Offshore finances afoot

Sir Michael Foot, a former Bank of England official and Bahamas bank inspector, was commissioned by the Treasury last December to produce an independent review of the long–term opportunities and challenges facing the UK’s offshore financial centres.

Finally, a report gave a balanced view on the financial impact territories such as Cayman Isles and Jersey have on the UK’s coffers.

While it suggested that there is work to be done on regulatory arrangements in some jurisdictions, the report also highlighted Deloitte’s study into exactly how much jurisdictions contribute to the UK economy.

In the second quarter of this year, they provided net funds to banks in the UK totalling £195bn, of which $218bn (£130bn) came from Jersey, $74bn from Guernsey and $40bn from the Isle of Man.

If the competitiveness of the Crown Dependencies were curtailed, it would serve to benefit the UK’s financial competitors such as the US, the report states.

There are criticisms levelled at the jurisdictions. This includes a call for further improvements to regulatory regimes to bring them into line with international standards, and the suggestion that some jurisdictions should consider introducing VAT to help shore up government funds during the downturn.

Still, at least it acknowledges that rather than stealing from the British taxpayer, many crown dependencies are contributing to the British economy.

In The Lawyer’s Offshore Special Report, published today, offshore lawyers responded to criticisms, which they feel are unfair and which have been widely reported in the British press.

Appleby partner Gray Smith hits back at suggestions that Cayman is bankrupt and defends the jurisdiction’s tax policy. “It’s business as usual,” he insists (see special report).

Lichtenstein, the jurisdiction that many feel was the first to feel the anti-offshore backlash, is defended by Berwin Leighton Paisner partner Andrew Watters, who says that the country has been quick off the mark to put in place transparency agreements with the UK (see special report).

Collas Day’s Michael Adkin’s comes out fighting for Guernsey. He questions whether the regulatory crackdown being thrust upon the offshore world by their onshore counterparts is too heavy handed (see special report).

Despite the countless reports and criticisms, some jurisdictions are witnessing a resurgence in instructions. Notably, this is coming from the emerging economies and the Middle East.

While the UK Government continues to publish its reports and consult on the future role of the offshore world, it in turn is becoming immune to the criticisms and many are getting back to business as usual.