I was fortunate enough to moderate a fascinating session with some leading thinkers on international regulation – Richard Hay, Professor Jason Sharman and David Russell QC – looking at some of the implications of Brexit from a wealth management perspective, and more specifically at the state of play when it comes to global standards of confidentiality and transparency.
Of course, the technical ramifications of Brexit are wide-ranging and complex, but at a high level, Brexit also represents something quite significant.
What became clear during our conversation was that we are at a pivotal point in history, not just in terms of the UK leaving the EU next year, but in terms of what it means for global standards and a global vision.
Earlier this year, I blogged on the significance and fine balance between geopolitical moves towards protectionism on the one hand, and the force of globalisation on the other, and with Brexit moving ever closer, this dynamic is becoming increasingly important.
What does it mean in terms of nation state control? Where does this leave global standard setting and how does it affect global approaches towards the tax and transparency agenda?
The EU is making moves to extend its own AML directive and maintain its own list of non-cooperative countries; meanwhile, the US is ploughing its own brand of trade policy and the G20, FATF, and OECD continue to set their own agendas.
The result is a fragmented tapestry of initiatives and agendas, all by and large politically driven, with something of the same end goal but with confusing and sometimes conflicting overlaps.
It was fitting – perhaps ironic – that as we were discussing this at this STEP event, it was almost a year to the day that Jersey started exchanging tax and beneficial ownership with around 50 other countries under the OECD’s Common Reporting Standard – intended to be the global standard for information exchange and cooperation. But which the US decided to opt out of in favour of their own FATCA rules.
Different approaches to public registers of ultimate beneficial ownership is another case in point. This year’s STEP Global Congress took place in Canada, and in Canada beneficial owners are tracked and verified by corporate service providers, so that whilst the register of beneficial ownership is not public, records are up to date, accurate and reliable.
There is a marked difference between that approach (which is broadly similar to Jersey’s) and attitudes in the UK and EU, with the UK in particular being quite vocal about wanting to move towards a position where public registers are the global standard.
If that pan-Atlantic disconnect wasn’t enough, within Europe itself there are some real conflicts between the drive towards transparency and the privacy rights of citizens under the new GDPR rules, and in the wildly varying moral arguments around complete transparency for the wealthy but complete privacy for the average man on the street.
So as we sit here on the precipice of a new era for the EU and UK, where does Jersey fit in?
Yes, this is indeed a pivotal point in our history, but rather than it marking a point in time where we are all battling against the tide, I’d suggest this is an opportunity to be more forward-looking and to focus on working more closely together, where the future vision is both clear and shared.
Jersey is ready and in a strong and fairly unique position to do that, as an IFC with interests and a good reputation in multiple markets around the world.
Because we want to do our business in the right way and because we believe passionately that our role in the world is a vital and positive one, we’re constantly working with stakeholders in key markets around the world to set common goals, to fight financial crime, to uphold our commitment to international cooperation and to make global financial flows more efficient and more impactful.
Moreover, we have invested in evidence-based research that can help drive forward sensible and progressive discussions around cross-border finance.
It’s understandable that there is apprehension about what a post-Brexit Europe will look like and what it means for the EU and UK on the international stage. But it’s also a chance for us to set out a vision for what the world will look like after this transformative change.
In my view, working together is a better solution and Jersey is ready to support those collaborative efforts.