HAWKSFORD Hawk-i: Issue 11 - Summer 2015

Issue 11 Summer 2015

DIVERSIFY TO GROW IN THIS ISSUE Page 2 - Welcome to Hawk-i - Maxine Rawlins, CEO Page 4 - Hawksford’s vision for 2020 - Steve Spybey, Operations director, Hawksford Group Page 6 - New kids on the alternative investment block - Claire Keeney, Director, Funds Page 8 - The evolution of the wealth industry - Steve Carr, Director, Private Client & Leon Keen, Director, Switzerland Page 10 - Leading the international compliance charge - Jacqueline Low, COO, Asia

Issue 11 Summer 2015

Welcome to Hawk-i Welcome to the summer edition of Hawk-i.

We are well into 2015 and this year has been exceptionally busy for the Hawksford team.

We have been focused on looking to the future – Thinking beyond tomorrow, which is our shared ethos across the Hawksford Group.

“We operate within an evolving regulatory, political and economic landscape – this helps make our professional roles so fascinating.”

CEO T: +44 (0) 1534 740000 E: maxine.rawlins@hawksford.com

As part of this, we have looked closely at the business, in particular our clients and the nature of work we undertake on their behalf. This has led us to formalise our offering across three major services – corporate, private client and funds – and with a more international element.

experience and skills will be invaluable in bringing strength in depth to our multi-jurisdictional structuring capabilities.

Further appointments in the pipeline will boost our capabilities in the coming months and we look forward to sharing these with you.

It’s been a defining few years for Hawksford and we are at an exciting stage in our growth story. Our company and services have evolved and diversified over recent years, as we respond to and anticipate the services that our clients need to help them achieve their ambitions.

Clients can expect business as usual from their dedicated Hawksford team.

The new structure will ensure that we offer an impeccable client service, this client commitment is what drives us.

Our formalised company structure, growing international footprint and the appointment of a number of specialists will help us to exceed expectations.

We have also refreshed our leadership team to formally reflect the nature of our company. Director Steve Robinson will take the lead on Hawksford’s corporate activity, while Director James Howe will have overall responsibility for private client.

We are also strengthening our wider teams through appointments and training and have promoted four of our Associate Directors to Directors. Read a little more about their ambitions on page 11. We welcomed Moira Ashby as an Associate Director in June, and her corporate

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Maxine Rawlins

Diversification is a common theme throughout this edition of Hawk-i.

Diversification and the ability to adapt are vital to every business. We operate within an evolving regulatory, political and economic landscape – this helps make our professional roles so fascinating.

“The new structure will ensure that we offer an impeccable customer service. This is our commitment to clients. This is what drives us.�

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Issue 11 Summer 2015

2020 vision Operations director Steve Spybey brings some context to Hawksford’s 2020 vision, explaining what it means to staff and clients.

The vision for our business is to be known as an international corporate, private client and funds business, which consistently delivers impeccable client service and is focused on thinking beyond tomorrow.

We have ambitious plans for the next five years and a renewed focus on what matters most; our clients and our people.

We must consistently place clients at the centre of everything that we do, ranging from consideration of team structures through to decisions to invest in process and technology enhancements. Our people are our most important asset and they must be nurtured and developed in order to ensure that we can continue to deliver the expertise, provide the level of responsiveness, and demonstrate the care that clients expect.

Our 2020 vision statement seeks to build on these foundations and place greater clarity around our ambitions for the next five years.

Why does Hawksford need to be an international business?

Our vision for Hawksford in 2020 is designed to take the business through the next stage of evolution. We have already grown from a small Jersey company to a truly international organisation, with two offices in Asia, one in Switzerland and a presence in the United Arab Emirates. It is our ambition to continue to expand our international footprint in a controlled manner, through both organic development and acquisition. Client service is at the core of this strategy and we understand that clients want

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an appropriate level of jurisdictional choice when establishing structures to achieve their objectives. Our increased international footprint will allow us to offer this flexibility to clients, whilst maintaining control and consistency of client service delivery.

