Asset and Fund Recovery Outside the EU

Advanced financial technology and broad accessibility to the internet enable different types of investors to participate in global markets, supervised and uncontrolled. In times where personal wealth and liquidity highlights, private investors seek ways to multiply their money. A perfect storm of objectives and opportunities allow legitimate financial professionals and obscure trading platforms to gain the attention of these private investors. Traditionally, local laws sought to protect the interest of residents. The accessibility to a global and often virtual market place changes this perspective where consumer protection laws do not always provide the much needed safeguards.

Trade unions and single market as implemented by for example the European Union seek to provide for a uniform framework for products, services and people. Within the EU, companies can use a single point of entry and be granted a license or passport to conduct transactions in any of the member states. It follows that rules to conduct business and protect consumers must be similar in all the member states. Although the protective measures via deposit protection and investment compensation are implemented at Union level, market entry and license control is not always uniform. The same applies to the possible route to the courts when investments incur unexpected losses.

Whether financial losses are experienced in the EU or abroad, the objective of investors is always to minimize risk. This can either be done by taking on a personal insurance policy to protect the investment, by choosing financial institutions that are part of investment compensation schemes, or when the loss occurred outside the parameters of the agreement, by taking legal action. A common misunderstanding is that legal action always annuls the agreement and returns the initial investment.

Asset and fund recovery outside the EU often follows a different framework that starts with the approval of a license to provide or execute investment advice. Such frameworks in countries like the Seychelles or Belize are not always considered reliable and based on consumer and investor protection. Local laws then should provide sufficient safeguards. This is not always covered but in the Bahamas for example, extensive regulation exist for the prevention of money laundering and the resolution of troubled bank and trust companies.

Legal Floris LLC



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