Policy

It is the policy of EFSAG Group and its affiliates, (hereinafter “EFSAG”) to prohibit and actively pursue the prevention of money laundering and any activity that facilitates money laundering or the funding of terrorist or criminal activities. EFSAG is committed to AML compliance in accordance with applicable laws of jurisdictions where EFSAG offers corporate and legal services. EFSAG requires its officers, employees and affiliates to adhere to these standards in preventing the use of its products and services for money laundering purposes.

For the purposes of the Policy, money laundering is generally defined as engaging in acts designed to conceal or disguise the true origins of criminally derived proceeds so that the unlawful proceeds appear to have been derived from legitimate origins or constitute legitimate assets.

Generally, money laundering occurs in three stages. Cash first enters the financial system at the “placement” stage, where the cash generated from criminal activities is converted into monetary instruments, such as money orders or traveler’s checks, or deposited into accounts at financial institutions. At the “layering” stage, the funds are transferred or moved into other accounts or other financial institutions to further separate the money from its criminal origin. At the “integration” stage, the funds are reintroduced into the economy and used to purchase legitimate assets or to fund other criminal activities or legitimate businesses. Terrorist financing may not involve the proceeds of criminal conduct, but rather an attempt to conceal the origin or intended use of the funds, which will later be used for criminal purposes.

Each employee of EFSAG, whose duties are associated with the provision of products and services of EFSAG and who directly or indirectly deals with the clientele of EFSAG, is expected to know the requirements of the applicable laws and regulations which affect his or her job responsibilities, and it shall be the affirmative duty of such employee to carry out these responsibilities at all times in a manner that complies with the requirements of the relevant laws and regulations.

The laws and regulations include, but not limited to: “Customer Due Diligence for Banks” (2001) and “General Guide to Account Opening and Customer Identification” (2003) of Basel Committee of banking Supervision, Forty + nine Recommendations for Money Laundering of FATF, USA Patriot Act (2001), Prevention and Suppression of Money Laundering Activities Law of (1996).

To ensure that this general policy is carried out, management of EFSAG has established and maintains an ongoing program for the purpose of assuring compliance with the relevant laws and regulations and the prevention of money laundering. This program seeks to coordinate the specific regulatory requirements throughout the group within a consolidated framework in order to effectively manage the group’s risk of exposure to money laundering and terrorist financing across all business units, functions, and legal entities.

Each of the affiliates of EFSAG group is required to comply with all aspects of the group’s policy as well as their own AML policies which specifically consider the local AML laws and requirements to which they are subject. Failure by the group and its affiliates to comply with the all applicable local AML laws and regulations could result in severe regulatory sanctions, possible fines and criminal penalties and damage to the group’s business reputation.

Risk Assessment

An assessment of the risk of exposure to money laundering issues across all customer relationships shall be completed using the EFSAG standardized risk rating model. The risk rating model shall be approved by the Board of Directors on an annual basis.

Suspicious Activities

There are signs of suspicious activity that suggest money laundering. These are commonly referred to as “red flags.” If a red flag is detected, additional due diligence will be performed before accepting client’s requests or providing services.

Examples of red flags are:

