According to the new Pandora Papers, South Dakota is protecting assets from people who were previously charged with financial crimes.
The Washington Post reported that South Dakota is now competing with notoriously opaque jurisdictions in Europe, the Caribbean and in financial secrecy.
These documents show that South Dakota trusts hold $360 billion worth of customer assets.
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According to new documents, South Dakota's financial secrecy laws have made it a popular location for foreigners looking to hide and protect their assets. Tens of millions of dollars are tied to individuals accused of human rights violations and financial crimes.
The International Consortium of Investigative Journalismists (ICIJ) leaked the Pandora Papers. It details the secretive offshore system that the rich and powerful use to protect their wealth. The documents, which number in the millions, were shared with media partners, including Le Monde, BBC Panorama, Le Monde and Washington Post.
According to the documents, $360 billion worth of customer assets is held in trusts in South Dakota. According to the ICIJ, South Dakota state legislators have approved legislation drafted in trust industry terms over the years. This has allowed them to protect their customers' financials and provide additional benefits. These accounts have seen their total dollar increase by fourfold in the past decade from $57.3 billion to $57.3 billion over the previous decade.
The Washington Post reported that South Dakota is now competing with notoriously opaque jurisdictions in Europe, the Caribbean and in financial secrecy.
For example, in 2019, the family of the Dominican Republic's former vice president, who was once the largest sugar producer in the country, created trusts in South Dakota. These trusts contained personal wealth as well as shares in the company. The trusts have been accused of human rights violations and labor abuses such as illegally bulldozing homes of poor families to expand plantations.
The Post reports that Sioux Falls, South Dakota has tens of million dollars in trusts for people and businesses accused of wrongdoing.
According to the newspaper, South Dakota is attractive to the ultra-rich because it offers the highest security, highest income and lowest costs.
According to the Guardian, state laws are now more secure to protect asset owners. The government taxes interest earned in a bank. Even though the money is exempt from taxes, it could still be lost in a divorce or other legal proceedings.
The Guardian reports that assets in South Dakota are protected against civil claims. Assets are not subject to criminal investigation. According to the outlet, finances are not protected from criminal investigation because the state does not have an income tax, inheritance tax or capital gains tax.
According to the ICIJ, 81 of the offshore accounts described in the Pandora Papers were located in South Dakota. This makes it the US state with the most trusts, according the report.
The ICIJ stated that "Trusts in South Dakota and other U.S. States remain cloaked with secrecy, despite the enactment of this year's federal Corporate Transparency Act which makes it harder to hide one's identity for certain types of owners,"
In the coming days, the news outlets will publish additional details about the Pandora Papers.
