By now Jersey has signed its tax information exchange agreement with the UK. This is not worth the paper it is written on. There are two good reasons.
First of all Jersey does not have the desire to exchange information. There is not a single measure on tax cooperation that Jersey has entered into willingly. Every sinew within its political and civil service structure, let alone within its financial services industry, is opposed to the idea of information exchange. It is inevitable as a result that it will resist every single information exchange request that is presented to it, for as long as possible, and in as much detail as possible. It will have this right under the terms of the tax information exchange agreement.
Second, Jersey has been doing its utmost to prepare for this day over the last few years. By this I mean that Jersey has been shedding itself of absolutely every possible piece of information that it can to ensure that the chances of effective information exchange taking place are reduced to the lowest possible level. Just five years ago the Jersey government require the following information be made available to it:
- Proof of identity of persons owning Jersey companies.
- The accounts of Jersey companies, which had to be submitted with tax returns.
- Tax returns, at least I have ever had in a while T the company traded within Jersey.
In addition, Jersey financial services regulations required that each financial services provider must have proof of the place of residence of their client.
This has now changed and now:
- Jersey has given up enquiring about the beneficial ownership of companies registered in the island. They claim that this is now the responsibility of financial services providers, but note that point made below about the limited enquiries a person in Jersey must make about identifying their client.
- The Jersey authorities no longer require that the accounts of any companies trading in Jersey, or registered in Jersey, be submitted to them except for that tiny minority who will be subject to the 10% tax rate because they operate within a very limited part of the financial services sector.
- Tax returns are not required for Jersey companies. The explanation given is that they do not pay tax. This is completely untrue: those owned by Jersey residents do through an entirely sham arrangement that attributes at least part of the profits of these companies to their members, which requires that these companies must in practice submit data to the Jersey authorities. No companies owned by persons outside the island do now, however, have to submit tax returns, and so no data on these companies, which will be those subject to information exchange requirements, is held by Jersey authorities for any reason at all. Nor need it be held by any Jersey financial services provider meaning that for all practical purposes absolutely no data of any sort is available upon these companies for information exchange purposes unless they happen to be within the tiny proportion paying the 10% tax rate.
- Jersey no longer requires its financial services providers to obtain proof of a person's residence. This is incredibly convenient. It means that no financial services provider need determine whether their client is within the scope of the EU savings tax directive, or not, and it also means that no financial services provider need have proof of whether an enquiry from third-party tax authority applies to their clients, or not.
And, of course, Jersey has absolutely no idea how many trusts that are supposedly located in the island because there is no register of trusts, there never has been any obligation upon trustees to advise the authorities of the existence of any such trust, and there are no tax returns submitted for Jersey trusts on behalf of non-resident people.
It is a sorry tale that basically suggests that the Jersey authorities have no way of knowing where most of the clients of their financial services industry are resident, and cannot, therefore, answer any enquiries from tax authority with regard to a person resident in a particular place. They have no way of knowing anything about a company registered in the islands, at all. And they have no way of really knowing anything about any trust supposedly located in the island.
Now tell me how information exchange will work?
And forgive my cynicism, but I do not think it a coincidence that they signed an information exchange agreement at the moment that they had divested themselves of the last of this information.
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The TJN will always be complacent and you just proved that in your post. I am not taking anymore notice of this sceptic nonsence.
Richard,
Have you actually read any of the TIEAs? Or do you just assume them to be a waste of time on the basis that if they were not, Jersey (and other such jurisdictions) wouldn’t have signed them?
The information doesn’t need to be held by the authorities – it only needs to be held in Jersey. If you seriously the finance industry in Jersey has spent the last 5 years shedding itself of all of these documents then you need to get out more.
