Comment: Jersey lags behind Guernsey in regulatory technology

Posted: 21/11/2016

Alan Rowe_FusionAlan Rowe, a Director at Channel Islands IT company Fusion Systems, argues that the Jersey system for the automated exchange of information for FATCA and the Common Reporting Standard (CRS) tax agreements places unnecessary strain on Jersey finance businesses.  

Jersey is really missing a trick when it comes to regtech, in particular with its business tax reporting systems.

Financial reporting products allow companies to submit electronic files both individually and in batches at the touch of a button.

In our experience of dealing with many tax authorities around the world for US FATCA and UK Crown Dependencies and Overseas Territories, Guernsey’s IGOR (Information Gateway Online Reporter) system for tax has come out as one of the best. It was ready in plenty of time and has been developed in such a way as to make the whole process as business-friendly as possible.

By contrast, Jersey’s online portal only supports a user logging onto the web portal and manually uploading files one at a time. This is extremely laborious for fiduciaries and other businesses, some of whom could have hundreds of files to submit.  

We are less than two months away from the start of the first CRS period and the Jersey Tax Office has yet to confirm the reporting specifics, placing unnecessary stress on these businesses.

Looking beyond tax reporting, there is tremendous scope for businesses to drive down operating costs by adopting regtech. Initiatives in the client due diligence space offer potentially massive benefits once some of the issues of acceptance and credibility are universally accepted, which they will be.

Room for improvement

Guernsey can still improve its act as well. The annual company validation process could be automated by machine-to-machine data exchange.

For example, an individual has to compare records presented on a web page on the Guernsey Registry website with records held by a corporate service provider. This could be easily automated with a similar exchange of data like tax reporting.

Unfortunately, the benefit will be to the financial services industry and not the government. So from the States’ point of view there is no business case for it, apart from an economic development or one of protecting the jurisdiction’s position against its competitors

It is disappointing that, when faced with the same challenges, the islands fail to work together to drive down the cost both to government and business. It would make a lot of sense to do so.

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