We need to ensure that all our staff have the right cultural experiences in order to interact appropriately with our global client base. As our international business grows, there will be further opportunities for staff to work alongside colleagues with different cultural backgrounds.

We launched our graduate programme in 2015 which includes an opportunity to work in an international office.

An international operational platform also acts as a strong staff retention tool. This drives client service benefits through the longevity of our client relationships.

Why corporate, private client and funds?

Whilst our 2020 vision places greater emphasis on the three separate aspects of corporate, private client and funds, this is not revolutionary when looking at our current client base and skill set. We enjoy a strong reputation in the market place for our private client expertise, particularly when dealing with matters involving high complexity and technical challenge. We also already deliver a significant amount of corporate and funds work for existing

clients due to client demand, but we want to be more successful at recognising this internally, and articulating it externally.

Our vision seeks to provide this clarity.

We recognise the need to differentiate our investment in staff that work within these different teams, noting that whilst some regulatory changes, such as FATCA and the forthcoming Common Reporting Standard, cut across all clients, some aspects, such as changes in listing requirements, are specific to particular departments.

What is impeccable client service?

We receive positive feedback from our clients and intermediary relationships. This is a result of previous efforts to sustain and enhance our service standards. We wish to confirm our commitment to client service as we grow and strengthen our focus on how we engage with our clients.

Clients always tell us that it is about doing the basics, well. It is our belief that a number of important client service measures are increasingly considered to be basic expectations. The provision of technical expertise, responsiveness, and timely, consistent communication should be the norm. We want to build on this and focus on the demonstration of an entrepreneurial can-do attitude that sees Hawksford providing solutions to a variety of client needs. In addition, we believe that it is important to be

increasingly proactive in the way in which we manage client relationships; we should provide insight and take the initiative rather than just being highly responsive to client driven interactions.

We believe that our existing strapline, ‘thinking beyond tomorrow’, remains more relevant than ever. We continue to place significant emphasis on considering the wider context in which we and our clients operate and consider that it is important to deliver solutions that remain fit for purpose.

We understand that impeccable client service will look and feel different to different clients; a one size fits all approach is not appropriate. We must ensure that we understand the preferences of our clients and suitably tailor our approach.

Our vision seeks to place the delivery of impeccable client service at the centre of everything we do.

What is changing?

We are creating three global teams focused on corporate, private client and funds. We recognise that this will take time and it is important to note what is not changing; client relationships are not being moved from one team to another or from one staff member to another.

We will be driving continual improvement in the performance of our individuals

and teams with the renewed focus on client service; this is also linked to performance management and reward.

All teams, regardless of their role within the business, are being encouraged to challenge and modify working practices in order to place client service at the centre of delivery.

Through these efforts we are in the process of aligning all aspects of our business. This will be supported by an evolution of our brand that will provide the architecture for articulating our service offerings in a simple and consistent manner across our increasing number of international jurisdictions.

“We are looking to the future with a clearly defined vision, dedicated and specialist workforce, exceptional clients, and strong leadership.”

Our corporate social responsibility strategy will focus on youth entrepreneurship. This will echo our overall business strategy as we seek to empower all employees to strive to achieve their best; we will support employees that demonstrate outstanding performance and potential to progress.

Staff at all levels across the company have been consulted about the 2020 business vision for the future, allowing us to achieve consistency of messaging and gain valuable support. The vision has been crafted with feedback and ideas from Hawksford staff. This collaborative approach has enabled us to implement changes swiftly and move forward with greater certainty as we seek to implement change over the coming months and years.

Steve Spybey Operations Director T: +44 (0) 1534 740197 E: steve.spybey@hawksford.com

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Issue 11 Summer 2015

New kids on the alternative investment block Traditional private equity and property funds continue to dominate our funds market, but we are also witnessing growth in alternative investment classes that represent the challenges and opportunities of our day.

Digital media, cyber security and intellectual property, as well as debt restructuring and infrastructure are all areas that have made an impact on the alternative investment market in recent years. This has resulted in a continuation towards diversification, not only limited to changes in asset classes but also from regions and countries historically viewed as ‘no go areas’.

