Offshore Finance Glossary

A category of regulated fund under Cayman Islands law where the fund itself is not directly regulated by CIMA but is required to appoint a licensed fund administrator who takes responsibility for certain oversight functions. Less onerous than a licensed fund but provides more regulatory structure than a registered fund.

European Union directive governing the management and marketing of alternative investment funds (AIFs) within the EU. AIFMD requires fund managers marketing AIFs to EU professional investors to be authorised as AIFMs and to comply with requirements covering capital, reporting, depositary, leverage and remuneration. AIFMD authorisation provides access to the EU marketing passport. See Fund Administration →

An entity authorised under AIFMD to manage alternative investment funds. An AIFM must meet specific regulatory requirements including capital adequacy, organisational requirements, risk management and remuneration policies. AIFM authorisation is required to market AIFs to professional investors across the EU using the AIFMD passport.

The body of law, regulation and procedure designed to prevent the use of financial systems for laundering the proceeds of crime. Offshore law firms, corporate service providers, fiduciary providers and fund administrators in all recognised offshore financial centres are subject to AML obligations including client identification, source of funds verification, transaction monitoring and suspicious activity reporting.

A form of authentication of public documents for use in countries that are parties to the Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents (1961). Commonly required for offshore corporate documents — certificates of incorporation, memoranda of association, powers of attorney — when those documents need to be recognised in another signatory country. Many offshore jurisdictions are parties to the Hague Convention and can issue apostilles on corporate documents.

The natural person(s) who ultimately owns or controls a legal entity or arrangement, or on whose behalf a transaction is conducted. Offshore financial centres require the identification and verification of beneficial owners as part of AML and KYC obligations. Beneficial ownership registers exist in most major jurisdictions, though access varies — some are available to competent authorities only, others are public.

The primary corporate vehicle established under the BVI Business Companies Act 2004. The BVIBC is the most widely used offshore company vehicle in the world, with over one million active BVI Business Companies. It is valued for its flexibility, low cost, minimal filing requirements and global recognition as a holding, joint venture and transaction vehicle. Browse BVI Corporate Services →

The share of a fund's profits allocated to the fund manager or general partner, typically 20% of profits above a hurdle rate. Carried interest is a key component of private equity, venture capital and hedge fund economics. In Cayman structures, carry is often held through a separate Cayman or BVI entity established alongside the main fund vehicle.

An insurance company established by a corporate group to insure the risks of its parent company and affiliates. Captive insurance companies are commonly domiciled in offshore jurisdictions with established insurance regulatory frameworks — Guernsey, Cayman, Bermuda and Isle of Man are leading captive centres. See Guernsey →

The regulatory body responsible for the supervision and regulation of financial services in the Cayman Islands, including investment funds, banks, insurance companies, trust companies and money services businesses. CIMA administers the mutual funds regime, VASP registration for digital asset businesses and the regulatory licensing of fund managers and administrators.

An OECD-developed framework for the automatic exchange of financial account information between tax authorities. CRS requires financial institutions in participating jurisdictions to identify account holders who are tax resident in other CRS jurisdictions and report their account information to their local tax authority, which then exchanges that information with the relevant foreign authority. All major offshore financial centres have adopted CRS. It affects offshore funds, bank accounts, trusts and other financial structures.

A licensed entity providing company formation, registered agent, registered office and related corporate administration services. CSPs are regulated in all major offshore jurisdictions and are required to comply with AML and KYC obligations. Browse Corporate Service Providers →

The Luxembourg financial sector regulator responsible for the supervision of banks, investment firms, fund management companies, investment funds, pension funds and other financial sector professionals. CSSF authorisation is required for UCITS management companies, AIFMs and most regulated investment fund structures in Luxembourg.

An entity — typically a bank or trust company — appointed to hold the assets of an investment fund in safe custody and to perform certain oversight functions. Under AIFMD and UCITS, regulated EU funds are required to appoint a depositary. Depositaries must be independent of the fund manager. The depositary requirement is one of the significant cost differences between Luxembourg and Cayman fund structures — Cayman funds generally do not require a depositary.

