Allegations about the level of tax evasion taking place globally, which have emerged in the wake of the release of the so-called Panama Papers over the weekend, “are not representative of the international financial services industry” today, the head of deVere Group international financial services advisory firm says.
Nigel Green, founder and chief executive of the Dubai-based deVere Group, made his comments in response to a leak of more than 11 million confidential documents from Mossack Fonseca, a Panamanian law firm.
As reported here yesterday, the leak has hit the global cross-border financial services industry hard, as it suggests that recent efforts to abolish tax evasion through the introduction of new regulations and increased automatic exchange of information hasn’t been working.
Some are calling it the biggest leak of confidential information ever to hit the global financial services industry.
In a statement, Green said that he, “like many people”, had found the details of the Panama Papers case, as outlined in the BBC Panorama programme on Monday evening, “very concerning, as it suggests there might have been tax evasion on a grand scale”.
“However, I do not believe that the Panama Papers allegations are representative of today’s wider international financial services industry,” Green added.
“The overwhelming majority of the offshore sector only provides services that are fully compliant and legal, and they are used by law-abiding clients, who are simply looking for typically better returns, more investment options and greater flexibility.”
As others in the offshore financial services sector have been saying, Green noted that many of the documents revealed by the leak date back several decades, and thus precede changes in the tax codes in the countries in which some of the apparent tax-evaders live. The global financial crisis of 2008 and earlier leaks of bank details from Switzerland and Liechtenstein also prompted many countries, including the UK and US, to introduce new regulations aimed at preventing tax evasion, and exposing it more easily.
“For the last several years, a new and totally unprecedented era of transparency and disclosure has been ushered in,” Green said in his statement.
“Indeed, the idea of a ‘tax haven’, in the traditional sense of the phrase, is now somewhat outdated. In today’s world, in which financial information is being automatically exchanged with tax authorities globally, it is almost impossible to hide money.
“No longer can people stash assets on ‘treasure islands’ and not expect to be caught.
“The international financial services industry plays a vital and largely positive role in the global economy. Yet this is typically overlooked by the media.
“As the press is quick to point out, there are many questionable reasons why people might want to keep money in an offshore account – which is simply an account in a jurisdiction different to the one in which the person currently lives.
“However, in my experience of working with expatriates and international investors, who have generally more transient lifestyles, offshore accounts are preferable simply for convenience. They offer centralised, safe, flexible and international access to their funds no matter where they live and no matter to which country the individual moves to in the future. In addition, they offer a wide choice of multicurrency savings and investment solutions.
“Offshore financial centres allow those who qualify to do so to use legal, bona fide international investment products to form part of a robust and sensible financial planning strategy.”
Green acknowleged that there may remain some areas which still could be improved, a fact that he says the Panama Papers “claims underscore”.
“Indeed, this [the outcry over the Panama Papers] should 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 become ever more globalised.”
Green founded the deVere Group in 2002 as an expatriate-focused advisory firm. Today it has more than 70 offices across the world, more than 80,000 clients, and says it has around US$10bn under advisement.