Know Your Client (KYC) Obligations
– What It Means, Compliance Requirements –
Vanuatu’s ‘Know Your Client’ (KYC) obligations is a standard imposed on the investment and financial services industry to verify customers and know their risk and financial profiles to avoid potential criminal conduct or illicit behaviour.
Tailoring Corporate Structures
Navigating the complexities of criminal conduct and illicit behaviour isn’t always straightforward. What’s deemed illegal in one jurisdiction may be perfectly acceptable in another. With almost 200 countries spanning the globe, each with its own set of laws and regulations, the landscape of permissible activities varies greatly. For example, practices like interest-bearing investments, gaming or share trading may be strictly prohibited in some regions yet integral to the economic fabric of others. As such, we approach each client inquiry with sensitivity to these nuances, recognising that what may raise red flags in one context may be standard practice elsewhere.
Our primary focus lies in steering clear of activities associated with ‘Money Laundering’ and ‘Tax Evasion’. As to the latter, it’s crucial to differentiate between these illegal behaviours and lawful tax planning strategies. While aggressive tax avoidance tactics push the boundaries of legality, they remain within the confines of the (relevent) law. On the other hand, overt tax evasion involves the deliberate concealment of income or assets from tax authorities, constituting a clear breach of legal obligations. By understanding these distinctions and carefully evaluating each client’s circumstances, we aim to provide tailored solutions that comply with applicable laws and regulations.
Legal Privilege: Our Commitment to Client Confidentiality
The protection of Legal Privilege is paramount in our practice. Every initial inquiry is facilitated by or on behalf of a Vanuatu lawyer and thus falls under the purview of legal professional privilege. This ensures that prospective clients can freely disclose information necessary for us to assess their needs and fulfill our KYC obligations. In the event that either the prospective client or our firm decides not to proceed, no records disclosing the nature of the conversation are retained. This commitment safeguards the sanctity of legal privilege and fosters an environment of trust and confidentiality between our clients and us.
- Please Note: While the majority of our initial consultations are conducted via electronic face-to-face meetings, typically through platforms like Skype, certain client requirements are deemed to be, or swiftly become, notably intricate. In such instances, arrangements can be made for in-person meetings. We frequently engage with clients and/or their legal or financial representatives in various global locations, including Hong Kong, Malaysia, Monaco, Slovakia, and Nevis (Caribbean), where we maintain direct affiliations with partner firms. Moreover, in situations where necessary, personal meetings can be facilitated in other jurisdictions convenient to the prospective client.
Anti Money Laundering (AML) & Tax Evasion Policy
Strategic Corporate Services Ltd (Vanuatu) is committed to upholding the highest standards of integrity and compliance with international laws and regulations. As part of our dedication to comply with Vanuatu’s laws combatting financial crimes, including money laundering and tax evasion, we have implemented stringent policies and procedures.
We strictly refuse to provide services to any prospective or existing client whom we suspect of engaging in money laundering, tax evasion, or any other similar unlawful conduct. However, it is important to note that we differentiate between legitimate tax planning and illegal activities. Our firm recognises the importance of profit generation and wealth accumulation in the business landscape, viewing them as essential aspects of smart financial management.
Our priority lies in creating customised structures that meet the specific needs of our clients while ensuring full compliance with legal and regulatory requirements. While some of our structures may appear intricate to an outsider, the majority are straightforward and transparent. As long as the income generated into a company is obtained from legal sources or settled into a trust established through legal means, we are pleased to provide our services.
- Notably, Vanuatu’s regulators have sensibly recognised that “Whether the key person has a criminal conviction or is subject to criminal proceedings, regulators should note that the simple fact of having a criminal conviction or being subject to criminal proceedings does not mean that a person does not meet fit and proper criteria. This is not how the Act should be interpreted.” Nevertheless, “Convictions for money laundering or terrorism financing should mean that a person does not meet fit and proper criteria.“,
It is vital to understand that the determination of whether we will engage or continue to engage with a client is solely at our discretion. Our Anti Money Laundering & Tax Evasion Policy is an integral part of our KYC obligations, underscoring our commitment to robust due diligence and regulatory compliance. We remain vigilant in identifying and mitigating any risks associated with financial crime, safeguarding the integrity of our operations and the trust of our clients.
