Transcript Slide 1

Anguilla Financial Services Commission Annual Meeting with the Financial Services Industry
The International Financial Services Industry An International Perspective
By
Jack W. Flader, Jr.
CHAIRMAN & CEO
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The GCSL Group of Companies Limited 2008
www.gcsl.info
The International Financial Services Industry - An International Perspective
OVERVIEW
Developments in international markets
Anticipated changes in market conditions
Marketing and strategic positioning for Anguilla
– The Four Ps
Conclusion
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The GCSL Group of Companies Limited 2008
www.gcsl.info
The International Financial Services Industry - An International Perspective
DEVELOPMENTS IN INTERNATIONAL MARKETS
Optimist? Pessimist? Realist?
“Due to the recent Global Financial Crisis, and the rising cost of electricity, gas and
oil, the Light at the End of the Tunnel has been turned off. We apologize for the
inconvenience.”
USA: Bump from Obama, TARP and global “flight to safety” in the US$ (deleveraging
and no other choice) insufficient to overshadow general gloom I experienced during
October and November visits.
SILVER LINING: Wealthy USA persons seeking either to expatriate, reside
overseas or settle offshore trusts.
Central & South America: Commodity based economies suffering from lower prices
while perceived corrupt governments seek more revenue without improved
efficiencies.
SILVER LINING: I was very pleased to meet in October many wealthy Latin
businesses / families seeking innovative offshore solutions in non-blacklisted
jurisdictions.
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The GCSL Group of Companies Limited 2008
www.gcsl.info
The International Financial Services Industry - An International Perspective
DEVELOPMENTS IN INTERNATIONAL MARKETS
Europe: During my November visit, people were happy with Obama as they perceive
him to be a like-minded socialist friend, but Europe is suffering from a workforce
seeking even more entitlements, eroding tax base resulting in aggressive government
action, inability to compete and slavish following over last 8 years of USA styled
financial services.
SILVER LINING: Wealthy Europeans seeking to reside overseas, including
Switzerland, to avoid effective “employment” by their governments.
Central Europe, Russia and Former Soviet States: Despite implementation of low and
flat tax systems that encouraged entrepreneurs to repatriate overseas money, harder
working labor force, strong growth in recent years due largely to oil and gas prices
and the confidence I encountered in July, the fragility and narrow revenue base of
these economies has resulted in people becoming increasingly fearful of the future.
SILVER LINING: Wealthy people seeking yet again to invest overseas, i.e. capital
flight.
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The GCSL Group of Companies Limited 2008
www.gcsl.info
The International Financial Services Industry - An International Perspective
DEVELOPMENTS IN INTERNATIONAL MARKETS
Japan: An largely insulated economy where Japan Post Bank, now a private
company, holds approximately US$2 trillion of 0% interest deposits, will
probably be the “least ugly” of the major economies due to two decades of
little or no debt for business/individuals.
SILVER LINING: We may see more Japanese exploring innovative planning
solutions overseas to achieve even 1%.
Greater China: Massive social issues due to unemployment, domestic
consumption insufficient to meet fall-off from Western consumption, rollercoaster financial markets and downward spiraling property prices will spell
pain despite huge government savings and movement of capital from
Europe to Hong Kong.
SILVER LINING: Governments encouraging Chinese to explore international
opportunities despite lack of skill sets, thus mandating OUR services.
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The GCSL Group of Companies Limited 2008
www.gcsl.info
The International Financial Services Industry - An International Perspective
DEVELOPMENTS IN INTERNATIONAL MARKETS
Asia: My visits in 2H08 have seen Singapore continuing to smile as € and
US$ seek perceived safe haven from aggressive governments and balance
of Asia did not have enough exposure to debt to suffer dramatically.
SILVER LINING: Experience of and recovery from ‘97 Asian Financial Crisis has
left Asia in a less horrible position than the West.
Australia & New Zealand: My August visit saw tiny economies largely based
on commodities, innovative (read dangerous) financial products and rollercoaster ride currencies encountering trouble, other than tourism as the
Southern hemisphere Summer approaches.
SILVER LINING: Aussies and Kiwis on “walkabouts” seeking to diversify risk via
offshore structures.
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The GCSL Group of Companies Limited 2008
www.gcsl.info
The International Financial Services Industry - An International Perspective
ANTICIPATED CHANGES IN MARKET CONDITIONS
2009 may be the worst year for the global economy since, well, the Great
Depression…but even worse.
US$700 trillion in derivative products – who are the counterparties?