The independent regulator of financial services conducted in or from the Dubai International Financial Centre. The DFSA regulates banking, asset management, securities, insurance, funds and other financial services within the DIFC. The DFSA is a member of IOSCO and is internationally recognised as a credible regulator operating under English common law principles. Browse Dubai DIFC Professionals →

A trust in which the trustee has discretion over how to distribute the trust fund among a class of beneficiaries, without being required to follow fixed entitlements. Discretionary trusts are the most commonly used trust structure in private wealth planning because the trustee's discretion prevents beneficiaries from having fixed entitlements that could be attacked by creditors or subject to forced heirship claims. Jersey and Guernsey are leading jurisdictions for discretionary trust structures. Browse Trust Services →

A bilateral treaty between two countries that determines how income and gains arising in one country are taxed when received by a resident of the other, typically preventing double taxation. Singapore's extensive DTA network (over 80 agreements) is a significant advantage for holding structures. Many traditional offshore jurisdictions have limited DTA networks, making treaty shopping via onshore holding entities important in complex structures.

Requirements introduced in most major offshore jurisdictions from 2019 onwards, requiring certain categories of entity to demonstrate genuine economic activity in the jurisdiction. Relevant entity types typically include holding companies, finance and leasing companies, fund management businesses, intellectual property holding companies and headquarters entities. Failure to meet substance requirements can result in penalties and disclosure to foreign tax authorities. All of the Cayman Islands, BVI, Jersey, Guernsey, Isle of Man, Bahamas and Bermuda have implemented economic substance legislation.

The primary fund vehicle used for private equity, hedge fund and other alternative investment structures in the Cayman Islands. ELPs are established under the Cayman Islands Exempted Limited Partnership Act and consist of one or more general partners (who manage the fund and have unlimited liability) and limited partners (who are passive investors with liability limited to their capital commitment). ELPs are the world standard for institutional PE fund structures. See Cayman Law Firms →

The primary corporate vehicle for international business in the Cayman Islands, established under the Companies Act. Exempted companies are exempt from local taxes and are not required to file financial statements publicly. They can be used as fund vehicles (open-ended hedge fund structures are commonly established as Cayman exempted companies), SPVs, holding companies and joint venture vehicles.

US legislation requiring foreign financial institutions to report financial accounts held by US persons to the IRS. Non-compliant institutions face a 30% withholding tax on certain US-source payments. All major offshore financial centres have entered into Intergovernmental Agreements (IGAs) with the US to implement FATCA compliance locally. FATCA affects offshore funds, trusts, bank accounts and corporate structures with US beneficial owners or investors.

An intergovernmental body that sets international standards for combating money laundering, terrorist financing and proliferation financing. FATF conducts mutual evaluations of countries' AML/CFT frameworks and publishes lists of jurisdictions subject to increased monitoring (grey list) or countermeasures (black list). FATF grey-listing of a jurisdiction can materially affect correspondent banking relationships and the ease of conducting financial business from that jurisdiction.

A person or entity that holds a position of trust and is legally or ethically obliged to act in the interests of another party. In offshore financial services, fiduciary services typically refer to trustee services, executor services, company secretarial services and other services involving the administration of assets or entities on behalf of clients. Licensed fiduciary service providers are regulated in all major offshore jurisdictions. Browse Fiduciary Providers →

A legal entity that sits between a trust and a company — it has separate legal personality (unlike most trusts) but exists to fulfil defined purposes or benefit defined beneficiaries rather than having shareholders. Foundations are popular with clients from civil law backgrounds (continental Europe, Latin America, the Middle East) where trusts are less familiar. Jersey, Guernsey, Cayman, BVI, Panama and Liechtenstein all offer foundation structures.

A service provider responsible for the operational and administrative functions of an investment fund, including NAV calculation, investor record-keeping, subscriptions and redemptions processing, financial reporting and regulatory filings. Major fund administrators include State Street, BNY Mellon, SS&C, Apex, IQ-EQ and Aztec. The Cayman Islands has the world's largest concentration of fund administration firms. Browse Fund Administrators →

The managing partner of a limited partnership who is responsible for the management of the partnership and its investments. In a private equity fund, the GP is typically the fund management entity. GPs have unlimited liability in the partnership (in a traditional LP structure), manage the fund's investments, charge management fees and receive carried interest. GP entities in Cayman or BVI fund structures are often separate entities to the fund manager.

The financial services regulator for Guernsey, responsible for licensing and supervising banks, investment firms, fund management companies, investment funds, insurance companies and fiduciary service providers. The GFSC is internationally recognised, is a member of IOSCO and IAIS and operates an independent regulatory framework separate from UK or EU regulation. Browse Guernsey Professionals →

The minimum rate of return that a private equity or venture capital fund must achieve for investors before the fund manager can receive carried interest. A typical hurdle rate is 8% per annum. Returns above the hurdle are split between the manager (typically 20%) and investors (80%) after the catch-up provision, if applicable.