Scott
Of course I do
And I think that the audit trail through to financial services operators is so tenuous because of the lack of information held centrally and hurdles to progress in TIEAs that all I say is entirely plausible
It is why effective information exchange is not taking place
That has nothing to do with the low volume of business from the USA. That’s just rubbish
Richard
Richard,
I strongly suspect if the US thought information exchange under the active TIEAs wasn’t effective they would say so (and please don’t rush off and start quoting US politicians etc who say it isn’t because there are just as many who say it is). Of course you have no evidence of the amount of requests that have been made under the TIEAS already active so really you’re just guessing (or is that “research”?). You presumably also know better than all of the countries who have been so desperate to get these things signed (or are they all wasting their time?). You cant seriously put an argument together that a TIEA isn’t a step in the right direction – the real issue is of course the ability of the larger countries to deliver a level playing field such that business of the type you believe is “rampant” offshore moves to places such as Switzerland. Back to your response, where exactly in the world do you think there is a pool of information held “centrally” such as you suggest – the UK? No. The US? No.
But Richard if Jersey businesses aren’t transacting with US clients why would there be higher numbers of requests from the US? You make it sound as though Jersey is doing huge amounts of business with the US. It isn’t !
Scott, not matter what Jersey does, Richard and Christopher just want it to go down. Thats obvious to everybody now.
Richard,
Your points 1-4 are wrong, utter complete drivel in fact. Have you written these “new” rules to suit your ideology?
1. Wrong – when forming Jersey companies we must declare beneficial ownership, givng names and address, dates of birth, place of birth and occupation
2.Wrong – I have tax letters in my hand requiring accounts of 0% tax companies to be submitted.
3. Wrong – why have I received tax returns for every single Jersey company we administer
4. Wrong – or at least the JFSC has not seen fit to tell us! Obtaining proof of address is stil a requirement on pain of losing our licence which is a far greater threat to us than your blog.
Your response is awaited.
Malcolm
I hate to disagree but I am right:
1) Jersey has announced it no longer requires that proof of ownership be provided to the States before a company is incorporated. So you are wrong.
2) Agreed – but only for companies owned by Jersey residents I suspect where Jersey blatantly abuses the EU Code of Conduct – so you are offering misinformation I am sure. There is no reason for anything else.
3) Of course you have – the change is in the current tax year – please do not misrepresent facts – but this is the new stated policy from your Comptroller of Taxes
4) Absolutely right – I gave the links – this is what Jersey says it requires
Bluntly Malcolm it seems I follow what is going on more than you do
I stand by everything I said
Or else I accuse Jersey civil servnats of misinformation
Which is, of course, possible
Richard
Richard,
Trust me, you are wrong on this. The AML handbook published by the JFSC clearly (page 39, para 26) requires the principal residential address of all individuals to be recorded by all financial services businesses.
The only “flexibility” is set out at page 60 of the same document, para 162, which allows that information to be held by an “intermediary or introducer” provided that the financial services business is satisfied the information will be provided on request.
In other words, if a regulated investment business wishes to place the funds of a client on deposit with another bank, the bank may (but does not have to) rely upon the investment business to identify its client and hold up to date info on the client’s residential address.
There are no clients (including ultimate beneficial owners) of Jersey financial services businesses whose identity, including residential address, is not known to the financial services business. Any “dodgy” business that once existed has long since gone.
Paul
Trust me I’m right.
One document evidence can now be given when the financial adviser completes KYC data – and a passport meets that criteria. It does not prove a place of residence.
Ergo, I’m right.
Richard
Paul,
Trust you? Why on earth would anyone do that. Its obvious you have a huge chip on your shoulder about offshore financial centers. To be honest I doubt anyone really cares about your opinions, which are ludicrous. I’m not sure where you get your information from. CBBC maybe – I doubt it, because even they would be more accurate than you. A passport is not sufficient in Jersey – it is one of the acceptable forms of photographic ID, which must be accompanied by other documentation, such as utility bills etc to prove residence.
Ergo, you are wrong!
G
I find it at least mildly ironic that you are so good at client identification that you call me Paul
As it says at the top of the page – my name is Richard
Are you sure you don’t need a little training?
