Jersey – on the slippery slopes to not knowing their clients

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To date Jersey has had a quite unusual claim it can make in the financial services world. Unlike the UK, for example, it apparently requires that the beneficial ownership of a Jersey company be disclosed to its Financial Services Commission. Of course, whether that really happens is not known since the disclosure is made in secret, but in principle the requirement is welcome.

Which is why, no doubt, Jersey is planning to scrap it. Apparently such disclosure does not help the competitive of the Crown Dependency, so it must go. As a result the responsibility for identifying beneficial ownership is to be passed to the commercial operators within the financial services sector in future.

All of which makes the news in yesterday’s Jersey Evening Post (whose website is so inadequate links are not possible) that “recent findings that some firms in the expert funds sector have not been carrying out sufficient ‘due diligence’ checks on investment managers based outside the island” all the more worrying, especially as the report comes direct from the Jersey Financial Services Commission. If the local financial services industry cannot check out fund managers what hope is there that they can prove the existence of the beneficial ownership of a company owned by a trust based in another offshore territory?

And if that’s known to be the case, why is Jersey promoting self regulation of beneficial ownership data when it knows it does not work? Is it another case of it creating a veneer of compliance?