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The Vanuatu Finance Centre Future of OFC Consultation, RBV 6 June 2008 By George Andrews, Commissioner, Vanuatu Financial Services Commission. Overview. The Finance Centre Today Our Strengths Our Weaknesses Our Competitors A Way Forward Examples of Cooperation VFSC/FCA/VG.
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Source of (total) data: Reserve Bank of Vanuatu Quarterly review June 2007, Table 28. Estimates of offshore activity by VFSC
Source: Reserve Bank Quarterly review June 2007 Table 19
Latest IMF report
Latest IMF report
“This has led to ... an even greater interest in moving beyond what has largely been the “commodity” production of registering companies, toward the provision of more sophisticated (and higher value added) financial services. However, this effort has been hampered by a number of causes, the most important being a lack of sophisticated international banking services and of qualified personnel.” (IMF Report Vol 1 Paragraph 10)
“Vanuatu has historically maintained strict banking secrecy provisions that have the effect of preventing law enforcement agencies from identifying the beneficial owners of offshore entities registered in the sector. Due to allegations of money laundering, and in response to pressure from the Financial Action Task Force (FATF), a few United States-based banks announced in December 1999 that they would no longer process U.S. dollar transactions to or from Vanuatu”
“The secrecy provisions [in the International Companies Act], along with the ease and low cost of incorporation, made IBCs ideal mechanisms for money laundering and other financial crimes.”
Extracts from Vanuatu Report US State Department International Narcotics Control Strategy report 2008
ICA Section 125
(1) Any person who, except when required by a court of competent jurisdiction, with respect to any company otherwise than for the purposes of the administration of this Act or for the carrying on of the business of the company in Vanuatu or elsewhere, divulges, attempts, offers or threatens to divulge or induces or attempts to induce other persons to divulge any information concerning or respecting:
(a) the shareholding in, or beneficial ownership of any share or shares in a company;
(b) the management of such company; or
(c) any of the business, financial or other affairs or transactions of the company;
shall be guilty of an offence
CAP 191 Section 381
381 (1) – (6) Exempted Companies - Preservation of Secrecy
“The Financial Centre Association encompasses the extensive business and financial facilities available in Vanuatu resulting from its "pure" tax free status; pure, because for both residents and non-residents there are no personal or corporate income taxes, no estate or gift duties, no capital gains taxes, no exchange controls, and extensive secrecy provisions.
Extract from local web site
“A Trust is a way of controlling assets without legally owning them.”
“A trust is a well established concept in common law originating in England during the Middle Ages and is a way of indirectly controlling assets without legally owning them
Extracts from two local web sites
“Name of Settlor (leave blank if you would like to follow our normal practice and have a nominee settlor whose name will be on the registered trust deed).”
(Extract from trust account opening form on a local web site)
“Advantages of a Trust
Absolute secrecy. The identity of the settlor is confidential. The ownership is vested upon the settlor* who acts as the legal owner (the trust is administered by the settlor*under the instructions of the settlor).”
*The second and third references to settlor are in fact errors and should refer to the trustee.
Extract from a local web site
Agreed by the customer:
Required by law;
In the public interest
In the bank’s interest.
The following countries have now signed tax information agreements with the USA:
The Cayman Islands
The Isle of Man
British Virgin Islands
Senate Bill Proposes Tougher Company Disclosure Laws
Tax-News.com, New York May 27 2008
“Senators Carl Levin (D-Mich.), Norm Coleman (R-Minn.), and Barack Obama (D-Ill.), Chairman, Ranking Minority Member, and Member of the US Senate Permanent Subcommittee on Investigations respectively, have introduced new legislation which aims to help law enforcement stop the misuse of US corporations.
The Incorporation Transparency and Law Enforcement Assistance Act would require the States to obtain beneficial ownership information for the corporations formed under their laws, and to provide access to this information to law enforcement upon receipt of a subpoena or summons.”
21 February 2008
The Financial Transactions Reporting Act 2000
5. (1) If: ...
(b) the financial institution has reasonable grounds to suspect that the transaction or proposed transaction is or may be relevant to:
(i) the investigation or prosecution of any person for a money
laundering offence; or
(ii) the enforcement of the Serious Offences (Confiscation of
Proceeds) Act No. 50 of 1989;
the financial institution must prepare a report of the transaction or proposed transaction and give the report to the Financial Intelligence Unit as soon as possible, but no later than 2 working days after forming the suspicion.
FTRA Section 5 (continued)
(4) A financial institution that has given a suspicious transaction report to the Unit must give the Unit any further information that it has about the transaction or proposed transaction if requested to do so by the Unit.
The CTSP Bill Section 4.6
(1) The Commission may, by notice in writing given to a licensee, require the licensee:
(a) to provide to it, at the time and place set out in the notice, the information and documents specified in the notice; and
(b) to answer questions that the Commission reasonably requires the person to answer.
(2) Subsection (1) only applies to information, documents or questions relating to:
the licensee’s regulated activities; or
the licensee’s integrity, competence, financial standing or organization; or
the licensee’s compliance with this Act or the Regulations, or with a licence condition imposed on the licensee’s licence.
“GUERNSEY Finance has appointed a Chinese national to be their official representative based in Shanghai.
Jersey Finance say they have been considering a similar move and will be including it in their business plan for next year, although it may be too early to establish a permanent base as yet.”
(Source: Jersey Evening Post Nov 16 2007
An apostille is a form of authentication accepted in countries which have signed the 1961 Hague Convention. This Convention abolished the requirement of diplomatic and consular legalization for public documents originating in one Convention country and intended for use in another. An apostille is often needed in adoptions, extraditions, and certain business transactions.
The VFSC/CIAV multi-discipline captive insurance marketing program.
(a) Identification of potential markets and insurance niche areas;
(b) Setting of realistic targets for new captives in Vanuatu;
(c) Establishment of the Vanuatu Captive Insurance Association;
(d) Establishment of a captive website www.insurance.vu that is integrated with www.vfsc.vu;
(e) Production of a comprehensive new booklet “ADVANTAGE VANUATU Captive
Insurance and other Financial Services”, a veritable “How to” guide for the potential international investor;
(f) Creation of a display stand for conferences and trade exhibitions;
(g) Attendance at selected conferences in the Asia Pacific region;
(h) Publication of captive insurance articles and general finance centre editorials.