And I maintain – I’m right
Worse – what I say is permitted under FATF rules
You guys just aren’t reading your rule books
Back to the training I guess
Richard
Testing to check you read things!!, because you certainly don’t appear to be well informed at all about Jersey.
Please point to the particular FATF rules and Jersey rules that say no proof of residence is needed, because we certainly do read them and have not seen anything that would suggest that no proof of residence is required.
If someone is determined, then of course they could quite easily open a bank account in Jersey, using false credentials.
So what? They same can be said of just about any bank anywhere in the world.
Just because that can happen, it doesn’t mean the bank is at fault, so long as they carried out the checks required.
Well I work in compliance and Richard’s claims are ludicrous.
Why people carry on giving them the publicity they so much crave beggars belief.
JSH
All based on fact and law
What’s your problem with what I say when it is right?
Prove me (I mean, prove me) wrong, chapter and verse and of course I’ll back down
But none of you try to do that
It is you who has the credibility issue as a result
Richard
Richard
I’m struggling with this.
You’re the one making all the allegations without a shred of proof yet you are the one demanding the counter-evidence from those who say that you are wrong. Where is your evidence that you are right?
We have people who work in compliance departments day in day out telling you that your allegations are wrong yet they are at the coalface and actually know exactly what goes on and what doesn’t go on. How is your “Market intelligence” any better than theirs?
Rupert
I am really not sure how anyone could struggle with this.
I have suggested a series of things that Jersey does not have or does not require. Prove to me why it has them, or why it requires them and I am wrong. What is so difficult about that if I am actually wrong?
I have links to all my sources, or they are in the public domain e.g. quotes from Treasury ministers or your comptroller of income tax in the Jersey Evening Post.
I can prove that everything I have said has foundation. Now you prove why the alternative is true.
If you can’t you really aren’t very good at your jobs, or arguing. But I assure you don’t tell me what your own firm’s manual says – tell me what Jersey says. That is all I am interested in. If your firm is out of date and working to a higher standard that is great news, but does not disprove my argument.
Richard
Richard
Its because your theories are so clearly divorced from the reality of what actually happens in Jersey.
The specific thing that I am asking you to prove is that the claims of people actually working in the compliance departments of actual Jersey banks and financial services companies are actually inaccurate, and that instead your theory of what happens takes preference over that.
What on earth does the Treasury Minister in Jersey know about how bank X actually implements its internal KYC and AML procedures ? What does the Comptroller of Income Tax know about those internal procedures ?
I don’t think that your argument is proved at all. Its a series of unfounded allegations based on what exactly ? Conversations between people who don’t actually know what happens on a “hand-on” basis ? Two posters above know exactly what happens. Are you trying to say that they are less credible than people who simply couldn’t be expected to know the finer details ?
Richard:
I figured it out!
You must be paid to publish negative publicity on supposedly “tax havens”.
Your intent is obvious… How much do they pay you?
You have not provided any evidence in response to the above queries (similar to my response to your article on Bermuda, which was full of inaccuracies).
If you quote newspaper articles, we’re all wasting our time blogging here! Very low level of debate…
Perhaps, we should just ignore you…
SN
‘Perhaps we should just ignore you’. Hm, you may be able to resist posting, SN, but I very much doubt you’ll stop reading.
Sirron
That allegation is really quite offensive. I accept that you disagree with Richard. However impugning his motives for disagreeing with you is scurrilous. I haven’t seen Richard acusing those who disagree with him of personal corruption which is what your comment amounts to. I think you should withdraw it.
Carol
Misinformation is an offshore speciality – I can live with the abuse, but for the record Sirron is, entirely wrong, of course. I can’t even imagine who ‘they’ who might be paying me are. I can confirm that the Joseph Rowntree Charitable Trust has confirmed its recommitment to TJN today – and will provide essential core funding for the next three years. I’d add that no one has ever paid me anything ever for anything done on this blog though.
