Guernsey: Guernsey: Are Asian Clients Missing Out?

Last Updated: 3 February 2014
Article by Fiona Le Poidevin

Most Read Contributor in Guernsey, September 2018

While the BVI and Cayman seem to be the Coca Colas and Pepsis of the offshore world for Asian clients, Fiona Le Poidevin, Chief Executive of Guernsey Finance reveals the ways in which Guernsey might be particularly attractive to wealthy Asians – both in and outside of Asia.

When seeking solutions for structuring their wealth, Asian investors are fairly open to placing their assets in offshore locations. But there is a tendency for Asian clients – and advisers – to stick to what they know, and for this reason, the BVI and the Cayman Islands remain the preferred choices for offshore wealth structuring.

Historically, Guernsey's primary introducer markets for new business flows have been the UK, continental Europe and the US. However, the maturity of these markets and the impact of the global financial crisis have impacted new business opportunities in these markets, explains Fiona Le Poidevin, chief executive of Guernsey Finance.

As such, over the last few years, there has been a refocusing of the Island's drive for new business to include emerging markets, such as Asia.

"Asia offers Guernsey diversification from reliance on our traditional core introducer markets," says Le Poidevin.

Similarly, placing funds in Guernsey can offer Asian clients diversification for asset protection purposes. Having some assets held offshore can protect them from potential domestic issues in the client's home country. Some geographical diversification is also logical – for example, a client might choose to hold some assets in the Caribbean, some in Asia, and some in European jurisdictions.

As well as onshore Asian high net worth individuals and families, the large diaspora of globally mobile Asians also represents a significant opportunity to Guernsey. This group includes second generation high net worth family members who have been educated in the UK or Europe and have opted to remain overseas either for work or because they prefer the lifestyle. The Island's proximity to both London and continental Europe means that it is a convenient offshore option for these clients: easily accessible, and in the same time zone.

Strengthening relationships

Guernsey Finance is a joint industry and government initiative to defend and promote the long term reputation, stability and development of Guernsey as a leading international centre for financial services. Numerous visits and exchanges with government officials, regulators, sector network associations and intermediaries have helped to raise Guernsey's profile in Asia. The agency has also had a representative office in Shanghai since 2007, and has relationships with Shanghai Municipal Financial Services Office, the China Insurance Regulatory Commission (CIRC), the China Securities Regulatory Commission (CSRC) and the China Banking Regulatory Commission (CBRC).

In November 2013 Guernsey Finance attended the STEP Asia conference in Singapore and a series of other meetings, including the Monetary Authority of Singapore (MAS). And in the same month, the Guernsey

Financial Services Commission (GFSC), signed a Memorandum of Understanding (MoU) with CSRC to facilitate the exchange of information between the authorities, to ensure compliance with their respective regulatory requirements. This aims to promote investor protection and the integrity of the investment products.

Balancing transparency and confidentiality

"The Island has a reputation for being well regulated," says Le Poidevin. "Its high standards are delivered within an environment which is not secret but which is still able to offer clients the assurance of appropriate security and confidentiality."

Guernsey was one of the first jurisdictions to regulate trust and corporate service providers. And independent assessments by the IMF and the OECD continue to place the Island in the top tier of international finance centres in terms of its standards of both regulation and transparency and exchange of information for tax purposes.

"As early as 2011, for instance, the Island moved over to automatic exchange of information in relation to equivalent measures under the EU Savings Tax Directive," reveals Le Poidevin. "Other jurisdictions are only now adjusting to this concept."

More recently, Guernsey signed a FATCA style agreement with the UK government – and will shortly sign a Model

1 intergovernmental agreement with the US under FATCA, which requires foreign financial institutions to report

US accounts to the Internal Revenue Service via local tax authorities. It could be argued that Guernsey's thorough regulatory regime and high standards of transparency could be off-putting for some clients. Many clients in Asia don't feel comfortable with institutions having their personal data, for security reasons. In some Asian countries, kidnapping and blackmail are a real threat for wealthy families.

However, Guernsey employs high data protection standards to ensure client security and privacy, Le Poidevin assures. Client data held in Guernsey is only available to the relevant Corporate Service Provider (CSP) and the appropriate regulatory authorities. And in addition, Guernsey's innovative and up-to-date private client laws are particularly attractive to clients around the world.

Innovative structuring tools

The jurisdiction has a 50 year history of establishing and administering private wealth structures. Today this offering includes a variety of structures that have been developed to meet the specific needs of wealthy individuals and families. A Guernsey private trust company (PTC) can be used for succession purposes, but also offers clients the flexibility to maintain management and control of the underlying assets during their lifetime. Many clients take advantage of Guernsey's purpose trust to hold shares in a PTC.

A Guernsey purpose trust has no registration or disclosure requirements under Guernsey law, meaning the ownership of the PTC can be confidential. Guernsey was the first jurisdiction to introduce a protected cell company (PCC), back in 1997. The PCC allows clients to create one or more cells within the company, the assets and liabilities of which are segregated from the non-cellular assets, and from the assets and liabilities of other cells. This ring-fencing of assets means that when a cell incurs liabilities, such liabilities are attributable to that cell only.

And in 2006 Guernsey brought in the incorporated cell company (ICC).

An ICC may create one or more incorporated cells, the assets and liabilities of which are segregated from the assets and liabilities of the ICC and of the other incorporated cells. Guernsey Foundations were introduced at the start of 2013. Whilst Guernsey is a common law jurisdiction, the law has been drafted in such a way as to reflect legal drafting in civil law jurisdictions – which do not usually recognise trusts, but are familiar with foundations. Guernsey foundations are expected to be of particular interest to wealthy individuals, family businesses and entrepreneurs in emerging market countries, many of which are civil law jurisdictions. An example would be mainland China.

Service providers

It's crucial that a jurisdiction can offer clients the services and support necessary to set up and maintain these sorts of structures. Guernsey boasts more than 150 licensed fiduciary services providers, ranging from multinational organisations to independent, boutique firms. It also has more than 50 licensed fund managers, administrators and custodians, currently managing assets of GBP286 billion (US$463 billion). And there are more than 30 licensed banks with deposits of £90 billion (US$146 billion). These businesses are supported by a network of professional support services, including multi-jurisdictional law firms and global accountancy practices.

"Our long and strong heritage in servicing private clients over the last 50 years also means that we have a tried

and tested infrastructure, including a robust legal system which is renowned for its independence – especially in relation to judgements made by foreign courts," says Le Poidevin.

"We will never profess to be the cheapest jurisdiction, and would never want to be. But we provide a bespoke service for our clients in order to ensure that their assets are administered in the best possible way, and protected for the benefit of future generations."

Originally published in the Hubbis Guide to Wealth Planning 2013, December 2013.

For more information about Guernsey's finance industry please visit www.guernseyfinance.com.

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 Mondaq.com.

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

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions