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Maitland Opens New Miami Office

Maitland, a global advisory and fund administration firm, has opened a new office in Miami, it´s15th across 12 countries. The office will provide the firm´s LatAm team with a regional base, giving their growing private and institutional client base access to on-the-ground support.

Economic and political instability in Brazil and LatAm – alongside regulatory changes such as Brazil’s recently announced tax amnesty program – are driving increased demand for the firm’s services, especially for clients who have based themselves outside their country of origin. The move ultimately allows the company to forge closer relations with its clients, prospects as well as the growing community of service providers in the vicinity.

Benjamin Reid, Senior Business Development and Client Manager, LatAm, said: “Since Maitland entered the LatAm market three years ago, we have been fortunate enough to work with some of the leading family offices in the region. As we continue to grow, it is paramount that we locate ourselves closer to our clients – almost all of whom have a foothold of some sort here in Miami. Being here allows us to provide a more seamless, local offering, and we have the expertise and linguistic skills to service this region to the highest standard.”

The office is located in downtown Miami. Benjamin Reid has relocated to Miami to continue to lead the group’s business development efforts in the region. Benjamin will be joined by Pedro Olmo and Camila Saraiva, as client relationship managers responsible for the day-to-day management of the growing book of LatAm clients. Pedro joined Maitland from Turim family office in Brazil where he was the group’s in-house counsel. Camila joins the team from Barbosa legal, a Miami based Brazilian law firm focused on servicing UHNW clients.

David Kubilus, Head of Business Development at Maitland added: “Our LatAm business has been growing quickly, so opening a Miami office fits perfectly with our strategy of expanding where clients are located. It’s a great new chapter in our global growth story, which happens to coincide with our 40^th anniversary as a business.”

MAS Directs BSI Bank to Shut Down in Singapore for Breaches of Anti-Money Laundering Requirements

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The Monetary Authority of Singapore (MAS) announced on Tuesday that it plans to remove the status as a merchant bank in Singapore of BSI Bank Limited (BSI Bank) “for serious breaches of anti-money laundering requirements, poor management oversight of the bank’s operations, and gross misconduct by some of the bank’s staff.” This is the first time that MAS is withdrawing its approval for a merchant bank since 1984.

In addition, MAS has referred to the Public Prosecutor the names of six members of BSI Bank’s senior management and staff to evaluate whether they have committed criminal offences. These are:

Hans Peter Brunner, former CEO
Raj Sriram, former Deputy CEO
Kevin Michael Swampillai, Head of Wealth Management Services
Yak Yew Chee, former Senior Private Banker
Yeo Jiawei, former Wealth Planner
Seah Yew Foong Yvonne, former Senior Private Banker

The Monetary Authority of Singapore (MAS) will allow the transfer of the assets and liabilities of BSI Bank Limited (BSI’s Singapore subsidiary) to the Singapore branch of EFG Bank AG. MAS and the Swiss Financial Market Supervisory Authority (FINMA) are working closely to oversee an orderly transfer.

“Clients of BSI Bank Limited are assured that both BSI and EFG are working for a fast and smooth transition. The Singapore subsidiary also has the full support of its parent bank, BSI,” said a statement by BSI, which also mentions that the bank has taken “note of the announcements by FINMA and MAS in relation to past compliance gaps related to the 1MDB case.”

MAS has also served BSI Bank notice to impose financial penalties amounting to $13.3 million for 41 breaches of MAS Notice 1014 – Prevention of Money Laundering and Countering the Financing of Terrorism. The breaches include failure to perform enhanced customer due diligence on high risk accounts, and to monitor for suspicious customer transactions on an ongoing basis.

Ravi Menon, Managing Director, MAS, said, “BSI Bank is the worst case of control lapses and gross misconduct that we have seen in the Singapore financial sector. It is a stark reminder to all financial institutions to take their anti-money laundering responsibilities seriously. Controls need to be robust, surveillance vigilant, and the management culture must emphasise professional integrity and risk consciousness.” Adding that “MAS is absolutely committed to safeguarding the integrity and reputation of Singapore’s financial centre. On this, there can be no compromise.”

Wealth Managers Compete for up to US$200b in Revenue as 40% of Clients are up for Changes

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Globally, up to US$200b in revenue may be at stake, as 40% of all clients surveyed are open to switching wealth managers under the right circumstances, according to EY’s 2016 global wealth management report The experience factor: the new growth engine in wealth management. Firms that fail to make strategic investments to deliver a superior client experience may risk losing a substantial portion of their current business, the report finds.

