Offshore Trusts Report: Cook Islands
Supervisory and Licensing Regime and Fees
A company offering trust services must obtain a licence.
The Trustee Companies (Due Diligence) Regulations
1996 require the officers and employees of a registered trust company
to take reasonable precautions to ensure that an International Trust
is not being used to shelter assets derived from drug smuggling,
money laundering or other serious crime; and the Offshore Criminal
Provisions Act 1996 provides that where an officer or employee of
a registered trust company has cause to suspect that an International
Trust is being used to shelter the proceeds of drug trafficking
or that a person related to or involved with the entity has been
convicted of serious criminal activity, that matter is to be referred
to the appropriate Government regulatory body.
Furthermore the registered trust company is to provide
such reasonable assistance, documentation and other information
as may be required by the Government regulatory body under the law.
In common with many other offshore jurisdictions,
the Cook Islands responded to pressure from the OECD and FATF by
tightening up its regulatory regime. Specifically, the Cook Islands
responded to its inclusion on the FATF black-list of jurisdictions
which have weak anti-money laundering legislation. In September
2000, the Cook Islands parliament passed the Money Laundering Prevention
Act, which provided for the setting up of a Money Laundering Authority,
to consist of the government's financial secretary (in the chair),
the commissioner for offshore financial services and the commissioner
The Money Laundering Prevention Regulations 2001
incorporated Guidance Notes for Financial Institutions based on
models from New Zealand, Japan and Guernsey. Issues covered in the
Notes included 'know your customer' rules; recognising suspicious
customers/transactions; reporting of suspicion transactions; keeping
of records and training. A Financial Intelligence Unit has been
established within the Office of the Commissioner for Offshore Financial
Services and the New Zealand government provided a technical adviser
to the Cook Islands to assist in the set up and implementation of
an appropriate data-base system and to train local staff in its
The Finance Intelligence Unit established in 2003,
was accepted as a member of the Egmont Group – the internationally
recognised body for FIUs - in July 2004.
Under Sections 10 and 11 of the Financial Transactions Reporting
Act 2003, a broad range of “financial institutions”
are required to submit ML-related reports to the FIU on suspicious
transactions and cash and/or electronic transactions above NZ$10,000
(at the time of writing).
The FIU has the authority to require reporting parties to supplement
reports and has broad powers to obtain relevant information needed
to combat ML. The FIU is able to exchange information with counterpart
FIUs or like agencies without violation of secrecy provisions.
In July 2009, the Cooks Islands signed a Tax Information Exchange
Agreement with New Zealand. The Agreement provides for full exchange
of information on criminal and civil tax matters between the two
countries, according to New Zealand’s Revenue Minister, Peter
Dunne. "We welcome the signing of this important Agreement
with the Cook Islands, with whom we have a close historical, economic
and cultural relationship," he said.
Dunne said that the Agreement will cover "not only information
held by banks and other financial institutions, but also information
on who benefits in company ownership chains and on the settlors,
trustees and beneficiaries of trusts."