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Welcome to the Guernsey Finance podcast page.
Our podcasts bring you all the latest news and insight from Guernsey, the global finance specialist, as well as audio from some of our online events.
brandon 0:04
Hello and welcome to the We Are Guernsey podcast where we bring you the latest developments from Guernsey's financial services industry. If you haven't listened to some of our previous podcasts already you can do so on your preferred podcast platform or via the on demand page at weareguernsey.com. My name is Brandon Ashplant and I am strategy and technical executive here at We Are Guernsey, the brand under which Guernsey Finance as an agency promotes the island of Guernsey's specialist financial services in its respective chosen markets. For those not familiar with Guernsey, the island is a leading global finance centre of substance stability and security committed to the cause of sustainable finance as a member of several United Nations Environment initiatives and having been proactive in developing world leading sustainable finance products and services. To find out more about Guernsey's success in sustainable finance, tune into our sister podcast, the Guernsey Green Finance Podcast. Today we're focusing on the Middle East exploring why families and investors in the region are looking to Guernsey as the jurisdiction of choice for managing their wealth and more notably developing strategies enabling them to conduct philanthropy. We will also be looking at some trends that service providers in Guernsey have seen in the region. To discuss this. I am delighted to be joined today by Rajah Abusrewil from Walkers. Okay. Rajah firstly, welcome and to introduce you to our listeners. Although you have joined us on the podcast previously. Just tell us a bit about your career to date and how you ended up working in Guernsey as a as a private capital and trusts partner at a local law firm.
Rajah 1:50
Hi, Brandon. Yes, thanks for having me. Always very happy to have a chat with Guernsey Finance. So a little bit about me. I suppose from the very beginning, my career has always been focused on private clients and trust. I started in London where I trained, qualified and practiced as a solicitor. Then after about five years in London, I moved to Bermuda and was called to the Bermuda bar and practiced as a barrister, an attorney and was based there for roughly six years, and then worked in the Cayman Islands as an in house counsel for a multi jurisdictional Trust Company. So that led me finally to go to Guernsey just over six years ago, and I've been group partner at Walkers Guernsey office, which is one of our 10 global offices in our private capital and trust group for coming out to three years specialising in structuring and asset protection for international families and family offices.
brandon 2:47
So getting straight into it. Guernsey's private wealth service providers kind of across all verticals have reported a growth and interest from Middle Eastern based families and investors who are looking to have their wealth domiciled and managed in the island. Firstly, why do you think Middle East and high net worths are looking to Guernsey?
Rajah 3:07
there's quite a few reasons that Middle East and clients look to Guernsey for that asset protection and structural solutions. And Guernsey has among financial services history has been consciously developed to ensure we've got skilled practitioners from lawyers fiduciaries, accountants, investment managers and the like who can offer clients a full range of high quality service and guarantees financial services industry is a well is well regulated and meets high international standards and often leads the way being a crown UK crown dependency with close links with the UK and London geographically we share the same timezone and also when there are onshore contacts and networks, but we we are self governing. Guernsey's independent legal tradition dates back hundreds of years and has a professionally operated court system, resulting in financial services and street that has access to and respect for more importantly, the rule of law. Guernsey's legal firewall provisions also provide clients with the additional comfort that their wishes will not be overwritten by non-Guernsey domestic laws following their demise or just generally. And this experience practitioners to assist them operate in a politically secure and stable environment that is complemented by robust and independent legal framework. And finally, but very importantly, security and discretion are of the utmost importance to ethics compliance and their affairs. Guernsey's established confidentiality laws and careful adoption of data protection legislation, meaning clients also have the concept that their affairs will remain private.
brandon 4:54
It is interesting how you note some of our key kind of traditional strengths as an incentive to use Guernsey one of which being the island's breadth and depth of experience and expertise, having offered services to private clients for more than 50 years now, the scope of Guernsey's financial services ecosystem is also often credited in this area for enabling philanthropic activity to flourish. Something we've spoken about on the podcast previously. Now, what is guernseys philanthropic offering in a nutshell, and why is guernseys ecosystem reasons behind this well developed philanthropic offering?
