Marketing Offshore Financial Marketing Offshore Financial Services 2 Universitأ© de Genأ¨ve...

download Marketing Offshore Financial Marketing Offshore Financial Services 2 Universitأ© de Genأ¨ve Facultأ©

If you can't read please download the document

  • date post

    15-Oct-2020
  • Category

    Documents

  • view

    0
  • download

    0

Embed Size (px)

Transcript of Marketing Offshore Financial Marketing Offshore Financial Services 2 Universitأ© de Genأ¨ve...

  • Marketing Offshore Financial Services 2

    Université de Genève Faculté des Sciences Économiques et Sociales

    Marketing Offshore Financial Services Drs. René A. KOOYMAN 1, Rue Micheli du Crest CH 1205 Geneva SUISSE Tel +41 22 751 04 27 Fax +41 22 751 04 28 Port +41 79 561 33 77 Mail rkooyman@bluewin.ch Geneva October 6, 2003 Thésis Post-Grade Diplôme d’Études Approfondies (DEA) Université de Genève Prof. Michelle Bergadaà Haute Études Commerciales

  • Marketing Offshore Financial Services 3

    Content:

    The offshore sector ............................................................. 5

    International tax planning, tax evasion and money laundering 6 Defining the object of study ............................................... 7

    The financial marketplace ..................................................... 9

    The actors ....................................................................... 9 The marketing perspective ............................................... 13 International competition and cooperation.......................... 14 Product dynamics ........................................................... 15 Brand strategies............................................................ 16 Secrecy, trust and public presence ................................. 16 Trade and protection in financial services ........................... 17 Market segmentation ...................................................... 18 Marketing strategies ....................................................... 19

    The social context ............................................................. 21

    Entering the public domain .............................................. 21 Corporate sector identity ................................................. 22 Globalization versus localization ........................................ 23 Increasing regulation and self regulation ............................ 24 Good governance versus privacy ....................................... 28 Center and periphery ...................................................... 29 Financial services in a global environment .......................... 31

    The field study .................................................................. 33

    The research method ...................................................... 33 Setting up the sample ..................................................... 34

    The findings ..................................................................... 37

    The state of affairs .......................................................... 37 The structure of Financial Service Providers ........................ 38 The actors involved ......................................................... 39 Competitive forces .......................................................... 40 Client developments ....................................................... 42 The influence of regulatory bodies ..................................... 43 Communication and public relations .................................. 44 Marketing strategy .......................................................... 46

    Sector perspectives and further research .............................. 48

    Towards a formal institionalized sector .............................. 48 Three possible roads to go ............................................... 48 Theoretical perspectives .................................................. 49

  • Marketing Offshore Financial Services 4

    Bibliography: .................................................................... 51

    Appendix A: Questionnaire ................................................. 54

    Appendix B: Overview of respondents interviewed ................. 56

  • Marketing Offshore Financial Services 5

    The offshore sector

    The offshore sector has a long history. The European continent is serviced by offshore finance centers (OFCs) that have been structured decades ago. Some of the older ones are genuine ‘offshore’ jurisdictions. Some traditional offshore centers have created their position on the basis of a colonial past, the British Virgin Islands, the Dutch Antilles (Curacao, Aruba, St Marten), etc. Others have created a special status as being an island just in front of the mainland (the Channel Islands of Jersey and Guernsey). Yet not all so-called offshore centers have been created decades ago. A number of recently created jurisdictions exist. Some of them are islands (Mauritius, Malta, Cyprus and Ireland); others have used the offshore status as a generic term for a financial tax- driven position (Liechtenstein, Luxembourg, Gibraltar, Monaco). Offshore financial structures are a global phenomenon. The offshore sector is not restricted to any continent. There seems to be permanent global competition between the different jurisdictions. All actors try to reserve their position in the global financial market. Surrounding each of the major trading blocs of the world economy there is a growing number of jurisdictions often known as 'tax havens'. The Pacific islands including Vanuatu, Western Samoa and the Cook Islands, Labuan and Singapore serve the Japanese area. The North American Free Trade Association and the Caribbean and Central American havens include jurisdictions such as the Cayman Islands, the British Virgin Islands and The Bahamas. China has Hong Kong; the Gulf States, Bahrain; India and Southern Africa, the Seychelles and Mauritius. Some authors even include relative independent financial centers such as Delaware, London, Brussels, New York in their analyses of offshore centers.1 And the sector is growing. At present over forty jurisdictions offer a variety of facilities for tax-driven activities and offshore finance.2 It is a sector that has been formed by a growing competition in the financial markets. The development of the offshore sector has had large effects on the financial sector. For some it has meant

    1 Hampton Mark P. and Jason P. Abbott (Ed.): The Rise (and Fall?) of Offshore Finance in the Global Economy, MacMillen Press, London 1999 2 Grundy Milton: The OFC Report 2001: Offshore Financial Centres and Services. Campden, London 2001

    Offshore and onshore traditions

  • Marketing Offshore Financial Services 6

    accelerated financial growth, especially in those underprivileged areas as small offshore islands. In these areas it means employment and prosperity. For others is has meant an ever- growing threat of financial losses.3

    International tax planning, tax evasion and money laundering It is difficult to find adequate figures about the volume of the offshore sector. This might be due to the fact that the activities are on the one hand developed within the public sphere, yet at the same time the operational activities are mostly hidden for third party spectators. The offshore sector covers all international financial movements, yet depending upon ones position one can identify three different activities. All international and multinational financial organizations are active in financial international tax planning. The different tax regimes in the separate jurisdictions are used to plan specific activities such as financial investments, restructuring of corporate profit and (inter- )company costs, etc. Part of these activities could be characterized as tax avoidance or evasion. In this case the company uses the different jurisdictions and tax regimes to lower the total amount of corporate tax that has to be paid. A third term used is money laundering. The two activities mentioned above are executed strictly within the limits of the legal structures available. Money laundering however is an activity with illegal and therefore criminal aspects. The Financial Action Task Force (FATF) – a subcommittee of the Organization for Economic Cooperation and Development (OECD) – states:

    ‘The goal of a large number of criminal acts is to generate a profit for the individual or group that carries out the act. Money laundering is the processing of these criminal proceeds to disguise their illegal origin. This process is of critical importance, as it enables the criminal to enjoy these profits without jeopardizing their source.’ ‘ By its very nature, money laundering occurs outside of the normal range of economic statistics. Nevertheless, as with other aspects of underground economic activity, rough estimates have been put forward to give some sense of scale to the problem.

    3 OECD: Harmful tax practices. OECD Paris 2002

    Tax evasion and money laundering

    Money laundering

  • Marketing Offshore Financial Services 7

    The International Monetary Fund, for example, has stated that the aggregate size of money laundering in the world could be somewhere between two and five percent of the world’s gross domestic product. Using 1996 statistics, these percentages would indicate that money laundering ranged between US Dollar (USD) 590 billion and USD 1.5 trillion. The lower figure is roughly equivalent to the value of the total output of an economy the size of Spain.’ 4

    One of the problems of the offshore sector is that on the one hand it is identified as international tax planning, based upon high standards of professionalism and ethics, yet at the same time it is identified with the practices of money-laundering.5

    Defining the object of study Ther