Guernsey is one of the most reputable offshore banking centers in the world due to its effectively regulated banking sector and wide range of services it provides.
Offshore banking sector in Guernsey is licensed, regulated and supervised by Guernsey Financial Services Commission (GFSC) according to the Banking Supervision Law of 1994. GFSC pay special attention to the detection of unlawful transactions and affairs.
Traditionally international banking institutions coming to Guernsey set up a local office staffed by residents of Guernsey, however recently administered offshore banking unit (ABU) is becoming increasingly popular. Like in Cyprus administered banking unit scheme in Guernsey local bank provides services for foreign banks; therefore foreign banks providing offshore banking services do not need to have set up an office and hire staff. However GFSC supervises administered banking units according to the same standards as local banks. Today around 30% of banks in Guernsey are ABUs.
Guernsey offshore banking sector together with other financial activities is subject to strict money laundering controls according to Proceeds of Crime of Bailiwick of Guernsey Regulations of 2002. Offshore banking institutions are required to report suspicious transactions associated with terrorism financing and money laundering to the Guernsey Financial Intelligence Service.
In June 2005 there were 50 licensed banking institutions in Guernsey. According to Guernsey Financial Services Commission report in 2007 total volume of deposits in Guernsey banks were £112.7 billion with an increase of 33% compared to last year. Historical figures show that deposits grow from other financial institutions in Guernsey, foreign banks, corporate customers and Swiss fiduciary deposits.
Guernsey services are less popular among offshore banking users than the same services of Jersey Island, however they have an advantage: those who establish offshore company in Jersey and at the same time have an offshore banking account in Jersey are subject to income tax on the interest earned on bank deposit. Therefore having a Jersey company and Guernsey bank account is the best way to avoid taxes legally.