Navigating KYC Requirements in the Crypto Space
Governments don’t discriminate between companies and trusts operating in crypto-currencies to those operating in traditional currencies and negotiable instruments. Consequently, numerous countries now mandate crypto based entities adhere to AML regulations. Thus, compliance involves implementing typical Customer Due Diligence (CDD) procedures, of which KYC obligations are central. Nevertheless, crypto users can leverage innovative methods such as digital identity verification, biometric identification, and ID document verification to ensure compliance with regulatory standards. Every KYC assessment is assessed on its own circumstances.
Flexible settlement options
Generally, but always dependent on the particular life company issuing the insurance bond, one can purchase bonds, receive withdrawals, and make distributions, in most major currencies including: USD$, EUR €, JPY ¥ / 円, GBP £, CNY ¥ / 元, AUD A$, CAD C$, CHF, HKD HK$, SGD S$, SEK kr, KRW ₩ / 원, NOK kr, NZD NZ$, INR ₹, MXN $, TWD NT$, ZAR R, BRL R$, DKK kr, PLN zł, THB ฿, ILS ₪, IDR Rp, CZK Kč, AED د.إ, TRY ₺, HUF Ft, CLP$, SAR ﷼, PHP ₱, MYR RM, COL$, RUB ₽.
Importantly, where the bond-holder requests the purchasing currency of a bond be converted to an alternative currency, in which the bond’s value is to be held, there can be negative consequences. For example, such a conversion may incur third-party fees and be subject to rates of exchange disadvantages that may reduce the bond’s underlying monetary value. In further example, converting some currencies to USD$ may, due to US government dictates at any given time, significantly reduce the convertible value of the initial investment; and such converted currency might not be able to be converted back to the original purchasing currency without further devaluing, or at all. There are a range of strategies for dealing with such issues.
Purchasing insurance bonds in Crypto – some life companies will offer to convert Crypto-currency, most commonly Bitcoin, into a monetary denomination of your choice, which shall constitute the bond’s funds, from which investments will be made. Transaction and service fees will depend on the particular Crypto-currency -to- monetary denominatory conversion. The crypto space can be volatile in terms of rapidly varying values, and holding Crypto may produce superior capital growth than an insurance bond.
GENUINE PRIVATE ADVICE YOU CAN RELY ON
China Pacific Partners offers confidential professional advice across a wide range of financial strategies for institutional and private clients living or investing in the Asia Pacific & Oceanic region.
With long-standing local and global affiliations, we can advise on medium and long-term financial strategies from an international perspective, focusing on those core sectors that we know well and understand.
With a combination of digital convenience and human investment expertise, our goal is to increase and protect your assets over the long term. Whatever your financial needs, we never lose sight of your objectives.
Insurance Bonds and Tax Implications – Risks, consequences and other important things to consider: The information provided on this particular webpage is subject to this website’s terms and conditions of use, available at www.charteredpacificpartners.com/website-terms-conditions/. The information on this particular webpage is not intended to provide, and should not be relied on for investment, tax, legal or accounting advice. The information is intended only for general reference. Insurance bonds may not be a legal investment instrument in the jurisdiction from which access to this website is made. Similarly, there may not be any such tax benefits available to tax-residents of some jurisdictions, and there may be civil and/or criminal penalties for purchasing an insurance/investment bond issued from an offshore jurisdiction. In today’s world there are tax implications for whatever we do. Tax laws are constantly evolving, and are constantly becoming more complex. It is therefore essential that you have the requisite assurances that you are paying the correct amounts of tax in respect to any investment decision you make. China Pacific Partners will assist clients obtain the necessary investment, tax, legal and accounting advice to ensure clients purchasing an insurance bond is compliant with the laws of the jurisdiction of which they are resident. Generally speaking, there is no such thing as tax free bonds unless the law allows it.