Guernsey Offshore Banking
Guernsey is reforming its business practices in response to international
criticism
and in preparation for a boom in e-commerce, as Chris Vellacott
discovers
Two decades ago, the Bailiwick of Guernsey relied on tourism and
horticulture, dubbed ‘the two Ts’ - tourism and tomatoes
- for most of its income and employment.
It was perceived as Britain without the weather, ideal for nursery
growing and a popular destination for bucket-and-spade holidays.
But a tax regime that favours non-resident offshore investors ensured
that finance fast eclipsed the traditional mainstays of the economy.
Tourism today accounts for a paltry 14 per cent of gross domestic
product on the island.
Guernsey Offshore Banking - Fund Management
Across the fields of banking, fund management and life assurance,
the island now plays host to some of the world’s best- known
and most highly regarded financial institutions. According
to the Guernsey Financial Services Commission, the financial regulator,
total deposits held in the jurisdiction’s banks stood at £61
billion at the end of June. This represented an increase of more
than £1 billion since the previous month and £3 billion
since the beginning of the year.
Guernsey Offshore Banking & Financial Services
“Financial services account for between 60 and 70 per cent of
Guernsey’s GDP. It is the island’s most important industry
and most other industries feed off it in some way,” says Peter
Crook, director-general of the GFSC. But the island’s
finance professionals are not able to rest on their laurels just
yet. The world’s economic giants are irked about loss of tax
revenue caused by investors choosing to deposit their wealth offshore
in jurisdictions such as Guernsey.
The US and EU in particular have waged a campaign, both individually
and through the Organisation for Economic Cooperation and Development
to stamp out what they regard as unfair taxation.
“There is no reason why taxpayers who do not, or cannot, take
advantage of harmful tax practices should have to pay the taxes
avoided by those who have easy access to tax havens and harmful
preferential tax regimes,” reads an OECD mission statement
on its intention to stamp out unfair tax competition.
Guernsey Offshore Banking & The Campaign
If the campaign is a success, Guernsey will be forced to dismantle
the tax regime which made it so successful in the first place - a
step that would devastate its financial services industry.
Like its rivals, Jersey and the Isle of Man, Guernsey is keen to cultivate
an image of itself as a blue-blooded offshore jurisdiction where the
funds of blatant tax evaders and criminals are not welcome. Indeed,
a survey into levels of cooperation in the international fight against
money laundering conducted by the Financial Action Task Force gave
the island a clean bill of health. Late last month, the Offshore
Group of Banking Supervisors conducted an evaluation of Guernsey’s
compliance with 40 recommendations issued by the FATF.
The OGBS, concluded Guernsey, has a “comprehensive”
anti-money-laundering system in place with standards that are “close
to complete adherence to FATF’s 40 recommendations.”
Peter Crook says that this endorsement shows Guernsey’s anti-money-laundering
system is among the best in Europe.
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