IFCs As Creative Ecosystems

International Financial Centres (IFCs) are sources of important contributions to global law and finance. 1 Over the past fifty years, IFCs have been at the forefront of developing new legal entities and adapting existing ones to new uses, greasing the wheels of global commerce. Using the lens of the late psychologist Mihaly Csikszentmihalyi’s systems model of creativity, we see why they are uniquely suited to generate significant legal and financial innovations that improve the global financial system. 2 The Systems View: A New Lens For Understanding IFC Innovation Csikszentmihalyi’s groundbreaking work on creativity rejected the ‘lone genius’ narrative that pervades much popular thinking on the subject. Instead, he proposed that meaningful innovation emerges from the interaction of three key elements: creative individuals, domains of expertise, and fields of experts who validate and adopt new ideas. This tripartite model provides a powerful explanatory framework for understanding how IFCs have become laboratories for legal and financial innovation. Unlike traditional analyses that focus primarily on competitive or regulatory aspects of IFCs, Csikszentmihalyi’s model illuminates the dynamic social processes underlying innovation in these jurisdictions. While previous studies have cataloged what innovations emerged from IFCs, this perspective helps us understand how and why these innovations occur …

Bermuda Corporate And Commercial Legal Review 2024/25

The Investment Fund Business Act 2024 came into operation on 29 July 2024 and introduces a framework for an investment exchange or clearing house to apply to the Bermuda Monetary Authority (BMA) for designation as a recognised clearing house, thereby allowing it to carry on such business in Bermuda without requiring a licence or registration under the Investment Business Act 2003. In connection with the Amendment Act, the Investment Business (Recognised Bodies Recognition Requirements) Regulations 2024, the Investment Business ((Recognised Bodies (Reporting Accountants) (Facts and Matters of Material Significance)) Regulations 2024 and the Investment Business ((Prudential Standards) (Recognised Bodies)) Rules 2024 have also been introduced. A Recognised Body will be subject to certain ongoing requirements under the Recognised Bodies Regulatory Framework, including: SAC Guidance Note For General Business Insurers The BMA’s Guidance Note on General Business Insurers with Segregated Accounts and Separate Accounts (SAC Guidance Note) went into effect on 1 January 2025.  The SAC Guidance Note sets out the regulatory framework applicable to general business insurers utilising segregated accounts and separate accounts.  The SAC Guidance Note focuses on governance, risk management and financial reporting, and requires that the SAC insurers address the structure of segregated accounts in their governance …

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Why China Will Not Blink: Beijing’s Strategic Resolve Amid Escalating Trade Tensions

As the United States ratchets up its economic confrontation with China—slapping tariffs as high as 145 per cent on most Chinese goods—Beijing’s message is clear and consistent: “With all certainty, China will not be the first to blink,” said Chinese Foreign Minister Wang Yi. It retaliated by raising its tariffs on US goods to 125 per cent. In a recent press conference, the Chinese Foreign Minister responded to Washington’s moves by stating, “China stands firm against these tariffs, not only to defend its own rights and interests, but also to safeguard the common interests of the international community to ensure that humanity is not dragged back into a jungle world where might makes right.”  Chinese President Xi Jinping, speaking during a Southeast Asia diplomatic tour, reinforced the sentiment, warning that “trade wars yield no winners.” Instead of escalating the confrontation, he advocated for “mutual respect and multilateral cooperation to maintain global stability.”  But behind these carefully worded remarks lies a deeper truth: China’s long-term economic and geopolitical vision makes it uniquely positioned to endure and outmaneuver short-term economic pressures. While Washington plays checkers, China plays chess.  The Tariff Tally: Escalating Measures And Global Disruption  Following his inauguration on 20 January …

Trump, IFCs, And The New World Order

To many in the United States, this is a breath of fresh air: why should US-tax dollars be used to fund wars or prop up political regimes of countries that have no or limited return on investment to the United States? Why should the United States continue to be expected to protect Europe from Russian aggression when Russia is a shadow of its superpower self and China is far more of a threat? Why should the United States be expected to work towards climate goals that are, in all likelihood, going to lead to significant and negative economic and social change in small-town communities built on fossil fuel extraction across America? And why, quite simply, should the United States have to support a global economy at its own economic expense when it can operate as a perfectly sustainable economic bloc by itself? But elsewhere across the Western world, and particularly in Europe, the mere fact that these questions are being asked is horrifying enough, let alone the significant economic consequences that could emerge. But could international finance centres help both stabilise the global economy and dampen some of the more extreme effects of Trump’s current trade policy? They have helped …

