Jersey Financial Services Industry POLICY Framework // 1
POLICY
Framework
Jersey
Financial
Services
Industry
THE
GOVERNMENT
OF JERSEY
2 // Jersey Financial Services Industry POLICY Framework
Contents
CHIEF MINISTER’S STATEMENT // 3
FOREWORD // 4
Introduction // 5
PRIORITIES // 6
A government THAT supports
the financial services industry // 9
Growth and development of
the financial services sectors // 12
Developing markets to
provide growth and stability // 15
Fiscal policy THAT supports
the financial services industry // 20
Legislation and Regulation
THAT works with industry // 21
Conclusion // 23
Jersey Financial Services Industry POLICY Framework // 3
Jersey, like many countries, has responded to the effects
of the worldwide ?nancial crisis. Jersey’s ?nancial services
industry has demonstrated an innovative and resilient approach
to a fast-changing global economy and is committed to a
future shaped by choice, not chance.
As an international ?nance centre, our continued success
depends on our ability to sustain our core offerings and
on looking outwards to the opportunities for growth in a
measured, co-ordinated and sustainable way.
With the threat of ambitious new centres located across the
globe, we must continue to compete and remain very much
open for business in a proportionate and targeted way.
Today, Jersey is rated as one of the most stable and successful
international ?nancial services centres in the world and,
working together responsibly, the government, the regulator
and industry have the ability to continue to drive excellence
and innovation in everything we do.
“This document outlines the policies that are
vital to the future of the ?nancial services
industry and sets out the government’s
framework to achieve future success, and
thereby support local employment and the
provision of public services to the bene?t of all
Island residents. Together with the regulator
and industry, we will take the necessary action
to ensure that the industry remains successful
and competitive now and in the future.”
chief minister’s statement
SENATOR Ian Gorst
Chief Minister of Jersey
4 // Jersey Financial Services Industry POLICY Framework
The ?nancial services industry is key to Jersey’s economic
health. The sectors of the industry, which includes banking,
trusts, fund management, company administration, legal ?rms,
accountancy ?rms, investment advisory services and the
servicing of a wide range of corporate vehicles, are signi?cant
contributors to the local economy. This is highlighted by the
fact the industry employs more than 12,400 people
1
on the
Island spanning the range of ?nancial services provided.
Jersey’s ?nancial services industry is also a signi?cant
contributor to the global economy, particularly the United
Kingdom. A report prepared by the respected independent ?rm
Capital Economics has found that Jersey provides a net bene?t
to the United Kingdom of almost £2.5bn a year and supports
around 180,000 British jobs
2
.
Early in 2013 Jersey Finance Limited, the organisation that
represents and promotes Jersey as an international ?nance
centre of excellence, carried out an independent jurisdictional
review of the ?nancial services industry, with the support of
leading consultants McKinsey. Its recommendations have been
embedded into this document and are being implemented by
the government, the Jersey Financial Services Commission
(JFSC) and industry.
This document serves as a useful guide to government’s policy
on Jersey’s ?nancial services industry for our current and
potential stakeholders locally and internationally. The innovation
and resilience we have demonstrated, time and again, in
meeting the challenges presented to us as a jurisdiction will
continue. We are con?dent that we will succeed and remain a
strong international ?nance centre that bene?ts our Island’s
community.
1 Jersey labour market
at June 2013 – analysed
by the Statistics Unit on
behalf of the Population
Of?ce, States of Jersey
2 Jersey’s value to Britain,
Capital Economics,
published 2 July 2013
foreword
“Jersey has a bright future and we have
proven that we are able to reposition ourselves
to meet the challenges and capitalise on
the opportunities that are presented to us.
The government has con?dence in Jersey’s
?nancial service industry and is willing to
invest to build on our strengths to ensure that
Jersey maintains an important role in the
global economy of the future.”
Senator Philip Ozouf
Assistant Chief Minister and
treasury Minister of Jersey
Jersey Financial Services Industry POLICY Framework // 5
3 Banking Business (Jersey)
Law 1991, Q3 2013
registered banks statistics,
Jersey Financial Services
Commission
5 Jersey labour market
at June 2013 - analysed
by the Statistics Unit on
behalf of the Population
Of?ce, States of Jersey
4 Jersey labour market
at June 2013 - analysed
by the Statistics Unit on
behalf of the Population
Of?ce, States of Jersey
6 Jersey labour market
at June 2013 - analysed
by the Statistics Unit on
behalf of the Population
Of?ce, States of Jersey
An autonomous Crown dependency that
enjoys a secure, special relationship with
the UK but is not part of the UK or the
EU;
A well-established, diverse and highly
respected international ?nancial services
centre;
A highly skilled and experienced
workforce across a wide range of
?nancial services sectors;
An attractive business and living
environment for existing businesses,
executives and employees and those
looking to locate to Jersey;
Geographically well placed to serve
clients based in the UK, Europe, Africa,
the Gulf States and the Far East;
What we do
Jersey is a centre for banking expertise,
with 42 deposit-taking licences
3
in
issue, and an estimated 4,950 people
4
working in the sector;
Jersey has a long history of providing
high-quality services to the trust,
company administration and funds
sectors and is resident to a number
of global trust company head of?ces
and investment fund managers. These
growing sectors of wealth and asset
management are serviced by some
3,370 people
5
;
Jersey also hosts a range of globally
recognised, specialist legal and
accountancy ?rms collectively
employing roughly 3,130 professionals
6
;
Jersey has claim to a number of
companies used as listing vehicles on
many of the world’s major markets.
Notably, Jersey has the largest number
of non-UK companies listed on UK stock
exchanges.
A stable political system and economy
with a government that fully supports
the ?nancial services industry;
Jersey has a robust and independent
judicial system based on modern
commercial law principles;
A simple low tax/tax neutral ?scal
system that provides an ideal platform
to support an international ?nance
industry;
A proportionate risk-based regulatory
environment aligned to international
standards that is supportive of the
development of the ?nancial services
industry sectors, encouraged through
interaction between the government,
the regulator and industry.
Why choose Jersey
The Jersey Economic Growth and Diversi?cation strategy states
that the government is to prioritise the growth and diversity of the
?nancial services industry, together with the creation of new business,
employment and raising productivity. Jersey continues to be, and is
determined to remain, a leading international ?nance centre.
introduction:
6 // Jersey Financial Services Industry POLICY Framework
1
Sustain the core
The ?rst priority is to protect existing
business from the threat of competitive
challenges. Our aim is to ensure the long-
term prosperity of our existing ?nancial
services industry, while gradually diversifying
into other areas. We recognise that a change
of direction is required but that this change
needs to be gradual and planned.
2
Enhance enablers
Second, to stand out as an international
?nance centre, Jersey must excel in the areas
that determine investors’ choice of location:
namely the legal, regulatory and business
environments. These ‘business enablers’ are
essential to future success. We will make sure
we enhance the governmental, regulatory and
legislative framework and do all we can to
improve the business environment, allowing
innovation to ?ourish.
3
capture adjacent
growth
Third, we will work hard to support existing
business to capture adjacent growth in
products, services and markets. By this
we mean providing more to our existing
participants and attracting new entrants from
both established and developing markets. We
need to consider how we might replace any
business that looks vulnerable to loss.
4
reposition and build
new capabilities
The fourth priority is to explore more
ambitious opportunities in less familiar
business territory, repositioning our current
offering and building new capabilities. These
opportunities tend to be in the higher value-
added elements of the sectors and often
require a broader set of stakeholders.
An independent jurisdictional review of Jersey’s ?nancial services
industry was carried out in 2013, which set out a proposed strategy
for the ?nancial services industry in Jersey. Four key priorities, which
are embedded into this policy framework, were identi?ed in the
jurisdictional review: sustain the core; enhance enablers; capture
adjacent growth; and reposition and build new capabilities. The
formulation of this policy framework has been developed on the basis
of signi?cant research and consultation with stakeholders from the
?nancial services industry both in Jersey and internationally.
PRIORITIES
We have already started the process of
diversifying geographically, and will continue
this work in the months and years ahead.
Jersey Financial Services Industry POLICY Framework // 7
This policy framework supports the
continuation of an independent ?nancial
services regulator, the JFSC, which will assist
with the growth of the regulated ?nancial
services sector by continuing to ensure a
regulatory framework that is suf?ciently
robust to be compliant with international
standards and our proportionate risk appetite
as a jurisdiction, while retaining ?exibility
to adapt to and anticipate the needs of a
changing external regulatory environment.
It should be noted, however, that both
regulated and unregulated aspects of the
?nancial services industry are referred to in
this document.
Key objectives of the policy framework
The implementation of this policy framework
will require effective coordination between
government, the regulator and industry,
?exibility from government and the regulator
and innovation and adaptability from industry
to meet new challenges as they arise.
A key part of this policy framework is the
core principles that the government believes
will contribute to the success of the ?nancial
services industry. These core principles are
set out on page 8.
This policy framework provides the structure
for the ?nancial services sector to maintain
competitiveness, target new growth areas
and drive the product/service diversi?cation
that is required in such a challenging economic
environment now and in the future.
Maintain and promote
Jersey’s position as a
leading international
?nance centre
Effective
co-ordination between
the government,
the regulator and
industry
Maintain an attractive
operating environment for
existing and new businesses
across existing and potential
new sectors of the ?nancial
services industry
Ensure the
?nancial services
industry is
adequately
resourced
Comply with
international
standards and
initiatives having
global application
Maintain employment in the
?nancial services industry
at more than 12,000 in
the short term and aim to
grow this position over 4
years to 2018 in line with
immigration policy
Contribute to the
Island’s Gross Value
Added (GVA) and
tax revenues to the
bene?t of Island
residents
8 // Jersey Financial Services Industry POLICY Framework
The ?nancial services industry in Jersey
bene?ts from a legal and regulatory operating
framework that is supported by a stable and
committed government. It is our aim to sustain
and further invest in the long-term growth of
the industry and we endorse ?nancial services
businesses that share this view.
As a leading international ?nance centre, we
commit to comply with international standards
and global initiatives. Jersey is considered a
responsible partner to the UK, the EU and
other international jurisdictions and aims to be
a ‘good citizen’ internationally. We will ensure
an appropriately regulated ?nancial services
industry taking a proportionate risk-based
approach in order to uphold our reputation and
accountability to our business partners but also
ensuring that we remain competitive.
Jersey has a highly skilled professional
workforce offering world-class expertise
across the ?nancial services industry sectors.
We are committed to ensuring we maintain our
reputation as an international ?nance centre of
excellence by investing in our local skills base,
growing and diversifying our capabilities and
continuing to deliver market leading products.
We recognise the need for continuous
development of the ?nancial services industry in
response to changing global market conditions.
We understand the need to adapt and be
innovative in order to remain competitive and
we are fully supportive of industry initiatives to
deliver on this.
Working together with the regulator and
industry is the foundation of our ongoing
success and we will continue to ensure that
a collaborative approach is embedded in
everything we do providing an environment
where our objectives can be delivered.
Jersey Financial Services:
Core Principles
STABLE
RESPONSIBLE
Excellence
INNOVATIVE
working together
Jersey Financial Services Industry POLICY Framework // 9
Key objectives for the government
To stand out as an international ?nancial services centre in today’s
global industry Jersey needs to enhance business enablers that are
key to determining investors’ choice of location: the legal, regulatory
and business environments. The government’s role is to implement a
strategy, providing effective leadership, good co-ordination between
stakeholders and support for innovation and growth in the ?nancial
services sectors. We also recognise that successful delivery of this
strategy involves a number of other industries within the Island that
are deeply intertwined and co-dependent.