The vast majority (73%) of clients surveyed have relationships with multiple wealth managers. Fifty-seven percent of those would be willing to consolidate their assets with fewer wealth managers for various reasons, including “better pricing,” “better portfolio returns,” and “breadth of products and services.” While some of the motivations may sound familiar, what clients actually mean when stating these reasons has changed significantly, the research finds.

More than 2,000 wealth management clients representing a broad spectrum of segments including wealth level, age, region and gender were surveyed by Oxford Economics for this report. EY also conducted interviews with more than 60 wealth management executives globally to better understand how wealth managers are thinking about and investing in key growth initiatives.

Alex Birkin, EY’s Global Wealth & Asset Management Advisory Leader, says:

“This research should make the industry sit up and take notice. The rules of the game have changed. In order to attain growth, managers must now learn to compete with man, machine and hybrid-based firms to retain and attract new assets.”

Revenue growth is a top priority

With client assets in play, 50% of wealth managers interviewed globally indicated that revenue growth will be the top focus of their strategic business priorities in the next two to three years, especially in Europe and the Americas. Specific revenue growth initiatives will focus on enhancing the client experience.

Bridging the client experience gap

Client experience in wealth management is unique and complex, as it spans an individual’s life journey of managing and preparing for the unknown, the report notes. As a result, wealth managers have lacked a common definition of client experience or a standard against which firms can measure themselves. Yet, the report identifies a common view of client experience, as respondents say they value performance, engagement and trust the most in their wealth managers.

Clients and firms are aligned on most of these values, but there are three areas where firms appear to be out of step with client expectations, the report finds:

Transparency— Clients are eager for a new level of transparency that includes rating their advisors and connecting with similar clients in public forums.
Advice channels— Clients are significantly more open than firms to adopting digital channels for wealth advice, not just service.
Role of the advisor—The financial advisor may become more like a financial therapist in the future, helping clients with spending habits or reaching life goals instead of strictly providing standard asset allocation advice or other activities that could be automated.

Nalika Nanayakkara,EY’s US Wealth Management Leader, says: “In an industry where advances in technology, new types of competition and client expectations are changing rapidly, firms that challenge traditional norms while remaining true to their core value proposition will be better positioned to succeed. Delivering a comprehensive client experience is the linchpin that will make or break a firm in this wealth management landscape.”

Standard Life Investments Announces Real Estate Fund Manager Changes

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Standard Life Investments announced some changes to the real estate team including the appointment of Svitlana Gubriy to head of Global REIT funds and James Britton to fund manager of the Global Real Estate Fund.

Svitlana Gubriy joined Standard Life Investments in 2005 and is currently fund manager for the Global REIT Focus Fund (SICAV), and deputy fund manager on the Global REIT Fund (unit trust) – she will become fund manager of the unit trust. Svitlana worked with Andrew last year in respect of the distribution of our funds with John Hancock.

James Britton is fund manager of both the Standard Life Unit Linked Life Fund and the advisory South Yorkshire Pensions Authority mandate. He worked as portfolio manager on the Global Real Estate Fund from 2009 to 2013 managing a specific strategy in Brazil. James joined Standard Life Investments in 2006.

Andrew Jackson, Head of Wholesale & Listed Real Estate Funds, has resigned from Standard Life Investments after 25 years of service. Andrew will remain with the business until October 2016 to ensure there is a smooth period of transition. A further member of the listed real estate team will be recruited.

Andrew started in the property research team in 1991, and became head of the team in 1999. He moved into fund management in 2003 and launched Standard Life Investments’ first direct property UK mutual fund in 2005. He managed and launched various direct and listed property funds and investments trusts over the years, before being appointed to manage the wholesale and listed team in 2008.

CAIA Miami Chapter has a Successful Launch

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The CAIA Miami Chapter had its launch event on Thursday, May 12th at the Rusty Pelican restaurant on Key Biscayne, FL. The launch event was attended by approximately 105 guests generally representing Latin America and South Florida firms. The evening included a 5 PM cocktail reception and registration followed by a 6 PM program which included a keynote topic on the Current State of Liquid Alts: Products and Regulations, presented by Karim Simplis, VP/Senior Product Managers, Alternatives with Franklin Templeton Investments.

The keynote topic was followed by an Alternative Asset Classes panel discussion led by moderator, Chris Battifarano, Director of Research with GenSpring Family Offices and panelists David Coggins, Principal with Coral Gables Asset Management, Helen Doody, Managing Director with Abbey Capital, and Shawn Lese, Managing Director – Global Assets with TIAA Global Asset Management. A 7:30 PM social networking hour followed the program and many of the guests stayed and enjoyed meeting new faces well into the evening.

