Following the leaks, and follow up on the UK’s BBC Panorama programme on 4 April, the industry has defended the offshore financial services sector for its new wave of transparency and regulatory rigour, while highlighting its focus on investment and trust-based solutions rather than tax dodging and client anonymity.
Geoff Cook, chief executive of Jersey Finance, said that while the investigation is important for the sector due to the large number of clients involved and the high-profile nature of some of the named figures, the papers were predominantly based on speculation and allegations, rather than anything factual.
He said the due diligence standards for undertaking offshore business in the Channel Islands and other European jurisdictions are vastly higher than those seen in Panama.
He said: “Before undertaking a client relationship they need to verify who the ultimate beneficiaries are, who is the source of the funds, how they came by the money. I am not expecting any collateral damage in Jersey or Guernsey because the standards in place for the Channel Islands are just too high.”
Jersey clients with cross-border business often have valid reasons for setting up companies as the best way of dividing value, Cook explained; adding that the majority of their business was investment-related, rather than about setting up trading companies.
He added: “Setting up a company within a trust arrangement is just often a more sensible option because you can transact so much more easily.”
Uninformed hysteria
Alan Morgan-Moodie, chief executive of the Association of International Life Offices (AILO), said while some alleged clients may have been suspected of claims of fraud and evasion, for the vast number they have merely taken practical steps to avoid disclosure of their wealth and identity due to fears of ransom or kidnapping.
He said: “There appears to be a lot of uninformed hysteria on this. It has been common practice amongst wealth managers of individuals to arrange their affairs privately and legally.
“Privately because many wealthy people have a strong fear of kidnap or ransom demands; or there is no advantage in letting people know how wealthy you are. Among such people, and indeed most sensible people, taxation is seen as a cost, like any other cost such as bank charges, FX charges and [charges on] investing and returns.”