A government THAT supports
the financial services industry
Uphold the reputation of the
Island and ensure that Jersey
is considered a centre of
excellence for sound business
practice by the international
community
Provide support and
policy guidance to ensure
Jersey maintains highly
competitive and attractive
legal, regulatory and
business environments
Simplify legislation,
regulation and
enforcement while
remaining in accordance
with the agreed standards
to improve business
capabilities across
?nancial services sectors
Enable faster
?nance related
decision making
processes
Maintain and grow a
successful ?nancial
services sector that
contributes to the
economic well-being
of the Island and its
residents
10 // Jersey Financial Services Industry POLICY Framework
Jersey’s successful ?nancial services sector
has been based on the stability, innovation
and expertise that have enabled the Island
to become a leading international ?nance
centre. The Island’s well-developed legislative
and regulatory framework has provided the
foundation for its ?nance offerings. This
has in turn led the Island to be a centre of
excellence.
As a result of the changing structure within
our ?nancial services sectors following the
global ?nancial crisis, we recognise the need
to review certain policies and practices,
particularly in the banking and funds sectors.
We also recognise the need to remain
competitive, and to do so we need to offer
speed to market, which further challenges
some of our existing legislation and regulatory
practices.
The anticipated change in policies and
practices does not mean that Jersey intends
to lower its standard, but it does evidence
that the government and the regulator
understand the changing environment and the
need for alternative approaches that facilitate
additional opportunities without exposing the
Island to undue risk.
Our aim is to promote Jersey as a location
open for inward investment. The ability
of Jersey to attract international business
requires a deeper level of collaboration
between the government, the regulator,
industry and other interested bodies in
order to co-ordinate the marketing and
development of Jersey’s ?nancial services
offerings.
The government works closely with Jersey
Finance Limited, a non-pro?t making
organisation formed in 2001 to represent and
promote Jersey, locally and internationally,
as an international ?nancial centre of
excellence. We are committed to providing
political support for promotional activities
undertaken in markets where industry
believes appropriate opportunities have been
identi?ed for growth. More widely we aim to
maintain awareness in mature markets and
increase awareness of the Jersey proposition
in developing markets.
Other organisations that support new
business and the promotion of Jersey are
engaged, such as Locate Jersey, which
provides guidance and support to businesses
and high net worth individuals looking to
locate to the Island. Working together we
will ensure that any such moves are as
accommodating as possible.
Improving business
capabilities
Promotion
of Jersey
Jersey maintains a strong reputation and we
believe that building on the Jersey brand is
critical to our success in existing and target
markets.
We aim to facilitate the growth of the
?nancial services sector; a key element
of this is working more with international
governments, industry bodies and legislators
to understand the impacts of how legislation
made elsewhere can affect the Jersey
?nancial services sectors. In the EU, for
example, the Channel Islands Brussels Of?ce
(CIBO) has been set up to facilitate a stronger
voice and greater understanding between the
Channel Islands and the EU. Closer to Jersey, a
London of?ce has been established to ensure
Jersey has a presence in what still remains a
most important market and a fundamental
constitutional and political relationship for the
Island.
In relation to the protection of the Island’s
reputation as a well-regulated, transparent
and tax neutral jurisdiction, the government
has set up the Sound Business Practice
Committee
7
which is used to ensure that
businesses operating or interested in
operating in Jersey are acting in the long term
interests of the ?nancial services industry and
the Island. We are committed to ensuring that
business practices in all the ?nancial services
sectors are aligned with our stated objectives
and that we are able to offer guidance and
policy as developments occur globally.
Reputation
of the Island
7 The Sound Business
Practice Committee
consists of members of
the government, regulator
and industry to advise
on acceptable business
practice generally
“The government is committed to maintaining and promoting Jersey’s strong reputation, building on the
Jersey brand and remaining competitive in existing and target markets.”
Jersey Financial Services Industry POLICY Framework // 11
Jersey has a rich heritage, an appealing
climate and is accessible from most major
European hubs. Other appeals such as the
choice of high-quality hotels, many ?ne
restaurants, wide ranging sport and leisure
facilities and breathtakingly beautiful bays,
beaches and countryside make the Island
an attractive destination to visit. The
government recognises that the ?nance
industry and the tourism industry share the
objective of ensuring good transport links and
making Jersey an attractive place to visit as
well as reside and we are fully supportive of
common initiatives to promote the Island.
At present Jersey has almost 100 ?ights per
week to and from many of the major hubs
in the UK and around Europe, making the
Island accessible. We are aware that these
connections to other ?nance centres and
international hubs are crucial to the ?nancial
services industry. The government will work
with businesses to make a case for additional
routes to improve connectivity.
We have also invested in the roll-out of an
Island wide ?bre optic network to facilitate
Gigabit Jersey creating one of the best
connected places in the world to meet the
demands from businesses and consumers for
high-speed data transfer.
The government is aware that in order to
attract new ?nancial services businesses to
the Island, the infrastructure in place needs
to be at the level expected by international
business. Jersey already has a signi?cant
number of modern of?ce buildings, however it
is understood that this may not be suf?cient
to meet future requirements.
We are therefore committed to the
continuous development of high-quality
of?ce accommodation to meet demand.
Jersey has an excellent education system
and a highly skilled workforce developed
across the ?nancial service sectors. These
factors create the foundation for any new
business requiring quality resource on the
Island now and in the future. We recognise
in order to diversify and grow we will require
new skills and additional resources to meet
our potential, which includes the continued
international recruitment of highly skilled
employees. We will ensure that in meeting
this requirement the action taken will remain
consistent with our declared population
policy.
Recognising the importance of our home
grown talent, working alongside Jersey
Finance Limited, we are actively supporting
the creation of internationally recognised local
quali?cations speci?c to the ?nance industry
which complement our growth ambitions in
the industry. Our aim is to ensure the next
generation of Islanders have the appropriate
skills and quali?cations to work within the
?nance industry and this is an important
aspect of the government’s policy.
Tourism Air links
Telecommunications Infrastructure Education and
skills base
“The government will ensure that the infrastructure in place is at the level expected by international
business, now and in the future.”
12 // Jersey Financial Services Industry POLICY Framework
Key objectives for the growth and development
of the financial services sectors
Stimulate innovation
and improve Jersey’s
international
competitiveness
Grow and diversify
the ?nancial
services sectors,
capacity and
pro?tability
Develop new areas
of capability to
adapt to current
and future market
needs
Encourage new
businesses and
employment in
high-value areas
of the sectors
Ensure that protecting
and enhancing the
reputation of the
Island is at the
forefront of everything
the government, the
regulator and the
industry does
Jersey has a successful and diverse ?nancial services industry
and while recent market conditions have resulted in the industry
adapting to the changing external environment, Jersey has proved
to be a resilient location for the respective ?nancial services
sectors. However, we recognise the need to embrace an approach
of continuous development in order to grow, and in conjunction
with key stakeholders in the Island and internationally we have
developed a new vision that will help to secure our future as a leading
international ?nance centre.
Growth and development of
the financial services sectors
Jersey Financial Services Industry POLICY Framework // 13
The government is committed to supporting
businesses in all sectors that wish to grow
their Jersey-based operations through the
recruitment of highly skilled employees,
bene?tting the industry and the Island’s wider
economy. We will continue to diversify and
invest in our homegrown skills base but we
also recognise the requirement for population
policies that accommodate the needs of the
industry where the availability of the required
skills in the Island falls short. We will ensure
that these policies are proportionate to the
contribution of new and existing businesses
to the Island.
Jersey has an established and well-respected
legal framework in which modern commercial
principles blend with English common law.
Jersey’s success as an international ?nance
centre has led to the development of a
highly respected legal sector with a large
pool of skilled professionals who provide the
necessary support for clients of all sectors
of the ?nance industry. The judiciary has
signi?cant expertise, and a signi?cant body
of well-reasoned case law and precedence
to deal with complex international ?nancial
matters. This provides clients and their
advisors with con?dence when deciding on a
location for management of assets.
Business growth
and availability
of skilled staff
Legal framework
The reputation of the Island’s ?nancial
services sector is considered to be of upmost
importance. For this reason the government
has set in place a number of actions to ensure
the credibility and integrity of the business
undertaken in Jersey supports the Island’s
goals of being, and being seen to be, a high-
value tax neutral jurisdiction.
In order for the ?nancial services sector
to continue to be respected in the global
community, the Island continues to adapt to
changing external regulatory requirements. As
global standards on information exchange and
co-operation develop, Jersey will continue
to comply with those global standards whilst
upholding an appropriate balance of compliant
client con?dentiality.
International
reputation
We aim to protect our existing businesses but we also recognise the
need to reposition our current offerings and build new capabilities.
Inevitably this will require a collaborative approach from the
government, the regulator and industry and we fully support working
together towards a shared goal for success.
“The government is committed to maintaining and promoting Jersey’s strong reputation, building on the
Jersey brand and remaining competitive in existing and target markets.”
14 // Jersey Financial Services Industry POLICY Framework
Jersey needs to maintain ?nancial services
regulation that responds to the needs of
changing markets, while also upholding the
robust and transparent legal and regulatory
framework that strengthens the Island’s
ability to compete internationally. The
government will work with the regulator to
agree an acceptable risk framework where
necessary which will include areas such as
country/jurisdictional risk, whilst recognising
the regulator’s operational independence from
government.
The government has sought, and will continue
to seek, representation from the regulator
and industry on the implementation of its
policies and strategies to ensure that they are
aligned with those key stakeholders. As part
of this policy framework, the government
is committed to having accessible and
responsive politicians to facilitate the growth
of target markets by working together with
industry to support innovative solutions and
remove barriers of entry.
It is our intention to support the ?nancial
services industry in both developed and
developing countries. We recognise the
opportunities created by the shift of wealth
and speed at which emerging markets in
Eastern Europe, Africa, Asia, the Gulf States
and the Far East are growing. We will seek to
build reciprocal relationships with identi?ed
countries including the development of trade
treaties, Double Tax Agreements (DTAs)
and Tax Information Exchange Agreements
(TIEAs) where required.
Jersey will actively seek to partner with
developing countries to raise standards and
engage in knowledge transfer and capability
building to expand business. Although we
acknowledge that developing countries may
represent higher risk, we believe that by
working collaboratively with these countries
and international bodies such as the World
Bank and regional bodies such as the African
Tax Administration Forum their standards will
be improved and risks will reduce. This will
ultimately lead to greater growth in these
countries to the bene?t of the country’s
economies and citizens.
For developing countries a proportionate
risk-based approach will be considered that
recognises the diversity amongst businesses
and markets but also upholds our existing
standards and reputation. Individual decisions
on business from developing countries will
include focusing on the skills, capacity and
capabilities of the Jersey promoter within an
overall approach of judging each proposal on
its merits. To the extent it has not already
done so, JFSC will be encouraged to develop
Memoranda of Understanding with these
countries and share best practice.
Countries subject to United Nations sanctions
will not be facilitated. In most other cases
Jersey intends to follow the bilateral trade
position of UK foreign policy and will not
establish a signi?cantly different strategic
approach to the UK and international
community.
