Hi ,

A specific type of Hong Kong pension law framework, when structured compliantly, can produce a cross-border financial financial structure that is government regulated, registered and recognized to reduce the cost of tax for cross-border investment into most countries in the world.

Set-up a pre-qualified AML & KYC Clean Nominee Bank Account

Letter of Engagement available upon request.

402(b) Regulator Asset Protection Structure

Has a bank told you they have no problem with FATCA, CRS or Automatic Exchange of Financial Information?

Some misunderstand what they have said. What they have said is ''we'' only accept transfers from Financial Institutions who have performed the AML & KYC.

For lack of a clean AML & KYC no financial institution would send or receive a transfer of funds.

Tax and Money Laundering are two separate issues. Paying tax does not clean dirty money. Money Laundering prosecution is for the receiver, processor, anyone who touched or had influence over the money and the advisor.

The Clean Nominee Bank Account Third Party Administer is a Financial Institution recognized by Financial Institutions globally as a freeway to transfer in money.

It is absolutely impossible to have any U.S. Tax Counsel, International Tax Counsel or any Bank, Financial Institution, Clearing Bank or Custodian accept your verbal words as proof of anything.

Financial Action Task Force (FATF) rules extends to everybody and leads to freezing up non-compliant banking, people and businesses. Banks are scared of a hiding and therefore only accept transfers from compliant financial institutions.

Anti-Money Laundering (AML) & Know Your Customer (KYC) rules include but are not limited to:

a) An explanation by contract, service agreement or other documentation of how the money was earned. For example services performed, product delivered or other as document description between you and the party paying these funds.

b) Documentation showing exactly from whom and from where the money is coming.

c) Documentation on the source of funds

d) Documentation of the tax jurisdiction of anyone connected to the money as receiver or beneficiary.

Compliance to AML & KYC rules is to make sure that you are not involved in Money Laundering!

Prosecution for Tax Evasion 3-5 years & Money Laundering 20 years. The prosecutions are not segregated which means both are possible. Total of 71 years is also possible.

U.S. Criminal Prosecution: Tax Evasion & Money Laundering

Tax evasion and money laundering may result in criminal prosecution by the US Department of Justice for both tax crimes and “related sister felonies”: wire fraud & mail fraud. When a taxpayer fails to pay taxes due (whether income, estate or gift taxes) and uses the “tax cheating” proceeds (which courts have ruled amount to “profits”) to make investments or purchase assets the taxpayer is liable to be criminally prosecuted for multiple felonies:

1. Tax Crimes: Tax Evasion (5 year felony), obstruction of tax collection (3 year felony), file false tax returns (3 year felony);
2. Money Laundering: the use of proceeds from a Specified Unlawful Activity (“SUA”), in this case tax evasion, to purchase assets/investments which “transmutes” the illegal proceeds from tax cheating into new assets (20 year felony);
3. Sister felonies: Mail fraud (the use of the postal system to effectuate a scheme to defraud, 18 USC 1341, a 20 year felony) and wire fraud (the use of the telecommunications facilities to effectuate a scheme to defraud, 18 USC 1343, a 20 year felony). In the 2005 US Supreme Court Case, Pasquantino the “wire fraud” which triggered a felony conviction was the use of a telephone to make an inter-state telephone call.

For those US taxpayers who cheat on their taxes and then make investments they face 6 different federal felonies, which subjects them to up to 71 years in jail. If the taxpayer conspired with another party to impede the IRS collection of taxes it is known as a “Klein conspiracy” and under 18 USC 371 both parties face 5 years in jail for conspiracy to commit tax evasion.

Money Laundering

Money laundering may be linked to tax evasion. A violation of the money laundering statutes includes a financial transaction involving the proceeds of a specified unlawful activity (“SUA”) with the intent to either:

1. Promote that activity;
2. Violate IRC Sec. 7201 (which criminalizes willful attempts to evade tax);
3. Violate IRC Sec. 7206 (which criminalizes false and fraudulent statements made to the IRS).

