It is well established that the world's securities and futures markets have not only grown individually in terms of size and sophistication, but also have grown more closely together through various means, including cross-border trading activity. The resulting development of internationalized markets has raised both regulatory and enforcement concerns that IOSCO has addressed by various means. In the enforcement context, IOSCO has made great progress in identifying means by which regulators can cooperate and assist one another in detecting and deterring cross-border misconduct1. Among those means are memoranda of understanding MOUs) pursuant to which a regulator can undertake to make available to its foreign counterpart information that is located within its jurisdiction relevant to an investigation being conducted by the foreign counterpart. The resulting assistance, in the form of exchanges of information, provides regulators with the ability to effective investigate cross-border activities.
These cooperative international enforcement mechanisms have not addressed, however, the problems that result when relevant information is located in jurisdictions to which foreign securities and futures regulators have difficulty in gaining access. The purpose of this study is to consider the problems raised by, and possible approaches to, such jurisdictions. This report will focus primarily on jurisdictions that allow legal entities to be establishes without sufficient requirements that ownership information concerning these entities be recorded and maintained; and jurisdictions where local laws including blocking and secrecy laws, to not permit the information, if it exists, to be provided to foreign regulators. Such jurisdictions are referred to in this report as "under-regulated" and "uncooperative" jurisdictions.
Part one of the report will review the information needed for enforcement purposes ant the difficulties encountered in obtaining it from under-regulated and uncooperative jurisdictions. Part two will discuss the various approaches adopted by IOSCO Working Party members to obtain assistance from these jurisdictions. Last, part three will develop options likely, in the group's view, to contribute to the improvement of the situation.
Footnote:
1. Cf . IOSCO Working Party No.4 Report "addressing difficulties encountered while negotiating and implementing Memoranda of Understanding" released by the Technical Committee in July 1990, and "IOSCO principles for MOUs "released by Technical Committee in July,1991.
