The Pandora Papers have generated intense scrutiny of S.D.'s trust industry. Is it a thunderclap or

The Pandora Papers have generated intense scrutiny of S.D.'s trust industry. Is it a thunderclap or balderdash?


Trusts have been a hot topic this week. John Tsitrian’s excellent editorial considers the correct calibration of governmental oversight of the trust administration industry. In South Dakota, the trust companies and banks which administer trusts are closely monitored and regularly audited by the state Division of Banking. Trustees are required to file trust tax returns and to pay federal income taxes. But perhaps more regulation is called for.

The Pandora Papers have generated an intense level of scrutiny on an industry that is so discreet and untroublesome that few South Dakotans had any clue that their state had become a world leader in prudent fiduciary management services. A few legitimate troubles – but too-often overstated or inadequately supported – have been spotlighted by the Pandora Papers. Federal legislation has already been introduced (the Enablers Act) to curb some of the perceived flaws.

All of this is quite sensible. But I’d like to add one additional point for consideration.

If one reads the various news stories on the Pandora Papers, one discerns several recurring concerns. One – probably the most genuine worry, and the one discussed by Tsitrian – is whether government regulation is sufficient to deter trusts or other entities which fund criminal enterprises.

We’re talking here, for example, about mobster Raffaele Amato’s purchase of real property in Spain, presumably with the fruits of his criminal syndicate. Or Jho Low, who embezzled billions from the Malaysian government before cycling the funds through a “web of companies” and becoming a fugitive. Weeding out bad actors from trusts, and from banks, is an ongoing challenge. That’s the first issue raised.

Read more: https://www.sdstandardnow.com/home/the-pandora-papers-have-generated-intense-scrutiny-on-sds-trust-industry-is-it-a-thunderclap-or-balderdash