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1. Private Client Practice Group
September 28, 2015
The Brewery, London
By
João Valadas Coriel
Luis Santine
Juan Carlos Madrigal, and
Nicholas V. Chen

2. 山雨欲來，風滿樓
Wind in the Tower Warns
of Storms in the Mountains
Tang Dynasty Poem by Xu Hun
‘Coming troubles cast their
shadows before them’

3. Table of Contents
• Multilateral Convention on Administrative Assistance
(João Valadas Coriel)
 The Automatic Exchange Of Information
 What Is Covered?
 Reportable Information
 Reporting Entities
 Reportable Financial Information Owners
 Competent Authority and Standard
 Looking Over the Horizon: What to Expect and When?

4. Table of Contents
• BSI First Swiss Bank to Sign Non Prosecution Agreement
 IRS and 70 Swiss Banks negotiating NPA's
• Two More Swiss Banks Prosecuted
 Number 13 and 14
• Singapore Private Bankers and Clients Sweat Loss of
Secrecy
 51 Countries with Automatic Reporting
• Carlyle Rogers, Anguilla

5. Table of Contents
• Lessons and Take Aways: What Can IR Members
Consider As Options: Solutions
 Segregated Trust Companies and other favorable structures
(Luis Santine )
 Alternative Asset Classes: Collectible Rare Gold Coins (Juan
Madrigal)
 Structuring Considerations (Nicholas V. Chen)
• Questions and Answers/Discussion

6. João Valadas Coriel
Managing Partner
www.valadascoriel.com Advocating for winners in a changing w

7. THE MULTILATERAL CONVENTION ON ADMINISTRATIVE ASSISTANCE
IN AUTOMATIC EXCHANGE OF INFORMATION OF TAX MATTERS:
THE END OF TAX HAVENS AND OFFSHORE CENTRES?
www.valadascoriel.com Advocating for winners in a changing w

8. www.valadascoriel.com Advocating for winners in a changing w
Previous General Rule:
• Exchange of information at request made by a tax authority to another in
specific and concrete cases.
Future General Rule:
• Automatic exchange of information between tax authorities of multiple
countries on the basis of financial information compulsorily gathered by
banks, financial institutions, securities depositaries, brokers, dealers and
mutual funds or investment fund management companies and insurance
companies, sent on an annual basis related to all income and or capital
gains earners, allowing for “fishing” for defaulting taxpayers in
home/residence/nationality/countries.
Entry Into Force:
• January, 1st 2017; BUT Retrospective effect: January, 1st 2016.
Multilateral Convention on Mutual Administrative Assistance on Automatic Exchange
of Information in Tax Matters: The End of Tax Havens and Offshores Centres?

9. www.valadascoriel.com Advocating for winners in a changing w
• Previously, the Multilateral Convention, although foreseeing already an
automatic exchange of financial information in tax matters, had no efficient
and effective mechanism to ensure such automatic exchange of
information;
• As from the 1st of January 2017 - with retrospective effect in relation to
income, capital gains and taxable estate or assets referred to as of the 1st
of January 2016 in some cases- the new Standard allows for such an
efficient and effective automatic exchange of financial information in tax
matters mechanism;
• Since October 29, 2014 around 80 countries- several inclusive being
“classic” tax havens or offshore centers- have agreed to sign the CAA and
adhere to the new Standard, any jurisdiction not signing the Multilateral
Convention, the CAA and the new Standard will find increasingly
difficult, if not even impossible to transfer monies, securities, assets and or
to have its residents or companies to open deposit and or investment
accounts in any country or jurisdiction adherent to the new Standard.
Multilateral Convention on Mutual Administrative Assistance on Automatic Exchange
of Information in Tax Matters: The End of Tax Havens and Offshores Centres?

