WELLINGTON, June 27 (Reuters) - New Zealand Prime Minister John Key said on Monday he expected his government would impose more disclosure rules on foreign trusts after a review found they were open to abuse.
The review, announced after the release of the Panama Papers, has recommended a registry of foreign trusts which would require the name, country of residence and tax identification number of settlors and beneficiaries of the trusts.
“There has been no direct evidence of illicit funds being hidden in New Zealand foreign trusts, or of tax abuse, said John Shewan who led the review.
“The inquiry considers it is reasonable to conclude that there are cases where foreign trusts are being used in this way,” Shewan said.
The Panama Papers showed in April how Mossack Fonseca touted New Zealand trusts as a secretive way to create a non-taxed vehicle in the South Pacific nation, prompting the country’s government to order an independent inquiry on April 11.
Key told reporters that he expected the majority of the review’s recommendations, which were released on Monday, would be implemented.
“A formal response to the inquiry is expected next month,” Key said. When asked whether the recommendations would be implemented, he said “I would have thought the majority.”
New Zealand has long been identified as offering a trust regime popular with the offshore trust business. The country’s tax department recommended in 2014 that there be a review of taxation of foreign trusts.
Many lawyers and accountants who set up trusts had been expecting more disclosure rules and saw no problem with the reviews recommendations.
“In reality all it means is we’re just filling out a form in a bit more detail than we are at the moment, but it’s the same information that we’ve already got at hand,” said Matthew French, a Dunedin-based manager of In Fiduciary Services, a company with around 300 foreign trusts in New Zealand.
Ron Pol, the head of anti-money laundering consultancy firm AML Assurance, said the recommendations were a blueprint to stop trusts being seen as a vehicle for the proceeds of crime.
“The report has proposed a series of new measures which, if adopted, will clearly and materially contribute to the effectiveness of crime prevention capabilities,” Pol said. (Reporting by Charlotte Greenfield; Editing by Michael Perry)
Our Standards: The Thomson Reuters Trust Principles.