Just as the summer's heat is giving way to autumn, so the issues which enflamed the atmosphere in which the finance industry operated at the start of this year are cooling, enabling Jersey to focus on initiatives which will bolster our position as a world class international finance centre (IFC).
A major focus in the first half of the year was addressing the controversies surrounding the Panama Papers and the UK's vote to leave the EU.
Panama Papers
The documents leaked from the Panamanian law firm Mossack Fonseca generated an enormous amount of negative publicity for so-called tax havens, but few of the Panama Papers relating specifically to Jersey were of sufficient interest to make the international headlines, and there was no evidence of modern-day financial criminal activity taking place in Jersey. The public image of international finance generically was certainly affected by the revelations, and the global response to the Panama Papers was to demand an improvement in the exchange of information between jurisdictions so that identities could not be hidden. Jersey was in a position not only to reaffirm its adherence to international standards for the exchange of information (something that we had already done), but to remind the world that Jersey has led the world in capturing beneficial ownership information since 1989.
Long before the Panama Papers, our strategy had been to differentiate Jersey from competitor IFCs by seeking independent experts to assess our position as a centre of excellence with world-leading regulatory standards. During the furore, Jersey was able to contribute to the debate on how to tackle financial crime by promoting the work of Professor Jason Sharman, who had independently reached the conclusion that Jersey's model of regulation was one of the most effective in tackling corruption, money laundering and tax evasion.
Panama Papers may have caused consternation at the poor regulatory practices in some jurisdictions, but Jersey has been able to highlight our positioning as a world-class IFC.
Strong foundations built on expertise, transparency, and sound regulation combine powerfully with our hallmark characteristics; a commitment to the rule of law, a favourable time zone, political and fiscal stability, all advancing our position as a trusted British financial centre, a safe harbour in troubled times, and we are seeing a flight to quality in attracting business here.
Brexit
In the melee that immediately followed the UK's vote to leave the EU, Jersey Finance worked hard to communicate that our position as an IFC in relation to the UK and EU would be unchanged. Indeed, we had researched and planned for both scenarios. The position of Jersey as an independent jurisdiction outside both the UK and EU meant that, irrespective of the outcome, the legislative framework within which our finance industry operates would be unaffected.
While the Brexit uncertainty caused the markets and exchange rates to fluctuate, it has also created opportunities for Jersey. There may have been an economic slow down in the lead up to the vote, but the certainty of Jersey's position is a significant positive. There is growth in the funds industry, with new investment, and a combination of a low pound and the reductions in commercial property prices following the Brexit vote have caused a resurgence in investment through Jersey into UK real estate.
Plans for the final third of 2016
In the final third of 2016, we have continued to seek independent confirmation of our position as an international finance centre of excellence and substance. To this end, reports showing the true value of Jersey to the UK, to Europe and to the Island itself have been produced and will be launched this month. In addition to the marketing activity, the legislative framework for the finance industry is being updated. Amendments to the Trusts (Jersey) Law will be confirmed, new legislation enabling company demergers to take place will be introduced, and the Limited Liability Partnerships Law will be updated.
Jersey's fund offering will shortly be improved with the introduction of two products. New manager-led regulation of funds will enable them to get to market with much greater speed, while limited-investor funds will benefit from a streamlined regime.
We also see Jersey as becoming an even more attractive and viable destination for funds which are marketing into Europe. In addition to the current national private placement regime, which enables funds to access EU markets, Jersey is well placed to achieve third-country AIFMD passport access, giving comfort that access to the EU will continue.
Finally, a comprehensive review of banking in Jersey is helping the sector to harness new opportunities, adapt to regulatory and technological changes, and will help define a long-term strategy for the industry
The work that we are doing now, and in the coming months, across the entire sector will place Jersey on a sound trajectory for development and growth, enabling us to remain a world-leading international finance centre.
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