The customer exhibits unusual concern regarding the AML policies, particularly with respect to his or her identity, type of business and assets, or is reluctant or refuses to reveal any information concerning business activities, or furnishes unusual or suspect identification or business documents.
The customer wishes to engage in transactions that lack business sense or apparent investment strategy, or are inconsistent with the customer’s stated business strategy.
The information provided by the customer that identifies a legitimate source for funds is false, misleading, or substantially incorrect.
Upon request, the customer refuses to identify or fails to indicate any legitimate source for his or her funds and other assets.
The customer (or a person publicly associated with the customer) has a questionable background or is the subject of news reports indicating possible criminal, civil, or regulatory violations.
The customer exhibits a lack of concern regarding risks, commissions, or other transaction costs.
The customer appears to be acting as an agent for an undisclosed principal, but declines or is reluctant, without legitimate commercial reasons, to provide information or is otherwise evasive regarding that person or entity.
The customer has difficulty describing the nature of his or her business or lacks general knowledge of his or her industry.
The customer attempts to make frequent or large deposits of currency, insists on dealing only in cash equivalents.
For no apparent reason, the customer has multiple accounts under a single name or multiple names, with a large number of inter-account or third-party transfers.
The customer is from, or has accounts in, a country identified as a non-cooperative country or territory by the Financial Action Task Force.
The customer’s account has unexplained or sudden extensive wire activity, especially in accounts that had little or no previous activity.
The customer’s account shows numerous currency or cashiers check transactions aggregating to significant sums.
The customer’s account has a large number of wire transfers to unrelated third parties inconsistent with the customer’s legitimate business purpose.
The customer’s account has wire transfers that have no apparent business purpose to or from a country identified as money laundering risk or a bank secrecy haven.
The customer’s account indicates large or frequent wire transfers, immediately withdrawn by check or debit card without any apparent business purpose.
The customer makes a funds deposit followed by an immediate request that the money be wired out or transferred to a third party, or to another firm, without any apparent business purpose.
The customer makes a funds deposit for the purpose of purchasing a long-term investment followed shortly thereafter by a request to liquidate the position and transfer of the proceeds out of the account.
The customer engages in excessive journal entries between unrelated accounts without any apparent business purpose.
The customer requests that a transaction be processed in such a manner to avoid the firm’s normal documentation requirements.
The customer, for no apparent reason or in conjunction with other red flags, engages in transactions involving certain types of securities, such as penny stocks, bearer bonds, which although legitimate, have been used in connection with fraudulent schemes and money laundering activity. (Such transactions may warrant further due diligence to ensure the legitimacy of the customer’s activity.)
Customer Identification

EFSAG will document and maintain written customer identification procedures (“CIP”) that will enable to form a reasonable belief that EFSAG knows the true identity of each customer. If the EFSAG is not able to verify the identity of a customer within a reasonable period of time after services or account opening request, that services shall be suspended and account will be closed. Such an account and services will be subject to increased due diligence until such time as the customer’s identity has been verified or the account has been closed and services suspended.

CIP for Natural Persons

For natural persons the following information should be obtained, where applicable:

Legal name and any other names used (such as maiden name).
Correct permanent address (the full address should be obtained. a Post Office box number is not sufficient).
Telephone number, fax number, and e-mail address.
Date and place of birth.
Nationality.
Occupation, public position held and/or name of employer.
An official personal identification number or other unique identifier contained in an unexpired official document (e.g. – passport, identification card, residence permit, social security records, driving license) that bears a photograph of the customer.
Source of wealth (where appropriate).
EFSAG shall verify this information by at least one of the following methods:

Confirming the date of birth from an official document (e.g. birth certificate, passport, identity card, social security records).
Confirming the permanent address (e.g. utility bill, tax assessment, bank statement, a letter from a public authority).
Contacting the customer by telephone, by letter or by e-mail to confirm the information supplied after an account has been opened or other services provided (e.g. a disconnected phone, returned mail, or incorrect e-mail address should warrant further investigation).
Confirming the validity of the official documentation provided through certification by an authorized person (e.g. embassy official, notary public).
CIP for Institutions

The underlying principles of customer identification for natural persons have equal application to customer identification for all institutions. Where in the following the identification and verification of natural persons is involved, the foregoing guidance in respect of such persons shall have equal application. The term institution includes any entity that is not a natural person.

For corporate entities (i.e. corporations and partnerships), the following information should be obtained:

Name of institution.
Principal place of institution’s business operations.
Mailing address of institution.
Contact telephone and fax numbers.
Some form of official identification number, if available (e.g. tax identification number).
The original or certified copy of the Certificate of Incorporation and Memorandum and Articles of Association.
Nature and purpose of business and its legitimacy.
This information should be verified by at least one of the following methods:

For established corporate entities – reviewing a copy of the latest report and accounts (audited, if available).
Conducting an enquiry by a business information service, or an undertaking from a reputable and known firm of lawyers or accountants confirming the documents submitted.
Undertaking a company search and/or other commercial enquiries to see that the institution has not been, or is not in the process of being, dissolved, struck off, wound up or terminated.
Utilizing an independent information verification process, such as by accessing public and private databases.
Obtaining prior bank references.
Visiting the corporate entity, where practical.
Contacting the corporate entity by telephone, mail or e-mail.
Recordkeeping

All identification documentation and services records shall be kept for the minimum period of time required by local law.

