It is the Isle of Man Government’s stated policy, that the Island’s regulatory frameworks for financial services continue to be able to demonstrate a high degree of compliance with applicable international standards.
In order that it is able to demonstrate such compliance the Isle of Man Government welcomes the periodic independent evaluation of the Island’s regulatory framework by the International Monetary Fund (IMF) under the Financial Sector Assessment Programme(“FSAP”).
External assessment by the IMF under the FSAP
Whilst further information of the FSAP is available from the IMF website, a brief summary of the work undertaken by the IMF in their assessments is reproduced here:
"The focus of FSAP assessments is twofold: to gauge the stability of the financial sector and to assess its potential contribution to growth and development.
Work undertaken to assess the stability of the financial sector
- FSAP teams examine the soundness of the banking and other financial sectors;
- conduct stress tests;
- rate the quality of bank, insurance, and financial market supervision against accepted international standards; and
- evaluate the ability of supervisors, policymakers, and financial safety nets to respond effectively in case of systemic stress.
While FSAPs do not evaluate the health of individual financial institutions and cannot predict or prevent financial crises, they identify the main vulnerabilities that could trigger one.
Work undertaken to assess the development aspects of the financial sector
- FSAPs examine the quality of the legal framework and of financial infrastructure, such as the payments and settlements system;
- identify obstacles to the competitiveness and efficiency of the sector; and
- examine its contribution to economic growth and development.
Issues related to access to banking services and the development of domestic capital markets are particularly important in low-income countries."
The ‘accepted international standards’ referenced in the work undertaken by the FSAP to assess the stability of the financial sector consider in relation to insurance supervision, the Insurance Core Principles (ICPs) issued by the International Association of Insurance Supervisors (IAIS) in relation to insurance supervision.
The Basel Core Principles for Effective Banking Supervision for the banking sector and the Principles of Securities Regulations issued by the International Organisation of Securities Commissions, the relevant international standards for the Island’s banking and securities sectors.
In addition, the FSAP reviews the regulatory and legal framework in place to combat money laundering and prevent terrorist financing against the Recommendations of the Financial Actions Task Force (the ‘FATF Recommendations’).
Most recent FSAP assessment by the IMF
The most recent independent evaluation of the Island’s regulatory framework against applicable international standards was conducted by the IMF under the FSAP programme in 2008. The FSAP also covered stress testing in respect of both the banking and insurance sectors.
The report concludes that "the IOM has maintained and improved on the generally high standard of compliance with the ICP, which was noted in the previous assessment. The IPA is commended for its proactive stance in establishing and enforcing high standards for supervision, which have contributed to the maintenance of the IOM’s good reputation as an international financial centre.".
The report also noted that “the Isle of Man authorities take their responsibilities in the area of international co-operation seriously”, citing supervisory co-operation, mutual legal assistance and tax information exchange agreements. The Isle of Man continues to develop its legislative framework to build upon and further enhance its level of compliance with international standards in this regard.
Copies of the IMF reports are available from the IMF website or by following the relevant link below:
- Financial System Stability Assessment
- Detailed Assessment of Observance of the Insurance Core Principles
- Detailed Assessment of Observance of the Basel Core Principles for Effective Banking Supervision
- Detailed Assessment of Observance of AML/CFT
- Stress Testing: Banking and Insurance
The continued endorsement by the International Monetary Fund (IMF) of the Island’s framework is important, not only to the Island’s reputation as a responsible international jurisdiction but also for the financial sectors to be able to maintain market share and position themselves for continued and sustained growth in the future.
The international standards most relevant to the Island’s insurance and pensions sectors
The IAIS is the international standard setting body responsible for developing and assisting in the implementation of principles and standards for the supervision of the insurance sector.
The ICPs provide the globally accepted standard for effective insurance supervision. A copy of the 'Insurance Core Principles, Standards, Guidance and Assessment Methodology' can be downloaded from the IAIS website.
The ICPs prescribe the essential elements that must be present in the supervisory regime in order to promote a financially sound insurance sector and provide an adequate level of policyholder protection.
The Principles are supported by Standards which are linked to specific ICPs. Standards set out key high level requirements that are fundamental to the implementation of the ICPs and should be met for a supervisory authority to demonstrate observance with a particular ICP.
Guidance material typically supports the ICPs and/or Standards and provides detail on how to implement the ICPs. Guidance material does not prescribe new requirements but describes what is meant by the ICP and, where possible, provides examples of ways to implement the requirements.
The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
The FATF Recommendations are recognised as the international standard for the combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction. They were most recently updated in 2012.
Further information and a copy of the 'International standards on combating money laundering and the financing of terrorism & proliferation' (the 'FATF Recommendations') are available from the FATF website or by following this link.
The IOPS Principles of Private Pension Supervision were approved in 2006 and revised in 2010. They cover a range of topics such as objectives, independence, adequacy of resources and powers, risk-orientation, proportionality and consistency, consultation and cooperation, confidentiality, transparency and governance. The Principles were revised in 2010.
Further information can be found here.
Membership of International Organisations
The Authority is a member of the following organisations:
- The International Association of Insurance Supervisors (IAIS) whose functions are described above.
- The Group of International Insurance Centre Supervisors (GIICS) which is an organisation of insurance regulators and supervisors from jurisdictions that provide international insurance services.
- The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) which is an independent monitoring mechanism for AML/CFT matters within the Council of Europe and is the body responsible for undertaking assessments of the Island's AML/CFT regime.