There appears no slowing of demand for private financial information to be put in the public domain, but while criminals must be exposed, there must be limits on how far such openness should go, a conference heard.

The right of individuals of all levels of wealth and income to enjoy privacy was robustly defended this week at a conference organised by the body making the case for Jersey as an international financial centre.

Your correspondent, and other representatives of this news organisation, attended the Jersey Finance Annual Private Wealth Conference, in Whitehall, London; WealthBriefing was a media sponsor of the event. (Other sponsors and supporters are listed below).

The sharpest argument for financial privacy came in one of the panel sessions – marshalled by BBC Today show broadcaster and political correspondent Nick Robinson – and was made by award-winning lawyer James Quarmby, partner of Stephenson Harwood (who was honoured by WealthBriefing last week at the news service’s annual European awards).

Reflecting on developments such as the Common Reporting Standard - the global network of agreements among governments to swap information so as to catch alleged tax cheats - Quarmby said he saw no shift in the constant pressure by policymakers and others for more transparency and information about who has wealth and where it resides. He gave an example, from the UK’s Labour Party, now campaigning ahead of the June general election. It has called for those earning £1 million or more to have their tax details disclosed to the public.

“There is naiveté that if you can open up everyone’s…[wealth] it will end inequality…and the sun will shine all day,” he said, going on to describe campaigners for total openness about wealth as “transparency jihadis”.

Quarmby is no stranger to controversy. He has spoken out in the past in favour of IFCs, and warned about the risks that legitimate tax planning is increasingly being squeezed in ways that play fast and loose with long-established principles of due process of law. And in the Jersey Finance conference he pointed out that financial privacy is a right under the European Court of Human Rights.

Such a comment led him, along with others at the conference, to reflect on what may be the fate of IFCs such as Jersey when the UK, to which Jersey is connected as a Crown Dependency, leaves the European Union. It has been argued that uncertainties around Brexit mean Crown Dependencies such as Jersey, Guernsey and the Isle of Man will benefit, because of their “third-country” status in the eyes of EU law. Quarmby counselled caution, saying it is possible that some remaining EU states, such as France, may seek to enact regulations that hamper what such territories can do.

Even so, Brexit means that places such as Jersey become more important for London’s financial industry as a conduit of capital, he added.

Turbulence and growth
Geoff Cook, Jersey Finance’s chief executive, kicked off proceedings by talking about the geopolitical and economic picture, noting a kind of split between a volatile and unpredictable political world (Brexit, Trump, France, etc) and what appears in broad terms to be economic recovery, albeit at a moderate pace. With political populism still very much in evidence, Cook said, there is even more need for jurisdictions that have strong reputations for honesty and stability to perform a role in steering capital to where it can produce growth. And he also made the point that was to be something of a theme in the conference that financial privacy and confidentiality deserve respect. And seeking to put the Brexit situation in perspective, Cook said that once the UK leaves the EU, only one of the world’s five largest economies, Germany, will be in the EU, with the others being the UK, US, China and Japan.

In a keynote speech, Nick Robinson set out the political scene, arguing that in contrast to the late 1980s, a period that saw the “Big Bang” financial deregulations and the fall of the Berlin Wall, today is a period when barriers of certain kinds are rising. He noted that current UK Prime Minister Theresa May, whose Conservative Party is expected to win the UK election in June with a larger majority, has espoused a more interventionist, high-regulation style of economic policy than her female predecessor, Margaret Thatcher. He said he expects May’s strongest negotiating card with the EU in the Brexit talks to be cash, given the financially-parlous state of the EU. As for Donald Trump, Robinson, who noted the latest allegations about the US President and his recent decision to fire FBI director James Comey, Robinson said there is a risk that if mid-term elections are poor for the ruling Republican Party, and controversies continue to mount, that Trump is “in trouble”. “Tighten up your seatbelts - it will be quite a ride,” he said.

Following Robinson was Richard J Hay, a partner at Stikeman Elliott who said there appeared to be evidence that government pressure in the UK, and in Europe, for public registers of beneficial ownership was weakening. Hay cited comments from David Lewis, executive secretary at the Financial Action Task Force, a multi-government-backed body fighting flows of dirty money, in which he said that public registers of beneficial ownership will not work unless information contained in them is relevant and up to date (speech, 11 May, 2016). Hay also gave the example of Pascal Amans of the OECD in casting some doubt on the value of public registers of beneficial ownership.

Panels
A notable sceptic about the value of public registers of beneficial ownership (as advocated controversially by former UK Prime Minister David Cameron) is Jason Sharman, a professor at the University of Cambridge and author of a recent book on anti-money laundering and compliance issues, The Despot’s Guide To Wealth Management (see an article about his views here). Sharman spoke on the panel alongside Stephenson Harwood’s Quarmby, as well as Tim Robinson, partner at Schillings, and Siobhan Riley, partner at Carey Olsen.

Sharman said that public registers will not necessarily work unless information fed into them is relevant and timely; there is also the danger that public registers, and other initiatives, are forms of political window-dressing. Compliance efforts need to be audited more rigorously, rather than for politicians to keep enacting new laws. He likened some of the problems of ever-increasing regulation to that of airport security efforts, where in the latter case operations were sometimes just a form of “theatre”.

“My message is stop introducing new rules and figure out if your existing rules can be made to work better,” he told delegates.

A subsequent panel discussion examined ways (see here) that Jersey is trying to keep pace with clients’ requirements and get the balance right between protecting client privacy and complying with rules. Panellists were Zillah Howard, partner, Bedell Cristin; Kathryn Purkis, barrister, Serle Court; Naomi Rive, group director, Highvern, and Professor Andrew Morris, Dean, Texas A&M University School of Law.

The event concluded with a talk by journalist, behavioural economist and broadcaster Tim Harford.

Sponsors were Carey Olsen; Affinity; Vistra; TMG Group; Moore Stephens; Hawksford; Estera; Highvern; Whitmill, and Capco Trust.