Central to the policy framework are the
requirements for facilitation of engagement
between the government, industry and the
regulator to ensure the ?nancial stability and
the reputation of the Island.
Regulation Expanding business Risk appetite
“The government will seek representation from the regulator and industry on the implementation of its
strategies to ensure that they are aligned with those key stakeholders.”
Jersey Financial Services Industry POLICY Framework // 15
Key objectives
for developing markets
The development of markets that will provide
growth while sustaining the current level of
business on the Island is a key part of the
overall jurisdictional review. The government
understands that in the changing economic
environment, Jersey’s traditional trading
partners will evolve and new opportunities
need to be identi?ed and encouraged to
develop businesses here in Jersey. The
required skills, regulations and an enabling
business environment are all part of this
policy framework.
The government and the industry have
joint responsibility for the marketing and
development of Jersey as a ?nance centre.
Jersey as a ?nance centre is promoted
through Jersey Finance Limited, a non-
pro?t making organisation formed in 2001
to represent and promote Jersey as an
international ?nancial centre of excellence.
The organisation is funded by members of the
local ?nancial services industry and the States
of Jersey. Jersey Finance Limited has of?ces in
Hong Kong and Abu Dhabi and representation
in London, Mumbai and Delhi.
Targeting the ?nance industry’s established
and prospective sectors, Jersey Finance
sponsors various events in Europe, Africa, Asia
and the Gulf States as part of the industry’s
business development initiatives. Jersey
remains a favourable jurisdiction, particularly
in relation to investment products and
wealth management vehicles such as trusts,
foundations and partnerships, as well as real
estate, private equity and hedge funds.
One of the signi?cant initiatives during 2013
has been the release of the Capital Economics
report on Jersey’s value to Britain to explain
the economic, ?nancial and ?scal links
between the two jurisdictions. This report has
demonstrated that Jersey as an international
?nance centre adds value to the countries
with which it trades.
Jersey Finance
The ?nancial services industry is continuing its transformation driven
by competition, regulation from international standard setters and the
shift of wealth from traditional market locations in Western Europe
and the USA to Eastern Europe, Africa, Asia, the Gulf States and the
Far East. This trend is likely to continue and will offer opportunities for
the growth and diversi?cation of our current established offerings in
the ?nancial services sectors.
developing markets to provide
growth and stability
Attract new business to
the Island focusing on
wealth management
opportunities from
identi?ed African
countries, Asia, the Gulf
States, Eastern Europe
and the Far East
Become the
location of choice
for estate planning,
family succession
planning and wealth
management activities
Be recognised globally as the
jurisdiction of choice for funds
with a clear, competitive and
stable legal and regulatory
regime enabling innovation and
speed to market whilst meeting
appropriate international
standards
16 // Jersey Financial Services Industry POLICY Framework
International banking in Jersey is the
foundation on which the ?nancial services
sector rose to prominence, which explains
why an estimated 4,950 people are employed
in the banking sector, making Jersey a centre
for expertise in the offshore banking world.
Historically, the links to Jersey’s banking
sector have been from the UK. However,
these links have expanded over time to
include countries with increasing prominence
and growth of wealth. Jersey is ideally placed
for those banks that require an offshore
presence close to Europe but outside of the
European Union.
The banking sector spans corporate and
institutional banking, private banking and the
provision of complimentary services to the
funds, wealth management and trust sectors.
Jersey currently provides deposit taking
licences to 42 organisations from the UK,
Europe, North America, Africa, Asia and the
Gulf States.
Banking
The UK will continue to be a signi?cant trading
partner in relation to the banking sector.
Recent developments in UK legislation,
following the Independent Commission on
Banking (ICB) review, will provide the option
for ring fenced banks to have branches in
Jersey.
Previously Jersey’s policy on banking
regulation was that only those banks within
the World’s top 500 and that met a number
of other criteria were eligible to be licensed in
Jersey. As a result of the changing structure
of international banks following the ?nancial
crisis this policy is currently under review. This
anticipated change in policy does not mean
that Jersey intends to lower its standards for
those banks looking to have a presence on
the Island. However, it does demonstrate that
the government and the regulator understand
the changing banking environment and the
need for alternative licensing approaches that
facilitate additional opportunities without
exposing the Island to undue risk.
Key objectives
for The
Banking
Sector
Continue to foster
Jersey’s strong links
with the City of London
given the symbiotic
relationship that
currently exists
Assist banks in
adapting business
models to new
regulations from
other jurisdictions
Target growth in
non-EU banks who
want to set up a
banking presence
outside of the EU but
in the geographical
area
Target banks
focusing on
high net worth
individuals
Jersey Financial Services Industry POLICY Framework // 17
Jersey was the ?rst international ?nance
centre to develop comprehensive and robust
legislation governing trusts. Jersey’s Trusts
Law has since been used as the basis of
legislation by international ?nance centres
around the world. The Trusts Law has only
been amended six times in its 30 years of
existence which demonstrates the strength
and resilience of the legislation. However,
innovation within the private wealth
management industry has seen targeted
amendments to the legislation to grow the
potential of the industry in Jersey.
In addition, the high quality of Jersey court
decisions is seen as a key driver behind the
use of Jersey trusts. The Royal Court of
Jersey is one of the most long-standing
and respected courts of any international
?nance centre, providing a stable judicial
system and signi?cant case law experience
required by trustees and settlors. As a result
the Island has a vastly experienced legal and
administrative service to support the sector.
With high standards of con?dentiality and tax
neutrality, Jersey has an appeal to developing
markets where fast-accumulating wealth
needs to be managed.
Wealth proposition
As a tax neutral jurisdiction, Jersey does
not tax individuals who are not resident in
the Island. Consequently non-residents can
hold cash deposits or investments without
incurring any liability to Jersey income tax.
Similarly, structures such as companies, cell
companies, trusts, funds, partnerships, limited
partnerships and foundations bene?cially
owned by non-residents will not be liable to
Jersey income tax. They also bene?t from the
lack of capital gains tax and inheritance tax.
The government has further supported the
wealth management sector by providing the
legislation for the creation of foundations
under the Foundations Law introduced in
2009. The creation of Jersey foundations
as a product was a development to meet
the increasing needs of wealth management
from new markets and notably civil law
jurisdictions. The Jersey foundation now
provides the private wealth management
sector with variety and ?exibility that is
required in order to permit Jersey to access
and develop new markets.
The government recognises the importance
of expanding the wealth proposition to
capture the growing proportion of private
wealth clients with truly international lives,
without a dominant country in terms of where
they spend their time or hold their assets.
To remain competitive we must capture
adjacent growth in areas such as estate
planning, family succession planning and asset
protection. Developing our position on non-
tax related offerings will also be an important
competitive advantage in the future.
Jersey is an ideal jurisdiction in which
to establish tax-ef?cient philanthropic
structures. The experience of the ?nancial
services sector in private wealth management
provides reliable and sustainable services that
can be used to establish leading philanthropic
enterprises. Along with the experience
already in the sector, the government is
committed to providing a new legislative
regime for charities in the Island which will
further advance the potential for marketing
philanthropic structures.
As part of a joint initiative between
government and the wealth management
industry, we are actively engaging with
international organisations and leading
experts in worldwide philanthropic initiatives.
We aim to develop the Island’s offering in this
sector with the view to positioning Jersey as
the leading international ?nance centre for
philanthropic wealth structuring.
Philanthropy
“The government will expand Jersey’s wealth proposition to meet the variety and ?exibility required to
access and develop new markets.”
18 // Jersey Financial Services Industry POLICY Framework
Jersey has grown over the years to be
a signi?cant international ?nance centre
for the funds industry with assets under
management in excess of £190 billion
8
. In
particular, Jersey has become a jurisdiction
of choice for many managers and related
administration, custodian and ancillary service
providers.
The funds sector in Jersey includes a diverse
range of asset types from the traditional
asset classes covering bonds, equities and
money market funds, to the increasingly
prominent alternative asset classes such as
private equity, hedge, real estate and other
alternative investment classes. The growth
of the industry has led to the development
of skills and other specialist support
services being performed on the Island by
leading offshore law ?rms, Big 4 and home-
grown accountancy ?rms, experienced
administration support professionals and
specialist IT services.
The tax approach to Jersey funds is that
of neutrality, and it is envisaged that
collaboration with international governments
and regulators in the future will also be
central to enhancing the understanding of
the industry internationally and thereby
facilitating ongoing access to key markets.
Funds
Jersey offers a full spectrum of fund
regulation from highly regulated funds that
may be marketed widely to the general public
to unregulated funds, for institutional or
expert professional investors that may opt
out of regulation provided certain criteria
are met. Being able to market to all types of
investors provides the ?exibility required for
market participants.
The government recognises that competition
for the location of funds and fund managers
has become increasingly ?erce and Jersey
is committed to remaining competitive by
performing a review of its funds’ legislation
and regulations to ensure it is offering
investor focused, ?exible products that
are innovative and suitably regulated on a
proportionate risk based approach.
The funds industry is being supported by
the government to ensure that Jersey’s
fund regime continues to attract suitable
new entrants to the market by encouraging
and supporting innovation whilst retaining
appropriately regulated funds regime that
is proportionate to our risk pro?le as a
jurisdiction.
Key objectives
for The Funds sector
Review and enhance
current investment
fund legislation with
a view to making the
process more effective
and remaining highly
attractive for new
entrants
Attract non-EU
fund managers
who wish to place
funds from non-
EU investors
Attract EU fund
managers who want
the optionality of
raising funds outside
of Europe whilst
retaining access to
EU markets
8 Summary of statistical
survey of funds serviced in
Jersey as at 31 December
2013, Jersey Financial
Services Commission
Jersey is a third country for the purposes of
the AIFMD and this provides Jersey with a
number of additional opportunities for growth
in the funds sector for both fund managers
wishing to conduct business in the EU and
those wishing to avoid AIFMD rules as Jersey
is not an EU member state.
On 22 May 2013, the European Securities
and Markets Authority (ESMA) approved a
cooperation agreement with Jersey on behalf
of the EU member states. As a result of this
and the implementation of the Alternative
Investment Funds (Jersey) Regulations 2012
and connected Orders that were issued
alongside the regulator’s codes of practice in
response to the AIFMD, Jersey is now able to
offer ?exibility to alternative fund managers
wanting to market Jersey funds into Europe
through private placement regimes until at
least 2018.
Jersey was the ?rst offshore jurisdiction to
implement a fully compliant AIFMD regime.
This timely and effective implementation
of the AIFMD legislation has again shown
Jersey’s ability to adapt quickly and that
where change is required, the government,
the regulator and industry can work together
to get things done.
Alternative Investment
Fund Managers
Directive (AIFMD)
Jersey Financial Services Industry POLICY Framework // 19
Jersey remains an attractive destination
for the domiciliation of head of?ces for a
number of business structures due to its tax
neutrality.
Jersey is already used by a number of
banks, trusts and mining companies as the
jurisdiction of choice for head of?ce functions
which is in part due to the reputation of the
Island’s ?nancial services industry and the
availability of a skilled workforce.
