Financial services are a highly important part of the economy of Jersey.
Jersey is considered to be an offshore financial centre [1] and one of the most economically successful OFCs in the world.[ citation needed ] Jersey has the preconditions to be a microstate, but it is a self-governing Crown dependency of the UK. [2] It is sometimes considered to be a tax haven. [3] As of 2021, Jersey has received an AA-credit rating from Standard and Poors. [4]
The first ever bank in Jersey was established in 1796. In 1961, banks began to establish offshore operations in Jersey to meet the growing demands of British customers. In the 1970s, Jersey authorities decided that bank licences should be limited to the top 500 global banks. The island was the first jurisdiction to bring in the world to bring trust and company service providers within a regulatory regime. [5]
Jersey-based financial organisations provide services to customers worldwide, including multi-currency banking, offshore mortgages and investment solutions. It is home to banking organisations from across the globe. [4] In June 2020, it was reported that there were 13,450 jobs within this sector. [6] According to Jersey Finance, a group which represents financial sector companies from the island, Jersey represents an extension of the City of London. [4]
The Royal Bank of Canada (RBC) is a major employer with some 900 staff employed in Jersey, as of March 2009. [7] The finance sector profits were about £1.18 billion in 2015. [8] In the second quarter of 2020, the total value of banking deposits held in Jersey decreased from £145.7bn to £141.2bn. There were 33,186 live companies on Jersey's register. [9]
On 4 February 2009 Jersey Finance officially announced its intention to open a new representative office in London. [10] Jersey shares The International Stock Exchange (TISE) with Guernsey, where it is based. [11] It was established in 1998. [5] In 2015, Jersey (in conjunction with the Bailiwick of Guernsey) established the Channel Islands Financial Ombudsman (CIFO) to resolve consumer complaints about financial services provided in or from the Channel Islands.
The first regulated Bitcoin fund was established in Jersey in July 2014, with the approval of the Jersey Financial Services Commission, after island leaders expressed a desire for Jersey to become a global center for digital currencies. At the time of the establishment of the fund by a Jersey-based hedge fund company, Bitcoin was already being accepted by some local businesses. [12]
Jersey's finance sector is planning to: [4]
Jersey is one of the top worldwide offshore financial centers. [13] It is described by some as a tax haven. [14] It attracts deposits from customers outside of the island, seeking the advantages such places offer, like reduced tax burdens.
Jersey has been variously given the title of a 'tax haven' since the 1920s, when wealthy Brits began to move (or move their wealth) into the island to avoid wealth and inheritance taxes. Its taxation laws have been widely criticised by various people and groups.
The economy of the Cayman Islands, a British overseas territory located in the western Caribbean Sea, is mainly fueled by the tourism sector and by the financial services sector, together representing 50–60 percent of the country's gross domestic product (GDP). The Cayman Islands Investment Bureau, a government agency, has been established with the mandate of promoting investment and economic development in the territory. Because of the territory’s strong economy and it being a popular banking destination for wealthy individuals and businesses, it is often dubbed the ‘financial capital’ of the Caribbean.
The economy of the Isle of Man is a low-tax economy with insurance, online gambling operators and developers, information and communications technology (ICT), and offshore banking forming key sectors of the island's economy.
The economy of Jersey is a highly developed social market economy. It is largely driven by international financial services and legal services, which accounted for 39.5% of total GVA in 2019, a 4% increase on 2018. Jersey is considered to be an offshore financial centre. Jersey has the preconditions to be a microstate, but it is a self-governing Crown dependency of the UK. It is considered to be a corporate tax haven by many organisations.
Money laundering is the process of illegally concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdictions with varying definitions. It is usually a key operation of organized crime.
The economy of Nauru is tiny, based on a population in 2019 of only 11,550 people. The economy has historically been based on phosphate mining. With primary phosphate reserves exhausted by the end of the 2010s, Nauru has sought to diversify its sources of income. In 2020, Nauru's main sources of income were the sale of fishing rights in Nauru's territorial waters, and revenue from the Regional Processing Centre.
Nordea Bank Abp, commonly referred to as Nordea, is a Nordic financial services group operating in northern Europe with headquarters in Helsinki, Finland. The name is a blend of the words "Nordic" and "idea". The bank is the result of the successive mergers and acquisitions of the Finnish, Swedish, Danish, and Norwegian banks of Merita Bank, Nordbanken, Unidanmark, and Christiania Bank og Kreditkasse that took place between 1997 and 2001. The Nordic countries are considered Nordea's home market, having finalised the sales of their Baltic operations in 2019. Nordea is listed on Nasdaq Nordic exchanges in Helsinki, Copenhagen, and Stockholm and Nordea ADR is listed in the US.
