors was 27 per cent in 2010/11, compared to 26 per cent in the previous year (see Figures 1 and 2).

Some other key findings of the 2010/11 survey

• Overseas institutional investors, the largest contributors among all investor types, contributed 42 per cent of total market turnover, similar to their contribution in 2009/10 (see Figure 1).
   
• Local institutional investors contributed 20 per cent to total market turnover, down from 23 per cent in 2009/10 (see Figure 1).
   
• Local retail investors contributed 22 per cent to total market turnover, compared to 21 per cent in 2009/10 (see Figure 1).
   
• Exchange Participants' principal trading contributed a record high of 12 per cent of total market turnover in 2010/11, up from 10 per cent in 2009/10 (see Figure 1).
   
• Findings regarding trading value by overseas investors (see Figure 3) show that:
   
• US investors regained their status as the largest contributors to overseas investor trading in 2010/11 with a contribution of 28 per cent, up from 24 per cent in 2009/10.
   
• UK investors, the second largest contributors, contributed 27 per cent of overseas investor trading in 2010/11, compared to 29 per cent in 2009/10.
   
• Continental European investors were ranked third with a contribution to overseas investor trading of 14 per cent in 2010/11, compared to 16 per cent in 2009/10.
   
• The contribution of investors from Mainland China to overseas investor trading was 10 per cent in 2010/11, compared to 11 per cent in 2009/10.
   
• Asian investors in aggregate contributed 22 per cent of overseas investor trading in 2010/11, compared to 27 per cent in 2009/10.
   
• There were 17 reported origins of overseas investors in Asia and over 36 reported origins of overseas investors outside Asia, Europe and the US.
   
• The survey examined for the first time the CAGR in trading value by investor type in the past decade.  The three overseas origins that had the highest CAGR were Mainland China (47 per cent), US (36 per cent) and UK (34 per cent) (see Table 1).
   
• Retail online trading accounted for 26 per cent of total retail investor trading (27 per cent in 2009/10) and 7 per cent of total market turnover (similar to that in 2009/10) (see Figure 4).

The Cash Market Transaction Survey has been conducted annually since 1991.  Each year’s survey covers HKEx's securities market turnover for the 12-month period from October the previous year to September the following year.  For the 2010/11 survey, questionnaires were sent to a target population of 471 Exchange Participants.  The response rate was 92 per cent by number and 96 per cent by turnover value of the target respondents.

The full report on the Cash Market Transaction Survey 2010/11 is available on the HKEx website.

Notes:

1. Cash market, securities market and stock market are interchangeable and refer to shares, bonds, funds, derivative warrants and other products traded on The Stock Exchange of Hong Kong Limited, a wholly-owned subsidiary of HKEx.
    
2. Stock Exchange Participant, or EP, principal trading is trading on the EP firm's own account.
    
3. Retail online trading refers to trading originating from orders entered directly by individual/retail investors and channelled to brokers via electronic media (eg the Internet).
    
4. The survey' target respondents were EPs. Their responses stemmed from their own understanding of their clients.  HKEx had no direct access to EPs' clients, nor could it verify their identities.
    
5. One of the limitations of the survey is that EPs might not know the true origins of all their client orders.  For instance, an EP might classify transactions for a local institution as such when in fact the orders originated overseas and were placed through that local institution, or vice versa.  In some cases, EPs might not be able to identify the composition of orders channelled via banks (which might be regarded as their institutional clients).  As a result, the findings may deviate somewhat from the true picture.

Figure 1.  Distribution of cash market trading value by investor type (Oct 2010 – Sep 2011)

Note: Numbers may not add up to 100 per cent due to rounding.

Figure 2.  Distribution of cash market trading value by investor type
(2001/02 – 2010/11)

(a) Local vs overseas

(b) Retail vs institutional

Note: Numbers may not add up to 100 per cent due to rounding.

Figure 3.  Distribution of overseas investor trading value in cash market by origin
(Oct 2010 – Sep 2011)

 

#

In 2010/11, reported origins in “Rest of Asia” were Bangladesh, Brunei, Cambodia, India, Indonesia, Kazakhstan, Laos, Macau, Malaysia, Maldives, Mongolia, Myanmar, Pakistan, Philippines, South Korea, Thailand and Vietnam.

