Glass houses

IFCs have long had many of the financial safeguards in place which are only now becoming commonplace across the world, argues Geoff Cook

The debate around transparency and information exchange continues to evolve, perhaps unsurprising, in this UK general election year. This consequently continues to demand a real focus for those working in international financial centres (IFC), which frequently find themselves in the frame when it comes to some of the political rhetoric and misinformation relating to secrecy, illicit financial flows and their supposed links with certain IFCs.

The regulation and transparency debate is an important one, but it is vital that it does not rest solely on the actions of IFCs. For some years, Jersey has argued that developments in regulation and information exchange mechanisms need to be implemented in a concerted manner across the globe, in order for them to be fair and effective.

In fact Jersey is coping well with increasing demands as far as transparency and growing amounts of regulation are concerned, and is working hard to obtain the credit it deserves for its response to the shifting regulatory agenda.

Welcome recognition

Around 18 months ago, for instance, there was a considerable political breakthrough when UK Prime Minister, David Cameron, made a welcome statement in the House of Commons. He said that it was no longer fair to refer to any of the Overseas Territories or Crown Dependencies as tax havens.

This was an announcement which, for Jersey, echoed comments by the secretary general of the OECD, Angel Gurría, who had written to Jersey's chief minister the previous year to congratulate the jurisdiction on the measures it had taken in support of international tax transparency.

Against a highly charged political backdrop however, this evidence constantly needs reinforcing. Larger countries continuously (often with weaker or less effective regulatory and oversight infrastructures in place) look to address national debt problems and appeal to the electorate by shifting blame to IFCs. For jurisdictions to be used as a political football in this way is a shame, as tax transparency is an important subject that merits serious discussion.

A new age for transparency

The momentum for greater transparency in financial services is undoubtedly gathering steam, both onshore and off. This is something that Jersey fully supports, providing it is done through the adoption of sensible workable global standards and, a mature approach to balancing transparency with a legitimate right to an appropriate level of confidentiality.

Indeed the argument for 'a level playing field' has been recognised by influential global bodies such as the OECD; the organisation's move to introduce a common reporting standard is welcome.

For its part Jersey can point to signing more than 40 tax agreements with countries worldwide. The jurisdiction is a signatory to FATCA, an intergovernmental agreement with the UK and the European Savings Tax Directive for automatic exchange of information. Jersey was also one of the 51 countries and jurisdictions to commit to the new OECD standard as part of the 'Early Adopters Group'.

As far as beneficial ownership is concerned, Jersey has captured beneficial ownership information on a centrally held corporate registry since 1999. This information is entirely available to law enforcement agencies.

In fact one of the outcomes of the last G20 meeting was an endorsement of the current approach to beneficial ownership, to ensure that the true owners of entities are known, that information is readily available and that it can be exchanged between governments without any difficulty.

This is absolutely the approach adopted in Jersey, and in fact Jersey's capabilities are far ahead of other onshore and offshore jurisdictions, including currently the UK, which is one of only a few countries in the world calling for a public registry.

Given there is ready access and availability of beneficial ownership information to fiscal and investigative authorities, Jersey's industry does not believe there is further benefit in pursuing a public register.

With a number of different information exchange models now in existence globally, reporting has never been more complicated for IFCs, and monitoring how the landscape evolves further will be vital - something that will be explored at our annual Private Client Conference in London next month.

It will be those centres like Jersey, that can efficiently meet these international requirements and at the same time package and securely administer international capital without dislocating domestic tax systems that will succeed.

Geoff Cook is the CEO of Jersey Finance

He writes a regular blog about Jersey for Private Client Adviser