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Finance Monthly. Ed i t or ’ s No t e Hello and welcome to the December 2022 issue of Finance Monthly Magazine! And just like that, we’ve made it to the last edition of Finance Monthly for 2022. A year marked by rising prices, political and economic instability, the ongoing war, the constant thread of the return of COVID-19 and so much uncertainty. For our December edition, we’ve gathered a collection articles and interviews covering some of the most talked-about topics in the world of finance this month. Here are some of our favourite stories from our last edition for 2022: All of this and so much more - I hope you enjoy the content in Finance Monthly’s December 2022 issue! For more financial news and commentary, please visit our website to stay up-to-date on industry news as it happens, join the conversation on our Twitter (@Finance_Monthly), like our Facebook page and follow us on LinkedIn and Instagram (@FinanceMonthly). Best wishes, Katina Male Editor editor@finance-monthly.com Copyright 2022 Published by Universal Media Ltd The views expressed in the articles within Finance Monthly are the contributors’ own, nothing within the announcements or articles should be construed as a profit forecast. All rights reserved. Material contained within this publication is not to be reproduced in whole or part without the prior permission of Finance Monthly. Circulation details can be found at www.finance-monthly.com Universal Media Ltd PO Box 17858, Tamworth, B77 9QG United Kingdom 0044 (0) 1543 255 537 8. Follow us on Instagram Financemonthly Find us on Facebook Finance Monthly Stay Connected www.linkedin.com/finance-monthly Tweet us @Finance_Monthly Monthly Finance 3 The Future of Work Could Crypto Change the Way We Get Paid? 14. US Midterm Elections A Crisis Delayed! 36. Metaverse Monopoly: 5 Tips for Getting Onto the Digital Property Ladder Top 5 Cryptocurrencies to Invest in Right Now 40.
Finance Monthly. Con t en t s 4 CONTENTS THE MONTHLY ROUND-UP News You Can’t Afford to Miss 6. 8. THE FUTURE OF WORK Could Crypto Change the Way We Get Paid? FRONT COVER FEATURE US Midterm Elections A Crisis Delayed! How to Help Businesses Thrive During Economic Challenges Amateurs Talk About Strategy; Professionals Talk About Logistics An Interview with Mario Medina 14. BUSINESS & ECONOMY 18. 22.
Finance Monthly. 5 Con t en t s 50. 26. The Time to Start Planning Your Wealth is Now An Interview with Óscar Cousillas Metaverse Monopoly: 5 Tips for Getting Onto the Digital Property Ladder Top 5 Cryptocurrencies to Invest in Right Now 36. FINANCIAL INNOVATION & FINTECH 40. CTS Acquires Tiger Eye Emerge Ecommerce Ltd Investment in Seaspace International Forwarders Ltd Altán Redes $388.1 Million Debtor in Possession Financing Golden Goose Acquires Italian Fashion Team 56. TRANSACTION REPORTS 58. How to Help Businesses Thrive During Economic Challenges 18. How Does Open Interest Work in Options Trading? BANKING & FINANCIAL SERVICES The Time to Start Planning Your Wealth is Now An Interview With Óscar Cousillas Meeting the Challenges of Pillar 2 Reporting 60. 61. INVESTMENT Why Stock and Shares Investors are Missing an Opportunity with Crypto Investment How Does Open Interest Work in Options Trading? 46. 50. 26. 30
Finance Monthly. 6 THE MONTHLY ROUND-UP News You Can’ t Af ford to Mi ss The Mon t h l y Round -Up FTX OWES BIG CREDITORS $3.1BN According to a court filing, crypto exchange FTX owes its top 50 creditors almost $3.1bn. Following the company’s filing for bankruptcy in the US, it owes about $1.45bn to its 10 largest creditors. The fall of the world’s second largest crypto exchange spread uncertainty in the already shaky cryptocurrency market. There are more than one million people and businesses that could be owed money following FTX’s bankruptcy. The company is launching a review of its global assets and is currently preparing for the sale or reorganisation of some of its businesses. Thousands of its users are still waiting to get their money back. A senior Bank of England official has said that better regulations are needed to protect the financial system after the collapse of the crypto exchange. “We should not wait until it is large and connected to develop the regulatory frameworks necessary to prevent a crypto shock that could have a much greater destabilising impact. “The experience in other areas of digitalisation has demonstrated the difficulty of retrofitting regulation on new technologies and new business models after they have reached systemic scale,” he commented at a Warwick Business School event.