Rajah 5:32
I think all the reasons why clients are attracted to Guernsey are their personal asset protection and their structuring are also the reasons why philanthropy in Guernsey is equally as attractive. And there are many different vehicles available in Guernsey for philanthropy. So some of those are charitable trusts, where it can either have charitable beneficiaries, or be used for charitable purposes. Purpose trusts, which are trusts without time beneficiaries, but are designed to fulfill a purpose he's in the name. The purpose can have a charitable and non charitable purposes, which allow for a flexibility that is greater than a purely charitable trust. Because it allows for a wider variety of impact, because some causes may not be recognised as charitable by law, but they are important or worthy. Then we have charitable associations, where a membership elect members to run an association and uphold the Constitution and its plans and companies limited by guarantee. So this is a company which is registered with the Guernsey registrar and is subject to all the company regulations, but does generally limit the directors and members from personal liability in relation to company debts, which can be important. And then there's my favorite Gates Foundation's. Whilst there is nothing new or flashy about the products and the structures and services we offer. The fact that we are tax neutral jurisdiction, which can collect and deploy benefits to charities and charitable purposes across the globe is very attractive. There is an absence of negatives. in Guernsey as unlike some jurisdictions, we do not have capital or currency controls that can restrict the ability for some institutions to provide funding or benefit outside of their own jurisdiction.
brandon 7:35
That's interesting how you know, the Guernsey foundation is one of your your favourites. Because it is is like you say one of the more proven popular routes to philanthropy not only amongst the Middle East and private client market but also in other markets as well. I mean, some estimates on our side and some of the research that Guernsey finance has done, claims that roughly half of all uses of the Foundation have been to conduct philanthropic or charitable economic activities. What is your understanding of the foundation? And why is the Guernsey foundation so popular amongst Middle East and private clients more specifically?
Rajah 8:14
Again, foundations are wonderful. And I could talk about for hours, but I promise I won't, there is a deadline. In brief, a guarantee foundation is an entity that has a separate legal personality. So it's a legal entity in its own right can enter into contracts directly in its own name, similar to how a company can but it is also an orphan vehicle. That is to say it has made shareholders or owners and they are extremely flexible, and they can be used for both charitable and non charitable purposes. It's not just one or the other there can be a mix, and can be drafted very specifically for whatever purposes or benefits reason once and although a foundation is registered in Guernsey, there is limited information available to the public. So privacy can be retained if required. The counsel of the foundation is the body that runs it, and it makes all the substantive decisions similar to directors of a company. But unlike directors of a company, as it's an orphan vehicle, they owe a duty to the foundation itself, not the shareholders. So everything that they do has to be in line with the purpose or what the foundation was set up. I think one of the reasons that the Middle East and clients like Guernsey foundation is that foundations are a specific legal entity, rather than being a traditional trust relationship that Western clients may be more more used to. It's more tangible concepts to many civil law jurisdictions. So Guernsey foundations also don't require, again the license fiduciary to on the council at the foundation. There are other regulatory requirements, but this can be very attractive depending on the purpose itself. Additionally, over the last few years in the region, both the Abu Dhabi global market and the Dubai International Financial chill center introduced foundation laws to establish foundations, which can be used to own local property and assets across the GCC region. As a result, the general education the understanding and acceptance of the concept of foundation has been permeating more quickly through this region. And there may be in other locations and is therefore becoming a more swiftly understood and accepted for use to structure general international assets for succession planning and philanthropy.
brandon 10:51
Just sticking on this conversation with regards to philanthropy and kind of Guernsey's offering here because this is an area in which the island has developed something of a specialism in recent years. Could you tell us about the Middle East and private clients preferences when it comes to philanthropy? Specifically? What causes are popular with them? What kinds of causes or purposes in a sense do they look to contribute towards Do you see any common themes or issues coming coming to the fore in that market?
Rajah 11:24
Yeah, I think that floats up in the form of charitable giving is something that's deep rooted in the cultures of the Middle East. It's it's sort of part of, the fabric. But traditionally publicized in such philanthropy is less common. individual families in the region have been very successful in their wealth creation, and many are the beginning stages, formalising their own asset protection and succession planning journey. Focusing on the next generation, and future generations after that can act as a catalyst to maybe consider formalizing their own philanthropic goals. As a result, I suppose that there is considerable number of programs set up in the region, as well as significant funding that's been provided to focus on development aid, corporate social responsibility, and then some of the areas that that do benefit. However, formal western style, structuring and collaboration for philanthropic philanthropic purposes, is still in its early stages, but the activity is growing data in relation to this is limited as it's sort of very personal, understandably, and as to what causes are benefited are specific to each family. But education, science, technology remained popular, and art and the arts.
brandon 12:53
Okay, it's interesting. And what other products or vehicles are popular amongst Middle Eastern families and investors, what do they look to to channel their wealth into these these kind of causes?
