Small Island states that have adapted and prospered in the face of adversity
The concerted international drive towards greater tax transparency and the combating of tax evasion continues unabated. As part of a changing international regulatory landscape, various instruments and devices have been introduced to enhance tax cooperation. These are especially aimed at smaller jurisdictions that have made international financial services a mainstay of their economy, as part of a diversification strategy away from agriculture and to complement tourism. Perhaps the central tenet of this global tax reform process is the automatic exchange of information.
While some jurisdictions still have much to do to get their houses in order, others have embraced and shown commitment to these prevailing winds of the day as part of a drive to secure international regulatory, political and moral acceptance for their legitimate and force for good international financial services activities. Select small island IFCs have proactively gone over and above the call of duty, such that they ironically outperform across numerous indices many of those very countries seeking to make examples of them. The Cook Islands in the South Pacific is one such place. Belying its small size and remoteness and in stark contrast to the malign narrative ranged against it and others like it by those powerful political interests looking for a tax evasion scapegoat, its efforts on the compliance front are noteworthy.
For example, it has recently signed the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information, which speaks of a commitment to incorporate the OECD's Common Reporting Standard into its legislation and commence the Automatic Exchange of Information by 2018. In addition, the jurisdiction has signed the Multilateral Convention on Mutual Administrative Assistance on Tax Matters, which adds to the numerous Tax Information Exchange Agreements it has entered into over the years. The Cook Islands also works in close concert with the likes of the FATF and the OECD, and is looking forward to its next Mutual Evaluation in 2017. In addition, its Financial Intelligence Unit does sterling work around collecting, analysing and disseminating financial information and intelligence on suspected money laundering, the financing of terrorist activities and other offences to the authorities in the Cook Islands and internationally.
"These credentials will come as no surprise to those in the know."
The jurisdiction’s March 2015 phase 2 peer review, for example, resulted in the Cook Islands being adjudged to possess "largely compliant" status. Where it had work to do it proactively addressed any highlighted issues. Thus, the Cook Islands has reached a state where it welcomes cooperation with the relevant international authorities since it has nothing to hide, while it remains a cut above the rest when it comes to its provision of international financial servicesThose with an existing interest in the Cook Islands financial services sector, as well as prospective parties can be reassured that the jurisdiction constitutes a fully compliant, yet nonetheless highly rewarding proposition, with a proven pedigree stretching back decades.
With huge increases in the number of UHNWIs worldwide, particularly in the Asia-Pacific region, and a corresponding impact on family wealth transfer levels the Cook Islands stands well placed to assist in this transfer of wealth, through its provision of wealth structuring, management and administration services. In short, the jurisdiction constitutes a model 21st Century hub of financial services expertise, marked by responsibility, accountability and transparency.
Antigua has become the physical and investment gateway to the Eastern Caribbean and beyond, with excellent infrastructure, progressive leadership, thoughtful development and strong financial services provision. The FATF's recent guidance on correspondent banking services is a vote of confidence for banks in smaller jurisdictions, such as Antigua, under threat from de-risking strategies which unfairly affect and malign those jurisdictions’ service providers. In addition, there is discussion of how de-risking speaks to a misunderstanding or incorrect application of AML/CFT measures.
Antigua and Barbuda Prime Minister, Gaston Browne has brought some much-needed gravitas to the debate, commenting on the record that de-risking acts to exclude the region from the global finance and trading system, with grave consequences for maintenance of financial stability, economic growth, remittance flows and poverty alleviation.
"It is not the first time that PM Browne has stood up for the underdog, as embodied in the small island state he leads. Back in 2014 he stood up at the UN to argue that the US must honour a WTO financial compensation ruling in favour of its small Caribbean neighbour because its online gambling sector had been unfairly denied access to the valuable US market."
Some 14 years since the dispute originally began the superpower that is the US has still not paid up, despite it losing numerous appeals in regard to the matter. In the absence of compensation or a resolution to the dispute, Antigua and Barbuda has now been authorised by the WTO to seek legal redress through the suspension of copyright on the sale of US intellectual property. There are plenty of other markets, however, which are keen to do business with Antigua. Not least of these is China, which has invested heavily into the country, particularly in an infrastructural capacity. One person who knows all about this, and who has helped to cement the strong relationship between the two countries is Antigua and Barbuda’s Non-Resident Ambassador to China, Brian Stuart-Young.
Mr. Stuart-Young brings to the role an impeccable pedigree, having been at the forefront of the thriving Caribbean financial services sector in his role as Chairman and CEO of Global Bank of Commerce (GBC). The international bank he spearheads has for 35 years been offering pioneering personal, commercial and private banking, wealth management and other services, in the process earning for GBC an enviable worldwide reputation, despite constantly moving goalposts courtesy of politically motivated international compliance forces. It is no doubt his ability to help put Antigua on the map and to calmly regroup, adapt and prosper in the face of inequitable global regulation that the Browne administration recognised as constituting the perfect qualities for his diplomatic role.