Regarding asset seizure, the U.S. government may seize assets pursuant to a violation of the money laundering laws. In addition, the IRS has authority for seizure and forfeiture under Title 26. Under IRC Sec. 7321, any property that is subject to forfeiture under any provision of Title 26 may be seized by the IRS.

IRC Sec. 7301 allows for the IRS to seize property that was removed in fraud of the Internal Revenue laws. IRC Sec. 7302 allows the IRS to seize property that was used in violation of the Internal Revenue laws.

A Hong Kong ORSO is after tax contribution with the idea that withdrawals after age 55 would, via Dual Tax Agreement, be tax free.

An ORS402b is deferred income, it is not your income until it is your income...

If you are an entrepreneur, which means you do not earn the same amount of money each month, in fact, as example this year if you earn one million and next year you earn 100,000. If you are in a 40% tax bracket that means you paid 400,000 plus 40,000 in tax over the two year period.

IF you can live on $60,000 a year than in an ORS42b you would have paid a total of $48,000 in tax over the two year period instead of $440,000 and invested 1,152,000.00 instead of 660,000.00

Prior to taking out retirement funds you move out of Canada to live outside Canada and when you receive from your ORS402b income it is not taxed in Canada because you are not a tax resident of Canada...oh my goodness your withdrawals are free from tax....

Which means for persons who have high fluctuations of income the deferred income plan is much much better....and besides when you retire are you really going to want to live in cold Canada?

A Clean Nominee Bank Account structure is not an off-the-shelf product and can be tailor-made in compliance to a statutory tax law mechanism and the clients financial situation.

How To Extend The Tax Holiday On Carried Interest

1. Private Equity because they could be caught by the carried interest definition and three year tax holiday; which means they could suffer to pay tax on money not yet received
2. Captive Insurance Passive income solution
3. Hedge Fund specific solution to continue deferral of carried interest.

Private Equity caught by the carried interest definition; which means they could pay tax on money not yet received.

This structure extends the tax holiday indefinitely.

This structure makes overseas passive income rules irrelevant.

That means the top marginal tax rate applies to overseas passive income because the general tax rate deductions and the new participation exemption rules reductions do not extend to Passive income and gains. (See 4501 and 1297)

The 2018 ''participation exemption'' in tax law changes makes the way an American Company financed their business no longer tax neutral.

Carried Interest

• The Tax Reform Act did not eliminate the tax advantages of carried interest but instead adjusted the holding period for private equity funds and real estate partnerships.
• The Act treats carried interest gains on partnership assets held for three years or less as short-term capital gain and as long-term capital gain if held more than three years. The three year timeline limitation begins at the start of the Fund.

The non-contentious part of that limitation is repatriation of carried interest for Corporations and Funds. Funds will suffer a ''double whammy'' of taxation and loss of yield. Which means funds not only kiss investor money away and suffer a huge tax bill.

Summary of 402(b) solutions for the 2018 overseas tax problem.

1. Extend the tax holiday on private equity, hedge funds and stock options.
2. There are no time limits to a tax holiday

• Removal of a promise by a US tax indifferent entity to pay a carried interest and replacement with a possibility of later payment
• In exchange, the certainty of taxation in 2018 is replaced by the certainty of taxation sometime later: in other words, deferral

The economics

• Tax deferred is tax saved
• The return on deferred tax is always better that the return on the 457A after-tax residue

The legal framework

• Use of a 402(b) compliant non-qualifying unvested deferred compensation plan organized under Hong Kong law with existing hedge fund clearer's as asset-holder of the plan
• Transfer of existing carried interest assets to the plan by the existing US tax indifferent entity as plan sponsor
• Vesting schedule by means of a generic award plan by which plan administrator decides on allocation to plan members, which is a tax event.

Additional benefits

• By-passes probate, useful for business succession planning
• Creditor-proofing
• Not a discretionary trust and 409A and 83 compliant

Request Case Study: Capital Deductible That Is Pre-Tax Capital Raising