Britain’s Chancellor of the Exchequer, Alistair Darling, was reported over the weekend as saying the Group of 20 major nations (G20) may blacklist countries that have lax financial regulation and impose sanctions on them, mirroring its crackdown on tax havens.

“Just as we want to go after tax havens, we want to go after regulatory havens as well,” Darling told Emerging Markets magazine in an interview published on Saturday.

“It is not good for financial stability that some companies can operate out of a Caribbean island, and shelter behind a veil of secrecy, and we don’t know what they are up to,” he said.

The Financial Stability Board, which coordinates the G20’s regulatory initiatives, will reportedly prepare a “provisional blacklist” of regulatory havens by a meeting of G20 finance ministers in November, as well as a grey list of countries that also should tighten standards.

The Cayman Islands has long been regarded as the quintessential tax haven and thus a prime target for an increasing volume of political rhetoric around the globe. In a belated response, our government embarked on a hasty programme of negotiating and signing tax information exchange agreements (TIEA) with a sufficient number of other countries to escape the OECD grey-list of non-compliant territories.

Although the qualitative aspect of the TIEAs now in force is still subject to peer review by the OECD, one must assume that we may now be able to escape the “tax haven” designation by the OECD, even though it will no doubt be extremely difficult to avoid the label in the popular media.

However, will the newly minted description of “regulatory haven” now be used instead as a reason to continue the pressure on the Cayman Islands and other jurisdictions to conform to what Britain has apparently decided is right for us in terms of our economic model and the taxation, direct or otherwise of our citizens and residents?

The Cayman Islands Monetary Authority (CIMA) has long proclaimed that they impose “international standards” of regulatory oversight and we suppose that the veracity of this assertion will soon be put to the test by the G20 nations in assessing whether or not we are a regulatory haven.

Unfortunately, the efficacy of such international standards has often proved to be sorely lacking in light of the many financial failures of huge proportions brought about by and through financial entities supposedly regulated in the Cayman Islands.

Furthermore, Mr Darling speaks of some companies operating out of a Caribbean island, and sheltering behind “a veil of secrecy” and such perceptions on the part of the G20 finance ministers are going to bring us back once again to the existence of our financial secrecy legislation currently enshrined in the Confidential Relationships (Preservation) Law.

We have argued on several recent occasions that, not only is the law well past any useful purpose, it is now likely to be an albatross around the neck of the financial services sector in particular and our economic recovery in general.

How can we justifiably claim to be moving away from a status and reputation as a “secrecy jurisdiction” into a new era of global financial transparency and uniform regulation when we still have the Confidential Relationships Law on the books?

Certain elements of the financial sector seemed to understand this and made representations to the previous administration, who responded that the issue needed more study – a convenient way of not having to deal with it.

The present Leader of Government Business, Hon. McKeeva Bush, has recently alluded once again to a proposed review of the Confidential Relationships Law but, we suggest, the recent remarks by Britain’s Chancellor should serve as yet another wake-up call that this needs to be put in hand sooner rather than later.

The evidence, if such were needed, that having various mechanisms in place for the exchange of tax information does not equate to financial and regulatory transparency, may be found in the effectiveness in this respect of the much-touted tax information exchange agreement with the United States, which has been in place since as long ago as 2001.

The existence of this TIEA has not prevented the United States Congress from classifying the Cayman Islands as a “secrecy jurisdiction” in the latest and all previous incarnations of the so-called “Stop Tax Haven Abuse Act”.

Equally, the more recent TIEAs with other countries are unlikely to prevent the G20 as a whole from classifying us as a “regulatory haven” unless and until we take urgent steps to counter this perception.