Country report: Welcome to Anguilla

By Sergio A. Pagliery, Jr., Esq., attorney at law, Sergio A. Pagliery, P.A., and Juergen Beck, Safe Harbor Financial Group LLC

It didn’t happen after September 11 2001. It had been launched a long time before that fateful day. Many say it began when the United States Internal Revenue Service implemented its qualified intermediary (QI) regime. The QI regime was designed to bring banking jurisdictions and financial centres into the fray of tax and reporting compliance. Offshoots of the QI regime are the all too familiar know-your-customer (KYC) and other due diligence rules that have now become mainstream business practices. Sure enough, QI even spawned the so-called compliance industry, which by all accounts has become a worldwide business in itself. Hindsight being 20/20 then, one can trace the US Patriot Act not to the events of 9/11, but to the efforts of the US in the late 1990s, which brought the QI regime into existence in 2000.

Relying on the work of organisations such as the Organisation for Economic Co-operation and Development (OECD), the Financial Action Task Force (FATF), the Caribbean Financial Action Task Force (CFATF), the Financial Crimes Enforcement Network (FINCEN) and others, banking jurisdictions and financial centres throughout the world were summoned to update their business practices. Those that did not comply were placed on so-called ‘blacklists’, which have actually been around for many years. In many instances, countries have been on those lists unjustifiably. Nonetheless, many banking jurisdictions and financial centres still had to make good and join the effort: to combat money laundering and the financing of terrorism – just two of the more popular efforts all this was designed to fix.

Some of these organisations and groups want to eliminate tax competition too. But be that as it may, many banking jurisdictions and financial centres are upstanding reputable models of efficiency and competency – so much so that they compete on the world stage, albeit quietly, because they have the proper up-to-date legislation, governmental regulatory bodies, infrastructure and competency to meet the varied and changing requirements (and standards) of doing business in the 21st Century.

What was once ‘foreign’ has now become quite mainstream. Years before QI, FATF, FINCEN, KYC and the like, foreign or offshore banking was for a few select groups. When these organisations implemented and otherwise imposed the new sets of business rules and standards on the jurisdictions and centres, they initially suffered economically. Not because they could not adapt, but because of the chilling effect of how the organisations implemented their strategies. In fact, many of the reputable jurisdictions adapted without any hiccups because they were already accustomed to doing business in the 21st Century, and although there was some capital flight from these reputable jurisdictions, those days now appear to be over, even though there is a new storm brewing.

The European Union’s third money laundering directive will most likely soon be implemented. Brits and many others are up in arms because the directive will inevitably push a lot of trust, banking and financial service business away from London. Some will make their way to New York, Dubai and Hong Kong. Whether the directive will push hundreds of millions of dollars, pounds, euros and other currencies out of the City of London – and into these jurisdictions and centres – is no longer a question of when, but to what extent. These types of regulatory storms, such as have already occurred in jurisdictions like Gibraltar and Jersey, come along fairly frequently, which is why we extend you a warm welcome from Anguilla.

Anguilla, a tropical paradise with turquoise, clear waters and pristine beaches, is an offshore banking jurisdiction and financial centre, which seceded in 1980. As a British Overseas Territory, just like Bermuda, the Cayman Islands and the British Virgin Islands, it recognises the common law of trusts. Its financial services legislation was introduced in 1994, and in 1996 it became a member of the CFATF. In 2000, seven different legislative acts became law, the most important being the Money Laundering Report Authority Act and the Proceeds of Criminal Conduct Acts of 2000. It is no surprise that these pieces of legislation took place the same year the QI regime went into effect.

Although there are no tax treaties in effect, there is a Mutual Legal Assistance Treaty with the US. The Anguillan financial-services department has been lauded in its continuing efforts, which attests to the country’s comprehensive legal and institutional framework, such that the CFATF has stated Anguilla’s legislation is broadly consistent with international standards. Other jurisdictions have been pointed to Anguillan legislation as a good role model to follow. As a result, it should come as no surprise that company and trust services comprise the largest growth segment in Anguilla. Of course, part of that growth is attributable not only to its advantageous regulatory scheme, but also to its receptive climate as a banking centre for trust administration and company management – both for high net worth individuals and captive insurance company holdings.

There are no ‘brass plate’ banking licences in Anguilla; the law requires that only banks that are subsidiaries (or branches) of banks with established track records, and which are subject to the effective consolidated supervision of their home authority, can be licensed as offshore banks.

The country’s Trust Ordinance has been rewritten to recognise spendthrift trusts, charitable trusts, asset protection trusts, and even choice of law and flight provisions. If it is company and trust administration services you require, we are confident that the efficiency and professionalism will astound you. Oh, and one more thing: the golf, fishing, and tourism opportunities are even more astounding. Welcome to Anguilla.