Funds business across all asset classes is thriving. Market players are reporting that investment activity levels are following a trajectory back to the intensity of 2008, a clear indicator that the growth trend is back. This is supported by figures in the latter half of 2014 showing signs that Jersey is on the cusp of attaining business growth and levels of interest akin to those seen before 2008.

The new-age players in the asset classes are driving diversification in economies, as well as investment portfolios. Jersey’s own inspiration to develop and market itself as a Gigabyte Island is testament to the faith in such alternatives. Equally, it positions Jersey to attract speculative and alternative investors for emerging entrepreneurial funds.

Claire Keeney Director, Funds T: +44 (0) 1534 740176 E: claire.keeney@hawksford.com

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Investment in digital media, specifically cyber-security asset classes, is of particular interest at present. Never has the world’s attention been so focused on cyber technology. Headlines reporting security leaks by government agencies, or secure systems being hacked by foreign

governments or individuals are becoming a daily occurrence. The term ‘wikileaks’ has now entered the Oxford English Dictionary.

The prevalence of global cyber terrorism has caused considerable embarrassment to various national and supranational organisations, leading to an exponential increase in domestic and foreign budgetary spend in recent years. The US Department of Defence’s Cyber Command Unit’s budget allowance was more than doubled to US$447 Million in 2014 from its allowance in 2013.

Such alternative investment opportunities are not limited to dotcoms and virtual reality, but also physical constructs, particularly infrastructure. Speculative funds investing into infrastructure programmes associated with large-scale projects – like the Heathrow runway extension, London array wind farms, Hinkley C nuclear power plant and oil exploration near Gatwick – could positively impact regions. Direct impact on real estate value and a growth in associated services to meet increased demands could bring economic prosperity.

We are experiencing significant interest in such investment opportunities from the Israeli, Asian and Middle Eastern markets, which appear to be shifting from traditional investment opportunities in prime real estate markets. It seems that the appetite and investment objectives derived from London-based residential and commercial property has reached

Direct impact on real estate value and a growth in associated services to meet increased demands could bring economic prosperity. saturation point; investor demands and their expectations are becoming as diverse as the investments being made.

Similarly, we are also experiencing a shift in our client base from regions and countries historically viewed as ‘no go areas’ such as Africa, Israel and India.

A shift in mentality, coupled with a greater understanding of such ‘alternative’ investor regions, has transformed our approach from a ‘no go’ to a selective ‘proceed with caution’, which in our view is appropriate with markets badged as ‘high risk’ by our regulator.

We are seeing further diversification with investor pooling, particularly in respect of the more substantial investment projects. Previously, material investment opportunities were principally funded by the institutional market but we are currently seeing substantial investments entirely funded (save for debt) by bespoke family / friends arrangements (aka club house deals). These arrangements can be established on an expedited and cost efficient basis in Jersey and typically fall under the lower end of the regulatory scale.

Given the global signs of economic recovery, investors are more conscious than ever about the benefits of maintaining a diversified investment portfolio. Going forward, we anticipate that real estate and private equity investment opportunities will continue to be a staple of Jersey’s funds industry but there will also be a greater diversification in alternative asset classes.

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Issue 11 Summer 2015

The evolution of the wealth industry To what extent has increased regulatory requirements and the international nature of clients led to the evolution of the wealth industry?

Jersey director, Steve Carr, and Swiss director, Leon Keen, explore what is happening in their jurisdictions.

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Steve Carr

Leon Keen

Director, Jersey

Director, Hawksford LSS

T: +44 (0) 1534 740273 E: steve.carr@hawksford.com

T: +41 (0) 43 500 3876 E: leon.keen@hawksford.ch

What are the major factors that have affected the evolution of the wealth industry in recent years?

Jersey As the world becomes smaller and families become much more internationalised, clients’ attitudes towards wealth structuring and a growing wish to be more involved and retain/exercise control over their structures are key factors for the diversification of the wealth industry.

