The Channel Islands are made up of a group of several small islands in the English Channel. They include two Crown Dependencies – Jersey and Guernsey – which means they each have their own independent legal and fiscal systems. Despite being physically small islands, Jersey and Guernsey pack a real punch on the global stage when it comes to the sophistication of their local industries – just one of the many reasons why the Channel Islands are viewed as attractive destinations to do business.
The Channel Islands are rich in both heritage and agriculture. Both Jersey and Guernsey have strong construction industries that meet the changing demands of a growing population. But it's their financial services sector that is a key cognitive contributor to local GDP and GVA. According to TMF Group experts, the Channel Islands have a combined GDP of circa £8 billion; with around 50,000 entities registered there, the Channel Islands boast collective assets under management (AUM) of around £800 billion, and a combined trust wealth of over £1 trillion.
Both Jersey and Guernsey are established international finance centres, with over 60 years of experience, that host top-tier banks, law firms, accountancy firms and, of course, professional services providers like TMF Group, who provide critical administrative and compliance support. Both jurisdictions have respected common law-based legal systems, robust regulatory frameworks in place and, post Brexit, have weathered economic uncertainty. This has allowed them to maintain strong links with both the UK and the EU.
It comes as no surprise that both Jersey and Guernsey have moved positively in TMF Group's Global Complexity Index (GBCI) rankings in 2022. With Jersey ranking as the 6th simplest jurisdiction in which to do business, and Guernsey ranking as the 12th simplest.
In this article, we will explore two of the critical reasons why both Jersey and Guernsey have climbed favourably in the GBCI rankings in 2022. Firstly, we will take a look at how the impact of Covid-19 has forced positive changes in the Channel Islands – especially when it comes to digitalisation.
The second item we will look at is governance and regulation protocols. We'll explore local regulation, robust infrastructure, as well as the political, social and economic stability of the jurisdictions.
The impact of Covid-19
This year's GBCI report findings show that both islands fared well through the Covid-19 pandemic, with forced technological advancements working well for business.
The development and implementation of digital documents such as online portals, workflows and applications helped remove the need for traditional face-to-face meetings or manual collation of certified true documentation. These digitalised processes have allowed for automated workflows, making it much easier for business needs to be carried out, and much quicker.
New digitalised processes now allow for companies to be formed through an online portal within two hours, and for private funds to be approved – again through a digital portal – within 48 hours.
Evidently, the impact of Covid-19 on digitalisation in the Channel Islands has been a positive one. We now know that the drive for digitalisation is here to stay and we're seeing our clients' demands grow rapidly in this area.
Governance and regulations
Our GBCI report continues to showcase the ease with which clients can understand or be advised on the legislative and compliance frameworks of both Jersey and Guernsey.
These ever-evolving regulatory frameworks seem to find the right balance between being open for business while offering sufficient protections for investors and other stakeholders.
Another observation made through the report is that having one prime proactive regulator in each of the jurisdictions remains a strong positive influence on their rankings.
With the ability to handle outsourced operations, both Jersey and Guernsey boast a significant presence of professional services firms, like TMF Group, along with those top-tier legal, accounting and tax firms again coming out really strongly.
The report also highlights the favourable timeframes in Jersey and Guernsey when it comes to reporting and undertaking corporate administrative procedures, such as incorporating a new company, approving the launch of a new fund, or even establishing a bank account. All of these factors remain less complex in the Channel Islands relative to many of the other jurisdictions assessed.
This year's GBCI report suggests that around three-quarters of popular private wealth and family office jurisdictions now require individuals holding wealth to disclose their identity to relevant authorities. Transparency for investors is a continuing global trend and both Jersey and Guernsey have 60 years' experience in this industry. To some extent, the Channel Islands have led the way for setting high standards in this particular area and will continue to provide specialist services and compliant environments for private wealth clients to manage their wealth.
In the coming months and years, we expect there to be increased regulation and international alignment as well as continued political, social and economic instability. We believe both Jersey and Guernsey are well positioned to continue to provide robust regulatory environments, access to high quality advice and professional services for a global client base.
The Global Business Complexity Index
The GBCI 2022 provides an authoritative overview of the complexity of establishing and operating businesses around the world. It explores factors driving the success or failure of international business, with a focus on operating in foreign markets, and outlines key themes emerging globally as well as local intricacies across 77 jurisdictions.
Explore the GBCI rankings, analysis and global trends to help you find your path to growth, amid the complexity of corporate compliance.
To download and read the report in full, visit the Global Business Complexity Hub today.
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