AIFM Directive
FATCA
Review of beneficial ownership
Ombudsman scheme
Anti-money laundering
Amendments to codes of practice
International relations
The EU Alternative Investment Fund Managers (AIFM) Directive and the relevant Jersey implementing legislation have been in force for more than six months. However, as a result of transitional arrangements in certain EU member states, a number of AIFMs and their advisers are yet to come to terms with the new regime.
By July 2014 all relevant entities will be required to opt in to Jersey's alternative investment fund (AFI) regime, so now is the time for Jersey AIFMs to consider what steps they must take if they wish to continue to have access to EU markets.
The US Foreign Account Tax Compliance Act (FATCA) creates a new tax information reporting and withholding regime for payments made to certain 'foreign financial institutions' and other 'foreign' persons. The definition of 'foreign financial institutions' is broad and includes investment funds. Failure to report could result in 30% withholding tax being deducted on US-sourced income and payments.
Implementation of FATCA is phased, and the first changes took effect on July 1 2014, with certain withholding requirements taking effect from the same date.
On December 13 2013 an intergovernmental agreement between Jersey and the United States was signed at the US embassy in London (which is due to be ratified by the States of Jersey in Summer 2014). The purpose of the agreement is to ensure that foreign financial institutions will:
- not be required to enter into foreign financial institution agreements, but instead will be directed by Jersey legislation to comply with FATCA;
- have reduced (or no) withholding tax or withholding obligations; and
- report on relevant accounts to the Jersey comptroller of income tax, not directly to the Internal Revenue Service.
The UK crown dependency governments have released FATCA guidance notes. Comments and feedback from industry users have been invited.
Review of beneficial ownership
Jersey's Chief Minister's Department has published a consultation paper concerning transparency of beneficial ownership of companies. The consultation period ended on April 30 2014.
Jersey is already significantly ahead of other jurisdictions in its requirement to disclose beneficial ownership to the Jersey Financial Services Commission upon incorporation and to maintain consumer due diligence on beneficial owners throughout the life of the company. It is hoped that the new initiative will not result in Jersey becoming a less attractive jurisdiction in which to structure investments and other asset holding vehicles.
The States of Jersey approved the draft Financial Services Ombudsman (Jersey) Law on April 1 2014 and the law is now awaiting UK Privy Council approval. The consultation on the secondary legislation, which will refine not only the scope of the scheme, but also who will be eligible to complain, has opened; however, it is hoped that all funds other than recognised funds will be excluded from the scheme.
In 2009 the International Monetary Fund published a report on Jersey's compliance with the recommendations of the Financial Action Task Force (FATF). While Jersey was assessed as "complying" or "largely complying" with the recommendations, a number of suggestions were made in the report about how Jersey's framework for anti-money laundering and countering terrorist financing could be improved.
A revised consolidated version of the Anti-money Laundering and Countering Terrorist Financing Handbook for regulated financial services business was published by the commission on December 11 2013.
Amendments to codes of practice
The commission has published revised codes of practice for fund services business and investment business in order to clarify the scope and basis on which the codes are issued, align regulatory requirements across the codes wherever possible and augment existing requirements or set certain new requirements. The amendments took effect on July 1 2014.
On December 20 2013 the French government announced that Jersey is no longer considered to be non-cooperative in the exchange of tax information and as such, Jersey has been removed from the French 'non-cooperative' list. On December 11 2013 it was announced that Jersey and Guernsey will establish an office in Caen in order to represent both islands' interests with French authorities. The Bureau des Iles Anglo-Normandes will support relations with France in areas such as energy, fisheries, civil contingencies, transport links, tourism, education, language links and business development.
This is a welcome development and indicative of the ability of Jersey's government to act quickly and constructively.
For further information on this topic please contact Niamh Lalor at Ogier by telephone (+44 1534 504 000), fax (+44 1534 504 444) or email ([email protected]). The Ogier website can be accessed at www.ogier.com.