The government recognises the need
to diversify and actively encourages the
exploration of other business areas that will
support the Island’s economy, such as:
Mining - the specialist professional skills
available on the Island lend themselves to
supporting Jersey as a base for international
investment into the sector. Investments
into less sophisticated jurisdictions can be
ef?ciently managed through Jersey providing
con?dence to investors and bene?ting those
jurisdictions. The Island has due regard for
international best practice and governance
initiatives relating to the extractive industries.
Digital - as Jersey develops its digital
industry, the ?nancial services sector can
provide venture capital investments and the
platform for listings for successful businesses.
The sophisticated ?nancial services industry
will also be a customer of development in the
digital industry.
Other Related businesses
Head Offices Other Business Areas
“The government recognises the need to diversify and actively encourages the exploration of other business
areas that will support the Island’s economy.”
20 // Jersey Financial Services Industry POLICY Framework
As a result of its constitutional autonomy, the government has responsibility for
its own ?scal policy. The Island has operated a simple, low tax regime that has
been successful for many years. This provides a tax neutral platform that facilitates
international investment. The international reputation of Jersey as a low tax jurisdiction is
acknowledged as a fundamental foundation of the ?nancial services industry.
The government does not wish the reputation of the Island or its ?nancial services industry
to be tarnished by improper use of its tax system. As a result, practitioners should ensure
that services are not used to facilitate abusive tax schemes or planning. The government
can and will take action against businesses it believes operate in such a manner.
A tax regime that supports the ?nancial
services industry and complies with
international standards is key to ensuring the
future sustainability of the Jersey economy.
We aim to provide reassurance to the
international business community that there is
no requirement to amend the current system
of taxation in Jersey.
We are committed to providing a tax regime
that is not only competitive with other
international ?nance centres, but is also stable
and certain. Fundamental changes to Jersey’s
tax regime will be made infrequently and only
after careful consideration and consultation.
This is further supported by Jersey’s
stable system of government and prudent
management of its ?nances over the years.
Tax neutrality is achieved through the
corporate tax regime’s general rate of tax
of 0% and there is also a low rate of tax for
?nancial services companies (10%), both
of which are a key feature for the Jersey
?nancial services global offering. The intention
is that Jersey will maintain a tax neutral
proposition. Maintaining a competitive rate
for this industry will continue to be one of the
government’s policies.
In addition to low corporate tax rates, Jersey
is mindful that personal tax rates are also
an important element in attracting a highly
skilled workforce in an increasingly mobile
market place. The personal tax rates in Jersey
are competitive with other jurisdictions and
we are committed to ensuring this remains
part of the tax policy in the future.
Fiscal policy THAT supports the
financial services industry
The tax regime
Jersey has positioned itself to be an
internationally compliant offshore jurisdiction
that has adopted international standards.
This has been evidenced by:
A corporate tax regime that is compliant
with the European Union’s Code of Conduct
on Business Taxation in 2011.
Intergovernmental agreements for
improving international tax compliance with
both the US and UK were signed on 13
December 2013 and 22 October 2013
respectively.
From 1 January 2015 automatic
exchange of tax information, in place of
the present retention tax, for EU Savings
Tax Agreements with EU Member States
will be mandatory; legislation is in place
to facilitate exchange, optionally, from 1
January 2014.
Jersey has signed 35 TIEAs, of which 27
are in force. A further 5 have been agreed
but are unsigned and 5 are in advanced
discussions. The Island has also signed 8
DTAs including agreements with Hong
Kong, Qatar, Luxembourg and Singapore.
These agreements demonstrate Jersey’s
commitment to international standards and
facilitate further business ?ows between
jurisdictions
9
.
In November 2013 Jersey was rated
‘largely compliant’
10
by the OECD Peer
Review Group. This is the same rating as
the UK, USA and Germany.
It has been agreed that the UK’s rati?cation
of the OECD/Council of Europe Convention
on Mutual Administrative Assistance in Tax
Matters be extended to Jersey. This will
come into effect in June 2014.
10 Global forum on
transparency and
exchange of information
for tax purposes,
Transparency 2013,
Report on Progress, OECD
These actions have resulted in an improved
understanding of the position of Jersey in the
?nancial services markets that it operates in
and increased respect for the legislative and
regulatory environment that Jersey maintains.
The international tax environment is currently
undergoing signi?cant change in terms of
public engagement and increased impetus for
greater transparency. We are mindful of these
changes and will ensure that we respond and
adapt to these changes, whilst ensuring a
competitive platform to both sustain existing
business and grow the ?nancial services
industry.
9 States of Jersey TIEAs
data, March 2014
Jersey Financial Services Industry POLICY Framework // 21
At the outset it is appropriate to state that Jersey wishes and intends to remain a well-
regulated jurisdiction that is respected both locally and by international businesses and
governments.
The government also considers that a sophisticated and proportionate regulatory environment
can contribute signi?cantly to economic development and sustainable growth, improving
the openness of international markets and fostering an open and competitive business
environment for innovation from existing and new entrants. The government will protect
compliant businesses by enabling fair competition, promoting a level playing ?eld and
providing business with the con?dence to invest, grow and create new jobs.
Regulation and legislation
THAT works with industry
Legislation Overview
The regulatory environment in Jersey is
created in two parts:
Through legislation created by the
government. Legislation sets the
rules by which bodies corporate and
other legal structures are established,
governed and operated. Government
also grants licences for businesses to
setup and operate in the jurisdiction.
Through regulation administered by
the JFSC for a wide range of licensed
?nancial services businesses. Where
legislation adopted by the government
provides a framework that requires
certain activity to be undertaken only
with regulatory oversight, this oversight
will be carried out by the regulator. The
regulator then sets guidance as to how
such regulated activities are undertaken
and monitored in accordance with
government policy.
The government is committed to creating
the operating environment in which
businesses can develop and grow. In order
to operate in Jersey, businesses are required
to have a licence to trade and a licence to
take on employees. Together these licence
requirements seek to ensure that only those
businesses with the appropriate objectives
aligned to the economic objectives of
the Island are able to operate within the
jurisdiction.
We recognise that the application of
legislation and the way in which it is brought
into force and applied by the regulator is
a key determinant for many businesses in
their choice of location in which to base their
operations. The government is committed
to reviewing the legislative and regulatory
process to improve the speed to market
and experience of industry. As part of this
process, government has retained additional
resources to deal directly with legislation that
affects the ?nancial services sectors.
Jersey will continue to review its
proportionate risk-based approach to
regulation to take into account changes
to target markets of the ?nancial services
sectors and recommendations from
international bodies. Government will
constantly monitor and assess the ?nancial
services industry’s approach to risk-based
regulation by reference to developing
practice internationally and by reference to
developments in other international ?nancial
services centre that we wish to be compared
to and compete with.
22 // Jersey Financial Services Industry POLICY Framework
Regulation
As an independent body, the regulator has
its guiding principles set out in the Financial
Services Commission (Jersey) Law 1998.
Consistent with these principles, government’s
key requirements of the regulator include that:
regulation will be proportionate to the
risks of the industry that is being given
oversight;
the regulator is accountable for the
ef?ciency and effectiveness of its
activities, while remaining independent
in the decisions made;
the regulator will help maintain Jersey’s
position as an international ?nance
centre;
businesses that persistently or
egregiously fail to comply with
regulations should be identi?ed quickly
and face proportionate and meaningful
sanctions;
the regulator will engage with
businesses who wish to increase activity
within Jersey;
The regulator currently oversees a number
of different fund products in Jersey and
commentators have suggested that these
offerings are reviewed to ensure they remain
competitive. The government, working with
the regulator and industry, acknowledge
that more can be done to facilitate a highly
competitive investment funds industry,
supporting the aims of attracting new
business whilst enhancing the Island’s
excellent reputation. All parties are committed
to working towards this shared aim. In
partnership with the regulator and industry
the government is providing additional
resources to assist with performing a
comprehensive review of current investment
fund legislation with a view to making the
process more effective. This will allow the
Island to adapt quickly to increased regulatory
and business demands when needed.
New regulation will take into account the
impact it may have on regulated entities. The
burden of such regulation will be measured
taking into consideration the complexity
and nature of the activities undertaken.
The government will play a leading role in
clarifying the acceptable risk appetite of
the Island and this will be proportionate,
recognising the diversity among ?rms and
markets.
The quality of the laws and enforcement
of regulations is underpinned by the skilled
staff at the regulator’s disposal and the
deep knowledge of the industry in which
it operates. The government supports the
regulator in the recruitment of suf?ciently
experienced resources to deliver the
calibrated regulatory environment that the
industry requires.
We also recognise the need to adapt and
remain ?exible with both our style and
practice of regulation not only to protect the
industry and uphold our reputation but also
to remain competitive in terms of quality of
service and experience of the regulator.
During 2014, the government is committed
to performing a review of the guiding
principles and the Financial Services
Commission (Jersey) Law 1998 under which
the regulator discharges its duties. The
intention is to ensure that they are ?t for
purpose in meeting our strategic objectives
for the industry. Based on the outcome of
the review we will work with the Commission
to implement, if necessary, changes to the
governance and legislation that impacts the
regulator as we build on and strengthen our
?nancial services proposition.
The government also understands that
legislation and regulation are not themselves
directed at innovation but can create a
framework that will drive innovation while
ensuring consumers are protected from risks.
The government has tasked the regulator with the responsibility
for regulating and licencing ?nancial services businesses operating
in Jersey. The general headings for these regulated businesses are
banking, funds services, trust company, investment business, general
insurance mediation, money service and alternative investment
business. The regulator is also responsible for maintaining the
companies’ registry and enforcing the implementation of
anti-money laundering legislation.
Regulation and legislation
THAT works with industry
Jersey Financial Services Industry POLICY Framework // 23
Over the past ?ve decades, Jersey has successfully developed as a ?ourishing international ?nancial
services centre that is a linchpin of the Island’s economy. Jersey has proved to be a stable location
for all the respective ?nancial services sectors but now needs to re?ect the challenges and
opportunities of a changing business environment in a policy framework that serves the overall
long-term interests of the Island as a whole.
The ?nancial services industry is continuing its transformation driven by competition, regulation
from international standard setters and the shift of wealth from traditional market locations in
Western Europe and the USA to Eastern Europe, Africa, the Gulf States and the Far East.
Trends such as continued growth in cross-border capital ?ows, accumulation of wealth in emerging
countries, and international acceptance of the proper role of fair tax competition, all bode well for
the future of international ?nance centres and create opportunities for Jersey.
The government encourages excellence, innovation and growth not only to protect the industry and
uphold our reputation but also to remain competitive in terms of quality of service and experience
to all present and potential users of the ?nancial services industry. We are committed to improving
?exibility in our style and practice of engagement with the regulator and industry. We have made
a statement of intent in this document that we will review legislation, policies and practices, and
provide the appropriate resource in government to facilitate this intention.
The government will work together with the regulator and industry towards a shared goal for
success. We aim to protect our existing businesses, reposition our current offerings and build new
capabilities.
In conjunction with key stakeholders in the
Island and internationally we have developed
a policy framework based on key objectives
that look to the futurE AND will continue to
secure our position as a leading international
finance centre.
