A well regulated Finance Centre
Jersey remains one of the 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. The Jersey authorities have signed 42 international tax agreements to date, which assist in building good quality business with those countries and are also a reflection of Jersey’s commitment to comply with international standards.
Jersey’s success as an international finance centre is underpinned by three key pillars: the funds sector, banking and trust services.
At March 2015, Jersey had £227 billion in funds under administration by its over 1,500 funds (both regulated and unregulated). In more recent years, Jersey has evolved into a specialist centre for the alternative asset classes, including hedge, real estate and private equity funds, which account for around 70% of its overall funds business.
The regulation of service providers to funds in Jersey is undertaken by the Jersey Financial Services Commission (JFSC), as providers of “fund services business”. Once an entity is registered for a class of funds service business it no longer needs to apply for authorisation in relation to each new fund for which it provides that class of services. This regime has also provided significant advantages for the provision of Jersey fund services to non-Jersey domiciled funds, which means that non-Jersey domiciled funds are subject only to a notification procedure in relation to their service providers and no longer need to seek fund by fund regulation.
Types of Funds
Jersey funds can be broadly classified as regulated or unregulated funds and are further described in “Jersey Business Vehicles” section.
Banks are registered in Jersey under the Banking Business (Jersey) Law, 1991 and the associated Banking Business (General Provisions) (Jersey) Order, 1991 which is supervised by the Jersey Financial Services Commission (the “JFSC”).
The bank laws in place have the following main objectives:
- To protect depositors
- To protect the reputation of Jersey as an International banking centre
- To protect the best economic interests of Jersey
- £137.3 billion held in deposits
- There are 33 bank branches and subsidiaries located and they include nearly half of the top 25 banks in the world, by Tier 1 Capital and employ 5,120 employees
- Jersey only authorises the global top 500 banks to establish a presence in the island and this policy has ensured that only banks of the highest pedigree operate from the jurisdiction
- Jersey's banking model is stable and diversified, and Jersey has received AA+ credit rating from Standard & Poor's.
The Islands traditional Trust management business was focused particularly on wealthy UK individuals. However the emphasis has now shifted due to successive tightening of UK anti-avoidance legislation that has reduced the possibilities for UK citizens. Despite this, the Island’s trust business has continued to grow based on a more international clientele, corporate trust work (following the introduction of a purpose trust) and collective investment funds (also based on trusts).
Jersey has an extremely well-developed legal and financial infrastructure for trust management. The creation and administration of trusts are governed by the Trusts (Jersey) Law, 1984 as amended. This ensures that a trust established under Jersey law is administered under the provisions of its trust instrument.
Many international families require tax efficient structuring to protect and enhance their
diversified private fortunes, which have accumulated over many years. The manner in which these assets are to be held and how the chosen vehicles are to be administered requires careful consideration of complex multi-jurisdictional issues. Numerous international families are in some way connected to the UK, from global entrepreneurs who relocate, to tax exiles from continental Europe.
Having a property in London offers lifestyle benefits and it can be argued that Britain’s unusually favourable tax regime entices people to live there. International families choose Jersey as an offshore jurisdiction not only because of its symbiotic relationship with the UK and close ties with the City of London, but because of the professional expertise that Jersey has to offer in the administration of tax efficient structures for UK residents.
As a regulated offshore service centre, Jersey has the reputation of being considered a premier service provider. Jersey has earned this reputation by complying with 44 of 49 Financial Action Task Force (“FATF”) recommendation and 15 of the 16 “core” and key FATF recommendations internationally. The Jersey regulator, the Jersey Financial Services Commission (“JFSC”) has been acknowledged by the International Monetary Fund (IMF) in their role in overseeing a comprehensive and robust system.