Steve Johnston, Miami Chapter Head, welcomed all the guests and briefly discussed the chapter’s mission statement before introducing the other CAIA Miami Chapter executives, Karim Aryeh, Eddy Augsten, Gabe Freund, Tisha Turner, and Daisy Weiss.

Bill Kelly, CEO of CAIA, congratulated the launch of the CAIA Miami chapter for CAIA members in Florida, as well as discussing the importance of the chapter’s inclusion of interested Latin America CAIA participants, which is a targeted growth region for the CAIA Association. The CAIA Miami launch event was sponsored by GenSpring Family Offices.

Enjoy the photos using this link

Mac Kirschner, New Global Head of Client Relationship Management at MUFG

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MUFG Investor Services, the global asset servicing arm of Mitsubishi UFJ Financial Group, has appointed McAllister (Mac) Kirschner as Global Head of Client Relationship Management.

Mac will be responsible for deepening relationships with existing clients across MUFG Investor Services’ alternative asset servicing platform. He will work in close partnership with client managers to develop client strategy and ensure continued client satisfaction throughout the investment lifecycle.

With more than 15 years of experience in platform development, client management and product administration, Mac will also drive market intelligence across the asset servicing business and assist sales and client development teams with both new and incremental business pipelines. He will report to John Sergides, Managing Director, Global Head of Business Development & Marketing, in New York.

Mac joins from BlackRock, where he was managing director in its Global Fund Services business, overseeing operational teams responsible for shareholder servicing, fund administration and trade operations. He joined BlackRock in 2007 following the acquisition of the fund of funds business of Quellos Group, where he served as an associate director focusing on client relations.

The announcement follows the recent appointments of Mark Catalano who joined from Atlas Fund Services, Michael McCabe from BNY Mellon’s Alternative Investment Services business and Daniel Trentacosta from Och-Ziff Capital Management Group.

John Sergides commented: “Mac’s extensive experience in managing operations and client relationships in the alternative investment industry is a huge asset to our business. His appointment is another important step in our strategy to grow organically and continue to provide high-quality asset servicing solutions to our clients. We are excited to have him on board and look forward to strengthening our client-centric offering across our asset servicing platform.”

Mac Kirschner, Global Head of Client Relationship Management, MUFG Investor Services, added: “As a former evaluator of asset servicing platforms, I’ve experienced MUFG Investor Services’ commitment to exceptional client service first hand. It truly is industry leading, and I look forward to strengthening this quality in my new role. Our aim is not just to be a provider but a valued partner, helping our clients achieve their growth ambitions.”

Chinese Business Leaders are Looking Outside of China

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According to Henry H. McVey, Head of Global Macro and Asset Allocation at KKR, “A recent visit to China gives us more assurance that there is a base rate of economic growth that the government will – using a variety of monetary and fiscal tools – work hard to achieve in 2016, however, our bigger picture conclusion remains that the Chinese economy is structurally slowing, driven by disinflation, declining incremental returns, demographic headwinds, and the law of large numbers. How these transitions unfold have major implications not only for China, but also for a global economy that now relies on one country, China, for more than one-third of total GDP growth.”

In his newest macro Insights, titled China: Mounting Macro Paradox, McVey discusses the following short-term and long-term investment conclusions:

As it relates to the short term, we are lifting our 2016 GDP forecast for China to 6.5% from 6.3%. This change represents the team’s first uptick in forecasted Chinese GDP growth since arriving at KKR in 2011.
Longer-term, however, we do not think that the recent stimulus can help the Chinese economy to re-establish a higher sustained growth rate.
Corporate credit growth remains outsized relative to GDP, which has implications for – among others – the country’s banks, insurers, and brokers.
There is no “One China” anymore, as the country’s economy is undergoing a massive transition.
To offset the slowdown in global trade and flows, China is also repositioning its export economy to take market share in higher value-added services.
China Inc.: Coming to a theater near you. Without question, this trip’s consensus view centered on the desire by many Chinese business leaders to acquire companies, properties, and experiences outside of China.

To read the full report follow this link.

Schroders Expands its Securitised Credit Capability

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Schroders has reached an agreement with Brookfield Investment Management to acquire its securitised products investment management team with more than $4 billion in assets under management.

The team is led by Michelle Russell-Dowe, Managing Director and Head of Securitised Products Investments at Brookfield, and will combine with Schroders’ existing New York based ABS team. The combined team will oversee more than $8 billion, with significant capacity for further growth.