10. www.valadascoriel.com Advocating for winners in a changing w
Model CAA: Multilateral Competent Authority Agreement
• Determines the tax authorities of the contracting states competent to
collect the financial information in tax matters and to send the same to the
tax authorities of the other states;
• Rules on the way to collect, exchange and use of such financial
information, including on the maintenance of its confidentiality.
CRS: Compliance and Reporting Standards
• Rules on compliance and reporting of financial information imposed on
banks, financial institutions, other financial intermediaries and insurance
companies.
Standard for Automatic Exchange of Information in Tax Matters (the “Standard”)
Operation instruments

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Reportable Information:
• Dividends, profits and other companies’ earnings distributed or placed at
the disposal of shareholders or partners or deemed as attributable to the
same;
• Interest, results of any sort and or any financial outcome of whatsoever
nature arising, paid, accrued and or distributed on bonds, debentures,
notes and or any other financial products or instruments of any kind;
• Royalties, author’s rights and any other rights derived from industrial and
or intellectual property.
Compliance and Reporting Standards (CRS)

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Reportable Information:
• Capital gains and any other profits or earnings of whatsoever nature
derived from financial investments or insurances of whatsoever nature;
• Balance of any current and or time bank deposit accounts, investment
accounts and or any deposits of whatsoever nature or kind derived from
the sale, otherwise disposal, exchange, liquidation, and or redemption and
or amortization of any financial assets and or products of any kind either
made in money and or in or converted into any other financial assets or
products.
Compliance and Reporting Standards (CRS)

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Reporting Entities:
• Banks, financial institutions and financial intermediaries;
• Brokers and dealers in securities, financial assets and certain life
insurances;
• Depositaries of any securities, financial assets and or wealth or asset
management companies;
• Insurance companies, especially those dedicated to certain life
insurance areas and to wealth and asset management.
Compliance and Reporting Standards (CRS)

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Reportable financial information owners:
• Individuals;
• Trusts, associations, foundations and companies dedicated to the mere
ownership and management of financial assets and or companies which
receive only “passive income”;
• “Passive income” is income derived from the mere holding of financial
assets, authors’ rights, other intellectual or industrial property rights or
technical assistance;
• Individuals whom are the “effective economic beneficial owners” of
trusts, associations, foundations, other legal entities and or companies
receiving only “passive income”.
Compliance and Reporting Standards (CRS)

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Competent Authority and the Standard:
• Previously, the Competent Authority for the Exchange of Information was
designated in the Convention;
• In the future, it is intended to designate the Competent Authority for the
automatic exchange of information in the Multilateral Convention;
• On an annual basis, the Competent Authority of the country of the
source of the reportable information exchanges the same with the
Competent Authorities of the other countries concerned signatories to the
Multilateral Convention.
Compliance and Reporting Standards (CRS)

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Competent Authority and the Standard:
• The Standard provides a model form where specific codes are
assigned to each given type of income, earning and or capital gain to
which the reportable information refers to, thus, rendering the collection,
processing and exchange of financial information in tax matters uniform
and easy to understand by all Competent Authorities, across language
barriers;
• Any Competent Authority of any given country may determine, in
accordance with its own tax laws and regulations, a prior notification to
the information owners just before the sending of said information to the
Competent Authorities of the other states.
Compliance and Reporting Standards (CRS)

17. • BSI First Swiss Bank to Sign Non Prosecution Agreement
 IRS and 70 Swiss Banks negotiating NPA's

21. Carlyle Rogers, Anguilla
"The Offshore World as We Know It Is Ending. The Offshore
World Was Never Intended to Be for Tax Cheats"
-Shanghai May 2015

22. Lessons and Take Aways: What Can IR Members
Consider As Options: Solutions Discussion
STC/PCC (Protected Trust Cell)
A company that has the ability to create one or more trust
cells with assets and liabilities that are legally
segregated from the assets and liabilities of other trust
cells and the STC/PCC itself. (Luis Santine)
Main Uses:
• Investment Funds
• Captive Insurance Companies
• Holding structure for assets such as real estate, aircraft,
vessels, other (i.e. rare coins)

23. A High Performance Portfolio Asset Class for Privacy and Wealth
Preservation
Alternative Asset Classes: Collectible Rare Gold Coins

24. Table of Contents
• Why Are U.S. Rare Coins an Attractive Investment Class?
 Investment Performance
 Investment Safety (A Hedge on a Hedge)
 Potential Future Market Growth
 Privacy
 Transparent Certification System (Cash Guarantee)
 Liquidity
 Portability
 High Value/Size Ratio
 Durability
• Asset Class Comparison Table
• Background
 Why are These Coins Rare?
 Melt Value vs. Rarity Premium
 Commodity vs. Rarities

25. Why Are U.S. Rare Coins an Attractive
Investment Class?

26. Investment Performance
• Demand and prices for rare U.S. coins are
trending steadily upward
 1996: First Rare U.S. coin crosses the million dollar barrier
 1999: 2 more coins join the “Million Dollar Coin Club”
 2005: 11 new coins join the club
 2012: A total of 57 members
 2013: First coin breaks the US$10,000,000 barrier
• Today there are hundreds of rare U.S. gold and
silver coins in the Million Dollar Coin Club

27. Investment Performance
Hypothetical U.S. rare coin portfolio purchased for US$1,000 in 1970. Growth prior to 2000
primarily shows collectors’ market impact, while growth after 2000 reflects the increase in “non-
collector” investors’ market involvement.