Training

All new employees shall receive anti-money laundering training as part of the mandatory new-hire training program. All applicable employees are also required to complete AML training annually. Participation in additional targeted training programs is required for all employees with day to day AML responsibilities.

Administration

For the purposes of AML Policy EFSAG shall appoint AML Compliance Committee. EFSAG AML Compliance Committee shall be responsible for the administration, revision, interpretation, and application of this Policy. The Policy will be reviewed annually and revised as needed.

The duties of the AML Compliance Committee with respect to the Policy shall include, but shall be not limited to, the design and implementation of as well as updating the Policy as required; training of officers and employees; monitoring the compliance of EFSAG affiliates, maintaining necessary and appropriate records; and independent testing of the operation of the Policy.

To find out how we can assist you with your offshore trust set up or management, please Contact Us. Alternatively, to learn more about the parties involved in a trust, view our Trust Parties page.

Trust Beneficiaries explained

A beneficiary in trust law is the person or group of persons who are entitled to benefit directly from the trust arrangement as specified the settlor or trustee. Usually, a beneficiary is a natural person, however in some cases; beneficiaries can take the form of a company, particularly for commercial trust transactions.

Beneficiaries can be:

• Natural persons
• Family members
• Friends or acquaintances
• Companies
• Minors
• Persons with mental disabilities
• Unborn children

Almost every trust structure is required to have nominated beneficiaries (with the exception of charitable trusts). It is therefore important when creating your trust, to consider who you wish to receive the asset you transfer to the trust.

Categories of beneficiaries:

Fixed – a fixed beneficiary has a ‘fixed’ entitlement to the income or assets held in the trust

Discretionary – beneficiaries in this category receive their entitlements according to the decisions made by the trust’s trustee

Role of beneficiaries

Beneficiaries do not play a specific role in the formation or administration of a trust; they simply benefit from the property held in the trust.

Although the trust beneficiary has little or no control over the formation and administration of the trust, in some circumstances, the beneficiary may take ownership and control of the trust if this has been specified within the trust deed. Additionally, it may be specified within the trust deed that the beneficiaries must satisfy certain criteria in order to receive the trust’s property.

Setting up an offshore trust in a favorable jurisdiction provides the settlor (person who sets up the trust) and the trust beneficiaries (those who receive the assets held in the trust) with many advantages. Essentially, one of the most common reasons to set up an offshore trust is to take advantage of the country’s trust laws in place, and low or zero taxation system.

For more information on the advantages of setting up an offshore trust, or to find out how we can assist you with the set up of your trust, Contact Us.

Offshore trust advantages available

There are numerous offshore trust advantages enjoyed by trust owners and the trust beneficiaries worldwide. Some of these advantages are detailed below.

Private – certain jurisdictions provide that the trust deeds of a person setting up a trust need not be publically registered. Overall, offshore trusts benefit from great levels of privacy and anonymity which is a highly sought after feature for many high net worth individuals seeking to safeguard assets of a significant value.

Protection of wealth – an offshore trust created in a politically and financially stable country with bespoke trust law effectively acts as a great asset protection tool. Wealth can be protected in a number of ways, including shielding wealth from external parties and creditors.

Tailored asset Protection tool –asset protection can be achieved provided there are favorable taxation laws in place, thus maximizing income from your estate. Each trust can also be tailored specifically to meet the individual requirements of the settlor and their beneficiaries.

Avoidance of forced heirship rules – forced heirship rules can be avoided by setting up a trust in a jurisdiction that does not enforce such rules. Assets can be held in the relevant trust structure and the settlor will be given the right to decide how they would like to distribute their wealth. One of the most sought after reasons to open an offshore trust is to plan ones inheritance as they see fit, giving them the freedom to manage their wealth.

Availability – offshore trusts are available to almost any person or company to set up. Some countries have no minimum deposit required to open a trust, while others promote the use of family trusts for specific purposes. It is a myth that you must be a high net worth individual in order to open a trust,

Protection - offshore trusts benefit from heightened levels of protection against creditor or other third party claims against the assets held in a trust. Creditors are required to prove “beyond all reasonable doubt” that the trust assets are fraudulent before they can seize them.