Hedge funds and Private Equity starting to crumble – who will take the crumbs?
Confidence at an all time low – is government the savior?
Wars being waged across the globe – when (or) will they end?
The changes in market conditions will be negative as those with liquidity seek to
hammer down asset prices for the best deals while those with over-priced
assets seek government bailouts/investments and new legislation.
The Stop Tax Haven Abuse Bill WILL become law with Obama and Levin at the
helm. Impact? Witness UBS and LGT.
Similar laws will be enacted during the Obama regime as they target non-voting
foreigners and are easy to sell to USA persons – witness indictment of Raoul
Weil.
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The GCSL Group of Companies Limited 2008
www.gcsl.info
The International Financial Services Industry - An International Perspective
ANTICIPATED CHANGES IN MARKET CONDITIONS
Incorporation Transparency and Law Enforcement Assistance Act with Obama
and Levin at the helm MAY be enacted, but it would force States like Delaware
“To ensure that persons who form corporations in the United States disclose the
beneficial owners of those corporations, in order to prevent wrongdoers from
exploiting United States corporations for criminal gain, to assist law enforcement
in detecting, preventing, and punishing terrorism, money laundering, and other
misconduct involving United States corporations, and for other purposes.” Big
$$$ at stake here…will Obama and Levin act?
Due Diligence and Know Your Client WILL become even more difficult.
Impact? If you are not “violating” your client with endless questions, then you
will eventually be violated!
Reminds me of the little boy walking by the dam when he notices a leak so he
plugs it with his finger. Then he notices another and another and pretty soon all
ten fingers, ten toes, his nose and his…well, you know what I mean…
NO ONE WANTS TO FIX THE SYSTEM!!!
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The GCSL Group of Companies Limited 2008
www.gcsl.info
The International Financial Services Industry - An International Perspective
MARKETING & STRATEGIC POSITIONING FOR ANGUILLA – The 4 Ps
Product: #4 and the LEAST important of the 4 Ps. One
commentator said to me “why do we need another common
law jurisdiction with a Foundations Act?” IBCs, LLCs, Trusts,
Mutual Funds, Captives - FOCUS!
Place (distribution): #3 and usually more important, but
Anguilla with approximately 50 licensed company managers
and trustees has a good balance of distribution with
regulation. Improvements are important, i.e. more
“managed” licensees, more production from existing
licensees, etc.
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The GCSL Group of Companies Limited 2008
www.gcsl.info
The International Financial Services Industry - An International Perspective
MARKETING & STRATEGIC POSITIONING FOR ANGUILLA – The 4 Ps
Price: #2 and usually not as important, but with
approximately 40 offshore (Jamaica coming soon) and many
onshore jurisdictions (New Zealand and Manhattan) and
exceedingly similar products, we are now selling, to a certain
extent, a commodity. We MUST be competitive.
Promotion: #1 and FUNDAMENTAL for Anguilla’s success.
Government and industry MUST work together. Lanston is
often out there. Niguel has made a good effort. I was
pleased to see Pam Webster at the IBA in Buenos Aires and
Fiona Curtis at the ITPA in London. I have not seen anyone
else. C’mon out to beat the drum!!!
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The GCSL Group of Companies Limited 2008
www.gcsl.info
The International Financial Services Industry - An International Perspective
CONCLUSION
Reality 1: Things will get worse long before they get better, but clients form structures not
only when business or investments are growing. They also form structures to protect
business and investments.
Reality 2: Obama & Levin, not to mention the OECD and other multi-lateral organizations,
have no interest in competition unless, of course, the guiding principle is MIGHT MAKES
RIGHT. We need to be prepared.
Reality 3: DD & KYC are not optional.
Reality 4: Clients will push you to design and implement form over substance tax schemes.
DO NOT PLAY BALL!!!
Reality 5: Confidentiality is fundamental on surface level, but is not the basis of a sound and
legal offshore plan. Professional advisors who sell otherwise are neither “professionals” nor
“advisors”.
Reality 6: We MUST PROMOTE or PERISH!
Reality 7: We MUST realize the excessive competition and commoditization of our products
will result in significant price competition.
Reality 8: The Sun will rise tomorrow despite the clouds so cherish and share good food and
drink with family, friends, colleagues and clients EVERYDAY!!!
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www.gcsl.info
THANK YOU
Tel: +852 2526 2736 Fax: +852 2526 2757
Email: [email protected] Web: www.gcsl.info
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The GCSL Group of Companies Limited 2008
www.gcsl.info