Different types of structures are now required by high net worth individuals and this “new generation� of HNW individuals and wealthy investors are perhaps more open and adaptable to alternative structures which offer increased flexibility.

This is very much illustrated by the increase in the awareness and formation of family offices, foundations and private trust companies Switzerland As well as client attitudes, jurisdictional developments play an important factor in forcing the wealth industry to evolve.

Sometimes overlooked in the wake of the decoupling of the Swiss Franc from the Euro was the second important announcement from the Swiss National Bank (SNB) in January, cutting interest rates from -0.25 to -0.75 percent p.a.

Under the mechanism, banks taking higher risk are afforded higher deposit limits by the SNB before punitive interest rates are charged. This puts more risk averse banks (i.e. private banks with limited balance sheet involvement) at a disadvantage as they will have to start paying the punitive interest rates from a lower level of cash deposits. Banks are in the uncomfortable position of having to decide to what extent they will pass on to clients the cost of depositing cash with the SNB.

Tell us about some of the key legislative changes that have impacted on client demands.

Jersey For UK residents, changes to tax laws have made it less attractive to create a trust and it is quite rare these days for a trust to be set up purely with a tax motive as the main driver. So whilst we accept that trusts are no longer created with the same frequency or volume as they once were, it is not right to assume this is purely down to a decline in wealth structuring. Whilst trusts may not provide the same benefits they once did, now there are many more options available to international families which has broadened the scope of wealth structuring.

Switzerland

Jersey Advisors and trustees have had to adapt their service offering to enable them to thrive on an international platform.

This has led to many trust companies growing internationally through acquisition or expansion. In itself this will not immediately result in a firm being equipped to genuinely provide wealth management structuring for international families but will offer an advantage over a number of competitors.

Switzerland As well as adapting for international platforms, professionals have stepped up their compliance procedures very significantly due to the increase in international compliance regulations.

Clients have to go to considerable effort to demonstrate that they are compliant and the source of funds is acceptable. The resulting transparency is embraced by the industry and the Swiss financial sector recognises that more substantial clients are mostly not tax adverse per se and have little appetite for aggressive tax planning. It is in this sector that Switzerland, as a sophisticated financial centre with a long tradition of private banking at the highest level, sees its future.

How have companies had to evolve to remain relevant and ensure they are can offer clients the best service?

Jersey The impact of technological advancements cannot be ignored as this has made working across a number of jurisdictions almost effortless. It has enabled many jurisdictions, some which historically might have been viewed as having weaker trust laws, to demonstrate that they too can offer the same structures with, in some instances, alterations made to suit the need of a very different type of client.

Switzerland One factor clients find imperative is client confidentiality. Switzerland still places a high value on preserving privacy and client confidentiality and many clients value this. Although preserving privacy and client confidentiality are important, Swiss Banks are not secretive in the sense it is sometimes portrayed. On the contrary, Switzerland has ramped up its compliance requirements dramatically and has signed up to the automatic exchange of information according to OECD standards from 2018, based on 2017 data, leading commentators to argue that Swiss banking “secrecy�, certainly in relation to government authorities, will have disappeared.

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With the tax treatment of trust beneficiaries moving to Switzerland remaining benign under the right circumstances, it is the legislative initiatives that did not pass into law that were of interest in recent months.

Referendums were held on the abolition of the lump tax regime as well as an introduction of a federal inheritance tax.

In both cases the public voted against the suggested measure, so that lump sum taxation remains available in certain cantons and no national inheritance tax was introduced. This is encouraging for international individuals and families considering Switzerland as a place to base themselves.

How have professionals had to evolve to meet these changes?

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Issue 11 Summer 2015

Leading the international compliance charge Many companies are diversifying and becoming more international in scope in order to meet the needs of current and future clients. For jurisdictions to be seen as trusted finance centres and to appeal to international individuals and businesses, they must ensure they comply and stay ahead of international regulatory demands.

