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 |  Subject: Cool: Foreign money secretly floods U.S. tax havens.  Mon Oct 04, 2021 8:01 pm | |
| Moguls and others linked to money laundering, corruption and worker exploitation chose U.S. over the world’s traditional tax havens
SIOUX FALLS, S.D. — Across from a Holiday Inn, in a red-brick building with a welcome sign that reads “The Heart of America,” a little-known financial firm set up shop seven years ago and extended an invitation to the world’s elite.
Trident Trust promised to protect the fortunes and privacy of its new customers by relying on the laws of a state that had become a global destination for wealth. The company called it “The South Dakota Advantage.”
Among those who answered the call: a Colombian textile magnate caught in a scheme to launder the proceeds of an international drug ring, an orange juice mogul who settled with authorities in Brazil for allegedly colluding to underpay local farmers, and family members of the former president of a sugar producer in the Dominican Republic that has been accused of exploiting laborers and forcibly evicting families from their homes.
The U.S. government has long condemned prominent offshore financial centers, where liberal rules and guarantees of discretion have drawn oligarchs, business tycoons and politicians.
But a burgeoning American trust industry is increasingly sheltering the assets of international millionaires and billionaires by promising levels of protection and secrecy that rival or surpass those offered in overseas tax havens. That shield, which is near-absolute, has insulated the industry from meaningful oversight and allowed it to forge new footholds in U.S. states.
The Washington Post and the International Consortium of Investigative Journalists (ICIJ) gained an unprecedented look into the money flowing into trusts in the United States by examining a trove of more than 11.9 million confidential documents maintained by trust and corporate services providers around the world.
The records, known as the Pandora Papers, expose how foreign political and corporate leaders or their family members moved money and other assets from long-established tax havens to U.S. trust companies.
The investigation identified 206 U.S.-based trusts linked to 41 countries. Nearly 30 of the trusts held assets connected to people or companies accused of fraud, bribery or human rights abuses in some of the world’s most vulnerable communities.
The cache of confidential files, obtained by the ICIJ and shared with more than 150 media partners, describes only some of the trusts in the United States but is the most significant set of records ever made public from inside America’s trust industry.
The trust documents come mostly from the Sioux Falls office of Trident Trust, a global provider of offshore services. In a written statement, Trident said it is committed to compliance with all applicable regulations and routinely cooperates with authorities. The company declined to answer questions about its clients.
Other states competing to lure wealth include Alaska, Delaware, Nevada and New Hampshire. In South Dakota, assets in trusts more than quadrupled over the past decade to $360 billion. One of the largest trust companies in the state, the South Dakota Trust Co., boasts a roster of international clients from 54 countries.
The industry’s rapid expansion was led by a group of trust company insiders, who year after year pitched legislative proposals that were highly appealing to customers in the United States and abroad: protecting trusts from creditors, from taxing authorities, from foreign governments.
With little opposition, state legislators turned the proposals into laws — dozens since the late 1990s.
“Nobody understands any of them,” Gene Abdallah, Republican chairman of South Dakota’s Senate Judiciary Committee, quipped at a legislative session in 2007. He died in 2019.
Bret Afdahl, director of the South Dakota Division of Banking, said that trust companies are required to confirm the identities of all customers and that foreign clients and assets receive additional scrutiny. The state seeks to audit trust companies at least once every two years and can penalize firms that do not meet standards, he said.
Critics say the oversight is limited, regulations are vague and trust secrecy is nearly impossible to breach.
“My concern is that … we become like Switzerland or Panama,” said former South Dakota state senator Craig Kennedy (D), one of a handful of lawmakers who questioned the growing industry. “I don’t know who the beneficiaries are, what kind of assets are being managed. People use banking and trust laws for inappropriate purposes. I can’t say that’s happening in South Dakota. But I don’t know.”
Like banks, trust companies are prohibited from knowingly accepting money generated by criminal activity. There is no evidence in the Pandora Papers documents that any of the foreigners with trusts in the United States sheltered criminal proceeds.
Financial experts, however, say the U.S. trust industry should look beyond convictions — investigating and turning away clients whose wealth was amassed amid credible accusations of crimes or human rights abuses or through ties to corrupt regimes.
More: .https://www.washingtonpost.com/business/interactive/2021/booming-us-tax-haven-industry/
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“The state calls its own violence law, but that of the individual, crime.”-- Max Stirner
"Remember: Evil exists because good men don't kill the government officials committing it." -- Kurt Hofmann |
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