*

In 2010/11, reported origins in “Others” included Algeria, Anguilla, Bahamas, Bahrain, Belize, Bermuda, Brazil, British Virgin Islands, Canada, Cayman Islands, Chile, Colombia, Cyprus, Commonwealth of Dominica, Dutch Antilles, Fiji, Ghana, Guatemala, Island of Nevis, Israel, Kuwait, Liberia, Mauritius, Mexico, Monaco, Nauru, New Zealand, Panama, Russia, Samoa, Saudi Arabia, Seychelles, South Africa, Turkey, United Arab Emirates and Venezuela.

Note: Numbers may not add up to 100 per cent due to rounding.

Table 1.  Compound annual growth rate (CAGR) in trading value by investor type in the past decade
Type of trade	2001/2011 CAGR
EP principal trading	39%
Overseas investor trading	34%
Retail	40%
Institutional	33%
Local investor trading	26%
Retail	25%
Institutional	28%
Retail investor trading	27%
Institutional investor trading	31%
Total	31%
Overseas origin	2001/2011 CAGR
US	36%
Europe	31%
UK	34%
Europe (excluding UK)	26%
Asia	35%
Japan	28%
Mainland China	47%
Taiwan	28%
Singapore	27% (2002/2011)
Rest of Asia	14%*
Australia	7% (2007/2011)
Others	26%
Total	34%

*	Since Singapore and Australia were spun off from "Rest of Asia" during the 10-year period, CAGR for "Rest of Asia" had to be interpreted with care.

 Figure 4.  Percentage share of retail online trading value in cash market
(2001/02 – 2010/11)

Note:

One EP which had a significant proportion of its total turnover as retail agency trading and reported high percentage share of retail online trading prior to 2010/11 did not provide the percentage share of its retail online trading in 2010/11. This EP was excluded from the responded sample in calculating retail online trading in percentage and value terms for 2010/11.

OECD recommends action on international tax loopholes

Aggressive tax planning – untaxed income, multiple deductions and other forms of international tax arbitrage - is a growing concern for all governments.

OECD’s new report Hybrid Mismatch Arrangements: Tax Policy and Compliance Issues describes arrangements that exploit national differences in the tax treatment of instruments, entities or transfers to deduct the same expense in several different countries, to make income “disappear” between countries or to artificially generate several tax credits for the same foreign tax.

The report, which draws from the OECD Directory on Aggressive Tax Planning, concludes that these arrangements generate significant policy issues in terms of tax revenue, competition, economic efficiency, fairness and transparency. It notes that concerns about distortions caused by double taxation also apply to double non-taxation.

Anecdotal evidence shows that billions of dollars in tax revenues are at stake. New Zealand settled cases involving 4 banks for a combined sum exceeding NZD 2.2 billion. Italy recently settled a dozen cases involving hybrids for an amount of approximately EUR 1.5 billion. In the United States, the amount of tax evaded in 11 foreign tax credit generator transactions has been estimated at USD 3.5 billion.

“The OECD strives to eliminate double taxation and other obstacles to cross-border trade and investment,” said Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration. “At the same time, we are working hard to make sure that there are no tax loopholes between tax systems that would allow some taxpayers to gain an unfair competitive advantage over others”.

Intertrust acquires Walkers Management Services

Intertrust Group Holding S.A. (“Intertrust”) announces it has reached agreement with Walkers Global on the acquisition of its subsidiary Walkers Management Services (“WMS”), a leading provider of corporate, company secretarial and fiduciary services.

Walkers Management Services provides corporate, fiduciary and company secretarial services from the world’s leading financial centres – the Cayman Islands, Delaware (USA), Dubai, Dublin (Ireland), Hong Kong and the British Virgin Islands. Headquartered in George Town, Cayman Islands, WMS currently generates annual sales in excess of US$ 50 million. WMS management is committed to stay with Intertrust Group post integration.

Intertrust is a recognized global quality leader in the trust and corporate services sector, providing a broad range of commercial, legal, tax and administrative services to multinational corporations and high net worth individuals. As a combined group, Intertrust will operate with more than 1,100 people from 30 offices in 21 countries. Intertrust combines global reach with local knowledge and cultural understanding to serve international clients from every corner of the world. The acquisition of WMS reinforces Intertrust’s successful acquisition strategy, aimed at extending its expertise and global capabilities in light of ongoing globalization and clients’ increasingly complex needs.

