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Guernsey's place in the world

29 July 2021

Written by Rupert Pleasant Guernsey Finance Rupert Pleasant

I was delighted to deliver a ‘Focus on Guernsey’ presentation at Z/Yen’s recent 'Financial Centres of the World 2021' series. I would like to thank Z/Yen for the opportunity, as this strengthens an already burgeoning relationship between the two parties, initially building on Guernsey’s work in green and sustainable finance, and I’m sure we’ll work together again in the coming months.

On behalf of WE ARE GUERNSEY my task was simple, to share information about Guernsey’s place in the world and provide details on the strengths of the island as a leading specialist global finance centre. 

I have outlined some of the key messages below: 

We have a close working relationship with the UK, and are something of a partner to the nation – particularly the City of London, but remain outside the UK and the EU. This means Guernsey is shielded from political, legal and fiscal volatility on either side of the Channel. 

Guernsey is not just a facilitator of global investment, but also an efficient one into causes that generate a genuine and tangible social return. We have the ability to funnel capital efficiently. This is often channelled into very worthy causes. Much philanthropic and charitable activity, as well as impact and ESG funds, benefit from this economic efficiency. 

Guernsey has unchanged and unrivalled global market access, including the UK and Europe, following Brexit. The island is presently home to more non-UK entities listed on the London Stock Exchange than any other international jurisdiction. We also retain our access to the EU and we are a specialist leader in the European private equities market.

More and more, the world is looking for both economic and physical substance in the jurisdictions that people are using. This is the case with all regulators and supervisors, including the likes of the Organisation for Economic Co-operation and Development (OECD) and the Financial Action Task Force (FATF) among many others. 

As a result of this, the substance of some jurisdictions is now coming into question. Guernsey scores very highly on economic substance by all measures, and is proud to play its part in the successful fight against genuine tax evasion – the government of Guernsey was an early adopter of the OECD’s Common Reporting Standards. 

Looking at Guernsey’s credentials in more detail, the island is whitelisted by both the OECD (in 2009) and the EU (in 2019) for proven economic substance. In addition, Guernsey introduced economic substance legislation by an amendment to the Income Tax Regulations in 2019. This is also an area that could be expanded upon, as Guernsey continues to meet its international obligations and expectations, and align with ever-changing standards. 

Guernsey is fully committed to all the treaties and taxation measures put forward by the OECD and FATF. The issue of Base Erosion and Profit Shifting (or BEPS) is becoming an increasing focus of governments worldwide, and will no doubt continue with more vigour as the world moves beyond the Covid pandemic. Guernsey is an active participant in these initiatives, and is considered compliant or largely compliant with 48/49 of the FATF’s recommendations on Anti-Money Laundering and Combatting the Financing of Terrorism. Guernsey has also signed a Model 1 agreement with the USA to implement Foreign Account Tax Compliance Act based reporting. 

The island is a global fund leader, being the number one jurisdiction in the European private equity market; from an insurance perspective, the island is also Europe’s number one captive domicile as part of an innovate finance sector; a specialist in the servicing of private wealth and family offices; and a specialist in international retirement schemes for internationally mobile employees. 

Guernsey is also at the forefront of green and sustainable finance. In 2018 we launched the world's first green fund kitemark - the Guernsey Green Fund - which is regulated by the Guernsey Financial Services Commission. As “green-washing” comes further to the fore, the Guernsey Green Fund is a robust and clear reminder that Guernsey – and its regulator, the Guernsey Financial Services Commission – is serious about combatting climate change. 

This year we launched the world's first ESG insurance framework for on-island member firms of the Guernsey International Insurance Association. Guernsey holds membership of several United Nations climate initiatives, including the Financial Centres for Sustainability Network, the Sustainable Insurance Forum and the Network for Greening the Financial System. 

The island’s reputation and expertise in this field is increasingly becoming a key reason as to why business activities are either being launched from, or moving to, Guernsey. 

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