In a period of substantial change, which has included political fragmentation as a result of Brexit and more widely by US President Donald Trump’s openly divisive agenda, protectionism has re-emerged as a threat to globalisation. Increasing demands for tax transparency, the onset of digitisation in financial services and the widespread restructuring by global banking organisations since the crisis unfolded, has seen Jersey emerge stronger, capable of meeting the highest global standards of regulation and compliance, while also championing innovation in the services it delivers to investors worldwide.
As a result, we can point to rising assets under management and administration, increasing numbers of foundations, higher levels of business from new markets such as the Gulf Cooperation Council (GCC) countries and Asia, and a skilled and experienced workforce that is at pre-crisis levels.
One influencing factor that was certainly not on the agenda a decade ago, would have been the far-reaching implications of the UK’s decision to leave the European Union; the impact of which remains uncertain, while negotiations continue on how the break from Europe will be concluded.
Setting aside any inevitable uncertainties about the outcome of those negotiations, investors can be reassured that our finance industry will remain in a solid position and continue to offer investors seamless continuity of service, supported by a regulatory regime which is recognised as one of the best in the world. The endorsements Jersey has been given by leading EU bodies, for instance, have not disappeared with the triggering of Article 50.
We also know that the Government of Jersey has a clear strategy for dealing positively with the effects of Brexit, while the UK Government has acknowledged in discussions that it has our best interests at heart.
As a Crown Dependency, Jersey has a strong, enduring relationship with the UK, carved out over the 800 years since the constitutional relationship with the Crown was formed. Furthermore, in more recent times, we can also point to our strong and stable partnership with the City of London during the last five decades or more, which will also remain unaffected by Britain’s departure from the EU.
Against this backdrop of political uncertainty and increasing volatility, it will be absolutely vital to deliver stability in the provision of financial services, while at the same time responding to challenges in order to ensure Jersey remains competitive and creates a future-proof environment in which our world-class providers are able to provide leading edge solutions.
During the last year therefore, there have been a number of innovative and unique platforms implemented to enhance our offering. In the funds sector we launched the Jersey Private Fund vehicle, the result of a streamlining of our investment funds regime and designed to enable small numbers of sophisticated investors to bring their funds to market quickly and efficiently. Jersey was also selected as the jurisdiction of choice for a new global technology fund – the largest in the world when it was announced and a significant coup for our funds sector.
Market access is critical for fund managers, especially in Europe since the introduction of the Alternative Investment Fund Managers Directive (AIFMD) and Jersey has responded effectively by providing a straightforward dual approach. This enables globally-focused managers to structure both their pan-European funds through flexible and fully AIFMD-compliant National Private Placement Regimes (NPPRs) and non-European funds through a ‘rest of the world’ regime which meets global standards.
Meanwhile, to boost our private wealth offering, a further set of amendments to the Trusts (Jersey) Law 1984 are being progressed. When they are introduced later this year, it will be only the seventh occasion in more than 30 years that amendments have been implemented, highlighting the quality and scope of the original trust law when it was first introduced, and a reason why others have subsequently sought to mirror it.
Jersey’s Charity Law also continues to be rolled out in phases highlighting our ambitions in the global philanthropy sector.
In the banking sector, which remains a pivotal focus of our offering, we updated laws in recent months to ensure banks and their customers could continue to benefit from fast and efficient cross-border payments with certain European countries, through our membership of SEPA (Single European Payments Area).
Whilst we must maintain the strongest possible regulatory standards in the fintech arena, we have nevertheless sought to blaze a trail and work together with the digital sector.
It is now more than three years since Jersey launched the first regulated bitcoin fund. Since then Jersey has implemented virtual currency regulation and has created the appropriate forward-thinking regime that creates a sound business environment for future virtual currency innovation, while ensuring there are controls to mitigate risk in this developing area.
Examples of innovation and product success are a clear theme of the articles included in this the 10th edition of Jersey ~ First for Finance.
However, what will also emerge in the following pages is an appreciation by everyone working in the financial services industry that there is no time to sit back on our accomplishments.
These views are echoed by the Government of Jersey and our regulator, the Jersey Financial Services Commission (JFSC), with whom we are working in partnership to refresh our strategy to meet future challenges and seize opportunities, including an increasing focus on overseas markets.
The global finance industry also faces mounting political pressure to provide greater transparency as a means of fighting money laundering, fraud and tax evasion.
Jersey is proud of its achievements in this field. Since the introduction of the proceeds of crime legislation as far back as 1999, which made evading tax illegal, there has been a consistent series of measures designed to deliver the highest possible standards of regulation and compliance, while we have also been a willing partner to cooperation and transparency agreements with countries worldwide.
In November last year, Jersey became one of only six countries in the world to be found to be entirely tax compliant against the high standards set by the Organisation of Economic Development (OECD), following a second round of peer review assessments. The following month the European Union’s Code of Conduct Group recognised Jersey as a cooperative jurisdiction following a year-long screening process.
Another important assessment was provided by MONEYVAL who evaluated our legislative and regulatory framework and gave us the joint highest rating to date of any jurisdiction assessed.
In addition to this, we were also one of the first jurisdictions to be approved by ESMA (European Securities and Markets Authority) for the granting of passport rights to market alternative investment funds into the EU when that becomes available to third countries; and we recently became only the third jurisdiction globally to have ratified the OECD’s MLI (Multilateral Instrument) relating to its Base Erosion and Profit Shifting (BEPS) programme, designed to ensure profit is taxed in the jurisdiction where economic activity was generated.
We have also signed up to all cooperation and information sharing mechanisms and we have a central register of beneficial ownership that meets international standards in providing information with tax authorities globally.
We continue to receive recognition for our status from leading media organisations including Citywealth magazine, where we have been selected as the ‘IFC of the Year’ for six consecutive years, and Wealthbriefing, where we have been judged ‘Best IFC’ in their European Awards for two consecutive years.
These endorsements from leading international standard setting bodies and from the finance media add to Jersey’s first-class reputation as one of the world’s leading specialist finance jurisdictions, equipped with a forward-thinking approach that has kept us at the forefront of global finance for more than 50 years.
By providing quality financial services, coupled with high regulatory standards, we are able to play our part in supporting businesses, governments, families and individual investors with their high-quality international investments, generating returns and creating wealth and jobs in communities far beyond our shores; which is what sets us apart from other IFCs.
Although there have been considerable changes during the last 10 years, Jersey’s positive role as an IFC and the availability of its expertise in support of investors worldwide has remained a constant. We are proud of the vital contribution we make to the global economy through cross-border financial services, which we provide consistently in a well-regulated environment. There is clear evidence from the research we have undertaken of the valuable role we play.
Furthermore, every single piece of independent research that we have commissioned during the last decade has thrown up one incontrovertible trend – that among governments, institutional investors, families and ultra-high net worth investors, there is an increasing demand for safe, secure and robust ways to put their capital to work in diverse markets; and Jersey remains ideally placed to meet that demand.