The Volcker Rule, which restricts proprietary trading, covers U.S. banks; it also affects Islamic banking and a limited number of banks in the Gulf region, Walid Alameddine, chief executive of Promontory Financial Group, Middle East and Turkey, said. He described the Volcker Rule as a "major positive", regardless of the extra bureaucracy, and said it was impossible to build individual first-class financial centres in, for instance, the Gulf states, Turkey and elsewhere without following international legislation and best practice. It would be impossible for such centres to thrive without such a rule, he said.
"What we need here is much more regulatory development in this region and a strengthening of it to make it more and more in line with international standards. In this particular instance, the Volcker Rule is ahead of all the legislation whether it is in Europe, Japan, Australia, Canada or elsewhere."
"It is not only [financial] centres that are distinguishing themselves," he said.
Alameddine cited as an example Qatar National Bank, now the Middle East's largest bank. As such, he argued, it had to follow international best practice and had to have top-notch systems and controls. "Larger banks have to follow something like the Volcker Rule if we are to be taken seriously."
Other delegates thought that exporting the Volcker Rule outside the U.S. was completely inappropriate and could not have disagreed more strongly with Alameddine's view. They included Paul Atkins, a former Securities and Exchange Commission (SEC) commissioner, now head of Patomak Global Partners, a regulatory consultancy, who was moderating a panel at the conference.
The closure of Switzerland's oldest private bank, Wegelin, highlighted the importance of a single approach, delegates heard. In January, Wegelin agreed to pay $57.8 million to the U.S. government, having admitted conspiracy charges for helping wealthy Americans avoid more than $1.2 billion in tax payments to the Internal Revenue Service. The bank had no presence in the U.S. and had complied with Swiss laws, but this was now a global issue, which FATCA was confronting.
"There will be other FATCAs coming. The UK is looking at it also," Chahdan Jebeyli, group head of legal and compliance at Bank Audi in Beirut, warned.
The conference was also told that the decision by the Financial Action Task Force (FATF), the global standard setter for anti-money laundering, to class tax evasion as a predicate offence for money laundering, had significant implications for "know your customer" procedures at banks worldwide, which again highlighted the importance of a collective approach worldwide.