Bermuda: Living in Interesting Times

As the Chinese saying goes, "may you always live in interesting times". And the past couple of years have been very interesting, and in many ways much like a curse. We have been battered with anachronisms to such an extent that even the offshore professionals dealing with the proponents of these initiatives cannot remember to what band of bureaucracy they belong. The OECD, FATF, QI, NCCTs, CFATF, HTP Group, G8, SCEEAMLMCE (no I did not make that one up, it stands for "The Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures of the Council of Europe)have all weighed in with their opinions and requirements.

What this all means for the offshore world is increased regulation and regulatory bodies with their associated costs. Like all industries where the costs of entry and operations rise, the result will be that some small offshore financial centers will find it impossible to fund an effective regulatory regime. As these small financial centers disappear, so too will the firms that operate within them. In the larger offshore centers small firms will find the increased regulatory burden a force for consolidation. The larger firms, like the LOM Group, will continue to grow for the normal reasons that people and institutions require offshore financial services:

• Privacy - Offshore accounts remain relatively very difficult for third parties to examine.
• Asset protection – Properly structured trusts, private corporations and other mechanisms can effectively protect assets.
• Flexibility of innovation and operations - Offshore financial firms tend to be more specialized than their counterparts onshore and can respond quicker to new requirements or needs of the customer.
• Professional expertise - There is a high level of expertise available in the larger offshore centers.
• Personal touch - The tradition of "knowing your client" has been a long-established one in the offshore world as the traditional client base is particularly service. Offshore professionals deal with many of their clients’ needs and the relationship is highly valued.

During these "interesting times" we fully expect that because Bermuda is one of the largest and most reputable offshore financial centers, its industry should continue to grow substantially for the foreseeable future.