The team also manages an Irish qualifying investor alternative investment fund (QIAIF), which will become an important component of the firm’s extension into alternative investments. These assets will be managed under the Schroders brand, with full access to the firm’s asset management platform, economists, research and risk management capabilities.

Karl Dasher, CEO North America at Schroders said: “This acquisition deepens our capabilities in one of the largest and most research intensive credit sectors globally. The process developed by Michelle and her team over two decades has delivered one of the longest and strongest track records in the sector with an extensive network of industry relationships. This will strengthen our investment capability for both US and non-US investors seeking higher return opportunities within fixed income.”

Michelle Russell-Dowe, Managing Director and Head of Securitised Products Investments at Brookfield said: “Our team is very excited to become part of Schroders. We feel the organisation, investment approach and environment will be a great fit for our team and our clients, which will benefit from the deep resources and capabilities Schroders has to offer globally. We look forward to working with Schroders to build on the exciting opportunities available in a changing fixed income landscape.”

Credit Suisse Sets up a Wealth Management Team in Thailand

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Looking to service wealthy Thais, Credit Suisse has expanded its Thailand operations.

The bank that has had a full-service securities house in Thailand for 16 years, has hired a team of 6 – looking to grow into 12, to target two key client segments – HNW individuals with assets of more than US$2 million (Bt71 million), and UHNW individuals with assets of $50 million, or $250 million in net wealth, of which the Credit Suisse Global Wealth Report 2015, estimates are close to 340 in Thailand.

According to International Investment, Christian Senn, Credit Suisse’s private banking market group head for Thailand, noted that Thai clients are increasingly looking to diversify their domestic wealth through global investments, as the the regulatory policy towards overseas capital flows in the country “continues to evolve”. They also note that in 2014 there were 91,000 Thais with more than US$1m in investable assets.

The new team will be supported by the firm’s regional private banking hub in Singapore, which houses more than 200 investment specialists, and which was in charge of the Thai Wealth Clients until now. With Thailand, Credit Suisse now has an onshore wealth presence in six Asia-Pacific markets.

Navigating the Regulatory Maze: An Overview of Key Regulations Impacting the Offshore Private Wealth Business

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For years, practitioners have been signaling the apocalypse for the offshore private wealth business due to strangling regulation. Yet, year after year, clients are well served, products are well developed and doomsday never quite arrives. Former Secretary of the Treasury Nicholas Brady is said to have once remarked: “Never bet on the end of the world; for one thing, even if you win there’d be no one around to collect from.”

And so it is with regulation. No doubt that technology and the otherwise shrinking and connected world have greatly accelerated the pace of global initiatives like tax transparency. Similarly, the pace of change in many countries has lagged and the ability to gather and share personal data globally has not moved consistently with governmental stability and the ability to keep private data private. Nonetheless, the global initiatives and their reduction to local law and regulation are a current reality.

No practitioner in the private wealth world should be without at least a conversational familiarity with those pieces of regulation shaping our world. While the regulations themselves vary from aspirational multinational initiatives by non-governmental bodies to specific national legislation or treaties, together they form a mosaic that is, in fact, beginning to resemble something recognizable.

I. United States Anti-Money Laundering Act

From 1970 the United States has had at least some measure of comprehensive anti-money laundering legislation. While the intricacies of the AML framework are vast and broad, certain areas directly impact the offshore private wealth world.

Broadly, money-laundering is the process of making illegally gained proceeds appear legal. It was officially established as a federal crime in 1986. Importantly, the ultimate offense of laundering criminal proceeds applies with specificity only to those Specified Unlawful Activities (SUA) enumerated in the legislation. Not all crimes are listed, and many are noticeably omitted, including tax non-compliance in foreign countries.

In the aftermath of the September 11, 2001 terrorist attacks, the US Congress passed the PATRIOT ACT. Title III of the Act is its primary AML component and greatly changed the landscape for brokerage and other non-banks. The Act greatly increased the diligence provisions of AML KYC (Know Your Customer) and crafted those as part of broader Customer Identification Programs (CIP) to which nearly all financial institutions must adhere. These CIP requirements, including its Customer Due Diligence and Enhanced Due Diligence prongs are most familiar to private wealth practitioners as they today form an essential piece of client onboarding and account opening. Foreign customers are treated differently than the domestic US national customers and require additional data gathering including identification documents which may range from passports to country verification cards.

The Customer Due Diligence Program (CDD) is designed to demand more from those clients and institutions that may present higher risks for money-laundering and terror financing. Customers that pose higher risks including certain foreign accounts such as correspondent accounts, senior foreign political figures and personal corporate vehicles, require even greater diligence. This “enhanced” due diligence (EDD) is the normal course for the offshore private wealth client.

