Guernsey: Guernsey Is The Alternative

Last Updated: 6 March 2012
Article by Sadie Podmore

Most Read Contributor in Guernsey, September 2016

Originally published in Private Client Practitioner Guernsey Supplement, December 2011

There is an implicit assumption that somehow the European Union's Alternative Investment Fund Management Directive (AIFMD) is going to impact on Guernsey's reputation as a leading offshore finance centre. Butterfield Bank's head of custody services, Sadie Podmore, argues that the directive is an opportunity for fund administrators in Guernsey to promote their expertise and resilience.

Many pundits have been touting the idea that the AIFMD, and its US equivalent the Dodd Frank Act, will bring a level of onerous regulation and costs on the heads of fund managers, and, by extension, administrators. In Guernsey, the feeling is that the AIFMD is a real opportunity for the jurisdiction to continue to promote its position as the leading international centre for fund establishment and administration.

There is no question, for some, the directive does seem to herald a high level of expensive regulation. This will see fund managers looking hard at their service providers and looking at alternative jurisdictions that can truly boast to be experienced in this type of work and demonstrate international regulatory standards that meet the directive's requirements but without the arduous regulatory burden. Guernsey can lead the pack here.

With so much more in terms of costs at stake those looking to invest will be searching for fund managers, administrators and offshore custodians that can demonstrate a clear track record and a level of expertise that negates the potential issues with AIFMD.

The EU has confirmed there will be a continuation of the private placement regime until 2018. This means, subject to certain conditions, third country alternative investment funds will continue to be able to market to professional investors based in EU member states under the existing private placement. It is also anticipated the EU will recognise an AIFMD equivalence for Guernsey which would put the jurisdiction at the forefront of those international finance centres that investors and fund managers are considering in their flight to quality.

The uncertainty of the AIFMD and how it will ultimately develop looms over the EU fund destinations rather than Guernsey directly. Some of the detail originating from AIFMD Level 2, with respect to custody and capital adequacy and professional indemnity insurance merely attempts to address perceived 'systemic risks' that are not, in reality, there – this just adds needless cost, for which the investor will ultimately have to pay. More than ever there is a need to talk to advisers and clients, who are often EU-based, about migrating their existing set up to Guernsey.

Significant levels of infrastructure and expertise have been developed in Guernsey making it a desirable base for many international investment structures and funds – even where there is no tax angle.

Stable environment

Fears that higher standards of global regulation, policing and co-operation would drive business away from Guernsey have simply not come to pass. In reality, Guernsey offers an economical and politically stable environment in which international cross-border business can continue and is thriving as a result of these high standards.

As well as the quality evident in the support services such as telecommunications and air links, Guernsey boasts a reputation for providing on-island experience specialising in the provision of custodial services to funds in a multi-market and multi-instrument capacity.

Guernsey already has a number of the necessary requirements to achieve AIFMD equivalence with an excellent track record and internationally recognised standards that already conform to best practice. Guernsey has 29 Tax Information Exchange Agreements (TIEAs) with 10 EU Member states including the UK and it has a high anti-money laundering regime.

The directive is not intended to impact fund managers with an aggregate gross asset value of less than EUR 100 million. Guernsey historically has serviced funds of all sizes including small niche funds that require a high level of expertise and due to this threshold will fall outside the focus of the AIMFD and should continue unfettered.

This noticeable shift towards funds with more esoteric asset classes, such as litigation claims, fine wine, art, cleantech and life interest settlements coupled with fund managers being more motivated through AIFMD to move between service providers to spread risk, means experienced custodians who are lithe and quick to react will continue to be successful in securing business.

AIFMD will only increase the demand for senior, experienced personnel to deal with increasingly complex technicalities. Guernsey will also remain open to non-EU business and, indeed, some managers, which are currently based within the EU, may find the directive too restrictive. Utilising Guernsey based managers, administrators and custodians could provide the solution.

End of private placement model

The removal of the private placement model in 2018 may lead to sponsors using a third country alternative investment managers and an alternate Guernsey investment fund. Guernsey is well-placed to accept this business as it is prepared already to be among the first non-EU jurisdiction to meet all the relevant requirements and its regulatory and compliance standards are already market leading.

Sponsors could therefore choose Guernsey over and above their home jurisdiction that could be struggling to meet the AIFMD, or equivalent, criteria. Guernsey's regulatory framework, in seeking equivalence and third country status, is also flexible enough for those managers not requiring an EU passport; it is designed for non-EU investors to set up a fund in a well-regulated jurisdiction without the additional burden of cost of reaching out to a European investor base.

Indeed dual parallel delivery of funds for European and non-European investors can be structured side by side, allowing investment ideas to be delivered in accordance with the investors' location while the custodianship, administration and management of both vehicles can have a common home and service provider base in Guernsey – an enviable position for most other offshore finance centres.

For more information about Guernsey's finance industry please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.