Jersey and Guernsey must continue to nurture their international connections, whilst also maintaining their strong links to London, according to Malin Nilsson, Channel Islands Managing Director at Duff & Phelps.
This follows the firm’s latest Global Regulatory Outlook (GRO) report which found that London is no longer perceived as the world’s preeminent financial centre by financial sector professionals.
New York has taken back the title according to the seventh annual GRO report, which surveys senior professionals in financial institutions around the world. It found that only 36% currently see London as the foremost global financial hub, a 17% decrease from last year. New York is now seen as the world’s financial centre by 52% of respondents, a 10% increase from 2018, and Hong Kong was also chosen as third most important financial centre by more respondents than last year.
Malin Nilsson, Managing Director, Compliance and Regulatory Consulting at Duff & Phelps, said:
“Brexit has cast a shadow of uncertainty over the UK’s world-class financial sector and its ability to dominate other major financial hubs in the coming years. Looking ahead, we see the combined effects of Brexit and the emergence of Asia with respondents expecting Hong Kong to play a bigger role as a leading global financial centre. Financial centres such as Luxembourg and Dublin were also named as potential financial capitals of the future by a smaller number of respondents. Recently, we have seen that Channel Islands firms have been and will be making the most of the opportunities this presents, by diversifying both in the U.S. and Far East, as well as in the EU.”
The survey also looked at how firms are coping with regulatory compliance challenges. Some of the most pressing issues facing the global financial community this year continue to involve anti-money laundering (AML). The report highlights that the change respondents deem will have the greatest effect on AML efforts is better coordination and information sharing between regulators and industry, rather than front-line activities such as funding at the firm level on AML controls. Other significant findings of the survey include:
While most financial firms rated themselves as being effective at AML, 30% global firms rate at least one of their AML components as being either ‘not at all effective’ or only ‘somewhat effective’; and
Nearly a quarter of global firms gave themselves low marks in their internal audit of AML risk, an essential element of AML risk management.
“I see it is certainly the case in the Channel Islands that while firms have become more diligent and sophisticated in their compliance and risk management systems, financial crime continues in a volatile global business environment and there is a growing sense of regulatory fatigue that cannot be overlooked. Excellence in compliance begins with a mindset that extends over every aspect of the business, maintaining that momentum of best practice at all levels. Without robust compliance the sector will be vulnerable to risks that are only just emerging.”