Jersey has not changed its spots

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I'm off to Oslo tomorrow. I'm giving a talk on Thursday on Tax Havens and Transparency and what is happening on this right now. I thought I'd illustrate this with some examples from Jersey. My paper is attached. In it I make the suggestions that:

1. Jersey remains committed to conventional tax haven practices, with all that implies;

2. Jersey's compliance is with the form of international standards but not with the substance of the conduct that they expect;

3. Jersey's co-operation with the USA is not indicative of its general approach to international issues;

4. Jersey is deliberately creating structures and procedures for use by its financial services industry that will result in information not being available for exchange under internationally agreed arrangements, so nullifying their effect.

The last point may be the most important. By creating law that facilitates the operation of sham trusts, by changing its company law to allow incorporated cell companies, by changing its tax law so that it will not collect information on the tax affairs of Jersey companies, by changing its money laundering rules so that many people using the Island will no longer have to prove their residential address (so allowing easy abuse of the EU Savings Directive, for example), by allowing redomiciliation of companies and by creating new ring fences in its tax laws Jersey is proving that tax havens aren't standing still in the face of new regulation.

The best explanation for all these changes (and more) appears to be the simplest one. As pressure mounts for tax havens to exchange information so they are reacting by ensuring that they either do not have that information, or by providing mechanisms that make it both harder to secure, and easier for it to flee. The result is that corruption in places like Jersey can no longer be tackled at the transaction level. Put simply, transaction data will soon be unavailable or will be in perpetual transit between tax haven locations. As such offshore corruption can now only be tackled at the systemic level. This requires a changed approach. The corrupt user of tax haven services is no longer the problem; the corruption of the tax havens is the problem now.

It is time to tackle the suppliers of corruption services if the integrity of the world's economy, taxation systems and democracies is to remain intact. Tax havens are at the heart of this challenge to the way we live. And tackling them systemically is the solution to this problem.

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