A Wealth of Reasons to Revisit the Cook Islands
In a world reeling from the devastation caused by COVID-19 and faced with elevated geopolitical and social tension, the emergence of the Cook Islands as a safe haven in a sea of unrest and uncertainty is cause for great comfort for those seeking stability and calm in regards to their assets and wealth. The following provides compelling reasons why high net-worth individuals (“HNWIs”) and their advisors should now more than ever consider the Cook Islands for their wealth and succession planning needs.
The Cook Islands has declared itself COVID-19 free. It has not registered a single case of the deadly virus. Whilst this has come at some cost due to the closing of borders and the resulting loss of tourism revenue, the international financial services sector has continued unaffected in servicing its global client base from the remote South Pacific island state. Physical distance has always been the norm for the Cook Islands as it has now become for the rest of the world.
The industry is well practiced in working remotely through online and digital means allowing it to continue to structure, invest and manage the wealth of HNWIs and remain in constant contact with them and their advisors during these difficult times. In an exciting development, the Cook Islands will soon transform its internet connectivity, speed, capacity and resilience when it connects later this year to a new optical fibre submarine cable laid between a number of South Pacific island nations.
“The Cook Islands is recognised as a world leader in the preservation and protection of wealth and a jurisdiction of choice for HNWIs and their advisors seeking the best asset protection available.”
Political Stability and Support
The Cook Islands is a sovereign nation that is and has always been politically stable with no threat of military or social unrest. It has a Westminster styled parliamentary democracy and a strong history of respect for the rule of law. For several decades its Government has shown itself to be fully supportive of its financial services industry. This has been through the timely passing of progressive and innovative legislation and investment in the industry’s growth and development. The Cook Islands’ international reputation has been enhanced through the enactment of robust laws to regulate and supervise financial institutions and combat financial crime to ensure the security and integrity of its financial system.
Meeting International Commitments
In 2018 the Cook Islands received an outstanding report from the Asia Pacific Group on Money Laundering (a regional body of the Financial Action Task Force) rating the Cook Islands AML/CFT regime as one of the best in the world, superior to a number of the larger and more recognised international financial centres. Earlier this year the Cook Islands was moved from the European Union’s “grey list” to its “white list” having passed legislation to address the concerns raised by the EU regarding preferential and harmful tax regimes. Being blacklisted by the EU was never an option for the Cook Islands. The Cook Islands has continually demonstrated its overriding commitment to meet all of its international obligations and has clearly proven itself to be compliant and responsible.
The Financial Services Development Authority (a Government agency established to encourage, market and promote the jurisdiction’s financial services industry) has recently released its 5 year strategic plan for the industry. The overriding goals of the plan are to increase the industry’s financial contribution to the country’s economy and create employment for Cook Islanders. A key to achieving these goals will be the use of financial technology which is providing exciting opportunities for service providers to improve and automate the delivery of financial services as well as create new offerings in the distributed ledger technology space, namely cryptocurrencies, cybersecurity and decentralised data storage.
“Cook Islands trust law is derived from the common law which has been enhanced by the Act allowing trustees to better carry out their duty to preserve and protect trust assets.”
The strategic plan aims to reinforce the Cook Islands identity as a mature financial services centre with a proven record of stability and independence in providing innovative and bespoke solutions for holding, managing and investing wealth. It confirms the commitment of all stakeholders, including Government, regulatory bodies and the service providers, to developing and growing the industry over the medium to long term.
The Cook Islands is recognised as a world leader in the preservation and protection of wealth and a jurisdiction of choice for HNWIs and their advisors seeking the best asset protection available. This status has been forged over the past 30 years by the Cook Islands focusing on developing a wealth protection framework through its legislation. In addition to the innovative and ground breaking amendments in 1989 to its International Trusts Act 1984 (the “Act”), the Cook Islands has also enacted asset protection provisions into its International Companies Act 1981-82, Limited Liability Companies Act 2008 and Foundations Act 2012.
Cook Islands trust law is derived from the common law which has been enhanced by the Act allowing trustees to better carry out their duty to preserve and protect trust assets. The Act overcomes a number of features of trust law that have existed for centuries but are no longer relevant to today’s society. For example, Cook Islands trusts can be dynastic and structured to allow the settlor to retain elements of control over trust assets, including their investment and distribution.
A Cook Islands trust will not recognise the forced heirship rights of any person related to the settlor nor will the judgement of any foreign court be recognised where it is based on law inconsistent with Cook Islands law. A person claiming against the transfer of assets to a trust will need to commence an action in the Cook Islands court and prove to the criminal standard, beyond reasonable doubt, that the transfer was made with the intention of defrauding the claimant and, by making that transfer the settlor rendered him/herself insolvent.
Given the current global turmoil caused by COVID-19 and its economic fallout, market volatility and social and political unrest, HNWIs need now more than ever to focus on the security of their wealth for their own peace of mind and their families’ futures. These are unprecedented times. Globally, uncertainty, instability and turmoil will be the norm for a long time to come. It is essential therefore that HNWIs move immediately to secure their wealth by providing the protection it deserves.
Certainty, stability and calm are the norm for the Cook Islands. Experience, expertise, integrity and acting responsibly have been the cornerstones of its international financial services industry for more than thirty years. When combined with its innovative and progressive asset protection laws, the Cook Islands is providing a wealth of reasons why HNWIs must revisit the South Pacific island state for their wealth and succession planning needs.
For more information: www.cookislandsfinance.com