Commenting on the transaction, David de Buck, CEO of Intertrust Group, said:

‘Walkers Management Services has a strong international position in the corporate services industry; providing high quality services to top-tier clients that will benefit from Intertrust’s capabilities to service them across the globe. Through the acquisition we gain a market leading position in the Cayman Islands, one of the most important financial centres in the world, and we further expand our global network by adding offices in Dubai, Delaware and the British Virgin Islands. Walkers’ quality, experience, heritage and ambitious approach to servicing clients mirror the Intertrust culture. We look forward to working with the Walkers Management Services team and enjoying further success based on our joint capabilities.’

Nancy Lewis, CEO of WMS, added:

‘We very much look forward to joining Intertrust Group. We share a drive for quality and experience in working for the world’s most sophisticated clients. Our combined network of offices will deliver a strong foundation for further growth of our business; bringing us a sound position in all key international business locations across Asia, Europe and the Americas. This platform will allow us to provide even greater global solutions for our clients.'

The acquisition is subject to regulatory approval and is expected to be completed in the coming months. Financial details of the transaction are not being disclosed.

Apex completes sucessful ISAE 3402/SSAE 16 examination

Apex Fund Services, one of the world’s largest independent fund administration companies successfully completed a Type 2 examination under Statement on Standards for Attestation Engagements No. 16 (SSAE 16), and under the International Standard on Assurance Engagements, Assurance Reports on Controls at a Service Organization (ISAE 3402).

A key determination for completing an ISAE 3402 / SSAE 16 examination is that an independent service auditor successfully examined the system under audit for processing user entities transactions during the period of audit, as well as the suitability of the design and operating effectiveness of controls based on the defined control objectives.

This examination was performed by KPMG in India, one of the leading firms of independent service auditors for such examinations for 10 offices of Apex Fund Services. 

Commenting on KPMG’s report, Peter Hughes, Group Managing Director, said:

“Fund Managers require increasing levels of confidence and trust in their administrators as the demand for greater transparency begins to take effect. The need for Managers to work with the most reliable partner possible has never been higher.

“Investors and Fund Managers alike can take comfort from the fact that KPMG has completed a ‘root and branch’ examination of the controls and systems at 10 of Apex’s offices. This is another clear demonstration of Apex’s commitment to its clients that they receive the best levels of service in the industry.”

The service auditors issue an unqualified opinion when they are satisfied that (i) the description of controls fairly presents the system that was designed and implemented through the period in scope, (ii) the controls related to the control objectives are suitably designed to provide reasonable assurance that the control objectives would be achieved if the controls operated effectively throughout the period in scope, and (iii) the controls tested, if operating effectively, were those necessary to provide reasonable assurance that the control objectives operated effectively throughout the period in scope.

Paul Napier launches OffSure Professional

The Directors and Executive Management of Paul Napier Ltd are delighted to announce the arrival of a new and exclusive range of Professional and Financial Lines insurance products for the UK and international offshore financial services industry including the Trust, Family Trust, Fiduciary and Corporate Service Provider sectors.

The product suite, being marketed under the new OffSure Professional brand offers bespoke coverage for various offshore asset classes, affording coverage both in excess of regulatory mandated Professional Indemnity requirements as well as a range of complimentary first and third party covers that sets a new benchmark for this sector of the financial services industry.

In addition to affording Professional Indemnity, Crime and Directors' & Officers' Liability coverage, new and exclusive protection is provided for reputational risks (for example associated with actual, or threats of, a clients confidential information being published on social media sites), and personal liabilities for non-payment of corporate taxes. OffSure Professional is designed on a user friendly, non-prescriptive "all risks" basis.

The security backing this offering is provided by Insurers that have a minimum S&P rating of A+ (strong).

Edward Cross, Divisional Director of Paul Napier Ltd commented that "this is the first time that such a competitively priced comprehensive product has hit the offshore financial services sector. Our aim is to provide the customer with a bespoke ‘one stop shop' for their personal asset and balance sheet protection requirements, with the assurance of a professional and efficient service at all times."

Whilst PNL will be undertaking appropriate marketing campaigns in each of the jurisdictions in which it operates, the product suite is also available on a "white label" basis for access by other brokers, in order that existing client/broker relationships may be preserved.

Guernsey fund figures show no room for complacency

New figures for the Guernsey funds sector show there is no room for complacency, according to Peter Niven, Chief Executive of Guernsey Finance – the promotional agency for the Island’s finance industry.

