Robert Christensen, Managing Director of Volaw Group, considers the recent interest in offshore finance centres in light of the G8 summit’s declared ambitions to clamp down on tax avoidance and increase corporate transparency.


Jersey, along with the other Crown Dependencies and British Overseas Territories, has received a great deal of media and political attention during the months preceding the G8 meeting in Northern Ireland, which had on its agenda a focus on preventing aggressive tax avoidance and seeking greater transparency on corporate structures. Many of the criticisms directed towards the Crown Dependencies were unjustified, based upon flawed assumptions and groundless preconceptions. The economist John Kay, writing in the Financial Times on 19 June, summarised this neatly:


“This week’s Group of Eight meeting produced denunciations of secrecy and tax havens. But the sources of the problem are not to be found in Bermuda or the Channel Islands. The activities that escape taxation take place in the G8. The correct starting point is the flawed structure and implementation of corporation tax in the G8 itself.”


The communique from G8 leaders relating to their desire for greater transparency on ownership of companies was singularly lacking in detail. This may be because many of the G8 – the USA and the UK in particular – lag way behind Jersey and some of the other offshore finance centres in collecting detail about the true beneficial ownership of companies and similar entities. The authors of an interesting 2012 study[i] on establishing “untraceable shell companies” found that:


 “Against the conventional policy wisdom, those selling shell companies from tax havens were significantly more likely to comply with the rules than providers in OECD countries like the United States and Britain.”


Jersey’s finance industry has for many years consistently sought to demonstrate the Island’s global role as a tax-neutral conduit, helping to facilitate international commerce[ii] and certainly not seeking to provide individuals with a means to evade paying their taxes. For many years Jersey has been at the forefront of international regulatory development and the Island’s long history of cooperation and its highly developed and robust framework ought now to be acknowledged not just by the UK government but also by other governments.


One form of cooperation is with tax-information exchange. In the Spring 2013 issue of Jersey Brief we described the preparations being made in Jersey to agree a tax information-sharing agreement with the UK Government, based on the principles of the US Government’s Foreign Account Tax Compliance Act (“FATCA”), which Jersey has also agreed to implement. Some major EU nations have also announced their intentions to implement similar types of agreement and there are some suggestions, following the G8 meeting in Northern Ireland in June 2013, that the EU might look to adopt a pan-European FATCA type model. These measures demonstrate a sustained political will to move towards global transparency on tax matters. Jersey will surely participate with the international community in this project, though it remains to be seen whether all other finance centres will do the same.


Following a meeting with UK Prime Minster David Cameron prior to the G8 summit, Jersey’s Chief Minister Ian Gorst issued the “Jersey Action Plan to Prevent the Misuse of Legal Persons and Legal Arrangements”. This includes a commitment to complying with any new international standard that has global application covering G8, G20, OECD, and EU member jurisdictions plus other major financial centres and would allow tax authorities and law enforcement agencies to have access to beneficial ownership information held on a central registry. Full details of this announcement can be found at the States of Jersey web site:


Industry reaction to Jersey’s announcement has been positive and while it is broadly supported, practitioners are warning that the drive for transparency should not be allowed to undermine client confidentiality, highlighting situations where, for perfectly valid reasons that have nothing to do with tax or tax avoidance, individuals would not wish their details to be made public. While the future establishment of registers of beneficial ownership seems highly probable and that these will be made available to tax authorities and law enforcement agencies, it is perhaps less likely that there will be global consensus on making these open-access public registers. There will undoubtedly be further discussion and consultation on these matters. Indeed, Jersey’s Action Plan includes the announcement of a general review of corporate transparency, having regard for the development of international standards and their global application, starting with the publication of a pre-consultation paper before the end of 2013.


Looking at these various developments from the perspective of existing owners of Jersey structures and from the position of individuals who may be looking to establish new structures in Jersey, these announcements do not really alter the current situation: There has been a long standing requirement in Jersey for firms involved in the establishment of companies and trusts to obtain and verify full personal details of all proposed beneficial owners. This information is provided to the Island’s financial services regulator, the Jersey Financial Services Commission, at the point that new vehicles are established. Furthermore, Jersey already has in place Tax Information Exchange Agreements with nearly forty countries. Therefore, at such future time that new, global arrangements are implemented, these will serve to enhance the arrangements already in place in Jersey, rather than being completely new and unprecedented, which will likely be the case in a number of countries.


[i] Global Shell Games: Testing Money Launderers’ and Terrorist Financiers’ Access to Shell Companies: by Michael Findley (University of Texas at Austin), Daniel Nielson (Brigham Young University) and Jason Sharman, (Griffith University, Australia).

[ii] A 2009 study “International Finance Centres and developing countries: providing institutions for growth and poverty alleviation” demonstrated the positive role played by offshore finance centres such as Jersey in helping to route investment funds to developing countries and thereby stimulate economic growth in those countries.


For further information about the use of Jersey financial structures, please contact Robert Christensen ( or any of our senior management team.