Jersey: Offshore Business Sectors
Trust management, particularly for wealthy UK individuals, was Jersey's traditional business. Successive tightenings of UK anti-avoidance legislation have reduced the possibilities for UK citizens, but Jersey's trust business has continued to grow based on a more international clientele, and following the introduction of the purpose trust, a surge in corporate trust work. Many Collective Investment Funds are also of course based on Trusts.
Total trust assets looked after on the island exceed GBP100bn, excluding Collective Investment Funds.
Jersey has an extremely well-developed legal and financial infrastructure for trust management. With such a large established base of trusts, and a growing reliance on corporate work, the volume of trust litigation is becoming significant.
Jersey's Financial Services (Extension) Law extended the remit of the Financial Services Commission (FSC) under the Investment Business (Jersey) Law 1998 over banking, investment funds and insurance activities into trust and company management, if the underlying activity is connected with financial services.
The law's code of practice was applied to relevant financial service providers from 27 November, 2000. Business licensing and qualification regulations came into force from 2 February, 2001, and 28 May, 2001 was the final deadline after which all other businesses must operate in full compliance with the code of practice. Qualification requirements for most lower category staff had to be fulfilled before November 2003; the deadline for top and middle category employees was November 2005.
In June 2009, Jersey's Privy Council approved an order allowing Foundations to be set up in Jersey.
Foundations have a long history in continental Europe. In medieval times they were used for charitable or religious purposes. They are now commonly used for wealth management, and residents of jurisdictions like the Middle and Far East are more familiar with foundations than with trusts, which do not exist in their legal systems. Jersey is the first of the Crown Dependencies to bring in a genuine foundation product.
The regulations will permit foundations to migrate in and out of Jersey. They also provide for existing Jersey companies to convert to foundations.
The approval of the Jersey Foundations Law by Jersey’s Privy Council was welcomed by Jersey Finance as a hugely positive step in affirming the island as a centre of excellence for private wealth management business.
Foundations sit alongside existing vehicles such as companies, trusts and limited partnerships for use in financial planning and private wealth management strategies.