Island faces crisis over UK threat to finance industry
JERSEY is facing a constitutional crisis, as it looks increasingly likely that the UK will try to impose laws on the Island which threaten the future of the finance industry.
Chief Minister Ian Gorst has said that Jersey would resist any such interference in Island affairs.
Labour MP Dame Margaret Hodge has lodged an amendment to the UK’s Sanctions and Anti-Money Laundering Bill calling for a fully transparent and public register of beneficial ownership – which would reveal who actually owns assets held by companies registered in the Island – to become mandatory in the Crown Dependencies and British Overseas Territories, such as British Virgin Islands and Cayman Islands.
The Crown Dependencies are Jersey, Guernsey and the Isle of Man.
It is understood that a number of Tory MPs are planning to vote in favour of the amendment, which is due to be debated in the House of Commons on Tuesday, along with Labour and the other parties, so there is a strong likelihood it will be passed.
The UK government has yet to disclose its position in relation to the Hodge amendment.
Senator Gorst said, however, that the UK legislating for Jersey was ‘unconstitutional’ and a public register of beneficial ownership could not be forced on the Island without Jersey’s consent.
Calls have been made for several years for the UK to impose greater levels of transparency on its offshore jurisdictions, which have, because of their positions on client confidentiality and privacy laws, been accused by critics of assisting in money-laundering and helping the super-rich hide their wealth.
The introduction of a public register of beneficial ownership would threaten the financial services industries of many of the jurisdictions, whose clients often value strict confidentiality arrangements. That is particularly true of the trust sectors of the various British jurisdictions.
Senator Gorst said that he opposed the move, as Jersey already had sufficient arrangements in place for sharing information with the UK about individuals who owned companies here.
As things stands, Jersey has a register of beneficial ownership, but it is not publicly accessible. It is, however, made available to other countries’ tax and law enforcement authorities on request.
‘It is unnecessary to extend the UK Bill to Jersey, since we already have legislation in place for sharing beneficial-ownership information for law enforcement purposes,’ Senator Gorst said.
‘We are regarded as being among the best jurisdictions in the world for tackling money-laundering and terrorist financing. The Government of Jersey will consider the question of a publicly accessible register of beneficial ownership in its own time and with Jersey’s interests in mind.’
He added that he believed the move was not legally enforceable by the UK and that the Island would resist it.
‘It would also be unconstitutional and impossible for the UK to impose such a measure on our island without our consent,’ he said.
‘We are not represented in the UK Parliament, and it is an agreed constitutional position that the UK does not legislate for Jersey. We would expect this convention to be observed and would resist the registration of any Order in Council issued in breach of our constitutional arrangements.’
Tax justice campaigner Richard Murphy, a long-time critic of Jersey’s finance industry, said on his blog that the amendment would ‘bring the curtain down’ on the UK’s offshore finance centres, which he calls ‘tax havens’.
He added that he believed that there were ‘ample legal precedents’ that proved that the UK government did have the power to impose the amendment on the Crown Dependencies and British Overseas Territories.
‘I noted yesterday that it is quite likely that Parliament will next week vote to impose transparency on the UK’s tax havens,’ he said.
‘Enough Tory MPs appear to be in favour to ensure an amendment to legislation proposed by Margaret Hodge will carry the day.’