Statistics from the regulator, the Guernsey Financial Services Commission (GFSC), show that the net asset value of funds under management and administration in Guernsey decreased by £10.2 billion (3.7%) during the final quarter of last year.

This represents the second consecutive quarterly drop in the value of the Island’s funds business but follows eight straight quarters of growth. This means that the total value of funds under management and administration reached £261.4 billion at the end of 2011, which is a rise of £4 billion (1.6%) year on year.

Mr Niven said: “What we can see from these figures is that the number of Guernsey closed-ended schemes under management and administration actually rose during the final quarter of last year but across the board there was depreciation in the value of our funds business.

“Of course, taking 2011 as a whole, there was actually growth in the value of funds business in Guernsey. This is very positive, especially considering the investment climate but we have to be aware that after strong growth in the first six months of the year to reach a record high of £274 billion, we have seen a contraction during the second half to reach £261 billion at the close of 2011.

“Much of this reflects the continued uncertainty and nervousness in the international investment community given the protracted Eurozone crisis and the general global economic downturn. However, it also shows that we cannot be complacent and in fact, this is the time in the economic cycle when we need to be out in the marketplace promoting Guernsey as a funds domicile so that we are among the first tier of jurisdictions under consideration by managers and advisers when the general conditions are more suitable for doing business.

“Indeed, this is a strategy which has been wholeheartedly endorsed by a new report from Oxford Economics which reviews Guernsey’s economic profile and assesses future opportunities. It highlights the importance of promoting Guernsey both in traditional and new markets and this is precisely what we have been doing just this week with one team of Guernsey Finance and industry representatives attending the private equity conference, SuperReturn International, in Berlin and another at the Russian Fund Forum in Moscow.

“In addition, we have another team of Guernsey Finance and industry representatives attending the property conference, MIPIM, in Cannes next week and this will be followed by attendance at the BVCA Mena event in London later this month. We already have a busy programme of activity in place, including the Guernsey Funds Forum in London at the start of May and what these latest figures show is that we need to ensure that we maximise these opportunities and then build on them in the future so that we can continue to grow the Guernsey funds business.”

The new figures from the GFSC show that Guernsey domiciled open-ended funds reached a net asset value of £55.3 billion at the end of 2011, which was a decrease of £2.1 billion (3.6%) during the quarter and down £2.6 billion (4.5%) year on year. The Guernsey closed-ended sector was valued at £119.1 billion at the end of December – down £6.6 billion (5.2%) during the last three months of 2011 but up £9.6 billion (8.8%) compared to twelve months earlier. Non-Guernsey schemes, where some aspect of management, administration or custody is carried out in the Island, fell by £1 billion (1.1%) during the quarter to reach £87 billion at the end of 2011, which is £3 billion (3.3%) lower than the value at the end of December 2010.

Patrick Firth, Chairman of the Guernsey Investment Fund Association (GIFA), said: “Market conditions are far from ideal for business at the moment but nevertheless our funds sector has proved more robust than many of our competitors in recent years. It is therefore disappointing to see two consecutive quarters of contraction in the value of our funds business but this does show that we cannot take anything for granted and that we need to make sure that we are marketing Guernsey as strongly as possible to ensure our long term success.”

Alter Domus expands its Guernsey service offering

Alter Domus in Guernsey has received approval from the Guernsey Financial Services Commission (GFSC) to provide a wider range of products and services, including the ability to administer unregulated companies and trusts and to act as a full Corporate Services Provider for clients.

The firm applied for the License under The Regulation of Fiduciaries, Administration Businesses and Company Directors in late 2011 and was advised of the approval in January.

Since April 2009, Alter Domus Guernsey has been licensed to provide fund administration services pursuant to the Protection of Investor (Bailiwick of Guernsey) Law 1987. The firm's clients now include some of the foremost private equity and real estate funds in the region.

Alter Domus is a leading independent provider of professional administration services for multinational corporations and alternative investment funds. Since 2007 it has established 14 new offices and desks worldwide.

“Alter Domus is dedicated to expanding our service offerings worldwide in response to the needs of our clients,” said Dominique Robyns, chairman of Alter Domus.

“With this new approval, we look forward to providing a full suite of fund administration and corporate management services in Guernsey.”

“Clients who are present across multiple jurisdictions often seek to streamline administration tasks so that they can better focus on meeting their global strategic objectives,” said James Brasher, the Channel Islands CEO for Alter Domus.

