As part of our series on the Channel Islands, we talked to Allan Wood of Jersey Finance to talk about the big themes he sees unfolding for the organisation and the jurisdiction.

The organisation representing the business and government of Jersey to the outside world is planning to set up a presence in Singapore by the end of 2022. It’s an example of how the European jurisdiction sees the need to spread its message worldwide. 

Jersey Finance has feet on the ground in Dubai, the US, Hong Kong, London as well as virtual offices in Shanghai and Mumbai. And Singapore is next on the list, its global head of business development, Allan Wood, told this news service recently. 

The connections with Asia – the world’s fastest growing region – are obviously important. 

“The connectivity between Jersey and Asia is growing from a financial services perspective and we are looking to build on that over the coming years,” Wood said. 

The island knows it has to seek new markets and develop existing ones in a world where there is a premium on stable and experienced offshore jurisdictions. Already, Jersey Finance has had an office in the US for three years, to give one example. (US investors are interested in Jersey as a route into the wider European investments space.) The body recently broadcast the contributions such IFCs make to global “financial supply chains.” The island of Jersey appears determined to sustain the brisk marketing and brand-building momentum that it has developed for more than a decade. 

And a big part of the agenda is stressing the “tools” – the structures and entities that are located in Jersey – that can be used by clients from around the world.

“As a jurisdiction we’re constantly reviewing our toolkit and product range to see where we can enhance or innovate. We made some amendments to our Limited Partnership law last year for instance, and that resulted in a sizeable number of migrations of LP structures to Jersey from other locations,” Wood told WealthBriefing.

“The Jersey Financial Services Commission (JFSC) has also introduced a new code of conduct around ESG reporting and disclosure to combat greenwashing – that’s a big area – and we’re looking to enhance our product range specifically for US fund managers later this year too,” Wood continued. “They’re examples of identifying opportunities in the market and reacting to them in innovative ways – all backed up by our commitment to robust regulation and governance. We’re also conscious that too much change can be a bad thing – investors like stability and familiarity, so it’s about achieving that balance.”

Wood argues that Jersey’s position has come so far because it has high regulatory standards, including a willingness to turn away business that is not compliant or suitable. 

Taking the initiative
Wood was one of several people interviewed by this publication in seeking to get a closer read on what Jersey needs to do, or keep doing, in order to maintain its offshore edge. (See here for an overview.) Jersey Finance has certainly set standards, winning plaudits from this news service, for example. Under former boss Geoff Cook and now under Joe Moynihan, Jersey Finance isn’t afraid to take the argument to those who decry the role of these “tax havens.” For example, it argues that Jersey makes what is called “tax neutrality” possible – those who use the island pay tax in their own countries and in those they invest in, without complex cross-border tax requirements – and without being taxed twice. If places such as Jersey didn’t exist, then bringing many different investors together would be tough, Jersey’s defenders say.

For example, Jersey Finance recently brought out a report examining the role the island plays in driving global financial “value chains.”

“The Global Value Chains report was pivotal for Jersey in a number of ways. First, no other IFC has undertaken an initiative like this, so it demonstrates in itself the commitment we have as an IFC to clarifying the role we play globally. But it also gives us hugely useful insights into our global reach, reinforcing just how far our global reach extends and quantifying the positive impact we have as an IFC,” Wood said.

“That sort of rich data is invaluable – we had the opportunity to present the findings at a Parliamentary event this summer, and there’s no doubt it landed really well at that, and should be helpful in explaining our position to policy makers in the UK and further afield.”

There may be signs that this message is getting through. Certainly, with so much geopolitical volatility (Brexit, Ukraine, Covid-19, China’s trade arguments with the West, etc), attacks on IFCs such as Jersey appear to have subsided somewhat, at least as far as this publication can judge. 

US market
Jersey Finance has pushed into the US market, and is continuing to do so. (See here for an interview about its US strategy.)

“Our US office is three years old this year, and there’s no doubt having a greater presence in New York has bolstered our appeal there.  Since the office opened, the value of US-originated fund assets under management serviced in Jersey has risen by 22 per cent, and we’re now diversifying our proposition more into the corporate financing and securitisation market,” Wood said.

“We’re seeing a lot of CLOs and CDOs [collateralised loan obligations and collateralised debt obligations, respectively] relocating to Jersey from other locations because we are seen as a premium jurisdiction,” Wood continued. 

There are also growth opportunities for Jersey in emerging markets. 

“The challenge is to manage the risks effectively,” Wood said. “Managing risk and compliance is a critical part of doing business in emerging markets and in Jersey we have a wealth of companies providing end-to-end regulatory compliance consulting services and governance consulting services. Our member firms have both local and global compliance expertise so you can be sure the highest regulatory standards are achieved releasing you to focus on growth. With laws and regulations continually changing, ensuring compliance is an ongoing challenge.”

All this talk of global opportunities is a reminder that the past few months have seen a resumption of international travel, albeit with the headaches of an airline industry coping with staffing shortages and associated disruptions. 

The pandemic did show the need for organisations not to rely on aviation. A presence on the ground is increasingly important.  

“We have future-proofed our need for travel,” Wood said. “In the last two years we have continued to hire professionals within regions to help reduce our carbon footprint,” Wood said.

Wood warmed to the “green” point about energy use (obviously very much top of mind at the moment).

Jersey Finance has welcomed the recent adoption of the Carbon Neutral Roadmap by Jersey’s legislature, the States Assembly, as a “key milestone” in cementing Jersey’s ambitions as a sustainable island. 

Wood returned to the international theme: “Jersey has long enjoyed a close and prosperous relationship with the Middle East; for example, the first Jersey-based Sharia compliant fund was established over 20 years ago.” 

“The longevity of the ties between Jersey and governments, businesses, and high net worth individuals in the Middle East is a testament to the common benefit for all parties in Jersey’s prominent position as an established, well-regulated international finance centre,” he said. 

“Jersey has a well-established relationship with the UAE and today our office in DIFC is our central hub for us in the GCC region. Our strong partnership with DIFC is the fruit of a real commitment and a lot of hard work from both sides over the past decade. In fact we are the only IFC to have an office in the DIFC.”

Jersey also does structuring work for clients across Africa in places such as South Africa and Kenya. “A number of South African fund managers have been using Jersey for years and we are seeing an influx of new funds. In Jersey we have 78 South African funds and we have seen a 39 per cent increase in AuM over the past year,” Wood said.  

“In fact South Africa represents the seventh largest pool of fund assets by country in Jersey. The 39 per cent growth we have seen from South Africa significantly outpaces the total growth in AuM that we have seen of 23 per cent over the past year. Stanlib. Ashburton, Novare Investments, Melville Douglas, Ethos, Westbrooke, Olduvai Capital and Knife Capital are to name but a few of the South African managers who use Jersey,” he added.