My good friend Steven Cantor along with Tomas Alonso, , David Munoz, Martin Litwak, Jeffrey Lehtman were Panelists at the 2016 FIBA Wealth Management Forum and the panel discussed “The Panama Papers their implications for the offshore financial services industry going forward”. Needless to say a lot of guys are a little concerned these days but I think these guys have a good handle on the subject.
Global demands for transparency had deeply affected regions like the Bahamas, where the offshore financial services industry has long been an economic driver, even before the Panama Papers leak.
Today, large institutions are still pulling investments out of offshore jurisdictions, said David Muñoz, chief executive officer at financial services company Deltec International Group based in Nassau, Bahamas.
“That is a fundamental change for the Bahamas, but also for all offshore jurisdictions,” Muñoz said. “How do you employ the robust sector of individuals who are thoughtful and creative and value added?”
The industry has struggled to find ways to remain relevant and otherwise employ that sector, he said.
The Panama Papers leak may further fuel the shrinking of that industry. The leak exposed millions of documents from Panamanian law firm Mossack Fonseca and the International Consortium of Investigative Journalists showed the world how politicians, celebrities, money launderers and private individuals around the world use offshore companies to hide wealth from their people, creditors, tax authorities and estranged spouses.
Muñoz spoke on a panel Thursday that addressed the implications of the Panama Papers on the offshore financial services industry. The panel was part of the 2016 Florida International Bankers Association Wealth Management Forum held Thursday at the Ritz-Carlton in Coconut Grove.
Along with other members of the international panel, Tomas Alonso, managing director of Amicorp, pointed out that despite news reports focusing on tax havens in Panama and offshore countries, the U.S. is one of the world’s largest tax havens.
Many people, both in the offshore world and domestically, see it as a hypocrisy that the “United States is pushing tax transparency on everyone, but if there’s one place where ultimately the beneficial owners don’t have to be reported when any entity is formed, it’s here in the United States,” said Steven L. Cantor, managing partner at Cantor & Webb in Miami.
Aside from a handful of states known for the privacy their corporate registries provide, the U.S. isn’t on the list of countries that has adopted the Common Reporting Standards recommended by the Organisation for Economic Co-operation and Development.
For that reason, some offshore financial providers have stated plans to move accounts to the U.S. from countries that have adopted them, Cantor said.
“Moving to the United States on the thought that you are going to avoid some sort of reporting is a shortsighted, foolhardy thing to do on a short-term basis,” said Cantor, who equated it to buying a car that is only going to work for 8,000 miles before it falls apart.
Cantor said the Internal Revenue Service commissioner has indicated the Treasury department wants to adopt or align with the Common Reporting Standards. While that would take congressional action likely to be stalled in an election year, the Panama Papers is pushing it along, he said. Federal legislation also has been proposed to regulate the formation of entities nationwide, Cantor said.
However, if the U.S. stays out of the Common Reporting Standards for three or four years, that delay may be enough to move the industry to the U.S. from countries where it’s adopted because investors may not bother to move again, said panelist Martin Litwak, managing director at Litwak & Partners.
Many of those who attended Thursday’s panel were bankers, which have been under significant pressure from regulators to know the source of their customers’ wealth. Some bankers saw the leak’s implications to the industry from a different perspective.
“Some of the attorneys specializing in offshore entities are not being held to the same standards as bankers, and some of them have a tradition of closing their eyes and not asking sufficient questions,” said Seno Bril, owner of 1826 Group, an international banking consultant in Aventura. “The Panama Papers will change that. … The use of offshore corporations will change tremendously.”
My friend here in Panama, Carlos Camano puts thing in Perspective for those of you who do not live here.
Hello Tom, thank you for the article, very interesting and as confirmed what many of us have heard that the U.S. is one of the world’s largest tax havens. It is ironic how they investigate corporations overseas and their activities to promote transparency, but have not accepted the Common Reporting Standards.
The truth is that the “Mossac Fonceca Paper” as it should be called, in a way confirms what we all have heard before, “there are only two things for sure in life: Death and Taxes” and that “the truth will set us Free” Panama is on his way to a more transparent investment country, despite the fact that there are flexible laws and regulations of perhaps (government officials not enforcing the law) that allow certain activities to go undiscovered (for a while), the majority of Foreign investments and progress of the country has not been because of these activities.
The majority of Panamanians are honest hard working people, proud to live in a country of opportunity, which beauty and content of it´s people´s character has attracted honest foreign investments which has made Panama the fasted growing economy in Central America. Some one once said, It´s not the size what makes a country rich or poor, but the “attitude of its inhabitants” . Good times passes by and so do bad times, Panama will come back stronger and will continue to be a country of opportunity for those who like doing things right.