As for not answering points – I did answer Sirron’s point. I said Bermuda was on every list of tax havens for the last thirty years. No exceptions that I could find. I think that was a pretty comprehensive reply to he claim it was not a tax haven.
And no one has as yet responded to my challenge on Jersey. I suspect I know why: they daren’t. I might be right.
Richard
Rupert
You ask “What on earth does the Treasury Minister in Jersey know about how bank X actually implements its internal KYC and AML procedures ? What does the Comptroller of Income Tax know about those internal procedures ?”
Let me answer like this: if you had effective regulation the answer would be quite a lot.
What you admit is that you do not have effective regulation. As I’ve always suggested.
Richard
Richard
Now you are being ridiculous.
In case you aren’t aware, the regulator of the Jersey finance industry is the Jersey Financial Services Commission, NOT the Treasury Minister, and NOT the Comptroller of Income Tax. The latter two officials do not have, and it would be absurd if they did have, hands-on access to the detailed manner in which compliance departments actually carry out their AML and KYC requirements. Yes, they may have some involvement in the scoping and enactment of the relevant legislation, but not in overseeing the actual compliance with the required AML and KYC procedures.
Are you seriously suggesting that the Treasury Minister or Comptroller of Income Tax would knock on the doors of the Jersey banks to come in and personally do spot checks of how those procedures are actually being carried out in practice ? That’s precisely what the JFSC is paid to oversee and regulate !
😳
Sorry couldn’t help myself from joining in –
I guess a lot of the issue here is what is “IN” JSY legislation and what is guidance and therefore not enforceable (what is common practice doesn’t really count)- there are also requirements for companies and requirements for AML being a little mixed up – what did the last IMF visit indicate – what will be the results fo the current round? All pertinent.
There appears to be a pole of opinion here and in reality it is probably somewhere in between.
There is no in between argument. Richard has just admitted that his organisation is given hand outs by a charity to obviously republish newspaper articles that were probably derived from here in the first place.
Sources in Jersey are now advising finance people to ignore the claims of the TJN and ATTAC because their claims are actually inaccurate and are a tangent away from reality.
The conference arranged last week in Jersey proved that beyond reasonable doubt.
Rupert
My apologies – you are right – the JFSC seat is responsible for regulation – but let’s be clear – when Colin Powell is involved in just about everything to do with Jersey’s finances how can we split responsibilities?
And that is the point that I had made previously: when the place is as small as Jersey and effective regulation is impossible and there is no possibility of Chinese walls
But in that case why shouldn’t the Treasury minister know what is going on in regulation. Indeed, shouldn’t he? And shouldn’t the comptroller of income tax to exactly the same? After all, if the regulation is not working he is losing and I know that tax loss to the Jersey authorities from tax avoidance is an obsession of the States of Jeresy – which is why you have section 134A in your tax code even if it does appear to allow taxation by arbitrary mandate – which is something that I’m pretty sure does not comply with human rights.
So please get real: of course but the people I refer to have a valid interest in the effectiveness of what JFSC is doing.
Richard
Paul #9 says
“There are no clients (including ultimate beneficial owners) of Jersey financial services businesses whose identity, including residential address, is not known to the financial services business. Any “dodgy” business that once existed has long since gone.”
Not according to the training I’ve received from a Jersey based company. They stated quite categorically that in the case of trust structures the ultimate beneficiary may never be known. A series of holding companies that will be perfectly legitimate will be able to fulful the criteria to pass compliance checks. They then went on to suggest that choosing these trusts as clients was mainly guesswork.
Also talking to lawyers involved with corporate trust structures seems quite clear that they delight in obfuscation.
Really, people, why are secrecy jurisdiction so (supposedly) successful (although judging by Guernsey infrastructure I suspect that there’s much spin iinvolved in these claims) if not because people are wanting to get away with not paying tax? Legal or not, the industry is rife with shenanigans and those that say it is not are really not looking around them.
Is that Angolan oil thing still going on…? Ah yeah, doesn’t matter, Angola is miles away.
