Automatic For The People - A Milestone for 'Early Adopters' to CRS
Automation seems to be something of a theme this year. Fans of US alternative rock band REM, for instance, could have been excused for getting excited when it was announced a few months ago that a 25th anniversary edition of album Automatic For The People would be released in 2017.1 September 2017
Closer to home, and automation has been something of a theme too – in particular there’s plenty of talk within the financial services industry about the impact of automatic exchange of information under the OECD’s Common Reporting Standard (CRS). And as far as that’s concerned, it’s certainly not a case of ‘everybody hurts’ or ‘rapid eye movement’ for Jersey firms.
In fact, September 2017 marks another milestone in the fairly lengthy implementation process for CRS globally, but not one that should be overly burdensome for Jersey. Firms here have been collating information for clients under the terms of CRS from the beginning of this year, and as from this month, they will be exchanging information automatically with more than 50 other jurisdictions who are also signed up as ‘early adopters’ to the CRS.
This seems like a significant undertaking, and in some ways it is, but the impact for Jersey is actually quite minimal.
This is due in large part to the fact that firms here have already been exchanging information automatically with the UK under its separate agreement with the Crown Dependencies for a year now. That means that firms have all the infrastructure, systems and expertise in place already to be more than capable of meeting the new CRS requirements, putting Jersey well ahead of other locations.
The fact that Jersey has been sharing information automatically with the UK for a whole year should also reiterate that Jersey has nothing to hide, thanks to the strength of its front-end defences and tax evasion and anti-money laundering checks.
It’s also notable that recent industry figures show Jersey has actually seen solid performances across its banking, private wealth and capital markets activity over the past twelve months, and a stellar performance in its investment funds business, confirming our expectation that CRS wouldn’t herald an outflow of assets from Jersey. In fact, quite the opposite has happened as investors have proactively gone out looking for quality and specific expertise.
In the wider scheme of things, though, this month’s CRS deadline is significant in terms of global transparency and combatting financial crime.
It is significant that more than 50 countries right now are exchanging information freely to try and root out financial crime.
And it is significant that by this time next year that more than 100 countries will be operating under the CRS regime. If there is any dubious activity in any of the participating countries and jurisdictions, CRS will find it.
Equally, this September milestone should mark a sea change in the quality and direction of debate around transparency. Given that CRS is so comprehensive, it should put a stop once and for all to the unsubstantiated claims sometimes made against international financial centres.
For some time now, Jersey Finance has argued that when it comes to transparency, it is important not to lose sight of the ultimate shared objective – to clamp down on financial crime so that good people and honest investors around the world can put their capital to work in a high-quality environment. That’s a shared global aim, for the benefit of everybody.
With automatic exchange now a reality, CRS should prove pivotal in moving that debate on sensibly.