Blogger comment draws flak

Thursday May 24, 2018 Written by Published in Economy
Cook Islands Financial Services Development Authority chief executive, Tamatoa Jonassen. 18052318 Cook Islands Financial Services Development Authority chief executive, Tamatoa Jonassen. 18052318

A “belittling” remark in a blog written by a Forbes magazine contributor in the US and used in a story in CINews on Saturday, obscures the real progress that the Cook Islands financial services industry has made since it pioneered the modern asset protection trust in the 1980s, says Cook Islands Financial Services Development Authority chief executive, Tamatoa Jonassen.

 

The blogger’s comments quoted the US Bankruptcy Court as saying, “I think somebody in Cook Islands probably decided that they weren’t going to corner the world’s market of coconuts. So what they would do instead is they would create what, as I’ve always understood it to be, a unique debtor’s haven.”

Jonassen says the progress made by the financial services industry in this country has in fact been recognised by international organisations such as the Asia Pacific Group on money laundering (APG) and The Organisation for Economic Co-operation and Development (OECD).

“For example, in 2009 an assessment by the Asia Pacific Group on money laundering (APG) placed the Cook Islands in the top 20 per cent of 166 countries for implementing international regulatory standards; the Cook Islands received a better assessment than New Zealand and Australia.

“The Cook Islands is currently in the final stages of another APG assessment that has been ongoing for about a year now.”

Jonassen says the world has come to accept modern asset protection, despite initial views of some that the Cook Islands was ‘too progressive’.

“Asset protection trusts are now offered by international finance centres around the world. In addition, given the extremely litigious society of the US, it is no surprise that one third of their States now have implemented asset protection regimes, beginning with Alaska in 1997.

“Although US asset protection for its residents has questionable effectiveness, as evidenced in a Supreme Court of Alaska decision from earlier this year, the US remains a debtor-friendly jurisdiction with venues such as the Bankruptcy Court seeking to provide relief to the financially-troubled. Even US president Donald Trump has previously availed himself to the protections of the US Bankruptcy Court.”

Wealthy US clients that set up Cook Islands trusts do so with legal advice from US lawyers who have expertise in asset protection, says Jonassen.

“It is no wonder that US persons seek the certainty provided by Cook Islands laws given the over-litigious nature of US society and the extensive machinations of the US legal system.

“For instance, the ongoing saga that the blogger pointed to has played out in the US courts for several years and has involved several courts, marriage dissolution proceedings, and legal malpractice claims. Lawsuits are prevalent in the US. Having competent legal advice will ensure asset protection works best for you.

“If properly set up, a Cook Islands asset protection trust will protect wealth from future unexpected events that would harm your financial security. Similar to insurance, the asset protection trust should be in place before an adverse event occurs. It is too late to start looking for volcano insurance for your home when lava is already flowing onto your property.”

Cook Islands trust laws do not protect assets that are proceeds of crime, money laundering, or terrorist financing, adds Jonassen.

“There are Cook Islands laws in place to protect against such proceeds entering our financial system, such as the Proceeds of Crime Act 2003 and the Financial Transactions Reporting Act 2017, which grants supervisory and enforcement powers to the Cook Islands Financial Intelligence Unit and the Cook Islands Financial Supervisory Commission over Cook Islands financial institutions.

The Cook Islands even drew the positive attention of the World Bank when the Pacific Catastrophe Risk Insurance Facility was established in the Cook Islands.

“The Cook Islands maintains high international regulatory standards for our financial services industry and is ranked very well when compared to other financial centres.

“However, some people, including bloggers and foreign court judges, may refuse to see this if they have difficulty taking their eyes off our captivating beaches and swaying coconut trees.

Jonassen says the Cook Islands offshore financial services industry is sometimes the target of disparaging and defamatory comments, particularly from those who don’t understand the industry or the strength of Cook Islands laws and regulations.

“The front page article in last Saturday Cook Islands News that regurgitates remarks from a Forbes magazine online blogger is an example of those kinds of comments.”

            - Release/CS

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