Internet Offshore Banking

Storms gather over fantasy islands

Mmm...the Bahamas, the Cayman Islands, Grenada... the very names trip off the tongue and conjure up images of exotic and sophistication. Bet you could get a decent return or two from a company out there...

Imperial Consolidated, for example: 15 per cent per year for one of its funds - guaranteed. 15 per cent per year! Guaranteed! Why even a poor old hack could make a decent man of himself with returns like that.
But that’s the thing about fantasy holiday destinations, they always seem just a little too fantastic.

Internet Offshore Banking & Investment International

As reported elsewhere in Investment International, Imperial Consolidated is offering fabulous returns. And while we are not saying IC will fail to achieve, one wonders whether the firm would have passed more stringent regulatory requirements in say, Jersey.
It has been a tough time for IC lately. News has been filtering through from the Bahamas that the firm has been forced to cease offering its Hint credit card.

This, because it lost the backing of card issuer Leadenhall Bank & Trust, and card administrator Axxess International. The firm has also decided to ship out of the Bahamas and may set up shop in Grenada, where it also has offices.

Internet Offshore Banking - Grenada

Meanwhile, over in Grenada, a firm called Preferred Trust, run by a man who is operating under a new Grenadan passport and a different identity, is offering even more enormous returns for investors.

Joseph Severin (previously Verlin Swartsendruber) is hoping to give investors returns of up to 60 per cent per year on investments as low as US$10,000.

Mouth watering stuff. But Swartsendruber, sorry Severin, admits the returns are not guaranteed and says his company has not been independently audited because this is unnecessary under Grenadan law.
So there you have it. Enormous returns and risk to match. But then, that’s the fantasy of the sunshine islands.

Still, it may be harsh to criticise some of these jurisdictions too heavily. After all the Bahamas has just landed the much-coveted Qualified Jurisdiction status that is awarded by the IRS in America.

Internet Offshore Banking & America

What this means is that America approves of the way the Bahamas is being regulated and of what it is doing to fight money laundering and tax ‘avoision’ by US citizens.
For jurisdictions that fail to land the ‘qualified’ status, the punitive measures are severe. Companies operating in such centres will face the sanction of a 30 per cent withholding tax on US-sourced income.
Ian Fair, chairman of the Bahamas Financial Services Board, was naturally overjoyed at the news.

He said: “It is obviously very, very good news because it clearly indicates recognition and acknowledgement that the laws that we have put in place and amended meet international standards.”
Fair also reckons the boost from the US will help the Bahamas to escape the OECD’s purge on tax havens.

Internet Offshore Banking & The Bahamas

“Our chances [of escaping the blacklist] have been increased. They have been enhanced by this because the only country which keeps a constant watch on us is our great neighbour, the United States.”
The Bahamas submitted its case for QJ status in the middle of last year, but the US stalled because of the centre’s lack of compliance with Know Your Customer rules.
It was only recently that the Bahamas introduced KYC rules which allowed the islands to win the status. At the moment the Bahamas doesn’t know how long it will retain QJ status.
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