Conclusion
Jersey Financial Services Industry POLICY Framework // 23
24 // Jersey Financial Services Industry POLICY Framework
POLICY
Framework
Jersey
Financial
Services
Industry
THE
GOVERNMENT
OF JERSEY
Information correct at time of print – April 2014
doc_159009037.pdf
POLICY
Framework
Jersey
Financial
Services
Industry
THE
GOVERNMENT
OF JERSEY
2 // Jersey Financial Services Industry POLICY Framework
Contents
CHIEF MINISTER’S STATEMENT // 3
FOREWORD // 4
Introduction // 5
PRIORITIES // 6
A government THAT supports
the financial services industry // 9
Growth and development of
the financial services sectors // 12
Developing markets to
provide growth and stability // 15
Fiscal policy THAT supports
the financial services industry // 20
Legislation and Regulation
THAT works with industry // 21
Conclusion // 23
Jersey Financial Services Industry POLICY Framework // 3
Jersey, like many countries, has responded to the effects
of the worldwide ?nancial crisis. Jersey’s ?nancial services
industry has demonstrated an innovative and resilient approach
to a fast-changing global economy and is committed to a
future shaped by choice, not chance.
As an international ?nance centre, our continued success
depends on our ability to sustain our core offerings and
on looking outwards to the opportunities for growth in a
measured, co-ordinated and sustainable way.
With the threat of ambitious new centres located across the
globe, we must continue to compete and remain very much
open for business in a proportionate and targeted way.
Today, Jersey is rated as one of the most stable and successful
international ?nancial services centres in the world and,
working together responsibly, the government, the regulator
and industry have the ability to continue to drive excellence
and innovation in everything we do.
“This document outlines the policies that are
vital to the future of the ?nancial services
industry and sets out the government’s
framework to achieve future success, and
thereby support local employment and the
provision of public services to the bene?t of all
Island residents. Together with the regulator
and industry, we will take the necessary action
to ensure that the industry remains successful
and competitive now and in the future.”
chief minister’s statement
SENATOR Ian Gorst
Chief Minister of Jersey
4 // Jersey Financial Services Industry POLICY Framework
The ?nancial services industry is key to Jersey’s economic
health. The sectors of the industry, which includes banking,
trusts, fund management, company administration, legal ?rms,
accountancy ?rms, investment advisory services and the
servicing of a wide range of corporate vehicles, are signi?cant
contributors to the local economy. This is highlighted by the
fact the industry employs more than 12,400 people
1
on the
Island spanning the range of ?nancial services provided.
Jersey’s ?nancial services industry is also a signi?cant
contributor to the global economy, particularly the United
Kingdom. A report prepared by the respected independent ?rm
Capital Economics has found that Jersey provides a net bene?t
to the United Kingdom of almost £2.5bn a year and supports
around 180,000 British jobs
2
.
Early in 2013 Jersey Finance Limited, the organisation that
represents and promotes Jersey as an international ?nance
centre of excellence, carried out an independent jurisdictional
review of the ?nancial services industry, with the support of
leading consultants McKinsey. Its recommendations have been
embedded into this document and are being implemented by
the government, the Jersey Financial Services Commission
(JFSC) and industry.
This document serves as a useful guide to government’s policy
on Jersey’s ?nancial services industry for our current and
potential stakeholders locally and internationally. The innovation
and resilience we have demonstrated, time and again, in
meeting the challenges presented to us as a jurisdiction will
continue. We are con?dent that we will succeed and remain a
strong international ?nance centre that bene?ts our Island’s
community.
1 Jersey labour market
at June 2013 – analysed
by the Statistics Unit on
behalf of the Population
Of?ce, States of Jersey
2 Jersey’s value to Britain,
Capital Economics,
published 2 July 2013
foreword
“Jersey has a bright future and we have
proven that we are able to reposition ourselves
to meet the challenges and capitalise on
the opportunities that are presented to us.
The government has con?dence in Jersey’s
?nancial service industry and is willing to
invest to build on our strengths to ensure that
Jersey maintains an important role in the
global economy of the future.”
Senator Philip Ozouf
Assistant Chief Minister and
treasury Minister of Jersey
Jersey Financial Services Industry POLICY Framework // 5
3 Banking Business (Jersey)
Law 1991, Q3 2013
registered banks statistics,
Jersey Financial Services
Commission
5 Jersey labour market
at June 2013 - analysed
by the Statistics Unit on
behalf of the Population
Of?ce, States of Jersey
4 Jersey labour market
at June 2013 - analysed
by the Statistics Unit on
behalf of the Population
Of?ce, States of Jersey
6 Jersey labour market
at June 2013 - analysed
by the Statistics Unit on
behalf of the Population
Of?ce, States of Jersey
An autonomous Crown dependency that
enjoys a secure, special relationship with
the UK but is not part of the UK or the
EU;
A well-established, diverse and highly
respected international ?nancial services
centre;
A highly skilled and experienced
workforce across a wide range of
?nancial services sectors;
An attractive business and living
environment for existing businesses,
executives and employees and those
looking to locate to Jersey;
Geographically well placed to serve
clients based in the UK, Europe, Africa,
the Gulf States and the Far East;
What we do
Jersey is a centre for banking expertise,
with 42 deposit-taking licences
3
in
issue, and an estimated 4,950 people
4
working in the sector;
Jersey has a long history of providing
high-quality services to the trust,
company administration and funds
sectors and is resident to a number
of global trust company head of?ces
and investment fund managers. These
growing sectors of wealth and asset
management are serviced by some
3,370 people
5
;
Jersey also hosts a range of globally
recognised, specialist legal and
accountancy ?rms collectively
employing roughly 3,130 professionals
6
;
Jersey has claim to a number of
companies used as listing vehicles on
many of the world’s major markets.
Notably, Jersey has the largest number
of non-UK companies listed on UK stock
exchanges.
A stable political system and economy
with a government that fully supports
the ?nancial services industry;
Jersey has a robust and independent
judicial system based on modern
commercial law principles;
A simple low tax/tax neutral ?scal
system that provides an ideal platform
to support an international ?nance
industry;
A proportionate risk-based regulatory
environment aligned to international
standards that is supportive of the
development of the ?nancial services
industry sectors, encouraged through
interaction between the government,
the regulator and industry.
Why choose Jersey
The Jersey Economic Growth and Diversi?cation strategy states
that the government is to prioritise the growth and diversity of the
?nancial services industry, together with the creation of new business,
employment and raising productivity. Jersey continues to be, and is
determined to remain, a leading international ?nance centre.
introduction:
6 // Jersey Financial Services Industry POLICY Framework
1
Sustain the core
The ?rst priority is to protect existing
business from the threat of competitive
challenges. Our aim is to ensure the long-
term prosperity of our existing ?nancial
services industry, while gradually diversifying
into other areas. We recognise that a change
of direction is required but that this change
needs to be gradual and planned.
2
Enhance enablers
Second, to stand out as an international
?nance centre, Jersey must excel in the areas
that determine investors’ choice of location:
namely the legal, regulatory and business
environments. These ‘business enablers’ are
essential to future success. We will make sure
we enhance the governmental, regulatory and
legislative framework and do all we can to
improve the business environment, allowing
innovation to ?ourish.
3
capture adjacent
growth
Third, we will work hard to support existing
business to capture adjacent growth in
products, services and markets. By this
we mean providing more to our existing
participants and attracting new entrants from
both established and developing markets. We
need to consider how we might replace any
business that looks vulnerable to loss.
4
reposition and build
new capabilities
The fourth priority is to explore more
ambitious opportunities in less familiar
business territory, repositioning our current
offering and building new capabilities. These
opportunities tend to be in the higher value-
added elements of the sectors and often
require a broader set of stakeholders.
An independent jurisdictional review of Jersey’s ?nancial services
industry was carried out in 2013, which set out a proposed strategy
for the ?nancial services industry in Jersey. Four key priorities, which
are embedded into this policy framework, were identi?ed in the
jurisdictional review: sustain the core; enhance enablers; capture
adjacent growth; and reposition and build new capabilities. The
formulation of this policy framework has been developed on the basis
of signi?cant research and consultation with stakeholders from the
?nancial services industry both in Jersey and internationally.
PRIORITIES
We have already started the process of
diversifying geographically, and will continue
this work in the months and years ahead.
Jersey Financial Services Industry POLICY Framework // 7
This policy framework supports the
continuation of an independent ?nancial
services regulator, the JFSC, which will assist
with the growth of the regulated ?nancial
services sector by continuing to ensure a
regulatory framework that is suf?ciently
robust to be compliant with international
standards and our proportionate risk appetite
as a jurisdiction, while retaining ?exibility
to adapt to and anticipate the needs of a
changing external regulatory environment.
It should be noted, however, that both
regulated and unregulated aspects of the
?nancial services industry are referred to in
this document.
Key objectives of the policy framework
The implementation of this policy framework
will require effective coordination between
government, the regulator and industry,
?exibility from government and the regulator
and innovation and adaptability from industry
to meet new challenges as they arise.
A key part of this policy framework is the
core principles that the government believes
will contribute to the success of the ?nancial
services industry. These core principles are
set out on page 8.
This policy framework provides the structure
for the ?nancial services sector to maintain
competitiveness, target new growth areas
and drive the product/service diversi?cation
that is required in such a challenging economic
environment now and in the future.
Maintain and promote
Jersey’s position as a
leading international
?nance centre
Effective
co-ordination between
the government,
the regulator and
industry
Maintain an attractive
operating environment for
existing and new businesses
across existing and potential
new sectors of the ?nancial
services industry
Ensure the
?nancial services
industry is
adequately
resourced
Comply with
international
standards and
initiatives having
global application
Maintain employment in the
?nancial services industry
at more than 12,000 in
the short term and aim to
grow this position over 4
years to 2018 in line with
immigration policy
Contribute to the
Island’s Gross Value
Added (GVA) and
tax revenues to the
bene?t of Island
residents
8 // Jersey Financial Services Industry POLICY Framework
The ?nancial services industry in Jersey
bene?ts from a legal and regulatory operating
framework that is supported by a stable and
committed government. It is our aim to sustain
and further invest in the long-term growth of
the industry and we endorse ?nancial services
businesses that share this view.
As a leading international ?nance centre, we
commit to comply with international standards
and global initiatives. Jersey is considered a
responsible partner to the UK, the EU and
other international jurisdictions and aims to be
a ‘good citizen’ internationally. We will ensure
an appropriately regulated ?nancial services
industry taking a proportionate risk-based
approach in order to uphold our reputation and
accountability to our business partners but also
ensuring that we remain competitive.
Jersey has a highly skilled professional
workforce offering world-class expertise
across the ?nancial services industry sectors.
We are committed to ensuring we maintain our
reputation as an international ?nance centre of
excellence by investing in our local skills base,
growing and diversifying our capabilities and
continuing to deliver market leading products.
We recognise the need for continuous
development of the ?nancial services industry in
response to changing global market conditions.
We understand the need to adapt and be
innovative in order to remain competitive and
we are fully supportive of industry initiatives to
deliver on this.
Working together with the regulator and
industry is the foundation of our ongoing
success and we will continue to ensure that
a collaborative approach is embedded in
everything we do providing an environment
where our objectives can be delivered.
Jersey Financial Services:
Core Principles
STABLE
RESPONSIBLE
Excellence
INNOVATIVE
working together
Jersey Financial Services Industry POLICY Framework // 9
Key objectives for the government
To stand out as an international ?nancial services centre in today’s
global industry Jersey needs to enhance business enablers that are
key to determining investors’ choice of location: the legal, regulatory
and business environments. The government’s role is to implement a
strategy, providing effective leadership, good co-ordination between
stakeholders and support for innovation and growth in the ?nancial
services sectors. We also recognise that successful delivery of this
strategy involves a number of other industries within the Island that
are deeply intertwined and co-dependent.