Singapore has welcomed regulatory enhancements in order to stay ahead of demands. One of the key developments in Singapore was a national risk assessment exercise, conducted in 2012 by the Singapore government, where Corporate Services Providers (CSPs) were found to be at risk of being used to set up complex or unusual business structures, to conceal beneficial ownership and conduct illegal money laundering and terrorist financing activities.

With effect from 15 May 2015, CSPs must now register under the enhanced regulatory framework, as Filing Agents (FA) and Qualified Individuals (QI) with the Accounting & Corporate Regulatory Authority (ACRA) in order to continue providing corporate services and access the electronic transaction system with ACRA. There is now stricter emphasis on knowing clients before taking them on, and to have in place strong compliance policies, processes and ongoing due diligence and compliance checks, even after the initial approval of on-boarding.

Under the enhanced regulatory framework, errant CSPs can be sanctioned from providing corporate services and/or fined, affecting the continuity of the business. This is an advantage for Singapore as it boosts its reputation as a trusted international financial and business centre. Singapore has always prided itself on being a business friendly jurisdiction where it is easy and quick to setup companies and do business.

Improved regulatory requirements are not isolated to Singapore. The development of international trade and multinational corporations has increased regulatory requirements globally. One key issue is the need to scrutinise the issue of double taxation. Double taxation arises when

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two or more countries impose taxes on the same taxpayer in respect of the same taxable income or capital. In other words, the same income is being taxed twice – the country of source where the income arises and the country of residence where the income is received. To relieve taxpayers from the burden of double taxation, countries provide various types of reliefs either under their domestic tax laws or under the tax treaties they have entered into with other countries.

There are copious frameworks, recommendations, laws and guidelines, for companies and governments to navigate and implement in order to combat the various illegal activities, such as Financial Action Task Force’s (FATF) Guidance on Transparency and Beneficial Ownership and Organisation for Economic Co-operation and Development’s (OECD) Tax Information Exchange Agreements (TIEA) and Common Reporting Standard (CRS).

In a recent article, John Byrne, a leading figure of the Association of Certified Anti-Money Laundering Specialists (ACAMS), said there is an ever-growing unease within the Anti Money Laundering (AML) community, as there is limited knowledge on terrorist financing trends and typologies in order to detect inappropriate activity. Keeping track is highly ‘resource intensive’ and difficult to achieve. While battling the old, there is always some new and unique challenges faced. Fortunately we are well prepared with sophisticated legislation, but it’s an ever-evolving world.

Like other international corporate service companies, Hawksford is at risk when providing services to various clients from different jurisdictions, backgrounds and requirements. We must be aware of potential misuse by criminals to disguise

and convert proceeds of their crimes through setting up corporate vehicles and hiding the information of source of funds and accurate personal details of the beneficial owner/s of the corporate vehicle.

Compliance is not just the responsibility of the compliance officer and their team, but also the responsibility of everyone in the company. Every employee must be made aware of the risks and be vigilant and alert. Adequate training and the continued review of internal and external policies and regulations is important. This is a high priority for Hawksford.

Drawing on 45 years of the Group’s experience, Hawksford has a strong risk, governance and compliance team that has established robust policies and processes and continues to keep the business and clients updated on the ever-changing requirements. Our presence in numerous jurisdictions allows us to understand the various global requirements and respond quickly to the international nature of compliance and governance.

Jacqueline Low Chief Operating Officer, Hawksford Singapore T: +65 (0) 6222 7445 E: jacqueline.low@guidemesingapore.com

In the boardroom What are the decisions we are taking at the top?

Adding strength and depth to the management team This edition of Hawk-i has drawn attention to a number of changes that Hawksford has been making to ensure it is intelligently positioned for the future.

This has involved strengthening our leadership team. As Steve Spybey mentioned earlier, a major aspect of this has been to focus on our teams – our strongest asset.

As part of this, Steve Carr, Daniel Hainsworth, Claire Keeney and Matthew Wilkinson have all been promoted to director.

As part of their new roles, they will also be joining Hawksford’s management board.

Under the new structure, this is particularly important. Representation from the company’s corporate, private client, funds and IT areas at a management level is vital.