“By delivering corporate management services as well as fund administration services in Guernsey, Alter Domus offers clients the convenience of working with a single service provider in this jurisdiction. Moreover, to further assist clients in efficiently and effectively address their needs in leading jurisdictions worldwide, Alter Domus designates a single global point of contact for each client. This unique contact is familiar with all aspects of the client’s account and coordinates all activities across every jurisdiction in which Alter Domus is providing services to them.”

Alter Domus’ Guernsey office is staffed by a team that is highly experienced in providing fund administration and corporate management services, and the firm continues to engage exceptionally well-qualified professional staff in Guernsey in response to the needs of its growing roster of clients.

OECD: New head of the Global Forum on Transparency and Exchange of Information for Tax Purposes is appointed

Ms. Monica Bhatia has been appointed Head of the Secretariat of the Global Forum on Transparency and Exchange of Information for Tax Purposes, within the Centre for Tax Policy and Administration (CTPA). She will take up her duties on 1 April 2012.

The Global Forum is the multilateral framework within which work in the area of transparency and exchange of information has been carried out by both OECD and non-OECD economies since 2000.

Ms Bhatia will lead this major OECD programme put in place in 2009 to advance the transparency agenda. She will have to ensure the quick and effective implementation of the peer review schedule, which will soon start focusing on practical aspects of information exchange. She will also manage the fast extension of the Global Forum which now includes 108 members on an equal footing.

Ms Bhatia has over 20 years of experience in the Indian Ministry of Finance and is currently Director in the Department of Personnel and Training of the Government of India. Until 2011, she was in charge of the international tax unit at the income tax department where she was tasked with conducting audits of nonresident companies. She has held different positions in the Ministry of Finance and its Revenue Department related to international tax policy, including treaty negotiations and drafting of tax legislation.. Finally, she has served as an assessor to the Global Forum’s peer reviews. Ms. Bhatia’s extensive experience will enable her to provide both strategic leadership and technical expertise and will bring to CTPA and the SG’s office her long experience in a key emerging economy.

Ms. Bhatia, an Indian national, holds an MBA from Zicklin School of Business (CUNY), New York and an LLM from the Panjab University, Chandigarh, India, besides holding a Certified Public Accountant certification from the US.

Mauritius: Cim Global Business - Chief Operating Officer

Cim Global Business, a major player in the financial services sector requires a dynamic individual who is self-motivated and committed to high performance for the position of:

Chief Operating Officer

The main purpose of the role will be to provide leadership to the Operations team whilst assisting Business Development Department and Product Development Department to develop strategies for increasing business.

The incumbent will be part of Cim Global Business Management team and the main duties will be:

Key roles & responsibilities will include

• To structure the operations in a way that best serves the delivery of the appropriate levels of service
• To manage the day to day operations of Cim Global Business
• To evaluate and monitor performance of existing service lines and functions
• To ensure appropriate tools and systems are deployed across the operations
• To work closely with management to ensure the company is delivering the prescribed standards
• To develop and maintain or improve business relations with all customers
• To develop objectives aligned with the corporate drive for customer retention.
• To provide innovative solutions including those that span jurisdictions and practices
• To prepare, administer the budget and responsible for the financial results of the operation teams
• To establish performance goals for team members and monitor performance on a continual basis to exceed the set targets
• To provide training for the development of the team as the business grows

Candidate profile

• Degree Holder or Professional qualification
• At least 10 years of experience in the Financial sector inclusive of 5 years of experience at Senior Management level
• Excellent technical knowledge of Financial services
• Excellent knowledge of relevant laws and legislations
• Have the ability to work under pressure and with a keen eye for details.
• Have excellent communication skills, verbal and written.

Closing Date: 16 March 2012

New research shows Guernsey is most popular fund domicile

More managers have their funds domiciled and administered in Guernsey than any other jurisdiction, according to the results of a new survey carried out independently by www.funddomiciles.com.

It shows that 24% of managers have their funds domiciled in Guernsey compared with 21% in the UK, 18% in Jersey, 12% in Cayman and 9% in Luxembourg. Malta, Ireland, the Isle of Man, BVI, Cyprus and the US make up the rest of the fund domiciles.

The survey results also reveal that 24% of managers have their funds serviced from Guernsey, followed by the UK (20%), Ireland (18%) and Jersey (16%). The rest of the managers have their funds serviced in Luxembourg, Malta and the Isle of Man.