A government THAT supports
the financial services industry
Uphold the reputation of the
Island and ensure that Jersey
is considered a centre of
excellence for sound business
practice by the international
community
Provide support and
policy guidance to ensure
Jersey maintains highly
competitive and attractive
legal, regulatory and
business environments
Simplify legislation,
regulation and
enforcement while
remaining in accordance
with the agreed standards
to improve business
capabilities across
?nancial services sectors
Enable faster
?nance related
decision making
processes
Maintain and grow a
successful ?nancial
services sector that
contributes to the
economic well-being
of the Island and its
residents
10 // Jersey Financial Services Industry POLICY Framework
Jersey’s successful ?nancial services sector
has been based on the stability, innovation
and expertise that have enabled the Island
to become a leading international ?nance
centre. The Island’s well-developed legislative
and regulatory framework has provided the
foundation for its ?nance offerings. This
has in turn led the Island to be a centre of
excellence.
As a result of the changing structure within
our ?nancial services sectors following the
global ?nancial crisis, we recognise the need
to review certain policies and practices,
particularly in the banking and funds sectors.
We also recognise the need to remain
competitive, and to do so we need to offer
speed to market, which further challenges
some of our existing legislation and regulatory
practices.
The anticipated change in policies and
practices does not mean that Jersey intends
to lower its standard, but it does evidence
that the government and the regulator
understand the changing environment and the
need for alternative approaches that facilitate
additional opportunities without exposing the
Island to undue risk.
Our aim is to promote Jersey as a location
open for inward investment. The ability
of Jersey to attract international business
requires a deeper level of collaboration
between the government, the regulator,
industry and other interested bodies in
order to co-ordinate the marketing and
development of Jersey’s ?nancial services
offerings.
The government works closely with Jersey
Finance Limited, a non-pro?t making
organisation formed in 2001 to represent and
promote Jersey, locally and internationally,
as an international ?nancial centre of
excellence. We are committed to providing
political support for promotional activities
undertaken in markets where industry
believes appropriate opportunities have been
identi?ed for growth. More widely we aim to
maintain awareness in mature markets and
increase awareness of the Jersey proposition
in developing markets.
Other organisations that support new
business and the promotion of Jersey are
engaged, such as Locate Jersey, which
provides guidance and support to businesses
and high net worth individuals looking to
locate to the Island. Working together we
will ensure that any such moves are as
accommodating as possible.
Improving business
capabilities
Promotion
of Jersey
Jersey maintains a strong reputation and we
believe that building on the Jersey brand is
critical to our success in existing and target
markets.
We aim to facilitate the growth of the
?nancial services sector; a key element
of this is working more with international
governments, industry bodies and legislators
to understand the impacts of how legislation
made elsewhere can affect the Jersey
?nancial services sectors. In the EU, for
example, the Channel Islands Brussels Of?ce
(CIBO) has been set up to facilitate a stronger
voice and greater understanding between the
Channel Islands and the EU. Closer to Jersey, a
London of?ce has been established to ensure
Jersey has a presence in what still remains a
most important market and a fundamental
constitutional and political relationship for the
Island.
In relation to the protection of the Island’s
reputation as a well-regulated, transparent
and tax neutral jurisdiction, the government
has set up the Sound Business Practice
Committee
7
which is used to ensure that
businesses operating or interested in
operating in Jersey are acting in the long term
interests of the ?nancial services industry and
the Island. We are committed to ensuring that
business practices in all the ?nancial services
sectors are aligned with our stated objectives
and that we are able to offer guidance and
policy as developments occur globally.
Reputation
of the Island
7 The Sound Business
Practice Committee
consists of members of
the government, regulator
and industry to advise
on acceptable business
practice generally
“The government is committed to maintaining and promoting Jersey’s strong reputation, building on the
Jersey brand and remaining competitive in existing and target markets.”
Jersey Financial Services Industry POLICY Framework // 11
Jersey has a rich heritage, an appealing
climate and is accessible from most major
European hubs. Other appeals such as the
choice of high-quality hotels, many ?ne
restaurants, wide ranging sport and leisure
facilities and breathtakingly beautiful bays,
beaches and countryside make the Island
an attractive destination to visit. The
government recognises that the ?nance
industry and the tourism industry share the
objective of ensuring good transport links and
making Jersey an attractive place to visit as
well as reside and we are fully supportive of
common initiatives to promote the Island.
At present Jersey has almost 100 ?ights per
week to and from many of the major hubs
in the UK and around Europe, making the
Island accessible. We are aware that these
connections to other ?nance centres and
international hubs are crucial to the ?nancial
services industry. The government will work
with businesses to make a case for additional
routes to improve connectivity.
We have also invested in the roll-out of an
Island wide ?bre optic network to facilitate
Gigabit Jersey creating one of the best
connected places in the world to meet the
demands from businesses and consumers for
high-speed data transfer.
The government is aware that in order to
attract new ?nancial services businesses to
the Island, the infrastructure in place needs
to be at the level expected by international
business. Jersey already has a signi?cant
number of modern of?ce buildings, however it
is understood that this may not be suf?cient
to meet future requirements.
We are therefore committed to the
continuous development of high-quality
of?ce accommodation to meet demand.
Jersey has an excellent education system
and a highly skilled workforce developed
across the ?nancial service sectors. These
factors create the foundation for any new
business requiring quality resource on the
Island now and in the future. We recognise
in order to diversify and grow we will require
new skills and additional resources to meet
our potential, which includes the continued
international recruitment of highly skilled
employees. We will ensure that in meeting
this requirement the action taken will remain
consistent with our declared population
policy.
Recognising the importance of our home
grown talent, working alongside Jersey
Finance Limited, we are actively supporting
the creation of internationally recognised local
quali?cations speci?c to the ?nance industry
which complement our growth ambitions in
the industry. Our aim is to ensure the next
generation of Islanders have the appropriate
skills and quali?cations to work within the
?nance industry and this is an important
aspect of the government’s policy.
Tourism Air links
Telecommunications Infrastructure Education and
skills base
“The government will ensure that the infrastructure in place is at the level expected by international
business, now and in the future.”
12 // Jersey Financial Services Industry POLICY Framework
Key objectives for the growth and development
of the financial services sectors
Stimulate innovation
and improve Jersey’s
international
competitiveness
Grow and diversify
the ?nancial
services sectors,
capacity and
pro?tability
Develop new areas
of capability to
adapt to current
and future market
needs
Encourage new
businesses and
employment in
high-value areas
of the sectors
Ensure that protecting
and enhancing the
reputation of the
Island is at the
forefront of everything
the government, the
regulator and the
industry does
Jersey has a successful and diverse ?nancial services industry
and while recent market conditions have resulted in the industry
adapting to the changing external environment, Jersey has proved
to be a resilient location for the respective ?nancial services
sectors. However, we recognise the need to embrace an approach
of continuous development in order to grow, and in conjunction
with key stakeholders in the Island and internationally we have
developed a new vision that will help to secure our future as a leading
international ?nance centre.
Growth and development of
the financial services sectors
Jersey Financial Services Industry POLICY Framework // 13
The government is committed to supporting
businesses in all sectors that wish to grow
their Jersey-based operations through the
recruitment of highly skilled employees,
bene?tting the industry and the Island’s wider
economy. We will continue to diversify and
invest in our homegrown skills base but we
also recognise the requirement for population
policies that accommodate the needs of the
industry where the availability of the required
skills in the Island falls short. We will ensure
that these policies are proportionate to the
contribution of new and existing businesses
to the Island.
Jersey has an established and well-respected
legal framework in which modern commercial
principles blend with English common law.
Jersey’s success as an international ?nance
centre has led to the development of a
highly respected legal sector with a large
pool of skilled professionals who provide the
necessary support for clients of all sectors
of the ?nance industry. The judiciary has
signi?cant expertise, and a signi?cant body
of well-reasoned case law and precedence
to deal with complex international ?nancial
matters. This provides clients and their
advisors with con?dence when deciding on a
location for management of assets.
Business growth
and availability
of skilled staff
Legal framework
The reputation of the Island’s ?nancial
services sector is considered to be of upmost
importance. For this reason the government
has set in place a number of actions to ensure
the credibility and integrity of the business
undertaken in Jersey supports the Island’s
goals of being, and being seen to be, a high-
value tax neutral jurisdiction.
In order for the ?nancial services sector
to continue to be respected in the global
community, the Island continues to adapt to
changing external regulatory requirements. As
global standards on information exchange and
co-operation develop, Jersey will continue
to comply with those global standards whilst
upholding an appropriate balance of compliant
client con?dentiality.
International
reputation
We aim to protect our existing businesses but we also recognise the
need to reposition our current offerings and build new capabilities.
Inevitably this will require a collaborative approach from the
government, the regulator and industry and we fully support working
together towards a shared goal for success.
“The government is committed to maintaining and promoting Jersey’s strong reputation, building on the
Jersey brand and remaining competitive in existing and target markets.”
14 // Jersey Financial Services Industry POLICY Framework
Jersey needs to maintain ?nancial services
regulation that responds to the needs of
changing markets, while also upholding the
robust and transparent legal and regulatory
framework that strengthens the Island’s
ability to compete internationally. The
government will work with the regulator to
agree an acceptable risk framework where
necessary which will include areas such as
country/jurisdictional risk, whilst recognising
the regulator’s operational independence from
government.
The government has sought, and will continue
to seek, representation from the regulator
and industry on the implementation of its
policies and strategies to ensure that they are
aligned with those key stakeholders. As part
of this policy framework, the government
is committed to having accessible and
responsive politicians to facilitate the growth
of target markets by working together with
industry to support innovative solutions and
remove barriers of entry.
It is our intention to support the ?nancial
services industry in both developed and
developing countries. We recognise the
opportunities created by the shift of wealth
and speed at which emerging markets in
Eastern Europe, Africa, Asia, the Gulf States
and the Far East are growing. We will seek to
build reciprocal relationships with identi?ed
countries including the development of trade
treaties, Double Tax Agreements (DTAs)
and Tax Information Exchange Agreements
(TIEAs) where required.
Jersey will actively seek to partner with
developing countries to raise standards and
engage in knowledge transfer and capability
building to expand business. Although we
acknowledge that developing countries may
represent higher risk, we believe that by
working collaboratively with these countries
and international bodies such as the World
Bank and regional bodies such as the African
Tax Administration Forum their standards will
be improved and risks will reduce. This will
ultimately lead to greater growth in these
countries to the bene?t of the country’s
economies and citizens.
For developing countries a proportionate
risk-based approach will be considered that
recognises the diversity amongst businesses
and markets but also upholds our existing
standards and reputation. Individual decisions
on business from developing countries will
include focusing on the skills, capacity and
capabilities of the Jersey promoter within an
overall approach of judging each proposal on
its merits. To the extent it has not already
done so, JFSC will be encouraged to develop
Memoranda of Understanding with these
countries and share best practice.
Countries subject to United Nations sanctions
will not be facilitated. In most other cases
Jersey intends to follow the bilateral trade
position of UK foreign policy and will not
establish a signi?cantly different strategic
approach to the UK and international
community.
