What Wealthy Families in Latin America Need to Know About Compliance Rules

April 8, 2016

Marcus Evans

Martin Litwak of Litwak & Partners, a law firm at the marcus evans Latin Private Wealth Management Summit 2016, discusses how the new compliance rules are impacting private wealth management in Latin America.

Interview with: Martin Litwak, Founding Partner, Litwak & Partners

“Compliance rules have dramatically changed in the last few years, and the next two ones will be even more complicated or challenging for most wealthy families,” according to Martin Litwak, Founding Partner, Litwak & Partners.

Litwak & Partners is a law firm attending the marcus evans Latin Private Wealth Management Summit 2016.

How will the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) impact private wealth management in Latin America?

There is a lot of information online about FATCA and CRS coming from banks and financial providers, but some families are not getting the best advice, from independent lawyers, on what to do or not do, how to manage the risks and the practical impact of these changes. It is not about filling out a new questionnaire. Families must make sure that the set of structures in place are in compliant with the new scenario. It is not just one piece of law that has changed; the whole system is now different.

About 10-15 years ago there were many ways that a family could keep what it owned private. Now countries are cooperating for tax purposes, and the information on the family’s assets is available to authorities as well as to third parties. This is an even bigger issue in a region like Latin America, where kidnappings take place and many governments are corrupt. The fact that information could exchange hands for very little money is very dangerous.

How could families better protect themselves?

Families must have the right structures in place before all these new rules take effect. There are very complex rules to follow now, so it is difficult to offer one and the same advice for everyone. It depends on the jurisdiction where the asset is held, the type of asset it is and also on the tax residency of the current owners and even the beneficiaries. It could be a good idea to hold a bank account in the US or Switzerland, to invest in real estate, art or jewelry.

There are however some guidelines families may follow. First, whatever they have or own should be reported. If they do not like the consequences this reporting may have, they can move to a different country with a better tax system. If they are not prepared to do this, they may be able to save or differ some taxes and/or to reach some level of confidentiality at least vis a vis third parties other than governments by setting up trusts and/or private family funds.

What are the benefits of having some assets offshore?

Jurisdictions traditionally considered as offshore international financial centers have stronger protections of secrecy and privacy. With offshore assets, it is better to structure them offshore too. Our clients usually pursue three objectives: privacy, tax optimization and succession planning. If they value secrecy the most, regulated investment funds (perhaps with their shares being publicly traded) are better than trusts. If succession planning is more important, a trust structure might be the best solution. We try to identify what matters to them the most, but they must also understand what can and cannot be achieved in this new transparent world.

How is the economic landscape impacting this space?

After 10 years of growth, the economies in the region are not as successful anymore. Governments are devaluing their currency. The environment is more risky. The next few years will be tough, with more mergers and acquisitions, as prices will be cheaper. Most of our clients now own distressed assets, real estate and interests in private equity funds. This trend will continue for a few years.

Contact: Sarin Kouyoumdjian-Gurunlian, Press Manager, marcus evans, Summits Division

Tel: + 357 22 849 313

Email: press@marcusevanscy.com

About the Latin Private Wealth Management Summit 2016

The Latin Private Wealth Management Summit is the premium forum bringing leaders from Latin America’s leading single and multi-family offices and service providers together. The Summit offers service providers and executives from single and multi-family offices an intimate environment for a focused discussion of key new drivers shaping the future of the industry.

For more information please send an email to alejandrad@marcusevansmzx.com or visit the event website at http://9nl.it/EMIA

About Litwak & Partners

Litwak & Partners is an offshore law firm highly specialized in multi-jurisdictional transactional and structuring work as well as in investment funds and private clients and trust works. The firm focuses in Latin America and it offers an alternative to traditional multi-jurisdictional Anglo-Saxon law firms with headquarters in the British Virgin Islands, the Cayman Islands and other offshore jurisdictions.

www.litwak-partners.com

About marcus evans Summits

marcus evans Summits are high level business forums for the world’s leading decision-makers to meet, learn and discuss strategies and solutions. Held at exclusive locations around the world, these events provide attendees with a unique opportunity to individually tailor their schedules of keynote presentations, case studies, roundtables and one-on-one business meetings. For more information, please visit www.marcusevans.com

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Tags: investment, latin, latin america, offshore, private wealth, wealth management
Posted in LatAm, Premium Content, Consulting, Wealth Management, Consulting, Wealth Management