IFC Economic Report 2022

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Editor's Note:

IFCs continue to contribute to the global economy and the movement of wealth in a way in which some onshore financial centres are simply not capable. Rumours of their demise have been rife for decades and yet they continue to not only flourish but to innovate and differentiate.

In this issue of the Economic Report, we illustrate that IFCs exist beyond tax. In the wake of a commitment from 136 countries to a new global minimum tax rate (see our interview with Pascal Saint-Amans from the OECD on page 8), this is important. Yes, IFCs may be primarily recognised as tax neutral hubs but their offerings go so far beyond that, it is risible for large parts of the mainstream media and other critics to write them off, as they so often do. In the pages that lie ahead, we exemplify just how important IFCs really are.

Our analysis begins with Andrew Morriss and Charlotte Ku who elaborate on how IFCs have led a creative wave of new and improved business entities over the last few decades; they go on to explain how IFC regulatory innovation is vital to the maintenance of a healthy global financial ecosystem.

Julian Morris builds on the argument, citing the captive insurance and FinTech sectors to demonstrate how IFCs facilitate innovation in financial mediation as a consequence of their adaptive legal systems and nimble, flexible regulatory systems.

Our features on global regulation and policy include more information on the potential impact of the global minimum tax rate and an update on Anti-Money Laundering (AML) initiatives - we have exclusive insight from Marcus Pleyer, President of the Financial Action Task Force on page 36.

We also explore the rising popularity of Environment and Social Governance (ESG) investment, with Lakshmi Ganapthi debating principles versus the bottom line and the impact of ESG on investors. Our Big Debate, which begins on page 50, discusses whether ESG investing serves social needs or if it is simply greenwashing?

Discussing post-pandemic wealth management, Keith Dixon ponders if trusts are a pandemic-proof solution whilst our jurisdictional round-up chronicles recent developments in the Cayman Islands, The Bahamas and BVI. Labuan IBFC expounds on its success as an intermediation centre.

We report on the challenges and opportunities of cryptocurrency investment with expert input from several leading authorities in this sector.

And finally, Alastair Sutton reports on ‘Brexit One Year On’ and its impact on UK Overseas Territories.

No doubt, IFCs will continue to be subjected to unwarranted censure and derision but critics would be wise to observe the continued success of these financial centres and their ability to adapt their systems in such a way that they remain an integral and vital part of the global economy.

Georgina Hatch

Consulting Editor