The Central Bank of Ireland is Ireland's central bank, and as such part of the European System of Central Banks (ESCB) and a founder member of the European Central Bank (ECB). It is the country's financial services regulator for most categories of financial firms. It was the issuer of Irish pound banknotes and coinage until the introduction of the euro in 1999 and now provides this service for the European Central Bank.
An offshore bank is a bank that is operated and regulated under international banking license, which usually prohibits the bank from establishing any business activities in the jurisdiction of establishment. Due to less regulation and transparency, accounts with offshore banks were often used to hide undeclared income. Since the 1980s, jurisdictions that provide financial services to nonresidents on a big scale can be referred to as offshore financial centres. OFCs often also levy little or no corporation tax and/or personal income and high direct taxes such as duty, making the cost of living high.
Financial services are economic services tied to finance provided by financial institutions. Financial services encompass a broad range of service sector activities, especially as concerns financial management and consumer finance.
The International Financial Services Centre (IFSC) is an area of central Dublin and part of the CBD established in the 1980s as an urban regeneration area and special economic zone (SEZ) on the derelict state-owned former port authority lands of the reclaimed North Wall and George's Dock areas of the Dublin Docklands. The term has become a metonym for the Irish financial services industry as well as being used as an address and still being classified as an SEZ.
Offshore investment is the keeping of money in a jurisdiction other than one's country of residence. Offshore jurisdictions are used to pay less tax in many countries by large and small-scale investors. Poorly regulated offshore domiciles have served historically as havens for tax evasion, money laundering, or to conceal or protect illegally acquired money from law enforcement in the investor's country. However, the modern, well-regulated offshore centres allow legitimate investors to take advantage of higher rates of return or lower rates of tax on that return offered by operating via such domiciles. The advantage to offshore investment is that such operations are both legal and less costly than those offered in the investor's country—or "onshore".
A financial centre or financial hub is a location with a significant concentration of participants in banking, asset management, insurance, and financial markets, with venues and supporting services for these activities to take place. Participants can include financial intermediaries, institutional investors, and issuers. Trading activity can take place on venues such as exchanges and involve clearing houses, although many transactions take place over-the-counter (OTC), directly between participants. Financial centres usually host companies that offer a wide range of financial services, for example relating to mergers and acquisitions, public offerings, or corporate actions; or which participate in other areas of finance, such as private equity, hedge funds, and reinsurance. Ancillary financial services include rating agencies, as well as provision of related professional services, particularly legal advice and accounting services.
The Royal Bank of Scotland International, trading under the NatWest International (retail), RBS International (institutional), Coutts Crown Dependencies and Isle of Man Bank brands, is the offshore banking arm of NatWest Group. It provides a range of services to personal, business, commercial, corporate and financial intermediary customers from its base in St. Helier, Jersey.
A tax haven is a term, sometimes used negatively and for political reasons, to describe a place with very low tax rates for non-domiciled investors, even if the official rates may be higher.
An offshore financial centre (OFC) is defined as a "country or jurisdiction that provides financial services to nonresidents on a scale that is incommensurate with the size and the financing of its domestic economy."
The External relations of the Bailiwick of Jersey are conducted by the External Relations department of the Government of Jersey. Jersey is not an independent state; it is a British Crown dependency, so internationally the United Kingdom is responsible for protecting the island and for consulting Jersey on international trade agreements but it is not a British territory.
The International Stock Exchange (TISE) is a stock exchange headquartered in St. Peter Port, Guernsey. The TISE provides a listing facility for international companies to raise capital from investors worldwide. It offers a regulated marketplace, with globally recognisable clients and a growing product range, from a location within the European time zone but outside the EU.
William M. Maurer is an American academic scholar of legal and economic anthropology. He currently serves as the dean of the School of Social Sciences at the University of California, Irvine. He has conducted research on money, finance, economy, and law, including the off-shore financial services industry in the Caribbean, alternative currencies, Islamic finance, mobile money, and traditional and emerging payment technologies, as well as cryptocurrencies like Bitcoin and related blockchain technologies. He has been called the “doyen” of the subfield of the anthropology of finance. Maurer is also the founding director of the Institute for Money Technology and Financial Inclusion, a research institute at UC Irvine funded by the Bill & Melinda Gates Foundation, and a fellow of the Filene Research Institute. He was previously the founding co-director of the Intel Science and Technology Center in Social Computing, also at UCI.
The Republic of Panama is one of the oldest and best-known tax havens in the Caribbean, as well as one of the most established in the region. Panama has had a reputation for tax avoidance since the early 20th century, and Panama has been cited repeatedly in recent years as a jurisdiction which does not cooperate with international tax transparency initiatives.
Jersey is a Crown Dependency with fiscal sovereignty and therefore sets its own tax rates. The island has a 'simple and stable' tax system, which does not change much over time. This is reflected in States policies, which call for a 'low, broad, simple and fair' system. Jersey does not have inheritance, wealth, corporate or capital gains tax.