A bilateral agreement between the US government and a foreign government to implement FATCA reporting through local legislation rather than direct reporting to the IRS by individual financial institutions. Most offshore financial centres have entered into Model 1 or Model 2 IGAs with the US. Under a Model 1 IGA, local financial institutions report to their domestic tax authority, which then exchanges information with the IRS.

A Cayman Islands exemption that allows a non-Cayman investment manager to manage a Cayman fund without requiring a Cayman Islands Securities Investment Business Law (SIBL) licence, provided the manager is regulated in its home jurisdiction. The IME is widely used by US, UK and European fund managers who manage Cayman fund vehicles but are themselves licensed in their domestic jurisdiction.

The financial services regulator for Jersey, responsible for licensing and supervising banks, trust companies, investment firms, fund managers, fund administrators and other financial services businesses. The JFSC is internationally recognised and a member of IOSCO. It regulates Jersey under a framework independent of UK and EU regulation. Browse Jersey Professionals →

A unit trust established under Jersey law used to hold UK and European real estate. JPUTs are tax-transparent for UK tax purposes and are widely used by institutional investors including pension funds, insurance companies and real estate fund managers. HMRC recognises JPUTs for various UK tax reliefs. The JPUT is one of Jersey's most commercially significant product innovations for the institutional real estate market.

The process by which regulated financial service providers identify and verify the identity of clients and understand the nature of their business and the source of their funds. KYC is a core component of AML compliance in all offshore jurisdictions. Requirements typically include certified identification documents, proof of address, beneficial ownership information and source of wealth documentation. KYC requirements have intensified across all offshore jurisdictions since 2015.

A passive investor in a limited partnership whose liability is limited to the amount of their capital commitment. In a private equity or hedge fund context, LPs are the investors — pension funds, endowments, sovereign wealth funds, family offices, high-net-worth individuals. LPs do not participate in the management of the fund and cannot take part in management without losing their limited liability status.

A relatively new category of Cayman fund introduced to provide a lighter regulatory framework for funds with limited leverage. LMAFs must register with CIMA but are subject to less extensive ongoing regulatory requirements than full registered funds, making them attractive for certain credit and lower-leverage alternative strategies.

Singapore's central bank and integrated financial regulator, responsible for supervising banks, insurance companies, capital markets intermediaries, fund managers and financial advisors. MAS administers the family office tax incentive schemes (Sections 13O and 13U), regulates the VCC framework and issues fund management licences (RFMC and LFM). MAS is consistently rated among the world's most respected financial regulators. Browse Singapore Professionals →

A fund structure in which multiple feeder funds (typically one onshore and one offshore) pool their capital into a single master fund that conducts all investment activity. The master fund holds the portfolio; feeders hold investor interests. Common in hedge funds — a Cayman offshore feeder for non-US and tax-exempt US investors alongside a Delaware onshore feeder for US taxable investors, both investing into a Cayman master fund.

The value of a fund's total assets minus its total liabilities, typically expressed on a per-share or per-unit basis. NAV is the primary valuation metric for open-ended investment funds and is calculated by the fund administrator, typically monthly for private funds and daily for UCITS. Accurate and independent NAV calculation is a key function of the fund administrator.

A mechanism allowing alternative investment fund managers from non-EU jurisdictions (or non-AIFMD-compliant EU managers) to market AIFs to professional investors in EU member states without the full AIFMD marketing passport. Each EU member state operates its own NPPR with different notification, registration and ongoing reporting requirements. NPPRs allow Cayman and other non-EU funds to be marketed in individual EU countries on a country-by-country basis.

An international organisation that develops global standards for tax, financial regulation and economic policy. The OECD developed the Common Reporting Standard (CRS), the BEPS (Base Erosion and Profit Shifting) framework and the Global Minimum Tax initiative. OECD pressure has driven the introduction of economic substance requirements and enhanced transparency obligations across offshore financial centres since 2017.