Finance Monthly. 7 The Mon t h l y Round -Up The price of Bitcoin has reached a two-year low, following Binance’s decision to scrap the deal to buy smaller cryptocurrency exchange FTX. On Thursday 10th November, Bitcoin fell below $16,000 for the first time since 2020, as the price of other cryptocurrencies was negatively impacted too. BITCOIN HITS A TWO-YEAR LOW AS FTX DEAL COLLAPSES THE FED INCREASES INTEREST RATES TO A 14-YEAR HIGH The US Central Bank has announced another sharp hike in interest rates as prices continue to rise. It is raising its key interest rate by 0.75 percentage points, taking the bank’s benchmark lending rate to 3.75% – 4%. It now sits at its highest rate since January 2008. The bank’s hopes are that the hike will bring down price inflation but critics are worried about the ‘serious downturn’ that will come with it. Further increases are expected as Federal Reserve Chairman Jerome Powell said: “We still have some ways to go.” Similar announcement is expected in the UK today, as countries across the globe continue to raise their own interest rates in an attempt to solve their inflation problems. Binance decided to pull out of the deal because of due diligence concerns connected to reports of “mishandled customer funds and alleged US agency investigations”. The move has left FTX customers unable to make withdrawals from the exchange, as fears of further crypto volatility if the company goes bust are intensifying. On Twitter, Binance commented that the issues facing FTX were “beyond our control or ability to help”. “Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market.”
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Jamie Haerewa - Managing Director at Agile HRO The FUTURE of WORK: COULD CRYPTO CHANGE THE WAYWE GET PAID? Tech-savvy businesses are continuously finding new ways to bring their workforce into the digital age. From hiring remote employees to conducting meetings in augmented reality, the workplace is changing faster than ever. One of the latest trends? Paying your employees in cryptocurrency. But should business owners start shelling out crypto instead of cold, hard cash? Let’s explore the benefits and challenges of paying your employees in cryptocurrency. Finance Monthly. Fron t Cove r Fea t ur e 9
The Rise of Cryptocurrency Cryptocurrency has been on the rise in recent years, partly due to its increased mainstream adoption. While Bitcoin is themost well-known cryptocurrency, there are now over 12,000 different types in circulation. And it’s not just individuals who are investing in crypto. Businesses are getting involved too. In 2019, Microsoft began allowing customers to use Bitcoin to buy content in its Windows and Xbox stores. And in 2021, Tesla made headlines when it announced that it had invested $1.5 billion in Bitcoin and would accept the cryptocurrency as payment. The appeal of cryptocurrency is clear. It’sborderless,decentralised, and secure. For businesses, that means lower transaction fees and reduced fraudulent activity. For individuals, it offers an alternative to traditional banking systems. Could Crypto Change the Way We Get Paid? With its growing popularity, it’s not surprising that people are now interested in using cryptocurrency to receive their salary. After all, what’s not to like about being paid in something that could increase in value? Over the past few years, several high-profile individuals have received part of their salary in Bitcoin. From famous sports stars like former Seattle Seahawk Russell Okung, musicians Mel B and 50 Cent and even politicians like Miami Mayor Francis Suarez. And it’s not just celebrities and politicians interested in being paid in crypto. According to research conducted by SoFi, over a third (36%) of workers want the ability to receive part or all of their paycheck in cryptocurrency. Paying Employees in Cryptocurrency: The Perks So, what are the benefits of paying your employees in cryptocurrency? First, it could help you attract and retain top talent, particularly tech-savvy employees interested in working for forward-thinking businesses and Gen Z and millennial employees who are more comfortable with digital currencies. Second, the rise of global mobility means more employees are working remotely than ever before. According to the World Population Review, over 8 million US expatriates are working and living abroad. The think tank Institute for Public Policy Research (IPPR) estimates that around 5.5 million Brits are living abroad - that’s almost 1 in 10 of the UK population! With more employees working internationally, business owners have to pay salaries in multiple currencies which often comes with high transaction fees and foreign exchange costs. However, cryptocurrency can be used to pay employees no matter where they are in the world without these additional costs. Finally, with the rise of stablecoins like USDT, the volatility risk is significantly reduced. Stablecoins have been trialled and tested by major companies like IBM, Facebook, and JPMorgan Chase. Essentially, these digital currencies are pegged to a real-world asset like the US dollar, which means they avoid the huge fluctuations in value often seen with other types of cryptocurrency. This means that businesses can be more confident about using them to pay their employees without worrying about the currency’s value fluctuating. Risks of Paying Employees in Cryptocurrency Of course, there are some challenges associated with paying your employees in cryptocurrency. First, it’s important to remember that the value of cryptocurrency is incredibly volatile. This week the news hit that the popular crypto exchange FTX filed for bankruptcy. This sent shockwaves through the financial industry as the company could owe over 1 million creditors. While this is an extreme example, it does serve to highlight the risks associated with cryptocurrency. For example, if you paid your employees in Bitcoin and the value of Bitcoin suddenly crashed, your employees would be left out of pocket. Compliance is another big issue. Cryptocurrency is still a relatively new phenomenon, and the regulatory landscape is constantly changing. That means that there’s a real risk that businesses could inadvertently run afoul of the law by paying their employees in crypto. For example, countries like Egypt and Qatar have banned Fron t Cove r Fea t ur e 10 Finance Monthly.
