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 of police.
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 use.
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."