Jersey: Country and Foreign Investment
Relationship with the UK
In 1998 the British Government announced that there would be a review of financial regulation and structure in Jersey, Guernsey and the Isle of Man. The review was carried out by Anthony Edwards, a former senior Treasury civil servant, and was published in November, 1998. Saying that 'the islands are in the top division of offshore centres' Mr Edwards gave the islands a generally satisfactory report, making 154 recommendations that applied to Jersey. The great majority of these covered matters that were already in the legislative pipeline or were readily agreed to by the administration. Some recommendations however were more contentious for the island.
The difficult recommendations were:
- That the Financial Services Commission should have powers to prosecute and to 'name and shame'
- That all limited companies and limited partnerships should file accounts
- That trustees should be obliged to make proper disclosures to beneficiaries
- That trustees should waive self-incrimination privileges
The administration's initial replies amounted to a qualified refusal of these recommendations, largely based on the existence of common law safeguards and in defence of confidentiality, but subsequent pressure from the FATF and the OECD, together with the consequences of the September terrorist attacks in the US have led to a considerable tightening up.
In 2001, for instance, the jurisdiction introduced a law obliging trust and company service providers to obtain an operating license from the Financial Services Commission, in much the same way as banks and investment funds have always been obliged to. This license commits the organisation to record the beneficiaries of all assets handled, provide adequate anti-money laundering training for staff, and report all suspicious transactions to the authorities.
Jersey's standards of anti-money laundering regulation have in fact been the subject of favourable international comment, and the G7 Financial Stability Working Group on offshore centres places Jersey in Group 1 - those which meet international standards of financial regulation and international co-operation.
Another review questioning financial supervision and transparency, taxation in relation to financial stability and international cooperation in Britain's three Crown Dependencies (Guernsey, Jersey, and the Isle of Man) and six Overseas Territories (Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, Turks and Caicos Islands) was released in late 2009. Authored by Michael Foot, former Chairman of the UK office of Promontory Financial Group, the report was largely complimentary of the way in which the Crown Dependencies conduct their economic and fiscal policies. Indeed, Foot concluded that these territories made a significant contribution to the liquidity of the UK market during his review, providing net financing to UK banks of USD332.5bn, with Jersey by far the largest net contributor. Foot also noted that the Crown Dependencies have good frameworks for tackling money laundering and terrorist financing, as recognised by the Financial Action Task Force (FATF) and that all three had met the Organization of Economic Cooperation and Development (OECD) standard for tax transparency by the G20 meeting in April 2009.