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Magazine Issues » October 2020

Jersey roundtable: Strong agreement

Funds Europe – What else do you see coming up on the regulatory agenda?

Haithwaite – Increasing pressure on no- or low-tax jurisdictions by the OECD [Organisation for Economic Cooperation and Development] and the EU. Substance will continue to be key, and I expect jurisdictions to align more closely on that over the next few years. Jersey’s white-list status means we should be confident investors will continue to support us, and we expect a flight to quality. Legislation passed earlier this summer to enable the migration of limited partnerships into Jersey from foreign jurisdictions was partly to satisfy investor demand to exit from blacklisted jurisdictions.

The PIF [Guernsey’s Private Investment Fund] potentially will compete with our private funds. Certainly, we are going to see increasing competition between fund jurisdictions. Whether the PIF has international appeal remains to be seen. It could become a vehicle of choice for the domestic market but not for international investors.

ESG will continue to move the regulatory agenda internationally. Jersey is nimble, and the industry can influence the legislative programme.

Macleod – On the European side, regulation is going to run in one direction, meaning there will be more of it.

That isn’t necessarily an issue for Jersey. We’re an uncontroversial funds jurisdiction. We’re tax-neutral, we don’t have multiple double tax treaties and we’re not particularly prone to BEPS-heavy [base erosion and profit shifting] arrangements like hybrids.

Outside Europe, I see a levelling of playing fields. Cayman is a good example where changes in legislation to satisfy a higher degree of regulatory expectation could potentially provide some practical challenges.

Refson – The key issues are Brexit, BEPS, substance and transparency, and how regulators handle them. While some jurisdictions have an evolving regulatory landscape, we were early adopters and offer stability and certainty.

Burgess – Jersey is an international finance centre with the highest reputation that will weather the current environment. In the coming quarters, we’re going to see increased distress in investments held by Jersey funds and elsewhere. With its intellect and governance, Jersey can offer clients expertise and professionalism in handling these distressed situations.

Coughlan – Jersey’s resilience to significant global challenges faced in the recent past, and our ability to proactively embrace new and amended regulation and legislation, is a unique selling point for the island and positions us well to embrace further change.

Anti-money laundering and combatting the financing of terrorism (AML/CFT) is at the forefront of everyone’s minds.

We expect continued tightening of regulation, certainly ahead of the local Moneyval [the Committee of Experts on the Evaluation of Anti-Money Laundering Measures] visit in 2021/22 and beyond. Our ability to assist our clients with managing the inevitable increased requirements will be key to our success.

Embracing technology is imperative in order to remain competitive. Flexibility and a continued shift towards electronic identification and verification processes is vital. We can also expect to see more enforcements by our regulator. However, in my opinion, that is a positive in that it highlights the strength of our framework.