"We were whizzing round Whitehall trying to get in front of as many people as possible"

Wednesday 27 June 2018

You’d think it was enough. Jersey has a central register containing the beneficial owners of local companies, which is available to the authorities on request – potentially, in the right circumstances, within an hour.

Yet political pressure is mounting in the UK to force that register open to public view as well, ostensibly in a bid to crack down on money laundering and terrorist financing.

Which raises two key questions: why? And can Jersey be forced to comply on a matter of domestic law?

The issue is important, although not fundamental for the future of the financial services sector – but it is critical in the way Jersey relates to the UK; is the island self-governing or not?

A few weeks ago, those two questions arose urgently, abruptly, acutely via amendments to the proposed Sanctions and Anti-Money Laundering Bill - meaning a Jersey team had to catch the next plane to London and get lobbying. 

Kate Nutt, the new Group Director for External Relations for the Government of Jersey takes us the story…

Kate Nutt: The Sanctions and Anti-Money Laundering Bill has actually been around for quite some time.  It was nearing the end of its passage through the Commons when the amendments around public registers and beneficial ownership got a bit of a head of steam and the amendments that were tabled got cross party support.

They came out of the blue really, at the last minute, as soon we did get wind of what the text was, and essentially it was that the UK Parliament was going to legislate for the Crown Dependencies and the Overseas Territories to introduce public registers of beneficial ownership.  

As soon as we got wind of that, we kicked into action.  We already had really good links into the civil service, and obviously we’ve got ministerial links anyway in External Relations with Ministers. So, we were able to talk to them about why those amendments were problematic, and about some alternative wording that might be appropriate.  

So, over the course of the Thursday and the Friday, and over the weekend we were liaising with them over email, over the phone, we had conversations with the Lord Chancellor, and the Chief Minister and the Minister for External Relations were involved with that, along with the other crown dependencies; and we were, you know, trying to make the point very clearly across several areas that this was not acceptable to us, and that lobbying then continued into Monday, where we were actually in London meeting face-to-face cross-party representatives to put our case across.  

Pictured: Amendments around public registers and beneficial ownership came out of the blue says Kate Nutt.

Now essentially that case fell into two broad areas.  

The first is that fundamentally we’re looking to achieve the same policy aims as the government and the opposition are looking to do. We want to be in a leading position in respect of tackling money laundering and terrorist financing and other areas of financial crime. 

We were an early adopter of the OECD’s common reporting standard on automatic exchange of information. The first wave of that information we shared in September of last year. We’ve helped to develop that standard, so we were really proactively involved.  

We actively participate in the OECD’s Base Erosion and Profit Shifting (BEPS) inclusive framework and that’s about essentially preventing companies from artificially shifting their profits around to avoid tax.  

We were assessed by MONEYVAL. That was published, I think, in 2016. MONEYVAL is the EU’s own body for assessing compliance of international standards, and you know we came out with flying colours on that and actually there was a comment about our central register, recognising the fact that it’s fully vetted and verified, it’s accurate, it’s up to date, you know it’s a leader of its kind.  

All of these things show that we are really serious about tackling financial crime, about being transparent, about abiding by the highest levels of international standards; and certainly, in terms of things like the exchange of information, we have signed up to an enhanced process with the UK government where in certain circumstances they can have information within an hour.  

So, all of these things are really strong arguments to say, we are working, we want to work with you, we’re working to the same end, we just disagree at this point that public registers are the best way of going about it.  

There is a very valid privacy argument there. People have a right to privacy.  The authorities can request the information and they get it straight away, so it is fully available, but you might have individuals or groups with certain interests, or perhaps an axe to grind against an individual. 

Having access to all of that information without any real cause, is actually quite an uncomfortable thing whilst there’s not a global standard; we have made it very clear that that is not something we are prepared to sign up to at this point of time. 

The other side of the argument, was around the constitutional relationship with the UK, and it’s a bit unfortunate those arguments had to be made as strongly as they were; but in particular with this area, when it comes to public registers it’s something that has gained a lot of traction, a lot of support, it gets conflated with other issues which means the debate around it gets, I think, quite emotional and you’ve got some very visible, quite powerful, organisations, NGOs and the like, that are really pushing these arguments forward.  

We said we support these objectives, and we want to help you deliver them, but you actually can’t legislate for us.

