The Pandora Papers leak of almost 12 million confidential documents regarding the wealth and dealings of world leaders, politicians and ultra-high net worth individuals has put the spotlight on the international financial industry in a way not seen since the Panama Papers ‘scandal’ in 2016.
Pandora’s recent revelation has made sensational headlines across the world as figures including former UK Prime Minister Tony Blair, the King of Jordan, Azerbaijan’s ruling Aliyev family, Czech Prime Minister Andrej Babis, and Pakistan’s political elite, amongst many others, have had details of some of their hitherto private financial affairs exposed.
More than 600 journalists,150 news outlets and two years of reporting have shown what appears to be an entirely murky, seedy, if not downright illegal world.
Certainly, when it comes to those who are in or have previously held political or royal office, and/or those who are actively seeking to break the law by hiding or ‘washing’ money, busting sanctions or evading tax, they must be completely transparent with their financial dealings. Their affairs need to be consistently scrutinised.
However, the vast majority of the millions of people who use companies providing offshore financial products and services are not representative of those named and shamed in Pandora Papers.
Indeed, they are hard-working, law-abiding individuals using fully legal and compliant solutions in order to seek out better returns, more options and greater flexibility.
In my four decades of dealing with cross-border investors, I can confirm that the number one reason people keep money in an offshore account – which is simply an account in a jurisdiction different to the one in which the individual resides – is convenience.
These accounts offer centralized, safe, flexible and global access to their funds regardless of where the person lives and regardless to where they may move to in the future, at the same time as offering an array of saving and investment options in a multitude of different currencies. These are important issues for those who live outside their country of origin, and who typically have transient lifestyles.
In addition, many offshore financial hubs offer tax neutrality, resulting in protection for firms that do business in multiple jurisdictions from double taxation. Many international investors use these hubs as they can offer a flexibility of corporate structures and issuance of a mix of share classes, easy incorporations and a robust legal system.
Also, these international financial centres can provide bona fide financial refuge for those in countries where there is economic, social and/or political turbulence, such as extremely volatile currency and expropriation of assets.
I have said on many occasions, financial privacy can be needed to keep individuals and families safe. That said, there is a difference between privacy and secrecy. Exchanging information between government authorities for relevant tax matters is legitimate. Sharing financial information with anyone else is not. Privacy can be crucial. Secrecy hardly ever.
Offshore financial services provide a much needed, fully legal and in-demand service for individuals, companies, organisations, agencies and charities all over the world.
The Pandora Papers illustrate that more should still be done to improve co-operation between some jurisdictions, however the damning and murky light are not representative of today’s wider international financial services industry.
Although, they should also act as an opportunity to further enhance the effectiveness and credibility of these international financial centres and the sector. This is especially important as the industry is set to grow exponentially in the coming years as individuals and companies seek to become ever more globalized.
London-born Nigel Green is founder and CEO of deVere Group. Following in his father’s footstep, he entered the financial services industry as a young adult. After working in the sector for 15 years in London, he subsequently spent several years operating within the international space, before launching deVere in 2002 with a single office in Hong Kong. Today, deVere is one of the world’s largest independent financial advisory organizations, doing business in 100 countries and with more than $12bn under advisement. It specializes global financial solutions to international, local mass affluent, and high-net-worth clients. In early 2017, it was announced that deVere would launch its own private bank. In addition, deVere also confirmed it has received its own investment banking license.
For more information on Nigel Green, go to: https://www.devere-group.com/
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