A jurisdiction that provides financial services to non-resident individuals and companies, typically characterised by low or zero taxation, a business-friendly legal framework, strong confidentiality provisions and a concentration of specialist financial service providers. Leading OFCs include the Cayman Islands, British Virgin Islands, Jersey, Guernsey, Luxembourg, Singapore, Dubai DIFC, Switzerland, Isle of Man, Bermuda and the Bahamas. The term is descriptive rather than pejorative — modern OFCs are recognised financial centres operating under internationally accepted regulatory standards.

A fund architecture in which two or more separate fund vehicles invest in the same portfolio on substantially similar economic terms but are targeted at different investor bases or structured for different regulatory regimes. The most common example is a Luxembourg RAIF or SCSp (for EU institutional investors) running in parallel with a Cayman ELP (for US and global investors) in a private equity structure. Co-investment in each vehicle mirrors the other's portfolio pro rata.

A trust established for defined purposes rather than for the benefit of identified beneficiaries. Cayman STAR (Special Trusts — Alternative Regime) trusts are widely used in structured finance, securitisation and complex corporate structures — often as the vehicle that holds shares in an orphan SPV. Purpose trusts do not require beneficiaries and are enforced by an appointed enforcer rather than by beneficiaries. BVI also has a purpose trust regime.

An asset class comprising investments in private (non-publicly listed) companies, typically through closed-ended funds with a fixed investment period and defined liquidation timeline. PE funds are commonly structured as Cayman ELPs or Guernsey/Luxembourg limited partnerships. The GP manages the fund; LPs are the institutional investors. PE strategies include buyout, growth equity, venture capital and distressed investing. Browse Fund Administration →

A category of regulated investment fund in Guernsey available only to qualifying investors meeting minimum investment and sophistication thresholds. QIFs benefit from faster regulatory approval than fully authorised funds and are used by institutional and professional investor mandates in Guernsey.

A Luxembourg investment fund vehicle introduced in 2016 that does not require direct CSSF authorisation — instead supervised indirectly via an authorised AIFM. The RAIF benefits from the AIFMD marketing passport and can take multiple legal forms including SCSp and SICAV. It is faster to establish than a directly regulated SIF and is widely used for PE, real estate, infrastructure and private debt strategies requiring EU distribution access. Browse Luxembourg Fund Administrators →

A licensed entity appointed to act as the official agent for a company in its jurisdiction of incorporation, responsible for maintaining the company's registered office, handling official correspondence and maintaining statutory records. All companies incorporated in offshore jurisdictions are required to have a local registered agent. Registered agents are typically licensed corporate service providers.

The most common category of regulated fund in the Cayman Islands. Registered funds must register with CIMA and file annual returns and audited financial statements. They are available only to investors meeting minimum investment thresholds. Registered funds are the standard vehicle for most open-ended Cayman hedge funds and are recognised by institutional investors globally.

A Luxembourg special limited partnership vehicle introduced in 2013, widely used for private equity and alternative fund structures. The SCSp is tax-transparent and closely resembles the Anglo-Saxon limited partnership in structure and mechanics, making it familiar to international PE managers and institutional LPs. It is the standard vehicle for Luxembourg-domiciled PE fund structures alongside the RAIF wrapper.

MAS tax incentive schemes for single family offices in Singapore. Section 13O (formerly 13R) provides tax exemption on income from designated investments for qualifying family offices managing at least S$10 million in AUM. Section 13U (formerly 13X) provides an enhanced exemption for larger offices managing at least S$50 million, with more substantive local employment and investment requirements. Both schemes require genuine economic substance including local fund management staff and local business spending.

A Luxembourg regulated fund structure available only to well-informed investors. SIFs require direct CSSF authorisation and appointment of a depositary and are subject to CSSF ongoing supervision. They are more flexible than UCITS but more heavily regulated than RAIFs. SIFs can invest in a wide range of asset classes and are used for hedge, PE, real estate and infrastructure strategies targeting institutional and professional investors.

A state-owned investment fund or entity managing national savings or commodity revenues for long-term investment objectives. Major sovereign wealth funds are among the largest LP investors in offshore-domiciled private equity, infrastructure and real assets funds. Notable SWFs include the Abu Dhabi Investment Authority (ADIA), Kuwait Investment Authority (KIA), GIC (Singapore), Temasek (Singapore), Norway Government Pension Fund and the China Investment Corporation (CIC).