Express: The constitutional arguments are very well rehearsed, is it frustrating that they keep having to be made?

Kate Nutt: In this instance, it was sort of a perfect storm, if you like, of circumstances. 

On the one hand you’ve got an issue that resonates very much with certain areas of the political system and resonates actually quite a lot with the media and the public.  You’ve got a government with a small majority, but which is working hard to deliver one of the biggest areas of change that the government has really ever had to do. Although the arguments around our constitutional autonomy are quite clear in our regard, it was quite a difficult set of circumstances.

We did make the constitutional case very clear. We made it very clearly to the Lord Chancellor. We made it very clearly to Lord Keane when we met him on the Monday.  We were whizzing round Whitehall trying to get in front of as many people as possible, just to reinforce the points around the constitutional relationship, because in the melee of some of the emotion that you get around these issues, sometimes it does get lost.

Express: What lessons did you learn from the process?

Kate Nutt: I think we had a unique set of circumstances here, there was only ever going to be a certain amount of planning that could take place.  

One of the things we need to look at is our messaging around the value of the jurisdiction and what the jurisdiction does, to increase the understanding of all the really good stuff that we’re doing around transparency and information sharing.

I think actually we need to have a complete re-look at the type of information that we’re pushing out, and the way that we’re communicating it, and we need to do it perhaps in a more planned way.  

The way that we have played it in the past, I think, is quite professional and mature but not terribly emotive. We stick with the facts and actually I’m wondering now whether in the longer-term that’s necessarily the right approach. I think we need to bolster it up and we need to look at the content of the messages we’re delivering, the way that we’re delivering them, and start to do it in perhaps more of a fashion as we see in other areas.

We’re not out of the woods yet at all. There are other pieces of legislation coming down the pipeline where you could see issues, like public registers, you could see them being attached to those Bills.

Express: What steps are you going to take to address those?

Kate Nutt: I am going to look at what the London Office is, you know, where we are actually targeting our activity. They have a very big stakeholder map of MPs and peers and diplomats and all of the key people that we need to be talking to.  

It’s important that External Relations work very closely with the financial services unit here. We work very closely with JFL as you might imagine.  

I think collectively we need to look at perhaps some of the research, and evidence, and material that we are using to make Jersey’s case and the approach that we are using as well. How often we’re getting the messaging out? Who are we speaking to? 

Express: Do you think it is possible that Jersey will stay off this public register or do think its bound to happen at some point?

Kate Nutt: The Chief Minister has made it clear that when it becomes a global standard we will consider adopting it then, and that I think is the position. Until that happens, for all the reasons that I’ve set out earlier, that’s not something that we’re prepared to do.

The pressure is growing, but I think we have got a really good story to tell and I’m not sure that public registers per se are necessarily the answer to all the ills that people that support public registers are hoping.  

Actually, what you need to be doing is working with the other jurisdictions that aren’t doing all the other stuff that we’re doing, that aren’t helping to develop and implement international standards, that aren’t exchanging information as quickly as we’re doing or as well as we’re doing.

A lot of jurisdictions don’t have central registers, let alone central registers that are as good as ours; so, the more effective approach, in my view, would be to work with other jurisdictions to get them up to that level. 

There’s a huge amount of work going in the Jersey team, but also in the overseas offices in London, Brussels and France to make sure that Jersey’s interests are promoted and protected.

We are also looking forward to what all the opportunities for Jersey are in the longer term. We’re managing the Brexit program for government, if you look at what the UK is going to be doing in future, what they are doing on the trade side, there are great opportunities for us to join up with what the UK is doing; but also looking at what we do, the agreements we have bilaterally with other jurisdictions, so not just UK and EU but also further afield.  

Our global market strategy, which has only recently been developed, and recently been resourced on the back of Brexit funding, actually has been, I think, pivotal in changing what we as a government are able to do with what I term ‘long-haul’ jurisdictions.

We’re looking at China, the Middle East, Asia, Africa, areas where there is real potential for us to develop.

This is not just about financial services or tax matters, this is about relationships based on cultural cooperation, heritage, education, other areas of the economy.  Digital for example. So, we’re looking at building really strong government-to-government relationships with the rest of the world as well, and that is really important I think in future because it means you can make sure Jersey is well positioned to take advantage of all the opportunities that I think are going to come.

This interview appears in the June edition of Connect Magazine. Click here to read it.