Cook Islands Financial Institutions Comply with International Standards, Prioritize Client Confidentiality
The Cook Islands has made significant strides in recent years to ensure its financial services industry is compliant with international requirements on money laundering and financial transparency. This move aims to combat tax evasion and other financial crimes while maintaining the jurisdiction’s reputation as a progressive, stable, and safe place to do business.
Meeting International Standards
To achieve this goal, the Cook Islands government has passed laws and regulations necessary to meet international standards. The country has incorporated FATCA and CRS into its laws for automatic sharing of financial information related to tax matters. Additionally, it has enhanced its anti-money laundering and combating the financing of terrorism (AML/CFT) framework with the enactment of the Financial Transactions Reporting Act 2017 and other related legislation.
Tax Transparency and Compliance
The Cook Islands has also committed to tax transparency and compliance by joining the OECD’s Inclusive Framework on Base Erosion and Profit Shifting (BEPS). The country has removed tax regimes deemed preferential and harmful by the European Union, earning it a reputation as a cooperative jurisdiction for tax purposes.
Balancing Financial Transparency with Client Confidentiality
Despite the push for greater financial transparency, the Cook Islands is committed to balancing this with individual privacy. While governments have a right to collect taxes and combat financial crimes, individuals have a legitimate expectation of confidentiality. The Cook Islands has struck a balance between meeting international obligations and protecting client confidentiality through its laws.
- The jurisdiction does not maintain public registers for beneficial ownership of incorporated entities or trusts.
- However, the Commissioner of the Financial Supervisory Commission and the Financial Intelligence Unit have investigative powers to uncover financial misconduct.
- Information obtained will only be shared in accordance with legal provisions, ruling out “fishing expeditions.”
Conclusion
The Cook Islands’ approach should provide comfort to governments, institutions, businesses, and individuals globally when dealing with its financial services industry. This stance gives the small island state increased credibility with international trade partners and financial institutions, making it harder for them to justify avoiding transactions with Cook Islands businesses due to money laundering or other financial crimes concerns.
Contact Us
For more information on compliance in the Cook Islands financial services industry, contact our team at Cook Islands Finance.