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Dynamic market developments – how do your CDD procedures keep up?


Dynamic market developments – how do your CDD procedures keep up?

Helen Hatton, managing director of Sator Regulatory Consulting and chairman of KYC Worldwide, tracks the move of client bases of Channel Island financial services businesses as they have spread east, west, north and south over the past 10 years, and the challenges that creates 

The trend for the client bases of Jersey and Guernsey businesses to show decreasing proportions of UK resident and domiciled or even UK ‘non-dom’ customers, is only likely to continue as the opportunities for UK-centric private and institutional clients to benefit from offshore structures continue to narrow. 

This is not new news. Indeed Channel Island businesses have responded vigorously over the last 15 years or so to the imperative to develop new markets. Any ‘red eye’ flight parades the dozens of senior executives willing to travel, willing to work hard to bring home the bacon to our islands.

Through varying but persistent marketing initiatives, businesses have worked tirelessly to secure increasing proportions of clients in centres with long-established Channel Island links such as South and East Africa, India, the Gulf states, Hong Kong, and more recently Singapore and Russia. Only 10 years ago it would have been commonplace to refer to the former USSR as ‘the emerging Eastern bloc’ but today, much of the former USSR is reformed into independent satellite states which, together with Russia itself, can be considered well and truly ‘emerged’. These countries remain target jurisdictions, in addition to which, new business pathfinders, ever keen to achieve the ‘first to market’ advantage,  look even further afield.

In January this year, Ian Talley, writing for the Wall Street Journal, observed that while five years ago, the world’s largest developing countries – Brazil, Russia, India, China and South Africa – commonly known as the ‘Brics’, had been taking the world by storm as their surging economic growth fuelled Western hopes and fears of a new world order, today those Brics now risked capsizing it as weak global consumption, plunging commodity prices and a host of other economic and political problems have pushed two of the countries – Russia and Brazil – into recession, and fuelled the biggest investor exodus out of emerging markets in more than two decades, with investors pulling a net $500bn out over 2015.

By Q1 of this year the Brics excitement had transferred to ‘Ticks’ with tech-heavy Taiwan and (South) Korea added to India and China, elbowing aside commodity-centric Brazil and Russia. And the story, and the ever-hungry hunt to service new inward and outward investor opportunities, does not stop there.  Doubtless as Brexit hits, new marketing opportunities will emerge, as new trading partners and corresponding capital flows develop.

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