What is offshore investment fraud?

Legal Floris LLC

In a global and virtual marketplace where supply and demand operates without much restrictions, contract parties may incorporate anywhere. The ideal circumstances reveal lawless transactions and satisfied customers. This unfortunately does not always happen. Especially where financial institutions and investments are involved. Financial intermediaries, banks and investment firms often diversify their holdings. To maximize individual stability and maintain profitability, holdings may be stored in offshore financial centers with substantial advantages for non-resident and international organizations.

Financial advisers, intermediaries, investment firms and even banks can be deliberate and unwilling participants in offshore investment fraud. This malpractice mostly has two distinct approaches, either domestic offshore financial institution are at the center of misconduct, or the detrimental activities are utilized via legal persons incorporated in offshore jurisdictions.

A definition of offshore investment fraud is broad. It covers a combination of the location and jurisdiction, with the conduct of the legal person involved. Such conduct can involve several types of financial crime, but also unforeseen bank failure due to third party misdemeanor and regulatory intervention. Creditors need to follow a tailor made approach towards risk mitigation in offshore investment fraud because misappropriated assets may be siphoned to other jurisdictions and legal systems in a fraction of the time.

Victims of offshore investment fraud and others who are duped by the workings of the offshore financial industry, must choose their modus operandi with care. Not every loss can be eligible for recovery and not every wrong is considered fraudulent. Contractual agreements between the buyer and seller of investment agreements often exclude liability of the investment firm and place all the risk at the expense of the investor. This is in particular true when it comes to the doctrine of caveat emptor that alleges that professional investors must do their own research before they enter into an agreement.

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