Although 65,000 Puerto Ricans left their bankrupt U.S. island commonwealth last year, a new group of private bankers are moving in. These private bankers are opening offshore banks faster and faster. These offshore banks are known as International Financial Entities. They were created under a Puerto Rican law in 2012. As of now, there are 44 International Financial Entities under this relatively new Puerto Rican law, 18 of which opened in the last year according to data compiled by the U.S. territories financial regulator. Ryan Christiansen, president of Christiansen Commercial Real Estate, says "Just in the last six months, we’ve probably closed seven deals for international banks."
Experts in tax law speculate the new IFE's are springing up due to a loophole in the Puerto Rican law that allows non-U.S. account holders to put money in Puerto Rico anonymously. This means they could potentially avoid paying taxes at home as they benefit from the safety and stability of the United States. Christiansen says this prospect is becoming increasingly attractive because of a global financial-disclosure system that is set to take effect in September of this year. This new system, called the Common Reporting Standard, allows more than 100 countries who have agreed to take part to automatically provide each other with annual reports about accounts owned by people belonging to member nations.
Up until now, nations have only shared this account information with one another upon request. This old way of reporting made it difficult to identify suspicious accounts belonging to persons trying to avoid paying taxes on their money. This new Common Reporting Standard will make it extremely difficult for people and companies alike to take advantage of offshore bank accounts to evade taxes.
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