Chief Minister's speech to the International Trusts & Private Client Forum

​Ladies and gentleman, I am grateful for the opportunity to speak to you today, to address what has become one of the most significant annual gatherings of Trust and Private Client practitioners in the Channel Islands.

Private wealth management is a significant pillar of the financial services industry in Jersey. It is a key foundation on which the industry has been built, and the quality of our legislation, regulation and judicial system has led to Jersey being rated as one of the most stable and successful international financial centres in the world.

However, we need to work hard to maintain stability and success in a fast-changing world. The government is committed to supporting the private wealth management industry, and Jersey’s wider financial services industry.

With the growth of ambitious new financial centres across the globe, we can achieve continued stability and success by sustaining our core offerings while also looking outwards for new opportunities, so that Jersey remains open for business in a proportionate, coordinated and sustainable way. 

Today I will outline the position we are taking on a number of major international issues that affect our industry. 

2013 saw jurisdictions and international organisations working hard to show they were tackling tax evasion and abusive tax planning. Jersey has always made it clear that we want to comply with international standards and we welcome the global approach that is now central to these initiatives. 

We share with the UK a zero tolerance of tax evasion and a commitment to transparency. This has been recognised by the UK Prime Minister, David Cameron. 

Chancellor, George Osborne, demonstrated the strength of our relationship with the UK when he supported efforts to remove Jersey from the French blacklist. This relationship with the UK is critical to Jersey moving forward in an uncertain world.  

The Exchequer Secretary to the Treasury, David Gauke, commended Jersey’s commitment to the global tax transparency agenda. He said the UK government would continue to work closely with the Crown Dependencies and overseas territories - and continue to press other financial centres to match the steps we have taken. 

The Prime Minister has written to me, as he has done to the other Crown Dependencies and the Overseas Territories, highlighting the wish of the United Kingdom to lead the world in raising standards of transparency of beneficial ownership.

In his letter Mr Cameron has recognised our long-standing, leading approach to transparency on beneficial ownership. This has also been remarked upon by the World Bank and others. 

However, while he has drawn attention to Jersey’s central registry of company beneficial ownership, he hasn’t mentioned our comprehensive licensing and regulation of trust and company service providers – practices which are not currently included in the UK government's proposals. 

We consider such provisions to be essential for law enforcement and for tax authorities to obtain, as they can from us, adequate, accurate and up to date information on beneficial ownership - to help combat tax evasion, money laundering and corruption. 

Following the discussions I attended with the Prime Minister at Downing Street last year, Jersey published an Action Plan to prevent the misuse of companies and other legal persons and arrangements. 

This was followed by a pre-consultation paper published in December 2013. On 3 February 2014 we published a consultation paper entitled ‘Review of Transparency of Beneficial Ownership of Companies’. That consultation closed today – and our next step is to consider the submissions received. 

David Cameron has said that he is looking forward to hearing the outcome of our consultation. We will also be looking at the approaches being adopted by the UK and other G8 and G20 countries – comparing them with what can be achieved with our own approach. Only then will we be in a position to respond to the Prime Minister’s letter. 

Jersey has committed, as have our major competitors of Luxembourg, Singapore and Switzerland, to joining the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters. This demonstrates our willingness to actively participate in the OECD’s efforts to introduce a single global standard for automatic exchange of information. 

Jersey will adopt international standards when they are set and widely adopted. We are fully committed to playing our part in the fight against tax evasion and to supporting international initiatives to enhance transparency and exchange of information for tax purposes. 

Jersey is joining with other countries in encouraging the global adoption of the new standard - because of the importance for us in creating a level playing field. 

In response to FATCA initiatives, Jersey has signed two Inter Governmental Agreements with both the US and the UK.

The signing of the agreement with the UK in October 2013 and the US in December 2013 provide further evidence of Jersey’s active role in developing international tax compliance initiatives and joining in the fight against tax evasion. 

Domestic Regulations to bring the IGAs into effect have been drafted and I anticipate lodging these regulations next week for debate by the States Assembly in June. 

My officers are continuing to work with officers in the other Crown Dependencies and the industry to achieve an agreed set of Guidance notes for the implementation of the IGAs. 

The second version of the Guidance Notes was issued on 1 April 2014 and we anticipate the release of the third version in May – taking on board comments from the industry. 

We continue to be committed to working with the industry and the other Crown Dependencies to implement the IGAs in a workable and achievable manner. 

Many of you here today will be aware that the European Parliament has recently determined its position on the fourth Anti-Money Laundering Directive. You may have observed that these proposals include a central public register of beneficial ownership that extends to companies and trusts. But while the European Parliament has announced its position, the appetite for its adoption by EU Member States is still not clear. 

