A systemised approach
Regulation and compliance requirements in key offshore jurisdictions have only increased over the past two decades.
Putting to one side anti-money laundering and counter-terrorism financing (AML/CTF) handbooks and ‘know-your-customer’ procedures to which fiduciaries are bound, together with increasing onshore tax complexity, there are many regulations that, until relatively recently, simply did not exist. In the case of Guernsey, for example, these include:
- Economic substance and tax regulations, first brought in by legislation in 2018, with the latest iteration being the Income Tax (Substance Requirements) (Implementation) Regulations, 2021 (the 2021 Law).
- Mandatory disclosure rules on Common Reporting Standard (CRS) avoidance and opaque structures set out in the Income Tax (Approved International Agreements) (implementation) (Mandatory Disclosure Rules) Regulations, 2020.
- Beneficial ownership registers, with a plethora of guidance, first brought in by the Beneficial Ownership of Legal Persons (Guernsey) Law, 2017.
- Enhanced lending regulation dealing with both capital requirements and AML/CTF, taking the form of the Lending, Credit and Finance (Bailiwick of Guernsey) Law 2022 (the 2022 Law).
- More onerous private trust company (PTC) regulations via the Regulation of Fiduciaries, Administration Businesses and Company Directors, (Bailiwick of Guernsey) Law, 2020 (the 2020 Law) and related guidance.
- An increase in onerous provisions within data protection laws, with the General Data Protection Regulation equivalent, the Data Protection (Bailiwick of Guernsey) Law, 2017.
Onshore regulations
However, Guernsey structures will often be exposed to onshore assets, invoking the need to consider the proliferation of regulation there. The UK has seen the introduction of the Register of Overseas Entities, a people with significant control register, regulation of the art market on AML/CTF grounds and, in the US, the Corporate Transparency Act introducing its own beneficial ownership register.
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