Their involvement will help to ensure we move ahead as a cohesive business.

Meet the new directors Private client specialist Steve joined Hawksford, back when we were known as Rathbones, in 2000. As director he is responsible for developing new products and services, growing the business in new jurisdictions and expanding the private client team. Steve has experience working with clients across a diverse range of industries including retail, manufacturing, entrepreneurial and the sporting and entertainment sectors.

Daniel will play a significant role in growing Hawksford’s corporate business, both through organic growth and strategic acquisitions. He has more than 15 years’ experience in the corporate and wealth structuring industry and has played an instrumental role in developing Hawksford’s Middle East business. He sits on the board of several companies with interests in real estate investment, securitisation and Islamic finance structures, as well as multinational and entrepreneurial corporate businesses.

Claire will lead the continued growth of our funds business, which has grown considerably since she joined Hawksford at the beginning of 2014, both in respect of its client base and the team of dynamic and specialist funds experts. Claire is a well-established offshore funds practitioner with considerable technical expertise and specialist knowledge in all areas of fund administration. She manages a wide range of complex structures for an international client base.

Business Enablement director Matthew will continue developing and enhancing Hawksford’s international technology offering, and implementing a centralised, business-focused function that will enable a robust, reliable and scalable service

for staff and clients. Matthew has nearly 20 years’ experience in technology and operations, and joined Hawksford in 2009 as head of IT. He has overseen the smooth project management of a number of significant acquisitions.

‘Steve, Daniel, Claire and Matthew have made significant contributions to their respective business areas. These director appointments recognise their commitment and expertise, and are reflective of Hawksford’s commitment to business growth and international expansion. It’s particularly gratifying to reward loyal and talented staff, and I look forward to welcoming their input to Hawksford’s management board.’ Maxine Rawlins, CEO.

“It’s particularly gratifying to reward loyal and talented staff” 11

Hawksford – Leading the way Hawksford is an international and award-winning corporate, private client and funds business. Through our three core service pillars – corporate, private client and funds – we are experts in a wide range of administration and structuring solutions. We invest in state of the art technology to ensure our processes and systems allow us to offer flexible and consistent client service across our seven international offices.

Proudly recognised as...

2012 TM

TM

MAGIC CIRCLE AWARDS 2013

MAGIC CIRCLE AWARDS 2013

MAGIC CIRCLE AWARDS 2013

Trust Company of the Year (Non institutional)

Trustee of the Year 2013 – Julian Hayden

Trust Company of the Year 2013 – Runner up

TM

WINNER

WINNER

Winner Owner-Managed Trust Team of the Year

RUNNER UP

Best Offshore Trust Company – Jersey, Guernsey and the Isle of Man

Contact details For further details on any of the content of this issue, or if you would like to contribute to future issues, please contact: Cherith Fothergill | Marketing and Communications Manager | T: +44 (0) 1534 740264 E: cherith.fothergill@hawksford.com

Jersey

Switzerland

United Arab Emirates

Hawksford Group Hawksford House 15 Esplanade St Helier Jersey JE1 1RB T: +44 (0) 1534 740000

Hawksford LSS GmbH Talacker 50 Zürich 8001 Switzerland T: +41 (0) 43 500 3870

Hawksford PO Box 340505, Unit 1307, JBC 5, Jumeirah Lakes Towers Dubai, United Arab Emirates T: +971 (4) 420 3375

Hong Kong

Singapore

Hawksford Hong Kong Level 8 & 14, 88 Gloucester Road Wanchai, Hong Kong www.guidemehongkong.com

Hawksford Singapore 16 Raffles Quay #33-02 Hong Leong Building Singapore 048581 T: +65 [0] 6222 7445 www.guidemesingapore.com

www.hawksford.com Jersey | British Virgin Islands | Hong Kong | New Zealand | Singapore | Switzerland | United Arab Emirates Hawksford Group (and Hawksford International) are the Registered Business Names of Hawksford Trust Company Jersey Limited which is regulated by the Jersey Financial Services Commission.