Multiple uses – trusts are not set up for the sole purpose of shielding personal wealth, in fact many companies set up trusts for employee benefit plans, retirement programs and stock option schemes. Trusts can also be established for insurance plans.

Tax planning – asides from benefiting from low or zero taxation, your assets held in your offshore trust may also benefit from no capital gains or estate planning tax, depending on the jurisdiction in which the trust is established.

EFSAG offer a wide range of asset protection and trust services. To find out more, please view our Offshore Trust Services page.

Understanding a testamentary trust

A testamentary trust is a particular asset protection structure that is set up for the eventual benefit of the nominated beneficiaries. Like a family trust, a testamentary trust has the ability to outline which beneficiaries will receive the property stipulated within the trust.

When setting up a testamentary trust, it is important to have the four key party members, including the settlor, the beneficiaries, the trustee and the protector. The inclusion of these individuals enables the trust to be a fully operational legal entity.

The settlor (the individual wishing to establish the trust) appoints a trustee to manage and administer the trust. The protector is responsible for supervising the administration of the trust in compliance with the settlor’s wishes, whilst the beneficiaries are those who will ultimately benefit from the formation of the trust.

Property contained within a testamentary trust does not come into effect until the settlor has passed away. Once effective, beneficiaries can take advantage of favorable tax benefits (such as the exclusion of inheritance tax). In addition they will also be protected from creditor or litigation claims. A further benefit is that such structures also offer excellent estate planning opportunities.

For more information on the benefits of asset protection, please visit our Effective Asset Protection services page.

Trusts as a wealth management tool

A trust is a versatile asset protection and tax planning tool that enables people to place their funds in a secure agreement that is managed by a trustee. Trusts are also regarded as reliable wealth management tools, as they allow individuals and companies to effectively manage their assets by protecting them from external creditors and lawsuits.

A trust is regarded as an effective wealth management tool because its enables the settlor to manage his or her own assets according to preferences, whilst controlling how those assets are distributed upon death. Trusts also enable individuals to safeguard personal and professional assets from liabilities.

In creating a trust, the trustee can ensure that only the beneficiaries of the trust are able to benefit from the arrangement. A trust is therefore an effective tool for protecting assets from forced heirship rules as only the appointed beneficiaries can benefit from the trust property.

Moreover, trusts provide beneficiaries with confidentiality as well as privacy from the public eye. Individuals who wish to protect their wealth through setting up a trust are able to appoint a trustee to administer and manage the trust activity and ensure that only the named beneficiaries gain from the arrangement.

To learn more about how EFSAG can assist you with your asset protection and inheritance needs, please Contact Us.

Reasons to set up a holographic will

Holographic wills are handwritten documents that are legally recognized in 25 of America’s 50 states. Some states require a witness to be present whilst others have no such stipulations. They are advantageous if the creator wishes to fully express his or her wishes without being bound by legal terminology. They also reduce the standard expenses associated with the formation of a traditional will, as there is no need to invest in a lawyer for the formation of an attorney-drafted will.

Many people choose to set up a holographic will because they believe that their wishes are not complicated enough to have to seek the advice of a legal consultant. Further still, they wish to express their preferences using the traditional pen and paper method.

Although holographic wills are straightforward to set up, there are still certain requirements that individuals must abide by, in order to ensure that it is properly created and in compliance with the law of the testator’s chosen state. It is also vital that there are no ambiguities in place with regards to the testator’s true intentions, and therefore the testator must be extremely specific when creating the will.

Holographic wills are not very common and they are not accepted globally. Generally speaking, it is recommended to seek the advice of a qualified lawyer when creating a will, as this can reduce further complications upon the death of the testator.

To learn more about how EFSAG can assist you will your asset protection and inheritance needs, please Contact Us.

Features of a holographic will

A holographic will is a type of will that is written and signed by a testator by hand. Many countries across the globe do not accept holographic wills; therefore before drafting such a document it is important to ensure that your will and its estate are legally applicable. Taking such precautions guarantees that the property outlined within the will does not go into probate on the grounds of invalidity.

Holographic wills are gradually becoming less and less popular, as asset protection laws continue to become more stringent. In the case that a holographic will has been written without being signed by a witness, it is unlikely that it will be legally accepted.

