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Traditional Offshore Industry: Battle-shy, Redundant Traditional Offshore Industry: Battle-shy, Redundant


Traditional offshore industry:
Battle-shy and redundant

In times of conflict, some rise up to the challenge, others surrender. Today's offshore industry is no exception: many are raising the white flag.

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One fundamental about a free market that never changes is that if a demand exists for a particular product or service then this need will be catered for.

Complete financial privacy is -- and always will be -- available to those who want it, despite the recent attacks against the offshore industry.

To the surprise of some, the attacks have been met with varying degrees of battle-shy submission from both the offshore jurisdictions themselves and the offshore providers that promote their services.

The Bahamas, for instance, has done away with the important attraction of its International Business Company (IBC) -- non-disclosure -- and will suffer losses estimated at tens of millions of dollars annually as businesses migrate to more attractive jurisdictions. A high price to pay for a congratulatory nod from a band of un-elected bureaucrats in Paris!

The majority of the traditional offshore sector have shown themselves equally unwilling to stand up to the half-baked truths emanating from the OECD/FATF publicity machines.

International tax planners, private wealth managers and asset protection consultants have traditionally relied on offshore financial centres in the course of their business. How could they not? The implementation of many successful strategies in these sectors involves offshore tax havens. Although a few of these professionals have struck out at the attacks against everything offshore, most have not.

At the other end of the market, virtually all offshore company formation agents continue to sell the same offshore corporations they always did, ignoring the fact that the offshore environment has changed beyond recognition.

Some offshore incorporators did react to the changing offshore landscape: they chose to disguise themselves as the former, more professional group. Hoping to protect their reputation in a world where the word "offshore" has become tainted in the minds of many, they no longer "sell offshore companies". Instead, they offer "global tax planning solutions" and "wealth protection strategies". Lurking behind these phrases is still the familiar desire to sell the same bundle of paper from the same jurisdictions.

This can hardly be a happy time for these companies as they see their overpriced, profitable enterprises destabilised and attacked.

To stand up to the propaganda would automatically mean having their reputation tarnished with the slur "money launderer" -- a difficult accusation to "wash off" (forgive the pun) against a background of sensationalism and ignorance about offshore matters amongst the general public.

To stand up to the propaganda would mean admitting that many previously "offshore" havens can no longer be considered truly offshore. It would mean admitting that much of their "shelf lists" of offshore companies have become redundant. It would mean coming to terms with the fact that their high-volume, high-margin "incorporation factories" have little to offer today.

Unhappy as they may be, most in the offshore industry have chosen profit over morality and continue to sell yesterday's easy-fix products, not fitting with the goals of their clients. In addition, most are placing new clients under absurd and insulting levels of scrutiny and demand detailed identification and reference documentation even before considering clients for their outdated services.

Few have acknowledged that today's situation demands innovation and creative responses if we are to fight back and regain what we have lost.

In the long term, only those in the offshore industry that are driven by clients' needs -- and not those of quasi-legal international bodies in Paris -- will succeed. In today's offshore services industry, there seem to be two distinct camps forming and it's not at all difficult to spot the difference.

 


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