You might think that we’re harbouring something of a developing love/hate relationship with the Guardian after you read this article – particularly following our assassination of the basis of their argument in a recent article entitled ‘Will Britain Need to Bail Out Offshore Tax Havens.’ But in truth, we respect their journalists, we just find it amusing that they will turn even the most undeniably positive into an extreme negative when it comes to any international financial centre.
Take Jersey for example – as we intend to do in this report – it has just received almost overwhelming praise in a new report from the International Monetary Fund entitled ‘The Financial System Stability Assessment Update,’ to the point at which we’re about to show that quite probably Jersey is a safer haven for your wealth than onshore UK. But in reporting on the same story, the Guardian introduces Jersey, the basis for the article, as a location “which has earned notoriety as a tax haven.” We love it…
Anyway, back to the matter at hand, is Jersey a safer haven for your wealth than onshore UK? Well, if you take the IMF report as the basis for your research then yes it is, because Jersey came out higher in terms of its standing in the report on the basis that it has put in place a “comprehensive and robust” framework for countering money laundering and terrorist financing for example. What’s more it has a higher level of compliance with the Financial Action Task Force’s Recommendations than Great Britain.
In their report into Jersey’s standing following the IMF’s assessment of the offshore centre, the Guardian of course has to admit that yes, “[the] IMF rates Jersey ahead of UK on compliance with international financial regulation rules” – but then they have to go on and damn Jersey and call attention to the fact that in its past it had links to those involved with money laundering and corruption. However, the examples it cites date back decades – and if we review the British involvement in similar scandalous situations at the time we can once again show how Jersey was even then never as bad as the UK!
Now moving on, let’s look into the facts as highlighted by the IMF report. The report concludes that ultimately financial sector regulation and supervision on the island are of a “high standard” and “comply well” with international standards – including those of the G20 nations and other European countries. Thanks to the report’s findings, Jersey is placed in the top division of international finance centres – aka (for Guardian readers) offshore tax havens – and it ranks higher than America or Belgium for example when it comes to compliance with FATF recommendations. (Jersey complies with 44 of the 49 FATF Recommendations, and 15 of the 16 “core” and “key” FATF Recommendations.) Regulation was said to have improved since the last report was issued back in 2003, however, let’s not get complacent and too congratulatory here because the report also highlights areas where Jersey needs to make improvements and secure its position to continue weathering the financial storm that’s raging around the world.
The report does show Jersey to be an excellent financial centre that rates better than the likes of the UK in many areas of its compliance with international guidelines, but at the same time the areas where it needs to improve are significantly important. Fortunately the authorities in Jersey greatly value the efforts of the IMF in drawing their attention to these issues and have stated that they: “will develop an action plan to deal with these recommendations. The plan will be published and the authorities will report annually on progress.”
Areas for proposed improvement include examining the quality of auditors working in Jersey, reducing reliance on third parties such as intermediaries and introducers undertaking due diligence on clients before introducing their business to the island, and the exposure of locally based banks because of the process of ‘up streaming.’ (This is where Jersey banks take deposits from customers and place them with group entities (mostly in the UK or EU) to provide liquidity to the group. According to the IMF report with regard to the latter issue, “in the event that the health of the group deteriorates, the exposure of Jersey banks would require careful management.”)
Following publication of the report on Monday, Chief Minister Senator Terry Le Sueur, and Commission Chairman Colin Powell issued a statement saying that: “Jersey remains committed to maintaining and enhancing its adherence to international standards and welcomes the recommendations made within the FSSA. These recommendations will assist Jersey in further strengthening its regulatory, supervisory and AML/CFT arrangements and in developing its capacity to deal with financial sector shocks. The assessment reinforces Jersey’s position as a member of the community of nations that adhere to international standards in prudential, tax and AML/CFT areas.”
If you’re looking for the best location for saving, investing, banking or international business purposes, any jurisdiction you consider will have to be appropriate to your own personal situation and requirements – therefore to state that Jersey is a better international financial centre than say the UK, Guernsey, the Isle of Man or even Hong Kong is not possible. Seek personalised advice before making any decision affecting your personal financial situation and remember that there is nothing wrong with going offshore – it’s just your reporting obligations that you have to know about and adhere to.
