When the going gets tough, the tough gets going. The super rich have long enjoyed the ability to bounce around world capitals, but in response governments are beginning to implement strict regulations on so-called “wealth migration.”
China is the most predominant example of this additional supervision. In 2006, Chinese investment in U.S. residential property was $300 million, as compared to $30 billion in 2015. And according to the newly released Knight Frank wealth report, 32 percent of Ultra High Net Worth Individuals (UHNWIs) will purchase offshore real estate by 2019.
Of course, all of this cannot happen without government regulation. China allows investors to spend no more than $50,000 a year on offshore deals. Additionally, the Chinese government controls access to Macau casinos, which are often used to transfer money and limit credit for international cardholders. This year, harsher rules were put into action allowing investments for offshore transfers.
Similar to China, Russia now requires that foreign businesses with property in its country must send their information to authorities. As of last year, Brazil demands identification of beneficial owners of newly registered entities. Regulations in the United Kingdom are similar.
Further adjustments are expected to be made this year before the introduction of OECD’s Common Reporting Standard, which will heavily influence wealth migration by sharing citizens’ financial information between governments. [Knight Frank]