Central to the policy framework are the
requirements for facilitation of engagement
between the government, industry and the
regulator to ensure the ?nancial stability and
the reputation of the Island.
Regulation Expanding business Risk appetite
“The government will seek representation from the regulator and industry on the implementation of its
strategies to ensure that they are aligned with those key stakeholders.”
Jersey Financial Services Industry POLICY Framework // 15
Key objectives
for developing markets
The development of markets that will provide
growth while sustaining the current level of
business on the Island is a key part of the
overall jurisdictional review. The government
understands that in the changing economic
environment, Jersey’s traditional trading
partners will evolve and new opportunities
need to be identi?ed and encouraged to
develop businesses here in Jersey. The
required skills, regulations and an enabling
business environment are all part of this
policy framework.
The government and the industry have
joint responsibility for the marketing and
development of Jersey as a ?nance centre.
Jersey as a ?nance centre is promoted
through Jersey Finance Limited, a non-
pro?t making organisation formed in 2001
to represent and promote Jersey as an
international ?nancial centre of excellence.
The organisation is funded by members of the
local ?nancial services industry and the States
of Jersey. Jersey Finance Limited has of?ces in
Hong Kong and Abu Dhabi and representation
in London, Mumbai and Delhi.
Targeting the ?nance industry’s established
and prospective sectors, Jersey Finance
sponsors various events in Europe, Africa, Asia
and the Gulf States as part of the industry’s
business development initiatives. Jersey
remains a favourable jurisdiction, particularly
in relation to investment products and
wealth management vehicles such as trusts,
foundations and partnerships, as well as real
estate, private equity and hedge funds.
One of the signi?cant initiatives during 2013
has been the release of the Capital Economics
report on Jersey’s value to Britain to explain
the economic, ?nancial and ?scal links
between the two jurisdictions. This report has
demonstrated that Jersey as an international
?nance centre adds value to the countries
with which it trades.
Jersey Finance
The ?nancial services industry is continuing its transformation driven
by competition, regulation from international standard setters and the
shift of wealth from traditional market locations in Western Europe
and the USA to Eastern Europe, Africa, Asia, the Gulf States and the
Far East. This trend is likely to continue and will offer opportunities for
the growth and diversi?cation of our current established offerings in
the ?nancial services sectors.
developing markets to provide
growth and stability
Attract new business to
the Island focusing on
wealth management
opportunities from
identi?ed African
countries, Asia, the Gulf
States, Eastern Europe
and the Far East
Become the
location of choice
for estate planning,
family succession
planning and wealth
management activities
Be recognised globally as the
jurisdiction of choice for funds
with a clear, competitive and
stable legal and regulatory
regime enabling innovation and
speed to market whilst meeting
appropriate international
standards
16 // Jersey Financial Services Industry POLICY Framework
International banking in Jersey is the
foundation on which the ?nancial services
sector rose to prominence, which explains
why an estimated 4,950 people are employed
in the banking sector, making Jersey a centre
for expertise in the offshore banking world.
Historically, the links to Jersey’s banking
sector have been from the UK. However,
these links have expanded over time to
include countries with increasing prominence
and growth of wealth. Jersey is ideally placed
for those banks that require an offshore
presence close to Europe but outside of the
European Union.
The banking sector spans corporate and
institutional banking, private banking and the
provision of complimentary services to the
funds, wealth management and trust sectors.
Jersey currently provides deposit taking
licences to 42 organisations from the UK,
Europe, North America, Africa, Asia and the
Gulf States.
Banking
The UK will continue to be a signi?cant trading
partner in relation to the banking sector.
Recent developments in UK legislation,
following the Independent Commission on
Banking (ICB) review, will provide the option
for ring fenced banks to have branches in
Jersey.
Previously Jersey’s policy on banking
regulation was that only those banks within
the World’s top 500 and that met a number
of other criteria were eligible to be licensed in
Jersey. As a result of the changing structure
of international banks following the ?nancial
crisis this policy is currently under review. This
anticipated change in policy does not mean
that Jersey intends to lower its standards for
those banks looking to have a presence on
the Island. However, it does demonstrate that
the government and the regulator understand
the changing banking environment and the
need for alternative licensing approaches that
facilitate additional opportunities without
exposing the Island to undue risk.
Key objectives
for The
Banking
Sector
Continue to foster
Jersey’s strong links
with the City of London
given the symbiotic
relationship that
currently exists
Assist banks in
adapting business
models to new
regulations from
other jurisdictions
Target growth in
non-EU banks who
want to set up a
banking presence
outside of the EU but
in the geographical
area
Target banks
focusing on
high net worth
individuals
Jersey Financial Services Industry POLICY Framework // 17
Jersey was the ?rst international ?nance
centre to develop comprehensive and robust
legislation governing trusts. Jersey’s Trusts
Law has since been used as the basis of
legislation by international ?nance centres
around the world. The Trusts Law has only
been amended six times in its 30 years of
existence which demonstrates the strength
and resilience of the legislation. However,
innovation within the private wealth
management industry has seen targeted
amendments to the legislation to grow the
potential of the industry in Jersey.
In addition, the high quality of Jersey court
decisions is seen as a key driver behind the
use of Jersey trusts. The Royal Court of
Jersey is one of the most long-standing
and respected courts of any international
?nance centre, providing a stable judicial
system and signi?cant case law experience
required by trustees and settlors. As a result
the Island has a vastly experienced legal and
administrative service to support the sector.
With high standards of con?dentiality and tax
neutrality, Jersey has an appeal to developing
markets where fast-accumulating wealth
needs to be managed.
Wealth proposition
As a tax neutral jurisdiction, Jersey does
not tax individuals who are not resident in
the Island. Consequently non-residents can
hold cash deposits or investments without
incurring any liability to Jersey income tax.
Similarly, structures such as companies, cell
companies, trusts, funds, partnerships, limited
partnerships and foundations bene?cially
owned by non-residents will not be liable to
Jersey income tax. They also bene?t from the
lack of capital gains tax and inheritance tax.
The government has further supported the
wealth management sector by providing the
legislation for the creation of foundations
under the Foundations Law introduced in
2009. The creation of Jersey foundations
as a product was a development to meet
the increasing needs of wealth management
from new markets and notably civil law
jurisdictions. The Jersey foundation now
provides the private wealth management
sector with variety and ?exibility that is
required in order to permit Jersey to access
and develop new markets.
The government recognises the importance
of expanding the wealth proposition to
capture the growing proportion of private
wealth clients with truly international lives,
without a dominant country in terms of where
they spend their time or hold their assets.
To remain competitive we must capture
adjacent growth in areas such as estate
planning, family succession planning and asset
protection. Developing our position on non-
tax related offerings will also be an important
competitive advantage in the future.
Jersey is an ideal jurisdiction in which
to establish tax-ef?cient philanthropic
structures. The experience of the ?nancial
services sector in private wealth management
provides reliable and sustainable services that
can be used to establish leading philanthropic
enterprises. Along with the experience
already in the sector, the government is
committed to providing a new legislative
regime for charities in the Island which will
further advance the potential for marketing
philanthropic structures.
As part of a joint initiative between
government and the wealth management
industry, we are actively engaging with
international organisations and leading
experts in worldwide philanthropic initiatives.
We aim to develop the Island’s offering in this
sector with the view to positioning Jersey as
the leading international ?nance centre for
philanthropic wealth structuring.
Philanthropy
“The government will expand Jersey’s wealth proposition to meet the variety and ?exibility required to
access and develop new markets.”
18 // Jersey Financial Services Industry POLICY Framework
Jersey has grown over the years to be
a signi?cant international ?nance centre
for the funds industry with assets under
management in excess of £190 billion
8
. In
particular, Jersey has become a jurisdiction
of choice for many managers and related
administration, custodian and ancillary service
providers.
The funds sector in Jersey includes a diverse
range of asset types from the traditional
asset classes covering bonds, equities and
money market funds, to the increasingly
prominent alternative asset classes such as
private equity, hedge, real estate and other
alternative investment classes. The growth
of the industry has led to the development
of skills and other specialist support
services being performed on the Island by
leading offshore law ?rms, Big 4 and home-
grown accountancy ?rms, experienced
administration support professionals and
specialist IT services.
The tax approach to Jersey funds is that
of neutrality, and it is envisaged that
collaboration with international governments
and regulators in the future will also be
central to enhancing the understanding of
the industry internationally and thereby
facilitating ongoing access to key markets.
Funds
Jersey offers a full spectrum of fund
regulation from highly regulated funds that
may be marketed widely to the general public
to unregulated funds, for institutional or
expert professional investors that may opt
out of regulation provided certain criteria
are met. Being able to market to all types of
investors provides the ?exibility required for
market participants.
The government recognises that competition
for the location of funds and fund managers
has become increasingly ?erce and Jersey
is committed to remaining competitive by
performing a review of its funds’ legislation
and regulations to ensure it is offering
investor focused, ?exible products that
are innovative and suitably regulated on a
proportionate risk based approach.
The funds industry is being supported by
the government to ensure that Jersey’s
fund regime continues to attract suitable
new entrants to the market by encouraging
and supporting innovation whilst retaining
appropriately regulated funds regime that
is proportionate to our risk pro?le as a
jurisdiction.
Key objectives
for The Funds sector
Review and enhance
current investment
fund legislation with
a view to making the
process more effective
and remaining highly
attractive for new
entrants
Attract non-EU
fund managers
who wish to place
funds from non-
EU investors
Attract EU fund
managers who want
the optionality of
raising funds outside
of Europe whilst
retaining access to
EU markets
8 Summary of statistical
survey of funds serviced in
Jersey as at 31 December
2013, Jersey Financial
Services Commission
Jersey is a third country for the purposes of
the AIFMD and this provides Jersey with a
number of additional opportunities for growth
in the funds sector for both fund managers
wishing to conduct business in the EU and
those wishing to avoid AIFMD rules as Jersey
is not an EU member state.
On 22 May 2013, the European Securities
and Markets Authority (ESMA) approved a
cooperation agreement with Jersey on behalf
of the EU member states. As a result of this
and the implementation of the Alternative
Investment Funds (Jersey) Regulations 2012
and connected Orders that were issued
alongside the regulator’s codes of practice in
response to the AIFMD, Jersey is now able to
offer ?exibility to alternative fund managers
wanting to market Jersey funds into Europe
through private placement regimes until at
least 2018.
Jersey was the ?rst offshore jurisdiction to
implement a fully compliant AIFMD regime.
This timely and effective implementation
of the AIFMD legislation has again shown
Jersey’s ability to adapt quickly and that
where change is required, the government,
the regulator and industry can work together
to get things done.
Alternative Investment
Fund Managers
Directive (AIFMD)
Jersey Financial Services Industry POLICY Framework // 19
Jersey remains an attractive destination
for the domiciliation of head of?ces for a
number of business structures due to its tax
neutrality.
Jersey is already used by a number of
banks, trusts and mining companies as the
jurisdiction of choice for head of?ce functions
which is in part due to the reputation of the
Island’s ?nancial services industry and the
availability of a skilled workforce.
