I refer to the report ("Hong Kong and HSBC under scrutiny
as US cracks down on American tax cheats", January 5).
It made reference to an investigation by the US Internal Revenue
Service into Sovereign Management and its US-based clients.
We wish to make it clear that the Sovereign Management referred
to has no connection whatsoever with Sovereign Trust (Hong Kong)
Limited or its associated companies within The Sovereign Group.
The Sovereign Group is fully compliant with the IRS'
requirements under the Foreign Account Tax Compliance Act and is
not aware of any of its companies being the subject of any
This article does, however, bring to light the necessity for
tightening controls for corporate service providers and trust
management companies in Hong Kong.
Hong Kong has long promoted self-regulation and enjoyed the
freedom of a laissez-faire economy. However, with the taxation
landscape continually changing and the increased difficulty in
opening up bank accounts for companies owned and operated by
foreigners, tighter regulations could well help give banks the
confidence that corporate service providers are a perfectly
acceptable source of business for the banks.
This is the way it tends to work in the many well-regulated
offshore financial centres.
Should Hong Kong continue to prefer minimal regulation, we
recommend clients use professional directors from reputable
corporate services providers who apply rigorous
anti-money-laundering policies (often because they are licensed and
regulated in many other jurisdictions).
Banks should welcome this approach, as when professionals are in
control, they can and do provide a first line of defence for the
prevention of money laundering and tax fraud.
Hong Kong-based banks, in our view, should open bank accounts
only for offshore companies when these are managed by
Banks in offshore financial centres such as Guernsey and the
Isle of Man do not open accounts for client-operated companies.
In the absence of government regulation, enhanced
self-regulation of the corporate services industry can only be good
for clients and Hong Kong.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Virtual currency trading value and volume is soaring globally, but regulating virtual currencies and those who provide virtual currency exchange services (Exchangers) is challenging.
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