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The Regulatory Framework (Primary legislation (An Act of Parliament that…
The Regulatory Framework
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Offshore jurisdictions have historically been seen as venues for laundering the proceeds of illicit activity. Following a move towards transparency during the 2000s and the introduction of strict anti-money laundering regulations, some now argue that offshore jurisdictions are in many cases better regulated than many onshore financial jurisdictions
In most offshore jurisdictions a person needs a licence to act as a trustee whereas in the UK and the US there are no restrictions or regulations as to who may save in a fidcuariy capacity
Primary legislation
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The basic regulatory structure of the majority of offshore jurisdictions is similar to that of the UK's single regulator regime of FSMA2000
Each regulatory is an independent body established by a statute and some offshore jurisdictions have the view that the regulator needs to be seen as 'separate from the government of that 'jurisdiction' and 'separate' from the entities that it regulates to ensure that it can demonstrate an objective oversight of the regulated entities and activities that are being undertaken within the jurisdiction
To enable the Commission to use its powers it may be decided to incorporate the regulatory body as a limited company, providing it with legal status and the usual added features of perpetual succession and limited liability
The regulator will also have the power to appoint a board of directors and in some cases independent commissioners, experts in their field to offer guidance and advice
Secondary legislation
Legislation passed after the primary legislation that provides further details on the specifics of laws and regulation defined in primary legislation
A law made by an executive authority under powers delegated and granted to it in the primary legislation which grants the executive agency power to implement and administer the requirements of that primary legislation
The power to pass delegated legislation is defined and limited by the primary legislation, if the subordinate authority acts beyond its remit, its acts will be invalid or ultra vires
Forms of secondary legislation in the UK include statutory instruments, most commonly regulations, rules and orders
Codes of practice
A set of rules and/or best practice for a regulated and licensed company that provides financial services, issued by the local Regulator
Voluntary guides that recommends procedures or business practices which should be expected to be adhered to by licensed and regulated firms and individuals in that particular jurisdiction
Some have now been enshrined into legal legislation such as AML regulations and corporate governance regimes
May include codes for
individuals / persons employed in controlling or governing positions within the financial services sector
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Failure to follow does not usually render any person liable to proceedings of any kind or invalidate any transaction, but the codes of practice may be used as evidence in any proceedings if it appears to the court to be relevant to any questions arising in the proceedings and could be taken into accounting in determining any such questions