The government recognises the need
to diversify and actively encourages the
exploration of other business areas that will
support the Island’s economy, such as:
Mining - the specialist professional skills
available on the Island lend themselves to
supporting Jersey as a base for international
investment into the sector. Investments
into less sophisticated jurisdictions can be
ef?ciently managed through Jersey providing
con?dence to investors and bene?ting those
jurisdictions. The Island has due regard for
international best practice and governance
initiatives relating to the extractive industries.
Digital - as Jersey develops its digital
industry, the ?nancial services sector can
provide venture capital investments and the
platform for listings for successful businesses.
The sophisticated ?nancial services industry
will also be a customer of development in the
digital industry.
Other Related businesses
Head Offices Other Business Areas
“The government recognises the need to diversify and actively encourages the exploration of other business
areas that will support the Island’s economy.”
20 // Jersey Financial Services Industry POLICY Framework
As a result of its constitutional autonomy, the government has responsibility for
its own ?scal policy. The Island has operated a simple, low tax regime that has
been successful for many years. This provides a tax neutral platform that facilitates
international investment. The international reputation of Jersey as a low tax jurisdiction is
acknowledged as a fundamental foundation of the ?nancial services industry.
The government does not wish the reputation of the Island or its ?nancial services industry
to be tarnished by improper use of its tax system. As a result, practitioners should ensure
that services are not used to facilitate abusive tax schemes or planning. The government
can and will take action against businesses it believes operate in such a manner.
A tax regime that supports the ?nancial
services industry and complies with
international standards is key to ensuring the
future sustainability of the Jersey economy.
We aim to provide reassurance to the
international business community that there is
no requirement to amend the current system
of taxation in Jersey.
We are committed to providing a tax regime
that is not only competitive with other
international ?nance centres, but is also stable
and certain. Fundamental changes to Jersey’s
tax regime will be made infrequently and only
after careful consideration and consultation.
This is further supported by Jersey’s
stable system of government and prudent
management of its ?nances over the years.
Tax neutrality is achieved through the
corporate tax regime’s general rate of tax
of 0% and there is also a low rate of tax for
?nancial services companies (10%), both
of which are a key feature for the Jersey
?nancial services global offering. The intention
is that Jersey will maintain a tax neutral
proposition. Maintaining a competitive rate
for this industry will continue to be one of the
government’s policies.
In addition to low corporate tax rates, Jersey
is mindful that personal tax rates are also
an important element in attracting a highly
skilled workforce in an increasingly mobile
market place. The personal tax rates in Jersey
are competitive with other jurisdictions and
we are committed to ensuring this remains
part of the tax policy in the future.
Fiscal policy THAT supports the
financial services industry
The tax regime
Jersey has positioned itself to be an
internationally compliant offshore jurisdiction
that has adopted international standards.
This has been evidenced by:
A corporate tax regime that is compliant
with the European Union’s Code of Conduct
on Business Taxation in 2011.
Intergovernmental agreements for
improving international tax compliance with
both the US and UK were signed on 13
December 2013 and 22 October 2013
respectively.
From 1 January 2015 automatic
exchange of tax information, in place of
the present retention tax, for EU Savings
Tax Agreements with EU Member States
will be mandatory; legislation is in place
to facilitate exchange, optionally, from 1
January 2014.
Jersey has signed 35 TIEAs, of which 27
are in force. A further 5 have been agreed
but are unsigned and 5 are in advanced
discussions. The Island has also signed 8
DTAs including agreements with Hong
Kong, Qatar, Luxembourg and Singapore.
These agreements demonstrate Jersey’s
commitment to international standards and
facilitate further business ?ows between
jurisdictions
9
.
In November 2013 Jersey was rated
‘largely compliant’
10
by the OECD Peer
Review Group. This is the same rating as
the UK, USA and Germany.
It has been agreed that the UK’s rati?cation
of the OECD/Council of Europe Convention
on Mutual Administrative Assistance in Tax
Matters be extended to Jersey. This will
come into effect in June 2014.
10 Global forum on
transparency and
exchange of information
for tax purposes,
Transparency 2013,
Report on Progress, OECD
These actions have resulted in an improved
understanding of the position of Jersey in the
?nancial services markets that it operates in
and increased respect for the legislative and
regulatory environment that Jersey maintains.
The international tax environment is currently
undergoing signi?cant change in terms of
public engagement and increased impetus for
greater transparency. We are mindful of these
changes and will ensure that we respond and
adapt to these changes, whilst ensuring a
competitive platform to both sustain existing
business and grow the ?nancial services
industry.
9 States of Jersey TIEAs
data, March 2014
Jersey Financial Services Industry POLICY Framework // 21
At the outset it is appropriate to state that Jersey wishes and intends to remain a well-
regulated jurisdiction that is respected both locally and by international businesses and
governments.
The government also considers that a sophisticated and proportionate regulatory environment
can contribute signi?cantly to economic development and sustainable growth, improving
the openness of international markets and fostering an open and competitive business
environment for innovation from existing and new entrants. The government will protect
compliant businesses by enabling fair competition, promoting a level playing ?eld and
providing business with the con?dence to invest, grow and create new jobs.
Regulation and legislation
THAT works with industry
Legislation Overview
The regulatory environment in Jersey is
created in two parts:
Through legislation created by the
government. Legislation sets the
rules by which bodies corporate and
other legal structures are established,
governed and operated. Government
also grants licences for businesses to
setup and operate in the jurisdiction.
Through regulation administered by
the JFSC for a wide range of licensed
?nancial services businesses. Where
legislation adopted by the government
provides a framework that requires
certain activity to be undertaken only
with regulatory oversight, this oversight
will be carried out by the regulator. The
regulator then sets guidance as to how
such regulated activities are undertaken
and monitored in accordance with
government policy.
The government is committed to creating
the operating environment in which
businesses can develop and grow. In order
to operate in Jersey, businesses are required
to have a licence to trade and a licence to
take on employees. Together these licence
requirements seek to ensure that only those
businesses with the appropriate objectives
aligned to the economic objectives of
the Island are able to operate within the
jurisdiction.
We recognise that the application of
legislation and the way in which it is brought
into force and applied by the regulator is
a key determinant for many businesses in
their choice of location in which to base their
operations. The government is committed
to reviewing the legislative and regulatory
process to improve the speed to market
and experience of industry. As part of this
process, government has retained additional
resources to deal directly with legislation that
affects the ?nancial services sectors.
Jersey will continue to review its
proportionate risk-based approach to
regulation to take into account changes
to target markets of the ?nancial services
sectors and recommendations from
international bodies. Government will
constantly monitor and assess the ?nancial
services industry’s approach to risk-based
regulation by reference to developing
practice internationally and by reference to
developments in other international ?nancial
services centre that we wish to be compared
to and compete with.
22 // Jersey Financial Services Industry POLICY Framework
Regulation
As an independent body, the regulator has
its guiding principles set out in the Financial
Services Commission (Jersey) Law 1998.
Consistent with these principles, government’s
key requirements of the regulator include that:
regulation will be proportionate to the
risks of the industry that is being given
oversight;
the regulator is accountable for the
ef?ciency and effectiveness of its
activities, while remaining independent
in the decisions made;
the regulator will help maintain Jersey’s
position as an international ?nance
centre;
businesses that persistently or
egregiously fail to comply with
regulations should be identi?ed quickly
and face proportionate and meaningful
sanctions;
the regulator will engage with
businesses who wish to increase activity
within Jersey;
The regulator currently oversees a number
of different fund products in Jersey and
commentators have suggested that these
offerings are reviewed to ensure they remain
competitive. The government, working with
the regulator and industry, acknowledge
that more can be done to facilitate a highly
competitive investment funds industry,
supporting the aims of attracting new
business whilst enhancing the Island’s
excellent reputation. All parties are committed
to working towards this shared aim. In
partnership with the regulator and industry
the government is providing additional
resources to assist with performing a
comprehensive review of current investment
fund legislation with a view to making the
process more effective. This will allow the
Island to adapt quickly to increased regulatory
and business demands when needed.
New regulation will take into account the
impact it may have on regulated entities. The
burden of such regulation will be measured
taking into consideration the complexity
and nature of the activities undertaken.
The government will play a leading role in
clarifying the acceptable risk appetite of
the Island and this will be proportionate,
recognising the diversity among ?rms and
markets.
The quality of the laws and enforcement
of regulations is underpinned by the skilled
staff at the regulator’s disposal and the
deep knowledge of the industry in which
it operates. The government supports the
regulator in the recruitment of suf?ciently
experienced resources to deliver the
calibrated regulatory environment that the
industry requires.
We also recognise the need to adapt and
remain ?exible with both our style and
practice of regulation not only to protect the
industry and uphold our reputation but also
to remain competitive in terms of quality of
service and experience of the regulator.
During 2014, the government is committed
to performing a review of the guiding
principles and the Financial Services
Commission (Jersey) Law 1998 under which
the regulator discharges its duties. The
intention is to ensure that they are ?t for
purpose in meeting our strategic objectives
for the industry. Based on the outcome of
the review we will work with the Commission
to implement, if necessary, changes to the
governance and legislation that impacts the
regulator as we build on and strengthen our
?nancial services proposition.
The government also understands that
legislation and regulation are not themselves
directed at innovation but can create a
framework that will drive innovation while
ensuring consumers are protected from risks.
The government has tasked the regulator with the responsibility
for regulating and licencing ?nancial services businesses operating
in Jersey. The general headings for these regulated businesses are
banking, funds services, trust company, investment business, general
insurance mediation, money service and alternative investment
business. The regulator is also responsible for maintaining the
companies’ registry and enforcing the implementation of
anti-money laundering legislation.
Regulation and legislation
THAT works with industry
Jersey Financial Services Industry POLICY Framework // 23
Over the past ?ve decades, Jersey has successfully developed as a ?ourishing international ?nancial
services centre that is a linchpin of the Island’s economy. Jersey has proved to be a stable location
for all the respective ?nancial services sectors but now needs to re?ect the challenges and
opportunities of a changing business environment in a policy framework that serves the overall
long-term interests of the Island as a whole.
The ?nancial services industry is continuing its transformation driven by competition, regulation
from international standard setters and the shift of wealth from traditional market locations in
Western Europe and the USA to Eastern Europe, Africa, the Gulf States and the Far East.
Trends such as continued growth in cross-border capital ?ows, accumulation of wealth in emerging
countries, and international acceptance of the proper role of fair tax competition, all bode well for
the future of international ?nance centres and create opportunities for Jersey.
The government encourages excellence, innovation and growth not only to protect the industry and
uphold our reputation but also to remain competitive in terms of quality of service and experience
to all present and potential users of the ?nancial services industry. We are committed to improving
?exibility in our style and practice of engagement with the regulator and industry. We have made
a statement of intent in this document that we will review legislation, policies and practices, and
provide the appropriate resource in government to facilitate this intention.
The government will work together with the regulator and industry towards a shared goal for
success. We aim to protect our existing businesses, reposition our current offerings and build new
capabilities.
In conjunction with key stakeholders in the
Island and internationally we have developed
a policy framework based on key objectives
that look to the futurE AND will continue to
secure our position as a leading international
finance centre.
Conclusion
Jersey Financial Services Industry POLICY Framework // 23
24 // Jersey Financial Services Industry POLICY Framework
POLICY
Framework
Jersey
Financial
Services
Industry
THE
GOVERNMENT
OF JERSEY
Information correct at time of print – April 2014
doc_159009037.pdf