Ready to play ball

After the publication of the Panama Papers, April became an eventful month for international finance centres around the world. With the planned anti-corruption summit taking place in London on 12 May, this month will be the same.

The summit has been planned for some time, but the casual observer might think that the order of events in the lead-up to it was:

• the Panama Papers were released: 11.5 million leaked Mossack Fonseca documents link 'a web of offshore centres' to tax evasion and money laundering involving celebrities and politicians

• amid the sensationalist headlines, people try to point out the difference between tax evasion and tax avoidance, and the ethics of legal tax avoidance are debated

• the debate moves towards how greater transparency would stop 'bad' tax avoidance, the intimation from some quarters being that any tax avoidance or use of international finance centres is bad

• David Cameron announces that the UK Government has made the Crown Dependencies and Overseas Territories agree to new measures in transparency

But is this a fair reflection?

The announcement on 11 April that the UK had reached information exchange agreements with all Overseas Territories and Crown Dependencies came after a turbulent few days, and it made clear that the UK was pushing for all its dependencies to establish registries of beneficial ownership. The announcement also reinforced that the UK was introducing a public register of beneficial ownership this summer.

While the pressures of the past month have certainly pushed the authorities in the Crown Dependencies and Overseas Territories towards announcing change, it is not as clear-cut as all that.

Since 2013, Jersey has been working closely with the UK, supporting them with their drive to enhance international transparency. Although recent pressures have increased the speed of the process, this agreement is part of ongoing work. Yes, an agreement was reached between the UK and Jersey regarding the exchange of beneficial ownership information with law enforcement and tax authorities, but this is something that has been in the pipeline for years.

The truth is that Jersey already has an effective central register of beneficial ownership and has been collecting and exchanging information on beneficial ownership since 1989. The information contained within the register is subject to strict validation by regulated professionals, meaning that the ultimate owners of every company registered in Jersey is known and monitored. This is an important distinction from other jurisdictions.

The agreement simply means that Jersey has agreed to a quicker turnaround on requests from the UK law enforcement and tax authorities. Urgent cases will now be dealt with in one hour, while routine requests will take 24 hours.

Jersey can approach this latest commitment with confidence given the capabilities of its company registry and robust depository for beneficial ownership information that we already have in place, and we hope that the central registries introduced by other jurisdictions will be as effective as Jersey's.

During his announcement, the Prime Minister also said that the subject of public registries would be discussed at an anti-corruption summit in May. My view continues to be that we have a more robust system in place for the collection of accurate information on the beneficial owner of every company in Jersey, than the UK's planned public registry well.

Given that, as part of the UK's plans, companies will be required to submit their own information on beneficial ownership, it is up for debate as to what checks and balances will be in place to ensure that the information provided is correct. Realistically, the criminal fraternity and individuals misusing companies to launder money would be unlikely to comply with any self-reporting requirements.

In Jersey meanwhile, the information is provided by intermediaries who are regulated by the Jersey Financial Services Commission. They are required to provide this information or face penalties.

With the regulator having access to the names of ultimate owners of companies and a comprehensive network of information exchange platforms, it is difficult to see how accusations of assets being secret or illicit could possibly be true. This approach, which is endorsed by the OECD and World Bank, provides a more effective way of achieving the ultimate objective of ensuring that our jurisdiction is not used for corruption.

The case for public registers of beneficial ownership are not clear cut and warrant careful and considered debate. What is clear, however, is that tackling tax evasion and fraud is a global responsibility in which Jersey will continue to play a full part.

Geoff Cook is the CEO of Jersey Finance

He writes a regular blog about Jersey for Private Client Adviser

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