The Pandora Papers do not represent the offshore financial industry at large, which generally helps people seek increased flexibility and higher returns.
Over the weekend, around 12 million confidential documents from world leaders, politicians and very wealthy people were leaked, including former British Prime Minister Tony Blair, King of Jordan, ruling family in Azerbaijan Aliyev , Czech Prime Minister Andrej Babis, and the Pakistani political elite, among others.
Of course, when it comes to people who have previously held political or royal office, and / or those who seek to break the law by hiding or “washing” their money or evading tax, there must be full transparency.
Yet the overwhelming majority of people who use companies providing offshore financial products and services do not represent these prominent names found in the Pandora Papers.
The majority of these people are hardworking, law-abiding citizens who use legal and compliant solutions to find better returns, increased options and more flexibility.
In my 40 years of working with cross border investors, I can say that the main reason people hold money in offshore accounts is simply for the sake of convenience. They provide centralized, secure, flexible and comprehensive access to their funds, no matter where the person lives or where they may move in the future. This is crucial for those who live far from their country of origin, with generally transient lifestyles.
Additionally, many offshore financial centers offer tax neutrality, thus protecting companies from double taxation that operate in many jurisdictions. As such, many international investors use these hubs because they can offer flexibility of corporate structures and the issuance of a mix of share classes, easy incorporation and a strong legal system.
These international financial centers can also provide a financial haven for people living in countries experiencing economic and social turmoil, such as currency volatility and the expropriation of assets.
I have said repeatedly that financial confidentiality is often necessary to ensure the safety of individuals and their families. Yet there is a world between privacy and secrecy. The exchange of information between government authorities for relevant tax matters is legitimate, while the sharing of information with others is not. Confidentiality is often essential, secrecy is not.
This is because offshore financial services provide an indispensable, fully legal and in demand service for individuals, businesses, organizations, agencies and charities around the world.
The Pandora documents point out that more needs to be done to achieve better cooperation between certain jurisdictions, but they are certainly not representative of today’s international financial services industry.
However, they should be an opportunity to further strengthen the efficiency and credibility of these international financial hubs and the sector as a whole.
This is all the more important as the industry is expected to experience significant growth over the next few years as individuals and businesses seek to increasingly globalize.
Nigel Green is CEO and Founder of deVere Group, one of the world’s largest independent financial advisory and fintech organizations.