Guernsey would welcome moves to improve transparency across the global financial services industry, according to Guernsey Finance Chairman Lyndon Trott (pictured).
His comments come after 11.5 million files were leaked to journalists from more than 80 countries from the database of the Panama-based law firm Mossak Fonseca. Following the leak, labelled as the ‘Panama Papers’, there have been reports that UK Prime Minister David Cameron will come under pressure to crack down on ‘offshore’ international finance centres, including the Crown Dependencies of Guernsey, Jersey and the Isle of Man.
Trott says the recent media coverage illustrated the fact that plenty of misunderstandings remain surrounding the standards that places such as Guernsey already work to.
“Guernsey became one of the first jurisdictions to regulate trust and company service providers and this is something which still does not happen in many territories around the world today, including the UK,” says Trott. “In addition, Guernsey has had legislation in place since 2000 that obliges all beneficial owners of Guernsey companies and other legal persons to be properly identified and recorded by regulated corporate service providers and is one of only a handful of jurisdictions that have such measures in place. We do not disclose this information publicly because we value client confidentiality, but this information can be accessed in a timely manner by the appropriate regulatory authorities and law enforcement agencies when requested.
“We therefore fully support international initiatives on beneficial ownership as in many ways we are already ahead of the curve and would welcome other jurisdictions enhancing their own regimes. A level playing field is good for business and competition.”
Trott says a recent study also highlighted the value Guernsey’s financial services sector provides to the UK and European economies. The KPMG report, published in May 2015 and entitled International Capital Flows, found that Guernsey’s fund industry facilitated GBP25 billion of inward investment to the UK from global investors and some GBP105 billion on inward investment into Europe.
“The report emphasised Guernsey’s partnership with the UK and Europe and pointed out that global investors are comfortable investing into Guernsey fund structures thanks to the Island's regulatory track record and commitment to transparency, something that cannot be underestimated in today’s environment,” says Trott.
“As Guernsey’s recent MONEYVAL report also showed, not only do we have in place a highly effective anti-money laundering and anti-terror financing regime, Guernsey is also active in its commitment to the practical implementation of tax transparency and meeting international standards."
Guernsey’s Commerce and Employment Minister, Deputy Kevin Stewart, says it was wrong to suggest that Guernsey was part of the problem identified by the ‘Panama Papers’.
Deputy Stewart says: “This report and the leaks are interesting as they establish the importance of the beneficial ownership debate, ahead of the UK-hosted summit in May, to which Guernsey representatives will be invited. What is also interesting is the automatic assumption of some that somehow Guernsey is part of the problem, which is demonstrably not the case.”
Deputy Stewart says further steps were underway to enhance that framework in line with and ahead of developing international standards, such as those of the Financial Action Task Force (FATF).
“We are not standing still and being complacent. Law enforcement and tax authorities in Guernsey share information with their counterparts in the UK and other jurisdictions and the effectiveness of that has been documented by UK authorities as well as independent organisations such as the OECD and the IMF. People should remember that there is a difference between privacy and secrecy. Guernsey is a jurisdiction that can provide privacy and confidentiality, but the fact that we work with other authorities and exchange information means we are not a secrecy jurisdiction, a very important distinction.”