28. Investment Performance

29. Investment Safety (A Hedge on a Hedge)
• Investors traditionally buy gold and silver
bullion as a hedge against inflation
• Bullion prices are volatile and subject to
external factors other than market
fundamentals
• In an uncertain global economy, wise
investors want a premium asset class to
store wealth and deliver value
appreciation in good times and bad
• Rare U.S. coins provide this because:
 Melt value rises along with commodity gold
prices, providing a hedge against inflation
 When bullion prices fall, the coin’s rarity
premium provides considerable support and
price stability, since there is an entire market
of collectors that trade these coins without
consideration given to bullion prices

30. Investment Safety (A Hedge on a Hedge)
0
500
1000
1500
2000
2500
3000
Jan '03 Jan '04 Jan '05 Jan '06 Jan '07 Jan '08 Jan '09 Jan '10 Jan '11 Aug '11 Jan '12 Sep '13 Apr '14
MS65 $20 SG MS64 $20 SG Spot Gold

31. Potential Future Market Growth
• Traditionally, collector market has been
U.S. centric
• “Non collectors” in North America and
Europe gave the market a large boost in
the 2000s
• Recently, investors in China, India,
Russia and other emerging markets
have taken an interest because of the
asset’s benefits in terms of wealth
preservation, privacy and portability
• Industry watchers predict that
increased interest in emerging markets
might fuel a new boost within the next
5 years

32. Privacy
• Investments in rare gold coins are
very private and offer the investor
complete anonymity
• Unlike securities and real estate,
there are no registration or
government reporting
requirements for the purchase of
rare coins
• Rare coin portfolios can be held
personally or through corporate or
trust entities

33. Transparent Certification System
• Rare U.S. coins are certified by one
of two major independent third-
party certification services
 PCGS
 NGC
• These certification services provide
cash-back guarantees
 If any certified coin is determined to be
counterfeit or altered, the customer
receives full fair market value from the
certification service
 No other collectible offers this type of
guarantee
• This level of transparency generates
confidence in the market and
increases liquidity
 PCGS and NGC certified coins can be sold
online to buyers willing to purchase
“sight unseen” (with a few exceptions
such as rarities)

34. Liquidity
• Rare U.S. gold coins are a very liquid
asset class
• Since coins are certified by trusted
third parties in advance, trading can
take place anonymously online
without having to inspect the coins
• Certified coins are traded every day
on major online trading networks
called the Certified Coin Exchange
(“CCE”), and CoinPlex
 Each has over US$100 million in coins for
sale every day
• Commodities and rarities have
different levels of liquidity

35. Portability
• U.S. rare coins enjoy true portability and
ease of secure storage
• U.S. rare coins do not pay customs duties
when moved across borders
 In the UK, coins that were at one point legal
tender are not considered luxury goods
 In the US, coins are considered US
manufactured products being repatriated
 Every other type of asset (diamonds, stamps)
needs to be valued and duties have to be paid
when they are moved across borders, which
leaves written records of the movement and
reduces privacy.
• In most other jurisdictions, if duties are
levied, they are calculated on the coin’s
“face value”, which ranges from 5 cents to
20 dollars.

