Hacker Publishes 2TB of Data from Cayman National Bank

Enlightened self interest. Those "insignificant" islands are generally speaking countries. By showing respect for the rule of law even in situations where they could easily overwhelm with force or economic power smaller nations, the larger ones reinforce that the law matters.

The larger countries use as a defense the idea that something is an "internal matter", IE it's no one else's business. If they bully their way into other smaller countries' business, then they open themselves up to the same interference.

Might does not make one right. Law does.

I have a fair bit of insight into this industry, both from friends, acquaintances, and family who use a variety of offshore structures to manage their wealth and from my own dealings (the company I founded and currently manage is offshored for tax and legal purposes).

What people don’t realise is that aside from a couple outliers offshore jurisdictions aren’t that shady at all and the major ones are usually under the protection and sometimes outright control of much larger and much more influential jurisdictions, with the United Kingdom being the leader here. If tax avoidance was as simple as just starting a business in a zero or low tax jurisdictions we would see a lot more of this kind of business being done in Africa (with the notable exception of Seychelles today) than the Caribbean overseas territories, but mature legal frameworks and more importantly reliable governments are incredibly important to both small time players who may stash some cash offshore as savings and large multinationals. If anything shady (civil unrest, wealth confiscation etc.) were to go down in the British Virgin Islands for example the United Kingdom has a nuclear option (as BVI is for all intents and purposes a Crown colony) to unseat the sitting government and bring order, which is incredibly valuable as an insurance policy.

Yes, it is possible to incorporate offshore corporations in less-reputable jurisdictions like Vanuatu or Seychelles, but doing business with these vehicles is next to impossible because no reputable bank in Singapore, Hong Kong, or Switzerland is going to want to have you as a customer if they don’t already know you due to compliance reasons. Without a bank account your ability to funnel and store money in these opaque conduits becomes rather difficult and there really isn’t any point any longer. Of course, there are small shady banks in certain jurisdictions (notably those that aren’t under indirect British control) that will take you on as a client, but then you run into the risk of them running away with your money or defaulting.

The money itself isn’t really managed by or from these island nations/colonies either, and in the cases where there are nominee directors the beneficial owner will usually have a power of attorney as well as an undated resignation letter from the nominee director which effectively gives them wherever they are total control of the company.

What is interesting is that crypto is changing all of this due it being completely outside the severely regulated financial sector, opening up a ton of opportunity for small island nations to compete on tax efficiency without being subject to the quite frankly draconian rules that usually places them on US/EU/OECD blacklists which can create severe consequences for the economies of said nations through sanctions.

Very interesting times indeed, and I think we will see more and more companies (particularly tech companies) being offshored than before in the next few years.