Nevertheless holographic wills are typically accepted under the condition that:

• Evidence shows that the will was in fact created by the testator i.e. through the use witnesses
• The testator demonstrates intellectual capacity to create the will
• The will must evidence that the testator expressly directs his/her estate to be distributed to the nominated beneficiaries

Most individuals who wish to create a will do not typically select a holographic will as it is notoriously less reliable than traditional wills. Nevertheless in situations where an emergency arises they can be used successfully to ensure that an individual’s wishes are met upon their death. In countries that do not accept holographic wills, exceptions are permitted for individuals in the armed forces or in high danger jobs.

EFSAG can assist you with all of your asset protection and tax planning needs. To learn more, please Contact Us.

Features of a no-contest clause

It is important when writing a will or setting up a trust that you select an entity that reflects your personal and financial requirements. In selecting a no-contest clause, it is also important to ensure that your nominated beneficiaries are fully aware of the factors associated with them.

A no-contest clause is used as a method of threatening specific parties or individuals with appropriate litigation from the following circumstances:

• Acting in certain way
• Refraining from acting in a certain manner
• Ceasing to act

In the event that you have selected beneficiaries whom you believe may challenge the terms and conditions of the will or trust, a no-contest clause is recommended. This is a convenient way to legally threaten specific beneficiaries with disinheritance, should the beneficiaries challenge the terms and conditions of document in court.

A no-contest clause is only effective in a court of law where the challenging individual does not obtain a probable cause as stipulated under the Uniform Probate Code (UPC). The Uniform Probate Code is implemented throughout many states across the USA including Florida, New Mexico and Montana.

In principle, the no-contest clause serves as a form of protection against any nominated beneficiaries who cause problems with regards to their inheritance once a testator dies. The testator can guarantee that should the beneficiary attempt to challenge the validity of the document, then they will completely disinherit their inheritance.

To learn more about how EFSAG can assist you with asset protection, please view our Asset Protection Services page.

Foundation property explained

The types of assets or property that can be held in an offshore foundation will ultimately depend on the jurisdiction the foundation is established in, as well as the type of entity being established. For example the nature of the entity will differ if a charitable foundation is being set up, as opposed to a non-charitable foundation.

When selecting a jurisdiction it is important to bear in mind that each jurisdiction adopts its own asset protection and tax planning rules, which will ultimately influence the structure of the entity. It is therefore vital that you select the most appropriate country to set up your foundation in, to achieve your desired asset protection and tax planning results.

The types of property typically held in an offshore foundation include, but are not limited to:

Capital
Stocks and Shares
Real Estate
Intellectual Property
Bank Deposits
Business Corporations
Life Assurance Policies
Pensions

If you wish to set up an offshore foundation it is recommended that you consult with a professional consultancy firm in order to achieve the most optimal and tailor-made asset protection solution. It is also essential that the correct type of foundation is formed in line with the intended activity of the foundation and the assets that you propose to be held within.

EFSAG can assist you in achieving the most effective level of asset protection. To learn more about setting up a will, please view our Asset Protection Services page.

Reasons to set up a mirror will

A mirror will is a particular type of will that is established by couples who have similar ideals in mind for the future of their assets. Although mirror wills are usually established by married couples, couples who wish to establish mirror wills do not necessarily have to be married. They can also be unmarried couples who simply wish to protect their assets for the future benefit of one another.

When writing a mirror will, the respective partners usually become the sole beneficiary and executor to one another. However, during the formation process it is recommended that at least one extra executor and beneficiary are added to each will, in order to safeguard the assets in the event that the couple may die at the same time.

Mirror wills are advantageous because:

• They enable a couple that has the same wishes to protect their assets in a mutual agreement
• They are made in the same terms and for the benefit of one another
• They are not irrevocable and can therefore be amended to fit the present circumstances at the time of death

Mirror wills are unique in that their contents can be amended following the death of the first partner. Other types of wills, including mutual wills, have a clause within them that stipulates that such changes are prohibited after the death of a spouse. Nevertheless revocable wills have both advantages and disadvantages.

Mirror wills are the selected option amongst many couples as they enable each party to create their own individual wills, as opposed to having to create one will that combines the wishes of both parties.