By: Téj P. Thind

The old adage, "see no evil, hear no evil and speak no evil," served the Swiss and other offshore bankers well for decades; it attracted flight capital and lots of crooks, criminals, dictators and terrorists to their counters. Times have changed, now the same bankers implement "know your client" and "source of funds" rules scrupulously. New laws and regulations swirling around fifty or more offshore financial centers, offer both an opportunity and obligation to the ongoing revamping effort. Most touted features of tax havens still exist but the methodology to take their advantage has changed. Billions of dollars still flow through offshore channels. Paris based OECD was instrumental in launching a no-nonsense campaign to persuade "predatory' or "rogue" regimes to enact new laws and keep their respective jurisdictions squeaky clean. More than 120 countries signed UN's Anti-Money Laundering treaty. Several layers of compliance requirements facilitate enhanced credibility and protection against fraud. Under the new regimen, offshore entities like privately owned Class-B, or restricted license banks and trust companies, mutual funds, captive insurance companies or corporations, can be highly profitable. Several common-law jurisdictions have enacted or amended trust laws for the settlement of foreign asset protection or special purpose trusts. The concept of electing transparency, as well as, domicile of grantors (settlors), beneficiaries, trustees, protectors, suitable governing laws, protection against predators, process of expatriation and repatriation of liquid assets and disclosures reflect key factors designed to separate genuine trusts from sham trusts. Application of special purpose foreign trusts for owning offshore corporations and investments is fast gaining currency. Protection afforded under the new or revamped laws may not be enough; the onus is on investors and entreprene urs, especially first time visitors to seek suitable professional advice as their due diligence. It is relatively easy to obtain information from offshore banks, insurance companies and mutual funds concerning statutory requirements, sponsors, banks or investments. Hidden behind reputable companies wait in ambush unscrupulous operators peddling shady schemes offering double-digit return investment certificates. If sponsors cannot supply essential information about themselves or their products and services, or if they reek of Ponzi schemes, its better to take a walk. Globalization is proof of inevitable change. Virtual online e-commerce and investments have simplified buying, selling and transnational transactions. Offshore centers are ideally suited to provide on-location or remote access Internet networking possibilities from preferred tax jurisdictions, with onshore connections. Telemarketing, sales and promotions, merchant charge accounts, joint ventures, international headquarters, private banks and insurance companies, structured offshore may prove practical and cost effective. Small island countries like Taiwan and Singapore rank high among developed nations; almost any offshore haven can be used for international trade and investment in compliance with "internationally accepted standards". In the final analysis, tax differentials can impact investment decisions. Offshore centers may not tolerate external interference with their sovereignty but may be flexible about fiscal responsibility. Some amendments to domestic law pertaining to controlled foreign corporations may be on the agenda. The future of revamped offshore havens never looked more promising.