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Global update: IFCs

12 January 2021

April French Furnell

As 2021 brings us back to work with the first struggle to remember our passwords, the Citywealth team’s sights are set on the upcoming IFC Awards 2021 which we’ll be hosting virtually on the 23rd February. What better time to get an update from across the private wealth industry.

You can vote for the top IFC of the year here.

If you haven’t already secured your ticket, you can do so here.

Cayman – pandemic sabbaticals – Global Citizen program

The Cayman Islands, has launched a new initiative, inviting visitors under its Global Citizen Concierge Program to relocate to the Cayman Islands for up to 24 months while they work remotely (individuals must not be employed on the island and annual fee’s apply (approximately $2,000 for one person/$2,500 for two per annum). There is a Concierge team to help with your relocation. For more information on the logistics and fun to be had locally: view our YouTube interview with Sue Nickason, VP Marketing and Sales, Dart Real Estate: https://www.youtube.com/watch?v=C1AVYwCjo2o

No restrictions on property for rent or sale

It’s the island’s quality of life and often its proximity to the USA with numerous flights and operators that is a significant draw for investors, professionals and their families, according to Cayman Finance. “There are no restrictions on property for rent or sale, which is not the case in many other island jurisdictions”, says Jude Scott, CEO of Cayman Finance. The EU and the OECD also recognize the Cayman Islands as a transparent jurisdiction in terms of its tax regime.

Cayman - Private Trust Companies, foundation companies and private wealth funds

According to Cayman Finance, the most popular structures for individual investors and families are “Private Trust Companies, foundation companies and private wealth funds” which are facilitated by Cayman’s cluster of experienced legal and financial services professionals. It means investors can be either directly involved or outsource many of the functions. Either approach “will help to deal with both threats and opportunities arising with succession planning.”

The American dream – buyouts and openings across the pond

The USA has been a focal point for the Citywealth team in the past year with New York up first and plans to go to Chicago next. As well as us, Jersey-headquartered, Crestbridge, a back office, financial administrator and family office opened in New York in 2019. IQ EQ has also built up their expertise. They made two acquisitions in the past six months: Blue River Partners, a regulatory compliance company in 2020 and most recently, Constellation Advisers who are investment management consultants. Following the acquisition, IQ EQ’s newly combined business totals more than 320 US-based employees specialising in regulatory compliance, fund administration and outsourced services. Their destination is not surprising: the US is one of the largest and fastest growing fund services and regulatory compliance markets in the world.

With the Citywealth Powerwomen Awards now transatlantic, we look forward to revealing the results for the US market in March and hosting a cocktail reception either in-person or digital for the shortlisted contestants and winners. Date to be revealed in due course, pending information on current travel and meeting restrictions.

Guernsey, Channel Islands - Private Investor Fund (PIF), opening a fund in one day, proves popular

Guernsey is one of the unique places that is fully open for business and life is normal for its residents, having had no social restrictions since June 2020. Rupert Pleasant, Chief Executive of Guernsey Finance, commented: “safety, security and stability are the foundations of what makes Guernsey a good jurisdiction for private wealth, and this has been emphasized with our response to the pandemic”. The island is best known for its family office sector and its Private Investor Fund regime, “which includes a proposed new bespoke family-only structure, and world-leading credentials in green and sustainable investing”, added Rupert.

Providence Investment Fund in administration

The Guernsey Royal Court has been reviewing a high-profile case for administrators of the Providence Investment Fund after it was found to be a Ponzi scheme following investigations undertaken by the SEC. The fund was run by Floridian Antonio Buzaneli, now jailed for 20 years, who was selling investors Brazilian debt and during his time had set up offices and affiliates in locations around the world, including Guernsey, Hong Kong, Singapore and Panama. Mathew Newman, a partner at Ogier and head of their Restructuring and Corporate Recovery team, is representing the insolvency office holder of Providence in a negligence litigation claim against the fund’s auditors PwC. In the summer of 2020, Mathew and his team won a hearing to continue the litigation against PwC on the grounds of negligence and the failure to spot the Ponzi scheme. The trial is expected to take place towards the end of this year, but no date has yet been set.

Litigation rising

With a COVID induced recession expected, more ponzi schemes could be brought into the open. Mathew commented, “As money becomes tighter we think more schemes will be discovered and ultimately will collapse. We expect this to happen, but we are not seeing it quite yet. For now, its busy on the refinancing and restructuring side, but we expect more insolvencies and discoveries of fraud at the end of this year and into 2022.”

Jersey, Channel Islands – digital investment to support wealth

Jersey, is focusing on its digital infrastructure explains Robert Moore, Director UK of Jersey Finance, with high speed fibre connectivity to every household and office on the island as well as high level cyber security software. This investment has proven itself useful in enabling the financial services industry to maintain its high-quality services to a global client base with staff working from home during the pandemic, added Robert. It’s also proven attractive to wealthy families and family offices; helping them stay local but connected to global enterprises and using fintech platforms for governance. In 2020, 15 new HNWIs made Jersey their home with the assistance of their relocation and marketing hub, Locate Jersey.

Monaco – more hoops for new residents to jump through

For those wishing to move to Monaco, they should be aware that the level of investigation into those applying for residency has increased. “More and more, when authorities are granting residency certificates, they are doing increased research and they want to be sure the residency is not artificial,” commented Xavier de Sarrau, a partner in Gordon S Blair Law Offices in our Monaco update last year. One way of establishing that is by looking at the number of days spent locally, but another is to investigate where that individual has established the centre of their financial interests and where they are managing their wealth. It is becoming much less acceptable to sit in Monaco and have your bank accounts in Zurich or London. The authorities now demand you move a significant proportion of your assets here. “Typically, that in turn means establishing a single-family office in Monaco, which is on the increase, says de Sarrau.

Swiss local governance predicted to attract 20% more UHNW’s by 2024

Switzerland is arguably the centre of private wealth in Europe with its cluster of wealth managers and banks, and according to the latest Knight Frank Wealth Report, the number of UHNWs living in Switzerland is expected to rise by 20 per cent by 2024. Citywealth spoke to Catherine Grun Meyer, Thomas Hochstrasser and Daniel Antognini of Niederer Kraft Frey to find out why Switzerland is coming back to the fore. Aside from the schools, taxation rates and standard of living, one of the key draws is its neutrality. Catherine explains, “The strength of its political system mainly derives from having local decision-making power at individual canton level. All Swiss cantons have their own legislatures and governments, as well as flexible political entities, which allows them to compete. Due to this separation of powers and the functioning independent judiciary, Switzerland provides a high level of legal stability. Additionally, the high prosperity enjoyed locally makes Switzerland a very safe country for all its inhabitants and their assets.” This safety has attracted clients from the Middle East, the UK and Latin America.

Dubai – JAFZA provides empowering changes for DIFC Foundations

2020 saw much welcomed news that the JAFZA (Jebel Ali Free Zone) a location in Dubai which is designed to promote business growth and has 0% personal income tax and no restriction on foreign employees, will allow DIFC Foundations, which are used for charitable purposes to have direct shareholders and or incorporators in registered entities. This simplifies the current legal structure and will help with asset protection for instance with real estate and provides simplified succession planning.

We look forward to catching up with all our friends and clients across the IFCs at the IFC Awards virtual ceremony on the 23rd February and celebrating their achievements, innovations and client successes. Don’t forget to vote for your top IFC of the year here.

 

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