During the debate on the future of secrecy jurisdictions at the Centre for the Study for Financial Innovation today Geoff Cook of Jersey Finance (who turned up with two other Jersey reps – meaning there’s an area for the review of expenditure the Jersey government might like to address) claimed that all international reviews of Jersey have unambiguously endorsed its standards.

I made clear this was not true in my opinion. I knew he must have seen a draft of the first OECD peer review of Jersey – issued by the OECD for comment late last week, and of which a copy turned up in my inbox over the weekend. As I made clear this does not give Jersey a clean bill of health, and it notes Jersey’s very limited experience of information exchange, which meant its ability to appraise actual compliance was limited in the extreme – an issue of concern to the peer review group.

Geoff reacted angrily (Geoff seems to react angrily to everything I say) demanding that if I was committed to transparency I must publish the document I have.

So in fulfilment of his request here’s the draft executive summary from the OECD’s report, which is not due for publication in final form for some time. I publish it for two reasons. First, because Geoff asked me to do so. Second, because this shows the opinion of the peer review group before Jersey commented and sought to water down the observations made. For that reason publication is in the public interest:

This report summarises the legal and regulatory framework for transparency and exchange of information in Jersey as well as practical implementation of that framework. The international standard which is set out in the Global Forum’s Terms of Reference to Monitor and Review Progress Towards Transparency and Exchange of Information, is concerned with the availability of relevant information within a jurisdiction, the competent authority’s ability to gain timely access to that information, and in turn, whether that information can be effectively exchanged with its exchange of information partners.

Generally, Jersey’s domestic laws establish a satisfactory framework to ensure that relevant ownership, identity, and banking information is required to be kept. In the case of accounting records however, not all relevant entities and arrangements are consistently required to keep reliable accounting records in line with A.2.2 of the Terms of Reference, and it is only in the case of companies and limited liability partnerships that an express obligation to retain accounting records for a minimum of 5 years exists. Recommendations are made for Jersey to address these points. Concerning ownership and identity information, nominees and trustees who are not acting by way of business are not subject to clear requirements to keep relevant information although the number of people in this category may be small. Banking information is required to be kept in respect of all account holders.

Jersey has created an appropriately-resourced oversight agency in the Jersey Financial Services Commission, which, inter alia, is charged with managing company and partnership registry services, overseeing compliance with the Control of Borrowing (Jersey) Order as well as safeguarding the fulfilment of regulatory and anti-money laundering obligations. The JFSC wields an array of administrative enforcement measures including private warnings, public statements, investigatory powers, cancellation of licenses or implementation of temporary managers to oversee remedial measures. In respect of financial penalties, these can be imposed where the Royal Court finds a person liable, to sanction breaches of obligations. In one case to date the Court has made orders in respect of non-compliance with record-keeping obligations under the anti-money laundering regime, imposing severe financial sanctions on the persons concerned.

Prima facie, domestic laws enacted since 2006 provide the Jersey competent authority with powers to access relevant information which include safeguards, notification rights and mechanisms to enforce those powers which are compatible with effective access. Access relies predominantly on the issuance of notices for the production of information, and in some instances a search and seizure warrant may also be issued. However, a number of significant limitations in these domestic access power laws have been identified which may impact on effective access. To date these provisions have not had the effect of hampering Jersey’s ability to access information for EOI requests, nevertheless this observation is made in the context of Jersey’s limited experience in exercising the powers. Jersey has indicated that it intends to amend the access powers legislation in a manner that will take into account the issues identified in this report.

Jersey has made substantive developments in expanding its EOI network, predominantly since 2006, and this has been combined with the development of a complementary domestic process to manage requests received from its EOI partners. Jersey has signed EOI agreements with 18 jurisdictions, which are generally in line with the standard although a small number of provisions have been identified which may impede exchange of information to the standard. It is therefore recommended that Jersey work with its EOI partners to ensure that the agreements are employed and interpreted in accordance with the parties’ intentions to comply with the international standard. With the exception of the UK and Guernsey, Jersey’s agreements to exchange information in respect of all tax matters have only started to come into force in the last four years, and the majority of these have only been concluded in the last two years. Accordingly, Jersey’s infrastructure and practical experience in exchange of information, while effective and expeditious to date, is relatively new.

Overall, this review of Jersey identifies a legal and regulatory framework for the exchange of information which generally functions effectively to ensure that the required information will be available and accessible. However, the review notes Jersey’s small amount of EOI experience to date, a matter which was referred to by a number of Jersey’s peers who provided input into this review. Nonetheless, Jersey’s practices to date have generally demonstrated a responsive and cooperative approach, with a willingness to develop its laws and procedures to reflect best practices appropriate to its circumstances.

Or to put it another way: Jersey’s law is not up to scratch, particularly with regard to accounting and beneficial ownership, it does not have the powers it needs to get all information that might be required and it has not been exchanging information in any meaningful quantities to date. What is more it’s fingers crossed about whether it can or will do so, not least because the peer reviewers note it has only “generally demonstrated” a responsive and cooperative, clearly implying in diplomatic language that there has been some reticence to do so on occasion to date. And it has signed agreements which impede effective exchange – which is not a good sign of intent. This confirms the opinion given to me by officials from a number of major states who have confirmed Jersey’s inability to exchange data requested – experience which seems to be reflected in the review.

What this also says is that contrary to the claims made by commentators on this site over a long period of time, it is not clear that Jersey does have the access that the OECD requires and secondly that it has very limited experience of actually getting any information. In other words, all the criticisms I and others have made of Jersey remain completely and utterly valid. Reading between the lines (and one always has to do that in diplomatic style documents, as this is) what this report says is that Jersey has not proven its ability to exchange information. In that case it remains an almost wholly effective secrecy jurisdiction.