The Queen of Compliance

Helen Hatton is one of the architects of Jersey’s financial services regulatory framework. She spent ten years as Deputy Director General of the Jersey Financial Services Commission, helping set up the regime which has seen the island flourish as a modern, respected international finance centre. Since leaving the JFSC, she has carried out international assessment work for the FATF and IMF, and is getting ready to celebrate ten years as the Managing Director of Sator, now BDO Sator, a regulatory consulting practice which she founded. Gwyn Garfield-Bennett went to meet her to get her thoughts on the current regulatory environment.

Where do you think Jersey, Guernsey and the Isle of Man are positioned today with the increasing pressures from the likes of Money Val , FATF reviews and the economic substance requirements?


‘We are in a very fortunate position in that we are three jurisdictions that have the skills pool and the infrastructure to be able to comply with that. We will be able to deliver services to clients such that the client structures will be able to evidence substance and that is not the case in the majority of other offshore jurisdictions which fundamentally are just booking centres.


‘I remember when we introduced mandatory competency requirements in investment business and in the trust company regime, there were great cries, “this will be the end of the industry, the cost of having qualified staff are un- sustainable”. Well you don't need to think about that too long to realise how inappropriate that response was at the time if you don't have competent qualified staff, how on earth are you fit to manage other people's money?


‘I do a lot of work in the Caribbean, as you appreciate. It's quite commonplace in a number of the islands when I go to do an onsite regulatory examination of a license corporate service provider, that it's a one room and a kitchenette office. There is perhaps one or two people working in there and they will have 5,000 companies registered there.’


Do you think therefore that the Caribbean centres’ days are numbered?


‘Absolutely and it's high time. I don't think jurisdictions with thin skills pools will survive and that's not restricted to the Caribbean,  that would include some of the Pacific Islands, places like Nauru, Cook Islands and Marshall Islands, they have a challenge on the way.


‘Mauritius is a fairly substantial centre with quite a good and deep skills pool, but the Seychelles starts to get a bit thin. There is a watershed coming up and a number of jurisdictions will not survive.’


Is there a danger we’ll see a brain drain out of Jersey and Guernsey?


‘Maybe, but I think almost the other way. I think it's more likely that there'll be a flight to quality and more operations of substance will come here. The challenge from a governmental point of view is how big do we want this industry to grow?  How big do we want the population to be?’


Do you think the substance requirements will be particularly challenging?


‘I think firms, particularly the trust company businesses have got to very carefully consider and review how they can advise their clients to evidence substance. We cannot risk tranches of high net worth clients leaving because the services we offer them don't meet the OECD standards. So we need to reinvent the nature of the services that we offer. And that thinking has already begun, a number of our clients are well down that track. But the whole industry needs to be thinking about that. And I think this is something where industry members should not consider themselves in competition with each other.


‘If trust company A comes up with a good solution and successfully advises their clients, but they keep it a secret and trust company B is all over the newspapers for failing, Jersey's still done badly I don't think the individual industry members should behave competitively in this space.’

You can read the full article in our February issue here.