Guernsey Association of Trustees (GAT) Committee Member, immediate past chair of STEP Guernsey and Client Services Director at First Names Group (Guernsey) Alasdair McLaren discusses why the recent focus on substance and privacy has provided a platform for Guernsey to show its qualities.
International regulations are pushing all jurisdictions to show that the companies resident in those jurisdictions have substance. Jurisdictions are having to revisit their tax strategies and the States of Guernsey are debating the Bailiwick's own proposals on new substance requirements this month. In practice the island has long been regarded as a "go-to" finance centre for those international clients, be they corporate or private clients, who want and need their structures to be managed properly and professionally. To have directors who do indeed manage and control the companies under their care, where there is a sophisticated infrastructure to support these directors and a robust judicial system to ensure that clients and investors interests are protected.
The days of 'nominee directors' are long gone and were never a service offering that interested Guernsey.
Much of the public angst against major corporate international companies using jurisdictions to limit their tax exposure does not apply to the island. We are not a centre for companies such as Amazon or Apple and the impact of the new BEPS measure will have limited impact.
The international focus on substance has had positive results for the island with international families moving their structures here because they are actively seeking a jurisdiction where there is substance and where they can rely on the quality and professionalism of the practitioners. The vast majority of these structures are not driven by tax but by succession planning and asset protection. Regulation does not have to have negative connotations - for many of these clients having a jurisdiction with robust regulation provides with a degree of comfort that their affairs are being managed properly by properly-regulated firms.
Much is also made in certain sections of the press about "shady people" looking for "shady places" with little or no understanding of the realities of the reporting requirements in countries such as ours. We have never promoted "secrecy" as a major reason for coming to the island. Clients are certainly concerned about confidentiality, as are any families looking at how to pass their wealth (however modest) to the next generation. The wealthier the family then often the more interest in that wealth. Guernsey understands these concerns and has not accepted that there is good reason for having public registers. We do, however, understand that there are legitimate agencies who will have legitimate reasons for seeking information and this has always been accepted and provided for. We have similarly been early adopters of CRS and FATCA, and as we constantly remind the world, are in the forefront of meeting international anti-money laundering standards.
More international rules and standards will be written, more transparency is, perhaps, inevitable, but as the island has adapted to date so it will adapt tomorrow. The ability to provide substance and professionalism will prove ever-more important and for that, I believe, we will always be leaders.
Guernsey as a jurisdiction of substance will be highlighted at the first-ever Guernsey Private Wealth Forum in London on Thursday 8 November.
For more information about Guernsey's finance industry please visit www.weareguernsey.com.
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