A key finding from the interviews with fund managers is that Guernsey has built a strong position in the private equity space, in particular.

These results build on the fact that Guernsey was the highest placed jurisdiction to show the most improvement with a move up to third position in the www.funddomiciles.com Stability Index 2011 and 61% of respondents in a Private Equity News / State Street survey of Chief Financial Officers (CFOs) said that Guernsey was their preferred location for private equity outsourcing.

Peter Niven, Chief Executive of Guernsey Finance – the promotional agency for the Island’s finance industry, said: “The results of this survey show that significant numbers of managers continue to choose to use Guernsey as a fund domicile and in particular, the Island is considered the jurisdiction of choice for private equity. We are very pleased with the results and especially because not only is it research which has been carried out independently but it also builds on a significant body of other work which shows that Guernsey is one of the foremost fund domiciles globally and a leader for private equity.”

The research from www.funddomiciles.com is entitled The Future of the UK Offshore Domiciles and is based on a representative sample of 50 UK-based alternative investment fund managers, including those from the private equity, property and hedge fund sectors.

The accompanying commentary includes reference to the fact that “Guernsey has received a number of very positive comments…It has the reputation of being a stable domicile with a good regulator and solid reputation. It seems to have established a very strong position in private equity and real estate management, in particular.”

It goes on to say that the threat of the AIFM Directive, which was taken very seriously in all three UK offshore centres, seems to have dissipated. “Nobody interviewed has said that they would be redomiciling funds from the UK offshore centres as a result of this Directive,” it says. The commentary adds, however, that a number of respondents are redomiciling funds into the EU from Caribbean jurisdictions.

One of the fund managers responding to the survey said: “We like Guernsey because of the quality of its service providers and the ease of access from London.” Another fund manager said: “Guernsey is the place to be in our industry [private equity].” One of the other selected responses featuring in the research report said: “The keys to domicile selection are stability and reputation. Guernsey has this.”

Commenting on the survey results, Patrick Firth, Chairman of the Guernsey Investment Fund Association (GIFA), said: “These results reinforce the fact that Guernsey has built a reputation among managers for our expertise in servicing the widest range of funds and in particular those investing in alternative asset classes and especially private equity. This served us well through the financial crisis and subsequent economic downturn, ensuring that we fared better than many of our closest competitors. It is also a message we will building upon during the year and in particular, at the Guernsey Funds Forum in London in May.”

The Guernsey Funds Forum will be held at the Grange St Paul’s Hotel in London on Wednesday 2 May and will culminate in a keynote debate featuring Lord Lamont and Economics Editor and Broadcaster Stephanie Flanders. The debate and the preceding panel sessions will be moderated by ITV News Anchor, Alastair Stewart.

Independent report into Guernsey's current economic profile

The Policy Council's Fiscal and Economic Policy Group ('FEPG') and the Commerce and Employment Department ('C&E') have released an independent report from Oxford Economics, a leading UK economics consultancy, which was commissioned to provide a respected third party view of Guernsey's current economic profile; potential future opportunities and overall strategic direction in relation to economic policy.

It is intended that the report will form the basis of a consultation process in the new States term to inform the development of an economic development strategy which will then be incorporated into the Fiscal and Economic Plan in the States Strategic Plan debate later in 2012.

Deputy Lyndon Trott, Chief Minister and chair of the Fiscal and Economic Policy Group said:

"This report is a comprehensive independent review of the island's current position and the challenges it faces. We are pleased that it generally endorses the current policies that are being pursued which have put the island in a strong position to weather the current global economic turmoil".

Deputy Carla McNulty Bauer, Minister, Commerce and Employment and a member of the Fiscal and Economic Policy Group said:

"Bearing in mind that it was only recently commissioned in September 2011, Oxford Economics have done a remarkable job assembling comprehensive economic data, policy comparisons and interviewing key stakeholders. It was felt important that we issue the report into the public domain at this time so the data and commentary are as current as possible for the basis of discussion.

I believe this is an excellent time to generate conversation and stimulate debate on the outcomes of the recent study. The views, perceptions, conclusions and recommendations in the report will need to be assessed when it is used to inform, but not necessarily dictate, the development of an Economic Development Strategy. Oxford Economics' work identifies new potential work streams as well as new strands to existing economic sectors that are most definitely worthy of consideration".