UK Government Pressures Jersey Over OECD

by Jason Gorringe, Tax-News.com, London

19 February 2002

According to the Financial Times, the British Government is threatening the island of Jersey with sanctions if it doesn't make commitments demanded by the OECD by February 28th. The paper suggests that the official pressure on Jersey reflects anxiety in the Treasury about potential embarrassment for Gordon Brown, chancellor of the exchequer, who has campaigned for greater financial transparency worldwide. "What Jersey doesn't realise is how serious the government is," said one official. "They have taken a very aggressive attitude."

The key demands of the OECD include equality of treatment for domestic and international 'offshore' companies, and effective 'know-your-customer' and information exchange regimes, and its 'blacklist' includes five other five British overseas territories - Gibraltar and the Caribbean jurisdictions of Montserrat, the British Virgin Islands, the Turks and Caicos Islands and Anguilla. Other territories have caved in and signed OECD 'commitment' letters, including Bermuda, the Isle of Man and the Cayman islands.

Jersey has in fact made a number of changes to its legislation in response to OECD demands, particularly since international pressure stepped up after the September 11th terrorist attacks in the US. 'We're a small jurisdiction and we're well aware how easy it is for outsiders to criticize our finance industry. We're not going to allow that to happen,' said attorney-general William Bailhache.

Most recently, the jurisdiction introduced a law obliging trust and company service providers to obtain an operating license from the Financial Services Commission, in much the same way as banks and investment funds have always been obliged to. This license commits the organisation to record the beneficiaries of all assets handled, provide adequate anti-money laundering training for staff, and report all suspicious transactions to the authorities.

The Jersey government however says it still has "one or two problems" with the OECD initiative, adding that the OECD had tried to reopen areas of debate the island considered resolved. "We are less than wholly happy with the administrative approach," the official said. "Issues which we regard as completely closed and dealt with suddenly bubble up again."

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