Jersey is recognised by international standard setters as one of the best regulated finance jurisdictions globally and its authorities have full knowledge of the beneficial owners of all Jersey companies, according to Geoff Cook, CEO Jersey Finance.

He welcomed moves for greater transparency and called on other locations that had not done so to introduce a regulatory regime that enabled them to know and share information on the beneficial owners of companies with appropriate authorities.

His comments follow the leak of documents https://panamapapers.icij.org/20160403-panama-papers-global-overview.html  belonging to the Panamanian law firm, Mossack Fonseca, which has led to calls for greater transparency in offshore jurisdictions to counter money laundering and tax evasion.

He said:

• “The Panama Papers challenge the use of offshore companies to hide the identities of the ultimate company owners – the beneficial owners. Jersey’s position on hiding the identities of beneficial owners is very clear: we do not allow it. Jersey has captured beneficial ownership information on a corporate registry since 1999 this enables Jersey to provide law enforcement and tax authorities with ‘adequate, accurate and timely’ data – the specific requirement of Recommendation 24 of the FATF Recommendations.”
• “Where there is found to be illicit or fraudulent activity in any country anywhere in the world, it is absolutely right that it should be challenged and investigated”,  said Mr Cook.
• “There have been a lot of allegations and speculation reported regarding Mossack Fonseca and the so called ‘Panama Papers’. Although Mossack Fonseca has a small office in Jersey, there is no suggestion that any illegal activity has taken place on the island or involved Jersey-registered companies”.

He added:

• “While no jurisdiction can ever guarantee it will never be used by a corrupt minority, we are confident we have world class anti-corruption measures and that few work harder than Jersey to stamp out illicit activity.
• The strength of Jersey’s financial regulations and security checks mean that anyone wishing to launder money or evade tax would find it extremely difficult to do so. Jersey is tax neutral. Individuals must pay tax in the jurisdictions in which they are expected to, and tax authorities in Jersey and around the world exchange information to ensure that companies and individuals with interests here do so.”

View Mossack Fonseca Q&As PDF  – also outlined below

Supporting information regarding Jersey’s position. Updated 7.4.16 1.

1. Is Jersey implicated in the leaked documents?

There are no reports of Jersey companies being used for illegal activity, but the Panama Papers show that two Jersey banks have been connected to Mossack Fonseca’s establishment of companies in other jurisdictions. Jersey has a well-established and robust central register of beneficial ownership. The information contained within the register is subject to strict validation by regulated professionals, meaning that the ultimate owners of every company registered in the Island is known and monitored. This is an important distinction from other jurisdictions. All incorporations of Jersey companies require the services of a professional, regulated ‘trust and company service provider’ (TCSP) responsible for capturing beneficial ownership information. It is through this rigorous and regulated process that Jersey has attained its status as one of the very few jurisdictions in the world to collect and retain corporate beneficial ownership information.

2. The Panama Papers talks of the ‘secrecy on sale in tax havens led by the UK’s substantial network of offshore enclaves’. Does this apply to Jersey?

The Panama Papers are careful to emphasise that owning an offshore company in itself is not illegal, and can be logical for some businesses.

What the Panama Papers do challenge is the use of offshore companies to hide the identities of the ultimate company owners – the beneficial owners. Jersey’s position on hiding the identities of beneficial owners is very clear: we do not allow it. Jersey has maintained a central register of beneficial ownership for more than 20 years and is one of only two jurisdictions globally that collect beneficial ownership data for all their companies. This process enables Jersey to provide law enforcement and tax authorities with ‘adequate, accurate and timely’ data – the specific requirement of Recommendation 24 of the Financial Action Task Force (FATF) Recommendations. All Jersey company incorporations require the input of a professional, regulated TCSP, and the TCSP has to provide very detailed information about the proposed company, its beneficial owners and its purpose and to confirm whether the company’s proposed business activities fall within the Registry’s ‘Sound Business Practice Policy’. It is through this rigorous process that Jersey has attained its status as one of the very few jurisdictions in the world to collect and retain corporate beneficial ownership information.

