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Compliance Risks in Finance in Cook Islands: A Jurisdiction Committed to Client Confidentiality

The Cook Islands’ financial services industry has been working diligently to ensure compliance with international standards, particularly in regards to money laundering and financial transparency. The government’s efforts have been focused on combating tax evasion and other financial crimes, ensuring that the jurisdiction remains a stable and safe environment for businesses.

Implementing International Standards

To achieve this goal, the Cook Islands has incorporated the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) into its laws, allowing for the automatic sharing of financial information for tax purposes. Additionally, the country has enhanced its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework through the enactment of the Financial Transactions Reporting Act 2017 and related legislation.

Tax Transparency and Compliance

The Cook Islands’ commitment to tax transparency and compliance is evident in its membership with the OECD’s Inclusive Framework on Base Erosion and Profit Shifting (BEPS). The jurisdiction has also removed tax regimes deemed preferential and harmful by the European Union, solidifying its status as a cooperative jurisdiction for tax purposes.

Balancing Compliance and Confidentiality

While governments are entitled to their rightful tax take and those profiting from crime must not be encouraged, there is a need for balance. The Cook Islands has struck this balance by meeting its international obligations while retaining an individual’s right to legitimate confidentiality. This approach ensures that personal information will only be shared in accordance with the law.

Confidentiality and Investigations

The Cook Islands does not maintain public registers for beneficial ownership of incorporated entities or trusts, and investigative powers are only exercised when there is reason to believe financial misconduct has occurred. Information obtained through these investigations will only be shared as permitted by law, ruling out “fishing expeditions”.

Increased Credibility

The jurisdiction’s approach should provide comfort to governments, institutions, businesses, and individuals worldwide, as it demonstrates a commitment to compliance while prioritizing legitimate confidentiality. This increased credibility is essential for international trade partners and financial institutions, who must weigh the risks associated with money laundering or other financial crimes against the benefits of transacting with Cook Islands businesses.

Contact Us

For more information on compliance in the Cook Islands financial services industry, contact our team at Cook Islands Finance.