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Compliance and the Cook Islands Financial Services Industry

April 7, 2023

The Cook Islands Trust Industry: Compliant with International Standards, Committed to Client Confidentiality

In recent years compliance with with international requirements on money laundering and financial transparency to combat tax evasion and other financial crimes, has been high on the agenda of the Cook Islands government and at the forefront of the Cook Islands financial services industry. During this time, the Cook Islands has passed laws and regulations necessary to meet international standards and promote and encourage compliant financial activity and business operations whilst maintaining its reputation for being a progressive, stable and safe jurisdiction to do business.

FATCA and CRS Compliance

The Cook Islands has incorporated FATCA and CRS into its laws for the automatic sharing of financial information for tax matters. It has enhanced its AML/CFT laws and framework with the enactment of the Financial Transactions Reporting Act 2017 and other related legislation to meet FATF’s recommendations for best practice.

Commitment to Tax Transparency and Compliance

The Cook Islands has joined the OECD’s Inclusive Framework on Base Erosion and Profit Shifting (known as BEPS) and passed laws to remove tax regimes deemed preferential and harmful by the European Union thereby being deemed a co-operative jurisdiction for tax purposes.

The ongoing political movement to establish global transparency on financial matters would suggest that the confidentiality and privacy of one’s financial affairs can no longer be taken as a certainty.

However, whilst governments should not be denied their rightful tax take and those profiting from crime should not be encouraged, there needs to be some comfort for those going about their lawful business that their personal information will not be available to those with no lawful need for it. The balance struck by the Cook Islands in this regard is to meet its international obligations but, through its laws, retain an individual’s right to legitimate confidentiality.

Stance on Beneficial Ownership

The Cook Islands does not have public registers for beneficial ownership of incorporated entities or trusts. The Commissioner of the Financial Supervisory Commission and the Financial Intelligence Unit do have investigative powers where there is reason to believe financial misconduct has taken place. However, the information they obtain will only be shared in accordance with the provisions of the law. Fishing expeditions will not be tolerated.

Conclusion

The Cook Islands approach to meeting its international obligations whilst recognizing and providing legitimate confidentiality for those doing business in and with the Cook Islands, should give governments, institutions, businesses and individuals globally great comfort when dealing with the jurisdiction and its financial services industry.

This approach gives the small island state increased credibility when dealing with international trade partners and financial institutions who should find it hard to justify the risk of money laundering, or other financial crimes, as the reason for not transacting with Cook Islands businesses.

For more information on the Compliance in the Cook Islands Financial Services Industry contact our team at Cook Islands Finance.

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