At the time of writing the United Kingdom has not left the European Union twice (or is it three times, one loses count).  Our neighbour to the North has had two prime ministers and is in the throes of a general election, the first to be held in December since 1923.  The United Kingdom is the Channel Islands’ largest trading partner.  The political and economic uncertainty through the year has definitely had its effect on activity in the Channel Islands.  Our experience has suggested that peak uncertainty was in the early part of the year, with only the most adventurous investors prepared to buy UK assets but enjoying the benefits of sterling under pressure.  With the Autumn, clearly some international investors had plugged a little more certainty into their spreadsheets and foreign direct investment has picked up substantially, a wave we felt building from mid-summer.

The roller-coaster that is the USA/China trade dispute (or negotiations, it depends on your point of view) has also contributed to a similar effect in the Channel Islands.  The Channel Islands’ financial services sectors are substantially based on the global movement of capital.  Trade disputes have an immediate effect on this so even though the issues may seem far removed, our international customer base is sensitive to the implications of reduced international trade and the effects can definitely be felt.

The implementation of economic substance rules for companies tax resident in Jersey or Guernsey continues.  This started late in 2018 with the States of both Jersey and Guernsey introducing legislation to meet requests from the European Union Code of Conduct on Business Taxation Group.  Readers will be aware that the legislation was implemented to take effect on 1 January 2019.  Important guidance has been issued but there are several areas that remain unresolved.  The vast majority of companies will by now have a reasonable idea of whether they are in scope or out of scope of the requirements.  The sanctions can be high and compliance is required now, with tax returns next year requiring detailed information.    This has created a substantial compliance burden and questions remain on the detail and its application to many companies.

You might have thought that Brexit would be a big enough constitutional crisis to occupy the UK’s politicians, but some considered they had more to do.  Continued challenges from UK Parliamentarians have resulted in a conditional commitment from Guernsey and Jersey governments to introduce public registers of beneficial ownership.  Alongside other strategy statements about accessibility of information regarding beneficial ownership, the Channel Islands along with the Isle of Man, committed to aligning public access to beneficial ownership information with proposals from the EU.  This is dependent on implementation of the EU’s Fifth Money Laundering Directive (expected in 2022) and the Channel Islands assessment of the standards then adopted.

In Jersey, the financial services regulator the Jersey Financial Services Commission has had the power to levy civil financial penalties on registered financial services businesses since 2015 and this was extended in late 2018 to individuals who are principal persons who were involved in a breach by a business of applicable rules.  The JFSC showed these rules had teeth when it levied in summer 2019 the first civil financial penalty for an historic contravention of regulations. The business was fined £381,010 on the basis of a failure properly to remediate issues within an agreed timeframe.  In its public statement on the matter, the JFSC highlighted mitigating factors including the co-operation of the registered person and other steps taken which indicate that the fine could have been substantially larger without such action.  The extension of the civil penalty regime to individuals and guidance from the JFSC that such fines should not be an insurable risk has created some concern amongst, in particular, the independent pool of non-executive directors who provide such services to businesses.  It is clear that both businesses and individuals should ensure they are fully cognisant and compliant with applicable rules and are ready to act swiftly and co-operatively where mistakes happen.

And what for 2020?  Well, whilst this article looks back to what happened in 2019, one must conclude that every issue considered above will continue to echo on into the next year.  Groundhog Day – let’s hope not!

Type

Insight

Locations

Jersey, Guernsey

Share
Twitter LinkedIn Email Save as PDF
More Publications
30 Jun 2020 |

"Lockdown" or "Time to Break Free"?

Arguably one of the greatest strengths of the human race is our ability to adapt. Few people in our ...

Contributors: Richard Field
23 Jun 2020 |

The International Stock Exchange – The home of UK Real Estate Investment Trusts (REITs)?

Real Estate Investment Trusts (REITs) were introduced in the UK under the Finance Act 2006 on 1 Janu...

Contributors: Chris Smedley
19 Jun 2020 |

Warranty Claims: On time, but too late?

A recent decision in the English High Court highlighted the importance of buyers acting quickly if t...

3 Jun 2020 |

Appleby’s overview of the key benefits of listing high yield bonds on TISE

In the last few years, an increasing number of issuers of high yield bonds have chosen The Internati...

Contributors: Chris Smedley
1 Jun 2020 |

We are Family and the Vital Role of the Family Office

Avoiding “shirtsleeves to shirtsleeves” in three generations is a challenge for all wealthy fami...

Contributors: Stuart Tyler
29 Apr 2020 |

Working (Remotely) 9 to 5 (-ish)

In the past few weeks, more employees than ever before have been forced to work remotely, whether fr...

13 Mar 2020 |

Appleby contributes five chapters to Global Legal Insights – Fund Finance 2020

Appleby provided five chapters to the Global Legal Insights - Fund Finance 2020 Guide. The publicati...

31 Jan 2020 |

Brexit Day has arrived: What does that mean for Jersey, Guernsey and the Isle of Man?

Brexit Day has arrived, and at 11 o’clock this evening the UK’s EU membership will come to an en...

7 Nov 2019 |

The Inequality of Equality Legislation in the Channel Islands

This summer Guernsey launched its public consultation in relation to proposals to introduce a compre...

9 Oct 2019 |

Transparency and the Crown Dependencies

Transparency of beneficial ownership information has been a political issue since June 2013 when Bri...