36. High Value/Size Ratio
• Rare U.S. coins allow investors to
concentrate large amounts of wealth in
an object the size of a mobile phone
that can be easily, discretely and legally
moved across borders at any time
• This is ideal for individuals looking to
protect their wealth from unstable
political regimes or the threat of armed
conflicts in their region or country
• The investor can either hold the coins at
home and take them with him in case
of an emergency, or they can be stored
in a safety box overseas either in a
bank, or at specialized gold storage
facilities such as Malca Amit

37. Durability
• Unlike other collectibles
such as stamps, wine,
paintings, ceramics, or
paper currency, gold coins
are extremely durable
• Last year, a couple in the
U.S. found over $10M in
gold coins buried in their
back yard.
 The coins had been buried
there for over 100 years
 Many coins were in perfect
condition

38. Asset Class Comparison
Asset Class Portability Durability Value/Size Ratio Volatility Appreciation Privacy
Certainty of
Authenticity
Rare US Coins Uniquely High Very High High Very Low High High
Uniquely
High
Gold Bullion High Very High Low Very High Low Low High
Diamonds High Very High High Medium Medium High High
Real Estate None
Medium
(requires
maintenance)
Low
High/Medium
(Depending on
Location)
Low/Medium
(Depending on
Location)
Very Low High
Classic Cars Medium
Low (Original
parts become
increasingly rare
over time)
Medium Low High Medium Medium
Classic Watches High Medium Medium Low Low High Medium
Fine Wine Medium Medium Low Very High Medium High Low
Jewelry High High Medium Medium Medium High High
Chinese
Ceramics
Medium Low Medium Medium Low High Low
Fine Art Low Low Medium Very High Medium High Medium

39. Why Are These Coins Rare?
• In 1933, U.S. president Dwight D. Eisenhower
signed Executive Order 6102
 The order forbade “the Hoarding of gold coin, gold
bullion, and gold certificates within the continental
United States“
 All U.S. citizens were required to surrender their gold
holdings to the government
• It is estimated that more than 50% of existing pre-
1933 U.S. gold coins were melted into bullion.
Most surviving specimen were held by European
collectors
• Only a small fraction of the remaining specimen
are in “mint” condition
• Today, the trading of rare U.S. gold coins is a $20
billion dollar industry, with high liquidity and very
transparent pricing

40. Melt Value vs. Rarity Premium
• The market price of a particular coin
depends on two factors:
 The “melt value” of said coin, if it was
melted and made into bullion
 The “rarity premium”, which is the
additional amount investors are willing to
pay above melt value because of the coin’s
specific condition and limited supply
• Melt value mirrors the spot prices of
bullion gold, while the rarity premium
tends to either remain constant, or
increase when drops in bullion prices
present buying opportunities for
collectors

41. Commodity vs. Rarities
• An investment portfolio of U.S. rare coins will usually consist of two components:
 “Commodity” Coins: These are pre 1933 U.S. coins that are available in the market
in larger quantities therefore their value reflects the price of bullion more closely
 Their rarity premium provides a hedge against drops in gold prices
 They are extremely liquid and can be sold anonymously online almost immediately. They can also
be sold through hundreds of dealers over the telephone and in person at galleries and at weekly
conventions throughout the U.S.
 They are often used as a safer alternative to bullion and are ideal to hold in the mid term (3-5
years)
 “Rarities”: These are extremely rare coins that are often bought and sold for
millions of dollars.
 Most of the value of these coins is in the rarity premium, so their prices do not move along with
bullion prices
 It is not unlikely for extreme rarities to double or triple in value every time they are traded
 These coins are less liquid since they are usually sold in highly publicized auctions
 These coins are ideal wealth preservation and appreciation tools for the long term (10+ years)

42. Structuring Considerations
• Structuring Considerations
 Why?:
 Preserve Confidentiality and Privacy
 Asset Value Preservation
 Generation Skipping
 Professional Management
 When?:
 Prior to 31, December 2016
 What?:
 Value Based Advisory

43. Structuring Considerations
 Who?:
 HNWI's
 Family Offices and Group
 Wealth Managers
 Investment Groups
 How?:
 KYC
 Post-Tax Funds
 Separate Jurisdictions for Trust, Trustee, Bank, Entity and separate
firewalled service providers for plausible deniability
 Beneficiary as classes of charities and others designed
 Beneficiaries can be changed or not designated

44. Structuring Considerations
 Distributions based on instruction
 Professional Trust management
 Use of attorney-client privilege if available
 Use of trusts, foundations, stichtings
 Can consider civil law trust structures, ie no legal person but a
relationship
 Donor's assets entry considerations
 Multiple layers of trusts/foundations
 Use of options agreements for safety valve
 Use of custodian/depositary to owner's share and preserve control
at top
 Asset classes not covered on CLAA eg collectible rare gold coins

45. Questions and Answers/Discussion