100th Signatory to International Financial Misconduct Agreement

100th Signatory to International Financial Misconduct Agreement

 The Indonesian Financial Services Authority has become the 100th signatory to the the International Organization of Securities Commissions Multilateral Memorandum of Understanding on cooperation and exchange of information. The memorandum is the instrument used by the organization, IOSCO, to combat cross-border financial services misconduct. 

Securities regulators use the memorandum to share with each other essential investigative material, such as beneficial ownership information, and securities and derivatives transaction records, including bank and brokerage records. The memorandum sets out specific requirements for the exchange of information, ensuring that no domestic banking secrecy, blocking law or regulation prevents the provision of enforcement information among securities regulators. 

The IOSCO, whose membership regulates more than 95 percent of the world's securities markets, said that gaining the 100 signatories to the memorandum – out of a total of 125 eligible IOSCO members – marked “a watershed” for the organization.  It added that, established in 2002, the memorandum is the “cornerstone” of the IOSCO’s efforts “to eradicate potential safe havens” for wrongdoers.   

Greg Medcraft, the chair of the IOSCO board, said that the memorandum was “the foundation on which IOSCO's proud record of regulatory cooperation is based.  It is a vital instrument supporting our global objectives of confident and informed investors, fair, efficient and transparent markets and reducing systemic risk.  The fact we now have 100 signatories is, therefore, a significant milestone for IOSCO. I particularly welcome recent signatories from the Asia-Pacific region – Indonesia and Bangladesh.” 

The chair of the Indonesia Financial Services Authority (IFSA), Muliaman D Hadad, said, “IFSA viewed this moment as a milestone in Indonesia FSA’s commitment to mutual assistance and the exchange of information for the purpose of enforcing compliance with the laws and regulations of the relevant jurisdictions, emphasizing the role of securities regulators to assist each other.”

Of the 25 IOSCO non-signatories, 20 are on the list of members who have formally expressed their commitment to seek the legislative and administrative changes necessary for achieving compliance with the memorandum.

Indonesia is the third jurisdiction to sign the memorandum in just over a month: The Bangladesh Securities and Exchange Commission became a signatory on December 22, and the Financial Services Commission of Gibraltar signed on December 20.

The IOSCO said that the growing number of signatories in recent years has contributed to a sharp increase in cross-border cooperation among IOSCO members, enabling regulators to investigate a growing number of inside traders, fraudsters and other offenders. In 2006, a total of 520 requests for assistance were made pursuant to the memorandum. The annual figure increased to 1,624 in 2010, to 2,088 in 2011 and to 2,374 in 2012.

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