Cook Islands: your Asia Pacific Partner

Better known for its beaches than its financial services, Cook Islands was a pioneer in trust law.

It was the first jurisdiction to enact modern asset protection legislation through its International Trusts Act 1984.

While the Cook Islands has diversified into banking, captive insurance, foundations and a maritime registry, trusts remain the cornerstone of its financial services industry.

Tamatoa Jonassen, CEO of the Cook Islands Financial Services Development Authority (FSDA), said: “We are well known for our trusts which have been tested and tried in courts in the United States and in the Cook Islands, and they have been effective.”

At a recent conference hosted by the FSDA in Hong Kong, Mark Brown, Minister of Finance, Cook Islands, said the island nation had formal diplomatic relations with more than 50 countries.

 

Cook Islands was a pioneer in trust law.

 

It is also committed to the Common Reporting Standard and has 21 Tax Information Exchange Agreements.

“We see the importance of developing collaborative partnerships with other countries and international organisations,” he said.

But it also understands its clients’ need for confidentiality, and it does not have public registers.

The Cook Islands has a strong rule of law, with a democratically elected parliament and an independent judiciary, mostly comprised of New Zealand judges.

Anyone wanting to register an offshore entity in Cook Islands must engage one of its eight trustee companies.

“They are licensed and regulated by our Financial Supervisory Commission and they are held to high international standards,” Jonassen said.

Antony Will, president of the Trustee Companies Association, told the conference that while the Cook Islands allows all of the same flexibility in estate and succession planning as most of the mainstream trust jurisdictions, it also has an added overlay of asset protection features that gives it an edge in the international market.

Will said one of the key features of Cook Islands’ trust law was that it does not enforce foreign judgements. Plaintiffs trying to have a transfer of assets to a Cook Islands trust voided must initiate legal proceedings there and they face a series of hurdles.

He explained the only action that could be brought was for fraudulent transfer, which must be proved to the criminal standard of beyond reasonable doubt. There are also strict time limits in which to lodge a challenge.

 

Plaintiffs…face a series of hurdles.

 

“Even if a plaintiff gets through all of these steps, which has not yet happened, they still cannot make a claim against a trust until all remedies against other property have been exhausted,” he said.

At the same time, the law offers certainty around the ongoing role of the settlor, whether as a beneficiary or retaining some element of control in the trust structure.

Cook Islands is highly regarded for its regulation, which is conducted by the Financial Services Commission (FSC), an independent body that was established in 2003.

Cheryl McCarthy, deputy commissioner at the FSC, explained it was a member of a number of international bodies, including the Group of International Finance Centre Supervisors, to ensure its regulation meets international standards.

McCarthy said the regulator placed a lot of emphasis on knowing and understanding its licencees, with the licensing process typically taking about three months.

Brian Mason, chairman of the FSDA, said as well as upholding high regulatory standards, the Cook Islands also prides itself on its levels of service and prompt replies. “If there is one thing that frustrates people when they are dealing with offshore jurisdictions, it is when they don’t get an answer or a response,” he said.

The Cook Islands’ geographical location, just to the east of the International Date Line, means it is six hours behind New York, and six hours ahead of Hong Kong, but a day behind it.

Jonassen jokes: “If you want something done yesterday, we can do it for you.”

 

Written By
More from Invest 2018

Dublin Port goes from Strength to Strength

A snapshot of Ireland right now sees a country marked by strong...
Read More

Leave a Reply

Your email address will not be published. Required fields are marked *