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Ensuring Financial Data Secrecy in EU with Professional Intermediary Letter

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The issue of data secrecy is a top priority for many investors. The usual reason is to hide the assets from tax in their home country. Some time ago I wrote about deteriorating Swiss performance when it comes to banking secrecy. However, Switzerland is still #1 on the Financial Secrecy Index as published by Tax Justice Network.

Generally, if you’re citizen in any EU country, exposing your financial data to any EU institution is highly risky. In EU there are a number of legislation initiatives, like Savings Tax Directive, which invariably will lead to automatic information exchange between EU member countries. Use of trusts is not practical as EU-based services providers, such as fund administrators, have the obligation to identify benefical owners. As well, legislation in some of the periphery countries may equate ownership through trust with direct ownership.

However, there is a way how to keep your financial data outside EU while investing in EU registered funds. This is done through Professional Intermediary Letter. The way it works is that your bank, say in Switzerland, writes such letter to a fund administrator in EU and bank invests on your behalf. The letter basically says that the bank is regulated in a reputable jurisdiction, is regulated and has performed all customer due diligince requirements. The end result is that the customer information remains confidetial in a jurisdiction outside EU while service provider in EU is allowed to rely on such bank to comply with anti money laundering prevention procedures.


Written by A.S.

October 6, 2011 at 11:30 pm

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