Part and parcel of enhanced diligence is the concept of “looking through” corporate investment vehicles, whether simple entities or trusts, to determine and verify true ownership. The use of these vehicles is regularly regarded as an additional risk factor which requires “high-risk” documentary procedures in account opening and subsequent monitoring. Of particular interest are potential underlying crimes of political corruption. Enhanced scrutiny of accounts involving senior foreign political figures and their families and associates is required to guard against laundering the proceeds of foreign corruption.

II. FATCA

In what is the most significant legislation impacting financial transparency, the Foreign Account Tax Compliance Act (FATCA) has reshaped the world of international tax reporting and cooperation. FATCA’s original intent was to enforce the requirements for US persons to file yearly reports on their non-US financial accounts by requiring foreign financial institutions to search the records for indicia of US person accounts and to report these to the Department of the Treasury. For those who fail to adequately search and report US persons within those foreign institutions, a 30% penalty would be assessed to qualifying payments. Because the US capital markets remain the world’s foremost, access by foreign institutions to those markets quickly became FATCA dependent.

For foreign institutions, FATCA commands they search their customer base for FATCA indicia of US person status, including place of birth, US mailing address, a current US power of attorney, and other indicators. Additionally foreign institutions are to annually certify compliance and implement monitoring systems to assure the accuracy of the certification.

An important FATCA feature is its complex definitional scheme. Many of FATCA’s definitional criteria impose bank-like requirements on commonplace personal investment entities designed to suit the needs of only one individual or family. Practitioners need to be aware that under FATCA simple PIC’s may well qualify to be FATCA foreign financial institutions.

In its most familiar implementation, FATCA devises a model of international financial data exchange through bilateral Intergovernmental Agreements (IGA’s). Today, there are over 100 IGA’s calling for exchange of information between governments. Beginning with France, Germany, Italy, Spain and the UK in 2012, other countries have joined the data sharing protocols which provide for either the foreign institution to directly provide the US person account data to the IRS (Model 2) or the institution reports to its home authority, which in turn reports the data to the US IRS (Model 1).

It is important to note that while mutual, not all IGA’s are reciprocal and that the reporting obligations may vary among the signatories. By example, under Model 1A, the US shares information about the country’s taxpayer, while under Model 1B there is only exchange to the US, but not from the US. The quality of the data may also vary greatly. As an example; Mexican financial institutions must identify the ultimate owners of corporate entities with US persons. Non-reciprocally, US financial institutions need not report those corporate entities beneficially owned by Mexican residents.

III. Automatic Exchange of Information

Taking its cue from the developing US FATCA framework, the OECD and the G20 crafted its own version of a global transparency framework beginning in 2014. The Automatic Exchange of Information Act (AEI) framework imposes an automatic standard requiring financial institutions in participating jurisdictions to report individual account holders to their respective home countries, including “looking through” legal entities and trusts.

The actual data exchange implementation requires bilateral agreement between the countries. Countries are free to deny exchange with other signatories if confidentiality standards are not satisfactory, among other factors. Importantly, the US is not committed to the AEI or it’s Common Reporting Standard (CRS) which dictates what the signatories are to report and contains many of the “look through” features which reveal the identities and home countries of the ultimate beneficial owners of corporate entities and trusts. While to date the US remains committed to its FATCA/IGA framework as its mode of implementing global tax transparency , IRS Commissioner John Koskinen recently has called for the adoption of the AEI/CRS standard.

Common Reporting Standard

In order to affect meaningful data exchange, there must be a uniform standard for the quality of data to be exchanged. Those provisions exist under Common Reporting Standard. Unveiled in February 2014, over 50 countries have expressed their willingness to join the multilateral framework. The US is not yet an adopter, and the OECD has noted that the “intergovernmental approach to FATCA is a pre-existing system with close similarities to the CRS.” In deference, the OECD views FATCA as a “compatible and consistent” system with the CRS. Under the CRS, institutions must report passive investment entities and look through the entity structure to report its “Controlling Persons”. Also included in the reporting scheme are trusts both revocable and irrevocable.

IV. Conclusion

The recent wave of regulation is fast and fervent. While it builds on an existing foundation in many instances, nothing will quite ever be the same again. Transparency and data sharing are inevitable. For the offshore private wealth practitioner, the only answer is transparent and locally tax efficient and compliant solutions. Consulting a learned wealth planner is no longer a luxury; it has become a necessity.