An entity created for a specific, defined purpose — typically to isolate financial risk, hold specific assets or facilitate a transaction. SPVs are widely used in structured finance (securitisation, CLOs, CDOs), real estate transactions and private equity deal structures. Cayman exempted companies and BVI Business Companies are among the most widely used SPV vehicles globally because of their flexibility, cost and legal neutrality. Browse Corporate Service Providers →

An annual subscription tax levied on Luxembourg investment funds based on their total net assets. The standard rate is 0.05% per annum, reduced to 0.01% for institutional share classes and money market funds. Certain exempt categories apply including pension funds and funds investing exclusively in other Luxembourg funds already subject to the tax. The taxe d'abonnement is one of the cost differentials between Luxembourg and Cayman fund structures.

A bilateral treaty allowing the exchange of tax information between two jurisdictions on request. TIEAs were widely negotiated between offshore financial centres and major economies from 2000 onwards, initially driven by OECD pressure. They have been largely superseded by CRS for automatic exchange purposes, but remain relevant for specific information requests by tax authorities. Most major offshore jurisdictions have extensive TIEA networks.

A legal arrangement under which a settlor transfers assets to a trustee, who holds and manages those assets for the benefit of defined beneficiaries or for defined purposes. Trusts are the fundamental vehicle for offshore private wealth planning and asset protection. Key offshore trust jurisdictions include Jersey, Guernsey, Cayman and BVI. Unlike a company, a trust does not have separate legal personality in most common law systems — the trustee holds the assets as a fiduciary. Browse Trust Services →

The person or entity that holds legal title to trust assets and manages them in accordance with the terms of the trust deed and for the benefit of the beneficiaries. Professional trustees in offshore jurisdictions are typically licensed trust companies (fiduciary providers) regulated by the local financial regulator. Trustees owe fiduciary duties to beneficiaries including duties of loyalty, prudence and impartiality. Browse Fiduciary Providers →

An EU regulatory framework for retail investment funds that can be marketed across all EU member states under a single passport. UCITS are subject to investment restrictions, diversification requirements, liquidity standards and investor protection rules. Luxembourg is the world's dominant UCITS domicile. UCITS are distributed not only within the EU but globally — they are recognised as a product standard in Hong Kong, Singapore, Taiwan, Latin America and other markets. Browse Luxembourg Law Firms →

A classification typically applied to individuals with investable assets of over US$30 million (definitions vary). UHNWIs are the primary client base for offshore trust structures, private family offices, private banking services and complex multi-jurisdictional wealth structures. Offshore financial centres serve UHNWI clients through their concentration of specialist trust companies, private banks, law firms and family office service providers.

A business that conducts activities relating to virtual assets (cryptocurrencies and digital tokens) on behalf of clients, including exchange, transfer, safekeeping and administration. The FATF has recommended that VASPs be subject to AML/CFT regulation. Several offshore jurisdictions including the Cayman Islands, BVI and Gibraltar have established VASP registration or licensing regimes. Cayman VASP registration is widely used for crypto funds and digital asset businesses.

A Singapore corporate structure introduced in 2020 for collective investment schemes. The VCC has variable share capital — shares can be issued and redeemed without shareholder approval — making it suitable for open-ended fund structures. It can be established as a standalone fund or umbrella vehicle with multiple sub-funds, each with segregated assets. VCCs are regulated by MAS and eligible for Singapore's family office and fund tax incentive schemes. Browse Singapore Fund Administrators →

A BVI trust law regime introduced under the Virgin Islands Special Trusts Act 2003 that allows shares in BVI companies to be held in trust while limiting the trustee's ability to intervene in the management of the underlying company. VISTA trusts are particularly popular for entrepreneurs and family businesses who want succession planning benefits while retaining management control of operating companies during their lifetime. VISTA is one of the most innovative trust law developments in any offshore jurisdiction. Browse BVI Trust Services →

The provision of investment management, financial planning, tax advisory and ancillary services to high-net-worth and ultra-high-net-worth clients. Offshore wealth management is concentrated in jurisdictions with established private banking infrastructure — Switzerland, Singapore, Jersey, Guernsey and Luxembourg are the principal centres. Offshore wealth managers must be licensed by the relevant local financial regulator. Browse Offshore Wealth Managers →

The transmission of tax and financial information between tax authorities of different countries, either automatically (under CRS), on request (under TIEAs or DTAs) or spontaneously. The global EOI framework has transformed the offshore financial services landscape since 2014, significantly reducing the ability to use offshore structures to conceal assets from home-country tax authorities. EOI is now standard practice across all major offshore financial centres.