Cook Islands: Offshore Business Sectors
Cook Island trusts are known locally as International Trusts and are governed by the provisions of the International Trusts Act 1984 (The Act), which has been substantially amended in 1989, 1991 1994, 1996 and 2004. See Forms of Company for a description of the legal basis and formation procedure for trusts, and see Law of Offshore for a more detailed analysis of Cook Islands trust law.
The Act provides for the licensing of trustee and trust management companies. All International Trusts must have a resident licensed trustee with management powers (unless they come within the custodian trustee exception cited below). Normally this means that the International Trust is required to use one of the 6 registered trust companies which operate out of the Islands. To obtain the protection of the Islands' laws the trust must be registered by the licensed trustee company within 45 days of its creation and they must certify that the trust is an International Trust under the Act.Trustee companies.
The non-resident settlor may appoint a licensed and resident Cook Islands trustee as a custodian trustee and is then free to appoint managing trustees within his own jurisdiction. The Act imposes strict confidentiality rules on trustees and the staff of licensed trustee companies, which can only be breached in the circumstances detailed below:
The Trustee Companies (Due Diligence) Regulations 1996 require the officers and employees of a registered trust company to take reasonable precautions to ensure that an International Trust is not being used to shelter assets derived from drug smuggling, money laundering or other serious crime.
The Offshore Criminal Provisions Act 1996 provides that where an officer or employee of a registered trust company has cause to suspect that an International Trust is being used to shelter the proceeds of drug trafficking or that a person related to or involved with the entity has been convicted of serious criminal activity, that matter is to be referred to the appropriate Government regulatory body. Furthermore the registered trust company is to provide such reasonable assistance , documentation and other information as may be required by the Government regulatory body under the law.