Pandora Papers don’t represent offshore financial industry
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The Pandora Papers are not representative of the wider offshore financial industry which typically helps hardworking people looking for better returns and more flexibility.
This follows the leak of almost 12 million confidential documents regarding the wealth and dealings of world leaders, politicians and ultra-high-net-worth individuals over the weekend.
These include 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.
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, there must be complete transparency with financial dealings.
However, the vast majority of the millions of people who use companies providing offshore financial products and services are not representative of those high-profile names that have been disclosed in the Pandora Papers.
Indeed, the overwhelming number 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 working 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 centralised, 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 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 is.
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, they 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 globalised.
Nigel Green is the chief executive of the deVere Group