The FSC claimed that the extension to the law
was an international benchmark and will influence many other
tax regimes worldwide. The FSC claims that Jersey will be
one of the first jurisdictions in the world to bring trust
companies and company service providers into regulation, with
the result that international standard setting bodies will
encourage other jurisdictions to follow suit.
In April 2008, the Financial Services (Trust
Company Business (Exemptions)) (Amendment No. 3) (Jersey)
Order 2008 and The Financial Services (Trust Company Business
(Exemptions No. 2)) (Amendment) (Jersey) Order 2008 came into
The first piece of legislation excludes holders
of fund certificates issued under the Collective Investment
Funds (Jersey) Law 1988 from the obligation to register under
the Financial Services (Jersey) Law 1998 in order to conduct
trust company business.
The latter amendment extended the Financial
Services (Trust Company Business (Exemptions)) (Jersey) Order
2000 to apply to the holders of fund certificates issued under
the Collective Investment Funds (Jersey) Law 1988, with regard
to unclassified funds.
In December, 2006,
it was announced that Jersey’s finance industry was consulting
with the regulator and authorities on further enhancements
to its Trusts Law, which it hoped would be introduced towards
the end of 2007.
Finance and legal professionals who attended
a seminar on the trust sector in London, organised by Jersey
Finance Limited, were given first details of the proposed
changes by Advocate Steven Meiklejohn, a member of the Industry
Working Party in Jersey, who was one of the speakers at the
The enhancements under consideration included:
The introduction of a statutory lien in favour of trustees
in respect of liabilities the trustees would have been
entitled to be reimbursed for, had they still been trustees.
This would help clarify the position of former trustees
when claims are made against them after their retirement.
The insertion of a provision into the Law stating that
in relation to a non charitable purpose trust, the mere
holding of the shares of a company represented a valid
purpose. This would be beneficial in the context of
a purpose trust holding the shares of an underlying
private trust company.
The possible reformation and re-statement of Article
21 of the Trusts (Jersey) Law 1984 insofar as it relates
to a trustee’s duty in respect of investments, so as
to more closely follow what is known as the ‘prudent
investor’ rule in the US and in a number of Caribbean
The insertion of a modern flexible definition under
Jersey Law of a ‘charity’ or ‘charitable purpose’.
It is also hoped that consideration can be given
to possible amendments to the principle by which beneficiaries
are entitled to know they are beneficiaries of a particular
trust, such that in respect of minor beneficiaries it would
be possible to prevent them from being told they were beneficiaries
should a settlor wish it. Such a change would reflect the
law in a number of US states.
Commenting on the move to address the issue
of liabilities of former trustees, Advocate Meiklejohn noted:
“Without possession of the Trust Fund, a former
trustee has no clear right to reimbursement in respect of
liabilities for which it could be indemnified if it had remained
trustee. The provision of a lien in the trustee’s favour would
entitle the trustee to be indemnified in respect of such proper
liabilities from the Trust Fund in the new trustee’s, or even
a beneficiary’s, hands."
“We are in the early stages of consultation
but the intention is to present a Trusts (Amendment No.5)
(Jersey) Law to the States of Jersey in 2007 for approval
and then obtain Privy Council consent towards the end of the
In October, 2007, the Jersey
Financial Services Commission said it was proposing to amend
and possibly replace secondary legislation relating to the
Trust Company Business and Investment Business laws, in preparation
for impending scrutiny of the island's regulatory framework
by the International Monetary Fund.
A consultation paper published by the Commission
on October 19 followed up a position paper issued in June
of that year, which set out the policy proposals that formed
the basis for the majority of the legislative changes referred
to in the consultation paper.
The consultation paper covers proposed legislative
changes in the following areas:
Repealing the Trust Company Business and Investment
Business secondary legislation relating to accounts,
audits and reports and replacing it with a single piece
of legislation designed to cover both business sectors.
The majority of the amendments proposed in the replacement
accounts, audits and reports legislation are in connection
with the Investment Business sector; although the proposals
do clarify a number of items for the Trust Company Business
Repealing the secondary legislation that currently
places requirements on Trust Company Businesses with
respect to safekeeping customer money. The replacement
legislation will incorporate the existing requirements
relating to customer money, and proposes requirements
relating to customer assets taking the form of: investments
(as defined by Schedule 1 to the Financial Services
(Jersey) Law 1998); and - immovable property.
The FSC stated that the amendments to the secondary
legislation were being proposed in preparation for the assessment
by the IMF of the Island’s regulatory framework (which took
place in the second half of 2008).
The subsequent report, published by the IMF
in September 2009, heaped praise on Jersey for its regulation
and supervision of its financial sector and for its money
laundering and terrorist financing defences. The Financial
System Stability Assessment also noted that the trust and
company services business sector enjoy a "comprehensive"
regulatory and supervisory framework.
Jersey is also on the OECD's 'white list' of
jurisdictions which have 'substantially implemented' the internationally-agreed
tax transparency standard.