New Trump Term Brings Big Changes On International Taxes And Digital Assets

Rejecting The OECD Pillar II Agreement On international taxation, the Trump administration is steering US policy back toward national sovereignty and tax competitiveness. Central to this shift is the outright rejection of the OECD’s global minimum tax framework, also known as Pillar II. This proposal, driven primarily by higher-tax nations, seeks to curb international tax competition, claiming it creates a harmful “race to the bottom” in global tax revenues. The OECD’s own data on corporate tax collection shows this fear is unfounded; instead, the rules would hamstring smaller and lower-tax jurisdictions to prevent any competitive financial threat to the global dominance of high-tax welfare states. Immediately upon taking office, the Trump administration provided a forceful denunciation of Pillar II, claiming it “allows extraterritorial jurisdiction over American income,” and “limits our Nation’s ability to enact tax policies that serve the interests of American businesses and workers.” It also clarified that “the Global Tax Deal has no force or effect in the United States,” though that is more a statement of reality than a policy change, as full compliance with Pillar II requires action by Congress, which they have not taken and certainly won’t under Trump. Rhetorically, though, this marks a significant …

The Cook Islands: A Safe Haven In A Sea Of Uncertainty

The Cook Islands The Cook Islands is comprised of 15 islands spread over two million square kilometres of the South Pacific, situated northeast of New Zealand and south of Hawaii. It is very accessible by air from New Zealand, Australia, the USA, and other Pacific islands. The Cook Islands is a self-governing nation with its own written constitution. It is a sovereign state in free association with New Zealand, and has had full legislative and law-making powers since it obtained independence in 1965. The Cook Islands has a Westminster-styled parliamentary system with democratic elections every five years. The Prime Minister is the Head of Government, with the Head of State being His Majesty King Charles III, represented in the Cook Islands by ‘the King’s Representative’. Legislative power is with the Cook Islands Parliament, whilst executive power is exercised by the Cook Islands Government and the King’s Representative. The Cook Islands resident population of approximately 15,000 marks it as one of the world’s smallest countries, but that has not prevented it from establishing itself in the international financial services industry through its innovative laws, and as a leader in the fight against money laundering and other financial crimes.   Significance Of …

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What Does Success Look Like In The Fight Against Financial Crime?

This is far from a theoretical issue. Financial institutions and governments in financial centres invest heavily in AML systems to meet global standards and expectations, especially those set by the Financial Action Task Force (FATF). But how do we measure if these investments are translating into success on the ground? The first step towards a meaningful answer to this question is clarifying what we mean by “success.” As explored further in this article, some experts argue that AML systems shouldn’t just safeguard financial markets or institutions. A truly successful system would contribute to broader goals, such as reducing criminality and corruption, safeguarding citizens’ rights, and contributing to a conducive and fair environment for financial innovation. This article highlights three relevant areas for international financial centres to consider when seeking to better gauge success in AML efforts. It is based on the latest findings of the Basel AML Index (index.baselgovernance.org), a data-based ranking and risk assessment tool for money laundering and related financial crime risks around the world. The Basel Institute on Governance, a non-profit organisation that works internationally to fight corruption and improve standards of governance, released the 13th annual Basel AML Index Public Edition and Report on 2 December …

Sanctions: War By Other Means

To continue borrowing from Clausewitz, sanctions are a tool to disarm the enemy so that the enemy is powerless to prevent you from imposing your will. The use and threat of force of sanctions are such that an opponent will sooner or later acquiesce rather than resist. Sun Tzu’s quote from The Art Of War, “The greatest victory is that which requires no battle,” is also relevant to using sanctions as a deterrent. Sanctions can have the opposite effect, leading to a rapid escalation of political tensions, economic stress, and eventually physical violence. The use of sanctions can stoke “primordial violence, hatred, and enmity” that Clausewitz identified as part of war. Sanctions That Helped Trigger A War The US and Japan were rivals in the Pacific since before World War I. Japan’s militaristic expansion and the invasion of China in 1937 led to even poorer relations between the two countries. In 1940, the US embargoed war supplies to Japan, including steel, iron, and scrap metal. The US also froze Japanese assets in the US in 1941. Japan saw these sanctions as a threat to its war effort in China and the survival of the Japanese Empire. On December 7, 1941, the …