3. World leaders, such as David Cameron and Barack Obama, have stated that there needs to be ‘transparency about who owns which companies’. What is Jersey’s stance on beneficial ownership?

Jersey is one of the world’s leading jurisdictions for the collection of information on the beneficial owners of Jersey companies and the companies that are administered in Jersey. That information is available to regulatory authorities around the world. Jersey has held a central register of beneficial ownership for more than 20 years and is one of only two jurisdictions that collect beneficial ownership data for all its companies and this information is available to law enforcement agencies and tax authorities on request. Should the relevant international competent authorities wish to obtain information in that regard, Jersey can and does provide it in order to assist in corruption investigations. In gathering information Jersey TCSPs, lawyers, accountants and other service providers connected with the establishment of Jersey companies are also required to undertake extremely rigorous “know your client” checks in relation to the owners of Jersey companies in compliance with Jersey’s 1999 anti-money laundering legislation and international (FATF) standards.

Jersey’s credentials in this regard were further highlighted in the study entitled “Global Shell Games”, which undertook a comprehensive testing of anti-money-laundering and fighting financial crime.

The study involved researchers posing as fictitious consultants representing various risk profiles of individuals who, via email, made over 7,400 solicitations for shell companies.

Shell company, is a loosely defined term meaning those companies that are not engaged in the production of substantive goods and services, but which instead are used mainly for the attribute of separate legal personality. These requests were sent to in excess of 3,700 corporate service providers across 182 countries, with the study designed to test how effective international rules were at preventing the set-up of shell companies. Jersey achieved 100% compliance in preventing their establishment.

The UK has signalled an intention to create a public register of ownership of UK companies. We believe that the new UK public register will provide data of questionable value, as the criminal fraternity and individuals seeking to misuse UK companies to launder money would be unlikely to comply with the self-reporting requirements. The data will be unreliable as there are unlikely to be any meaningful checks in place (such as those undertaken by regulated Jersey service providers) on the quality of information being captured. In addition, those looking to get around the rules, or those who simply wish not to disclose their information, could simply incorporate non-UK companies which would not be covered.

Further, an unsophisticated regime without appropriate regulatory supervision (such as the UK is proposing) will result in a gravitation of those seeking to hide their assets and interests to those jurisdictions who will hide behind a veneer of legitimacy but will simply disclose names of ‘proxy-beneficial owners’.

4. How does Jersey share information with other jurisdictions? Jersey shares information through bi-lateral negotiated agreements with authorities in other countries and its accession to multi-lateral international conventions.

Jersey is an early adopter of the Organisation for Economic Co-operation and Development’s (OECD’s) Common Reporting Standard, the new global standard in Automatic Exchange of Tax Information. It is part of the ‘Early Adopters group’, which included 51 signatory countries at the outset. We have been fully committed to the CRS since the start of the initiative, which aims to build on the US FATCA model (to which Jersey is also a signatory) to produce a global standard for the automatic exchange of tax information.

The first exchange of information by the Jersey tax authorities under CRS is expected to take place early next year. Up to date information on Jersey’s commitment to CRS can be found here: CRS Info In addition, Jersey, as mentioned above, has captured beneficial ownership information on a live register for more than two decades, with this information being available to international law enforcement and tax authorities on request, and the Island has signed 37 Tax Information Exchange Agreements (TIEAs) with other countries. Up to date information on our TIEAs and the countries they involve (including the UK and US) can be found here: TIEA Countries

5. Some news agencies are reporting that David Cameron is now under pressure to abolish all UK tax havens, including the crown dependencies of Jersey, Guernsey and the Isle of Man. How realistic is this?

Jersey is not a tax haven. Although it offers a tax neutral environment, it does not operate on the basis of providing secrecy – see above. The UK Government is coming under pressure to end what has been called the veil of secrecy over who is the beneficial owner of offshore companies, and is holding an international anti-corruption summit in London in May to address this and related issues.