Matt
You might have noticed if you read carefully (which you clearly did not) that absolutely everything you have said is wrong.
I am writing on behalf of Tax Research LLP. I get no funding from the Tax Justice Network to do this. I said that above.
I said that the Tax Justice Network have now been offered funding. I did not say I did. Therefore everything you say is completely and utterly absurd.
And of course sources in Jersey tell local politicians to ignore what we say. They always have. I guess they always will. That is your ostrich approach to life.
But it’s your problem that I have in the last few days spoken to most of the major newspapers in the USA and UK, plus some in Germany and several in Switzerland. I’ve also done interviews in France and Spain. You might think I have no credibility. And Swiss television filmed me this morning. They have noticed you don’t or can’t answer my allegations. They weight the evidence and think I do have something to say
And that, I assure you, is your problem. Because there is no one n Jersey (least of all Geoff Cook) seemingly capable of responding.
Richard
Richard
Do Alastair Darling and Dave Hartnett tour London banks checking the effectiveness of their compliance departments in relation to KYC and AML compliance ? I think not.
Does your comment about Colin Powell have anything at all to do with the conflict that he had for years with your mate John Christensen ? I suspect that it does.
Why is it that the picture of Jersey that you paint so unrecognisable from what so many who work in these so-called corrupt Jersey institutions see ? Are they all lying or turning a blind eye to everything? All of them ? Really ?
Sorry but it just doesn’t stack up.
Fast Robert
I don’t believe that the use of such structures still occurs today, but what the training organisation is saying is that they could exist, given willing or wilfully blind service providers. That must clearly be potentially true. Bear in mind of course that the training agency will be a commercial organisation making a profit. They have to ensure that the eyes of the service providers are fully opened to what they should be looking for. An element of what they say will be scaremongering. But there is nothing wrong with that if it helps to keep professionals on their toes. I attend at least such training seminars each year and they certainly work.
But let’s be frank. If there are still any organizations running such structures then the principals of such structures should be hung drawn and quartered and put out of business. Make an example of them. They would merely be ruining things for those of us who abide by the rules. And the latter is the vast majority in the islands of that I have absolutely no doubt. If there are any cowboys left then they must be weeded out.
I am confident enough to say that the major UK clearing banks,the Swiss banks and a small number of tiny trust companies are the potential bad eggs which could undermine the islands and I doubt if many would disagree with that view. But the islands are categorically not rotten to the core as is painted by some.
Richard, you ask for evidence of Jersey’s standards on KYC/CDD etc., but offer nothing other than unjustified and incorrect argument – no evidence and you do not point to any. Look on http://www.jerseylegalinfo.je to find links to the Proceeds of Crime Law and the Money Laundering Order, which together set out the minimum requirements for Jersey business who provide trust company business, other financial services business, company administration services etc., which includes following any structure up as far as individual beneficial owners and taking up to date CDD documentation from them. Coupled with regular audit visits from the JFSC, I really can’t see how you can say that we aren’t properly regulated. In fact the benefit of being a smaller jurisdiction means that regular JFSC visits for audit and supervisory purposes can happen, unlike in the UK, USA or many of the large jurisdictions. You can’t prove most if not all of your bare arguments, so like a 5 year old, you resort to the old chestnut ‘I am right and you are wrong’. If your pathetic ramblings weren’t so dangerous to innocent individuals in these offshore jurisdictions, it would be funny.
So, it would appear that Tax Research UK is funded by Rowntree Trust, money which was amassed in the Cocoa trade, and therefore by the exploitation of slave labour in the 19th and 20th centuries.
Please correct me if I am wrong.
Good heavens – know one did more to end slavery than the Quakers – and this money came from the time when this was a Quaker business
It’s absurd to suggest that Cadbury exploited slavery knowingly – I do not believe that to be true
It may do now – there is still slavery in the cocoa trade – but I reject this suggestion – and again I suggest that it is very unlikely that they do so deliberately or knowingly now2 either
Richard