Offshore

Guernsey Stresses Transparency, Rejects Direct UK Rule Claim As Panama Saga Rages

Tom Burroughes, Group Editor, 6 April 2016

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Guernsey has spoken out about its own standing as an offshore centre and its conduct amid renewed controversy about IFCs following a massive leak of data from Panama.

The European island of Guernsey, a UK Crown Dependency that recently opened an office in Hong Kong to drum up business, stressed its credentials as being a rules-compliant jurisdiction as the political and media world digested the “Panama Papers” saga. It also smacked down suggestions that the affair showed that offshore centres with links to the UK should be directly ruled by Westminster.

Lyndon Trott, chairman of Guernsey Finance, the body representing the island’s financial sector, said the jurisdiction welcomes moves towards more transparency and said recent media coverage of Panama showed how IFCs remain prone to misunderstanding.

His comments come after 11.5 million files were leaked to journalists from the database of the Panama-based law firm Mossack Fonseca. Following the leak, there have been reports that UK prime minister David Cameron will come under pressure to crack down on international finance centres, including the Crown Dependencies of Guernsey, Jersey and the Isle of Man. In parliament yesterday, UK opposition leader Jeremy Corbyn called to take such IFCs in more direct control.

In response to Corbyn and related comments, a spokesperson for Guernsey told this publication: “Guernsey is a Crown Dependency, not an Overseas Territory. We have our own parliament and elected government, our own tax system, and we pay for our own public services. We do not receive funding from the UK or the EU, and we are entirely self-funding. We have never been part of the UK, nor ruled from the UK, and there is therefore no basis for direct rule from the UK, or anywhere else.”

Trott said Guernsey has been an early adopter of moves towards more openness.

“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,” Trott said.

“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,” he continued. 

Trott said 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 £25 billion of inward investment to the UK from global investors and some £105 billion of 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,” he said.

“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."

 

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