Guernsey: Bank Secrecy And Confidentiality: The Offshore Perspective - Orwell's New World

Last Updated: 15 September 1999
Article by David Archer


"I have been asked to speak today about bank secrecy and confidentiality from the offshore perspective.

Let me say at the outset that it is clear to me that any finance centre which wishes to enjoy long-term success will need to be able to exchange information and co-operate with other jurisdictions. All of the main regulatory bodies have these criteria as part of their objectives. I cannot see how it is possible for a jurisdiction with bank secrecy to meet the standards of these bodies. It is therefore with some surprise I note that the Caribbean Financial Action Task Force has stated it has no difficulty with Cayman's secrecy legislation. I also wonder how Luxembourg and Austria are so readily accepted. Besides the regulatory bodies, there are a number of international initiatives reviewing the exchange of tax, criminal or regulatory information.

Exchange of information and co-operation will be the benchmark by which all finance centres are judged. However, we live in an Orwellian world. All finance centres are equal but onshore finance centres are apparently whiter than white and offshore centres are blacker than black. At least, that is what I infer from representatives of the onshore centres.

This view was echoed recently in a speech in Jersey by Howard Davies, the Chairman of the Financial Services Authority. He said "there is some frustration among G7 finance ministers and indeed amongst regulators, about the co-operation they get from some offshore financial centres". This frustration has led to a G7 initiative, the creation of the Financial Stability Forum. This Forum is reviewing how offshore centres enforce international prudential and disclosure standards and comply with international agreements on the exchange of supervisory information.

On an allied issue, a paper on Financial Havens, Banking Secrecy and Money Laundering issued by the United Nations in 1998 points the finger at offshore centres. That paper describes the common denominator in money laundering and other financial crimes as being the "enabling machinery that has been created in the financial havens and offshore centres". Part of this machinery is excessive bank secrecy protection, IBCs with an impenetrable layer of protection around the ownership of assets and the role played by professionals protected by legal privilege.

Unfortunately, like much of the criticism of offshore centres the paper does not substantiate that offshore IBCs and offshore bank secrecy are particular problems. Drawing upon US State Department material the report lists jurisdictions unwilling to lift bank secrecy, unwilling to assist domestic and international investigations and unwilling to permit the sharing of financial records. Few of these are offshore jurisdictions. The case studies in the report include some examples of the use of offshore bank accounts. But it is not clear how bank secrecy affected each case and it is apparent that onshore bank accounts are used by launderers just as much or more than offshore accounts. If I am to understand what I read in the papers, the Bank of New York's onshore facilities have been especially popular with money launderers in recent years.

The conclusion I have long held is that onshore centres are hypocrites. The vast majority of crime occurs onshore. The vast majority of the proceeds of crime enters the banking system onshore. The UN paper goes on to say that more than 90 jurisdictions offer bank secrecy and that such secrecy is becoming more popular. Presumably that number does not include jurisdictions with bank services that offer secrecy such as anonymous or numbered bank accounts. Such services should be part of any rational consideration of bank secrecy. There are far fewer than 90 internationally accepted offshore centres. A good number I know well, do not offer bank secrecy, particularly my colleagues from the other two Crown Dependencies here today. Yet it is offshore centres which are tarred with facilitating economic crime, especially money laundering. And it is offshore centres which are the targets of an ever increasing number of international initiatives.

Of course, there are problems with some offshore centres. We work hard in Guernsey to ensure we comply with the highest international standards but only a fool would say there is no room for improvement. However, some jurisdictions have far more scope for improvement than others.

I believe it is artificial to differentiate between offshore and onshore centres. The onshore jurisdictions have various lists of jurisdictions they would like to include as offshore but there is no philosophically satisfactory way of describing an offshore centre without including London, New York and similar financially based cities. Usually, definitions of offshore also exclude transparently offshore regimes. The United States has some of these regimes.

Irrespective of whether or not a distinction is made between onshore and offshore, finance centres should be divided into those that are committed to compliance with international standards (and importantly can demonstrate compliance) and those that do not. Hence, jurisdictions such as Guernsey which do not have bank secrecy, which have a can-do attitude to exchanging information and which are committed to enforcing exchange of information legislation should be placed on one side of the fence while those which are not committed to exchanging information and co-operation would be on the other side of the fence. John Moscow has never approached the Guernsey authorities for assistance but, if he were to do so through the appropriate channels, we would be able to prove we have confidentiality, not secrecy.

The subject matter of the speech I was offered is telling. It contains an equally weighted reference to secrecy and confidentiality. There is a different but equally Orwellian aspect to this. Secrecy is a position whereby law specifically prevents the exchange of information for any purpose whatsoever. Confidentiality is a completely separate legal position. Here, subject to the appropriate evidence and an approach to the appropriate body, confidentiality can be over-ridden and information passed to another body. However, it has become clear that when I talk about confidentiality, some American and European regulators and law enforcement officials think I mean secrecy. To them, there is no distinction between the two other than semantics. All the shades between true secrecy and true confidentiality are also often considered to be secrecy.

When I talk about tax planning, many people understand me to say tax evasion. It is clear from statements made by the UK authorities and the OECD that tax avoidance is increasingly considered to be tax evasion.

Such attitudes simply serve to cloud the real issues. A world where the onshore authorities state that white is black and that they, the onshore centres, are without blemish is not the right way to remove obstacles to the exchange of information and co-operation.

The ability to exchange information also brings with it civil rights issues. Somehow we all have to steer a sensible middle course, co-operating responsibly with the international forces of law and order while scrupulously preserving the confidentiality that legitimate customers are entitled to."

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
Related Topics
Related Articles
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
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 (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

To Use 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.


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.


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