There is opposition in several Member States to the idea of a public register and the UK has voiced its opposition to a central public register of the settlors and beneficiaries of trusts. Even when the Directive is adopted in final form by the Member States, the application of the Directive to Third Countries, such as Jersey, is still to be determined. 

My view is clear on these initiatives. Jersey can benefit from a level playing field, as businesses and individuals will choose to operate where the best support services are, not where lower standards apply. 

I see the challenges facing Jersey as opportunities. We are in a good position to use the shifting landscape of global standards to attract more business. However a level playing field is a must if we are not to risk losing business to our main competitors. 

Jurisdictional Review ​

The output of the Review has generated significant work for government, the regulator and across industry - with specific implementation groups established to consider recommendations of the report. The progress of these groups is on target. 

They have been reporting to a steering group consisting of myself and other members of the government, the regulator and Jersey Finance. So far we are most encouraged by what we see. 

One of the key findings from the Review was the importance of industry driving forward innovation, while the government and the regulator work to foster the commercial environment so that innovation can flourish. 

This approach is already showing tangible benefits - demonstrated by Jersey’s response to the EU Alternative Investment Fund Managers Directive, and the ongoing development of legislation in response to developing international standards and a dynamic business environment. 

Significant building blocks have been put in place to ensure the delivery of the review’s recommendations. In government, we have invested in more resources for the Financial Services Unit and we now have an Assistant Chief Minister with responsibility for Financial Services.

I am confident we now have the capacity to react to the recommendations and objectives established following the review.

In a similar vein, the regulator and Jersey Finance have invested in resources to help them carry out obligations arising from the review.

At the JFSC there have been appointments at director level in funds & trust company business, regulatory policy and the operations arenas. 

At Jersey Finance, the business development teams and overseas representative offices have seen continued investment and expansion. Jersey Finance now has a presence in Hong Kong, Abu Dhabi, London, Mumbai, Shanghai and Delhi - making Jersey, as a finance centre, a truly global force. 

There has also been a doubling of effort and resources for promotional activity in the Gulf States – this is as a direct result of the recommendations of the Jurisdictional review. Continued focus on business development in developing economies has led to enhanced business links through Community of Interest Groups formed for areas such as Africa, Asia and the Gulf States. 

The industry input we have received is critical to the success of the implementation groups established following the review. This reinforces the importance of industry driving forward innovation, a key recommendation of the review. 

I am therefore hopeful that with your continued input, we can push these initiatives through to conclusion, achieving the best possible result for Jersey. 

Financial Services Framework ​

 In 2013 it was independently highlighted that Jersey’s financial services industry is a significant contributor to the global economy, particularly the United Kingdom. A report prepared by Capital Economics found that Jersey provides a net benefit to the United Kingdom of almost £2.5bn per year and supports around 180,000 British jobs. 

The Capital Economics report, combined with the opening of the Jersey London office, is playing an important role in enhancing relationships with ministers and senior policy officials in the UK, just as the Channel Islands Brussels Office is building strong relationships with EU ministers and officials and developing their understanding of the islands.

This work is continuing in 2014, led by our new External Relations Minister, whose role is fundamental in achieving the best possible outcomes in protecting and promoting our interests overseas. 

External engagement ​

Jersey will be represented at all party conferences in 2014 to maintain this engagement. 

Ministers are raising Jersey’s profile on the international stage through a strong programme of foreign engagement, meeting senior political advisers and key decision makers. Foreign engagement is increasingly relevant to the financial services industry. 

I visited China last month and I leave for the United Arab Emirates this evening. In China, a particular point of note was the signing of an MOU between the China Securities Regulatory Commission and the Jersey Financial Services Commission.

With the provision of cross boarder financial services between Jersey and China expected to increase in coming years, this will establish a legal framework for the exchange of regulatory information and ease business connections with one of the world’s largest economies.

Similarly, my visit to the UAE will continue the strong programme of engagement with political figures and businesses. The UAE is a region identified as a key jurisdiction for our industry and one that is already showing tangible results. 

As I would hope those industry members here today would echo, the potential for the private wealth offering of Jersey in the UAE is significant and I am pleased to be supporting those opportunities. 

Legislation ​

Charities law

Another area of work is the advancement of philanthropy as an extension of our offering in the Private Wealth Management field. 

Jersey has established a world-leading private wealth management reputation. A natural extension of this is to extend that offering to the management of philanthropic structures. Along with the work of an implementation group that is working to establish Jersey as a world-leading centre for philanthropic wealth management - we are now starting to lay legislative foundations. 

I anticipate lodging a draft charities law in the next few months – to provide the legislative certainty required to develop this area of practice.