Offshore, however, does not equal illicit. In places such as Jersey, where the regulator has access to the names of ultimate owners of companies and a comprehensive network of information exchange platforms (including FATCA, CRS and our TIEA network), it is difficult to see how accusations of activities and ownership of Jersey companies being secret or illicit could possibly be true. We continue to reiterate our position as one of the world’s best regulated international finance centres, a position that has been acknowledged by independent assessments from some of the world’s leading bodies, including the OECD, G20 and IMF.

Jersey is fully aligned with the standards required by the EU Anti-Money Laundering Directive and was one of the first international finance centres to become a full signatory to the IOSCO Multilateral Treaty, an international benchmark for cross border co-operation between regulators. We were also an early adopter of the Common Reporting Standard, the global standard in Automatic Exchange of Information, and US FATCA. Evidence of Jersey’s world class reputation:

• Jersey has signed up to the Convention on Mutual Administrative Assistance in Tax Matters, which came into force in Jersey on 1 June 2014.
• On 29 November 2013, in a joint statement to the OECD, Jersey and over 30 countries committed themselves to the early adoption of the ‘Common Reporting Standard’ (CRS). The CRS contains the reporting and due diligence standard that underpins the automatic exchange of financial account information
• Jersey’s Chief Minister received a letter of congratulations from Angel Gurria, Secretary General of the OECD, dated 25th July 2013, concerning Jersey’s position on international tax transparency. Mr Gurria made particular reference to the joint statement issued by the Crown Dependencies on 15 June 2013, in which the Island committed to join the pilot initiative of multilateral automatic tax information exchange launched by the UK and four other EU Member states, to publish an action plan on beneficial ownership and to join the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
• The results of Jersey’s 2011 OECD Peer Review (including the 2014 Supplementary Report) found ‘the Jersey authorities are fully committed to transparency and exchange of information for tax purposes[1]’ and ‘Jersey’s practices to date have demonstrated a responsive and cooperative approach’.
• Jersey was rated by the IMF in 2009 as one of the best global International Finance Centres.
• Jersey was one of the first IFCs to be placed on the OECD ‘white list’ as having implemented internationally agreed tax standards in 2009.
• Jersey was invited by the French Chair of the OECD Peer Review Group to be the Vice Chair, alongside Japan, Singapore and India in 2009.
• Jersey received a favourable British Crown Dependencies Review (conducted by UK government – the Foot Review of 2009).
• Tax evasion is illegal in Jersey and has been since 1999. It is also a criminal offence to facilitate or engage in tax evasion.
• Jersey has captured beneficial ownership information on a central register since 1989. The Registrar of Companies (part of the Jersey Financial Services Commission) maintains a central register of beneficial ownership of companies. In addition, Jersey regulates those who form and administer companies, trusts, partnerships and foundations. They are required by statute to maintain up-to-date and accurate information on the ownership of companies. All the information held in the Island is available to tax authorities and law enforcement agencies on request. (XI) The Jersey authorities have signed:
  1. 37 Tax Information Exchange Agreements (TIEAs)
  2. 8 Double Taxation Agreements (DTAs) that follow the OECD’s model convention for information exchange
  3. 12 other, partial DTAs that cover income of certain individuals (such as employment and pension income) and operations of ships and aircraft.
• Taken together, these arrangements assist in building good quality business with those countries and are also a reflection of Jersey’s commitment to comply with international standards.

6. Labour party leader, Jeremy Corbyn, has called for the UK Government to impose direct orders on British overseas territories and crown dependencies to stop them acting as tax havens? What is Jersey’s response to this?

For all the reasons summarised above, Jersey cannot be labelled as a tax haven and has a world-class reputation for sound regulation and transparency. It is already endorsed by international leading bodies such as the OECD, G20 and IMF.

Unlike most other jurisdictions, we have also maintained a central registry of beneficial ownership of companies since 1989. Furthermore, the Island offers real benefits to the UK, generating around £2.3 billion in tax revenues each year, supporting an estimated 180,000 jobs, and is a conduit for almost £500 billion of foreign investment into the UK (source: “Jersey’s Value to Britain, 2013”, an independent research report undertaken by Capital Economics).

Jersey Finance has published an Article in response to the Panama Papers (there is also a Mossack Fonseca Q&A PDF provided at the end of the Article): View Here