Rajah 13:04
Again, Guernsey is very well placed as it's got a variety of structures that men these families, like and continue to you. And we have the traditional trusts that we mentioned before. Private trust companies and foundations also remain popular for asset protection and succession planning. The Guernsey private investment fund is gaining popularity when direct investment is important, rather than in a fiduciary capacity, and the protected cell company is one that's been used by some families in the region in conjunction with a Shariah scholar and bespoke legal agreements. And that's a name that can enable shariah compliant investing in non Shariah assets. It's something that previously may not have been popular and Guernsey due to the higher regulatory and compliance standards, that translated into costs being higher than in other jurisdictions. But gradually, as we all know, the other offshore jurisdictions have had to join Guernsey in its gold standard in this regard, they come up to our to our wonderful level, and the costs was maybe not identical, it has certainly become comparable. So that's been quite beneficial.
brandon 14:31
Now when discussing these trends in greater detail, something we often hear, certainly in in more the Western world for certain is this idea that the younger generation is less interested in kind of traditional forms of checkbook philanthropy, if you like. And instead of looking to make long term investments that leverage patient capital to do good, while also being financially successful, so they're almost looking for an economic as well as a social return on their socially responsible investment if you like, do you think the same thing can be said about the younger generation coming through? That's based in the Middle East?
Rajah 15:09
Yes. I think generally, the next generation sort of all over are looking to be involved at all levels of this philanthropic journey, not only just the signing the funding stage, possibly in previous eras, being able to sign a cheque or or make a donation was almost akin to offsetting the negative connotations of how significant wealth may have been created. But, however, with with time, with growth, access to huge levels of information, these days, the next generation are wanting to look at how funding is created, how to sustain that funding, and how to make a difference not only now, but across the future generations, it's to ensure checks and balances are maintained, as someone's involved can be considerably more than a trading business. So professional management, and insight is essential. This long view is not new, many charities were set up with the hope and expectation of continuing for multiple generations. But a more modern social conscious, has developed to ensure that the philanthropic ideals run throughout all levels. And that is getting popular popularity, not only in the Middle East, but generally worldwide.
brandon 16:37
So yeah, you seem pretty certain that there's a kind of a common global trend that's not kind of akin to a specific region or part of the globe specifically. In that sense, then do you think this could change in the next five to 10 years?
Rajah 16:52
Yes, I think that trends will focus on certain issues. And certain causes will inevitably change. And they should as time changes, because different different issues come to the forefront. But I think that the social conscious aspect, and that trend of wanting to be concerned and involved at all levels of a philanthropic venture, from wealth creation, management, and its disposal will continue for generations to come. Okay.
brandon 17:23
Well, thank you very much for today. Just a final question. As you know, sort of being based on the island, Guernsey has become a leading a leader in green and sustainable finance in recent years. How important is the climate crisis amongst Middle Eastern families and investors as an issue?
Rajah 17:41
Yeah, I think that the climate, sustainability and green finance are all extremely important issues to many families, especially in the Middle East, given how far their countries have developed technologically, in the last few decades, and how they were prioritising, sustaining their environment. And the region has considerable focus on future generations succession planning and the problems that this generation know the next generation may encounter. But also investing in the ability to understand and solve problems that we don't even exist yet. The unknown and knows as that that definitely is an area that needs to be thought of.
brandon 18:27
Okay, well, thank you very much for your for your time today. I particularly enjoyed hearing your thoughts about where you see the causes or issues being taken a further or further advanced and progressed by Middle Eastern families and also where you see alignment across the globe, between for example, the Western market and the Middle Eastern Market as the future generations come to the fore. And thank you, also to you for listening. If you've enjoyed this discussion, we have a backlog of interviews and panel discussions on the we are Guernsey podcast channel, you can check them out by searching for we are Guernsey on your preferred podcast platform. To find out more about Guernsey and its specialist financial services sector. Head over to our website weareguernsey.com. we also have links to his jaw and Walkers social media in our show notes. So check these out to hear more from them. Until then it's goodbye from Guernsey.
Transcribed by https://otter.ai