Fraudsters respect no borders: Country financial regulators need to boost cooperation, information exchange
| Author | Ahmed Zorome |
| Position | IMF Monetary and Financial Systems Department |
| Pages | 237-238 |
Page 237
Why convene a conference on cooperation and information exchange? Barry Johnston, Assistant Director in the IMF's Monetary and Financial Systems Department, explained that while each of the standard-setting agencies has provided extensive guidance on cooperation and information exchange, considerable work remains to be done in finding ways to share information, while protecting legitimate rights to privacy and supervisors' confidentiality obligations. The pending issues include sharing information among different sectors (for example, between banking and securities regulators); solving the complexity of multiple gateways for information exchange; and addressing possible differences in the standards' treatment of information sharing.
Financial markets are global, financial institutions do business beyond their geographical boundaries, and fraudsters respect no borders, Ethiopis Tafara (U.S. Securities and Exchange Commission) and Tom Snow (U.S. Department of Justice) observed. Nevertheless, regulators' and law enforcement agencies' authority stops at national frontiers. The resulting gap between global financial markets and crime, and the limits of national authority create a loophole that can only be plugged by cross-border cooperation and information exchange among national supervisors. Cooperation fosters financial stability and integrity by helping supervisors acquire a consolidated view of the financial institutions they oversee, regardless of the geographical location of their branches and subsidiaries.
The most common impediments to cooperation are secrecy, confidentiality conditions placed on requests, and supervisors' lack of power to collect the information, according to the preliminary results of a survey presented at the conference by Mary Zephirin (IMF's Monetary and Financial Systems Department).
Henry Schiffman and Richard Pratt (consultants) noted the conflict every regulator faces: promoting the public interest in sharing information versus protecting individual civil rights and the confidentiality of commercial transactions. These considerations have shaped the powers and cooperative gateways that legislators have granted to financial supervisors. However, each jurisdiction's...
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