by clicking the arrows at the side of the page, or by using the toolbar.
by clicking anywhere on the page.
by dragging the page around when zoomed in.
by clicking anywhere on the page when zoomed in.
web sites or send emails by clicking on hyperlinks.
Email this page to a friend
Search this issue
Index - jump to page or section
Archive - view past issues
Expat Investor : December 2008
JERSEY BANKING In search of economic stability Geoff Cook, Chief Executive of Jersey Finance, explains how economic stability and security are the chief concerns for this island’s financial services’ regulators. Economic stability and security are now the number one priority for investors, who have had their confidence in the financial services industries deeply shaken by events in New York and in other leading financial markets. In this turbulent economic environment, Jersey provides a relative oasis of calm, with a huge pool of liquidity available from deposits placed in the Island. More than £200 billion sterling has been attracted to Jersey over the years, funds that do not lie idle in the bank vaults of Island offices, but are circulating amongst the onshore financial centres, particularly London. As stability becomes an essential commodity for international investors the Island’s long held reputation as a safe, secure location in which to shelter assets from global turmoil, is gaining special significance. Banks in Jersey are subsidiaries or branches of worldwide financial institutions, but tend to be far more capitalised in Jersey than the industry norm, because the Island is a centre for deposits, giving further comfort to investors. The privacy issue Alongside the need to shelter assets in a secure, stable environment, there is also widening concern amongst high net worth clients that the privacy of their affairs may no longer be guaranteed. This has led to considerable debate amongst those who advise wealthy clients about the threats to confidentiality posed by the demands for greater transparency from tax authorities. The fact is that it is possible for jurisdictions to adhere to international standards and to co-operate with international moves to combat fiscal crime, whilst maintaining a client’s right to privacy and confidentiality. However, it is worth considering for a moment the differences in the rules that exist between jurisdictions. There are some financial centres that rely on banking secrecy laws to uphold the privacy of financial affairs.However, such centres are attracting an increasing level of negative publicity regarding assets linked to illegal activity which hide behind a cloak of secrecy. As a result, there is mounting pressure for them to abandon the secrecy barrier. There are other centres which do not rely on secrecy laws, including many jurisdictions which are familiar to British expatriates. Jersey is one such centre. The Island is not a secretive jurisdiction and it protects the rights to privacy and confidentiality of financial information relating to law-abiding citizens without the need for banking secrecy laws. Jersey embraces the concept of transparency in its regulatory practices and it is acknowledged for doing so by Fast Facts 10004 December 2008 ? EXPAT INVESTOR 9 international bodies and law-makers, but this does not mean that private and confidential data about clients held solely by institutions in Jersey is accessible and will be disclosed. On the contrary, Jersey has always upheld the principle of confidentiality of client affairs. Some may question whether the Island can continue to do this when the UK’s HM Revenue & Customs (HMRC) has been seen to increase its powers to obtain information about offshore bank accounts, most notably following the Court ruling it won in 2007. This case related to information held about clients in the UK with offshore bank accounts. The Industry believes that HMRC would not generally be able to compel information to be disclosed by Jersey subsidiaries and/or branches of UK institutions, provided always that the relevant information was not held in the UK. Although the position has not been tested in the Island, this is the view of Jersey legal experts familiar with an understanding of Irish and English civil case law. Tax and transparency In the fight against money laundering and fiscal crime and to meet OECD principles of transparency, a new model agreement has been created known as the Tax Information Exchange Agreement (TIEA). Many financial jurisdictions are signing agreements with individual countries and Jersey is amongst them. To date, the Island authorities have negotiated agreements with the US, Netherlands and Germany. It is important to recognise that tax authorities can only use TIEAs in specific cases where the requesting authority is able to demonstrate that there is a need to obtain information and that all other means to discover the information they require has been exhausted in their own territory. There is growing international pressure amongst all financial jurisdictions to co-operate in exchanging information where there is strong suspicion that crimes have been perpetrated, and its is possible to support the concept of greater transparency in financial affairs whilst adhering to original and long held principles that the financial affairs of legitimate, law abiding clients, are sacrosanct. Readers can find out more from Jersey Finance by visiting www.jerseyfinance.je
January February 2009