CONCEPTS

OFFSHORE FINANCIAL CENTRES

While there are well-regulated Offshore Financial Centres (“OFCs”), the primary attraction of the offshore sector remains the frequent existence of legal frameworks designed to obscure the identity of beneficial owners, to promote regulatory and supervisory arbitrage, and to provide mitigation or evasion of home-country tax regimes.

Some OFCs offer the ability to form and maintain a variety legal entities such as international business companies (IBCs), "exempt" companies, trusts, investment funds and insurance companies. To maintain the anonymity of the true beneficial owner of these entities, many are formed with nominee directors, nominee officeholders and nominee shareholders. When combined with the use of bearer shares (shares that do not name the owner, rather, ownership is based on physical possession) and "mini-trusts") instruments used to further insulate the beneficial owner while bridging the ownership and management of the corporate entity), IBCs can present impenetrable barriers to law enforcement. The continued selling of "economic citizenship," (passports sold to foreigners who promises to invest in the country) if improperly controlled, creates yet another impediment to law enforcement.