cryptocurrency, so if you have employees in those countries, you would need to be very careful about how you pay them. Finally, it’s worth noting that crypto isn’t regulated when it comes to social securities like pensions and healthcare. Also, if an employee wanted to take out a mortgage, they would be unable to use their crypto earnings as collateral. So, while there are some definite benefits to paying your employees in cryptocurrency, it’s important to weigh up the risks before making the decision. A Hybrid Model Could be the Answer So, what’s the solution? While some definite risks are associated with paying your employees entirely in cryptocurrency, that doesn’t mean that the idea is a non-starter. One way to mitigate some risks would be to adopt a hybrid model, where employees are paid part of their salary in crypto and part in fiat currency. For example, suppose you pay your employee £5,000 a month. They could opt-in to receive 10% of that, or £500, in crypto. This would give them the opportunity to participate in the upside of cryptocurrency without being completely exposed to the downside. For this model to be successful, the option to be paid in crypto would need to be voluntary. Employees would also need to be allowed to convert their crypto earnings into fiat currency on a regular basis. Final Thoughts Paying employees in cryptocurrency is a great way to attract and retain top talent, but it’s important to remember that there are some risks associated with this approach. A hybrid model, where employees are paid part of their salary in crypto and part in fiat currency, could be a good way to mitigate some risks while reaping the benefits. Working with a reputable payroll provider with experience in paying employees in cryptocurrency is essential to ensure that your business stays compliant. They’ll be able to: ● Help you choose the right cryptocurrency for your needs. ● Convert fiat currency into crypto. ● Pay your employees in crypto. ● Monitor compliance regulations and ensure that you’re always up to date. About Jamie Haerewa As Co-founder and Managing Director at Agile HRO, Jamie Haerewa helps businesses expand their remote workforces by merging cuttingedge technology with industry experts. With 12+ years of experience in the global PEO, global mobility, and workforce solutions, she is a recognised thought leader with her valuable insights featured in popular publications like Business Leader, Grit Daily News and HackerNoon. Her hard work and determination have resulted in her company being awarded the #1 payroll provider in Singapore in 2020 and SME100’s fastestmoving company in 2022. She is also committed to giving back to the community and is a proud sponsor of education for the next generation of Cambodia through the not-forprofit organisation Caring for Cambodia. Finance Monthly. Fron t Cove r Fea t ur e 11
Business Economy. 14. US Midterm Elections A Crisis Delayed! How to Help Businesses Thrive During Economic Challenges 18.
Bus i ne s s & Economy Finance Monthly. 14
A Crisis Delayed! US MIDTERM ELECTIONS Markets around the globe think we dodged a bullet from the recent US Midterm Elections. Polls suggesting the Republicans would convincingly win the Senate and Congress, pushing President Joe Biden into lame-duck irrelevancy, while confirming increasing polarisation and political gridlock across the economy proved wildly wrong. US voters chose to forget the Orange Ghost of President’s past, rejecting Donald Trump’s raft of election deniers. Bill Blain Strategist at Shard Capital Finance Monthly. Bus i ne s s & Economy 15
Trump was left looking humiliated but will still stand for the Republican nomination in 2024. The consensus is any sound conventional Republican should beat him. Had his candidates fared better, and a Trump-led MAGAdominated party seized both houses, global markets would now be severely concerned about the risks to global trade from increasing US protectionism and isolationism, and the US pulling back from its global hegemon role by withdrawing support for Ukraine, plus the possibility Trump would threaten to pull the US out of NATO in response to Yoorp’s perceived slights on his divine personage. Trump would happily unravel global trade and security for another four years free of the threat of court action. Fortunately for theglobal economy – which has been uncertain enough this past year - Biden and the Democrats held the Senate! It means they retain control of many levers of the State – theoretically; they still have to deal with serial troublemakers like Joe Manchin and Kyrsten Sinema who block Democrat legislation even more effectively than the other side. The Republican majority in Congress is razor thin, meaning there are deals to be done to move the US economy forward. The US Midterm Elections are always interesting – but make little sense to outsiders. Why do the Americans have a system which is pretty much designed to ensure Bus i ne s s & Economy Finance Monthly. 16
any sitting US President will spend an inordinate amount of time domestically politicking, with at least half the House against him at least half his time in office? It would seem to be a very inefficient form of government from an enabled leadership perspective. Perversely, some of the greatest stock market gains are made following the mid-terms! The data shows stocks gained 17/19 times following midterms. Markets perceive gridlock as a marvellous thing – stopping presidents from spending money or raising taxes to do anything meaningful to the domestic economy. From the outside, the polarisation of gridlock looks like political madness, but it’s created the compromise politics that drive the US. Political management is simple and very transparent – if a sitting president’s party wants to achieve anything it has to bribe the opposition majority to achieve it. It sort of works. However, the headline numbers from the Election hide some fundamental crisis points. The first is the great age of leadership in both parties. Nancy Pelosi, theretiringDemocrat leader of the house of representatives is 82. Mitch McConnell, the leader of the Republicans in the Senate is 80. Biden is 78. They hardly share the same ideals as the young, struggling masses who make up the 84% of Americans under 65. The idea of Biden taking on an equally senile Trump will not fill markets with a sense of here are two men razor fit to command and control the most powerful armed forces the world has ever seen in an increasingly hostile geopolitical landscape. The question is who replaces them? Both parties have younger leaders in the wings, but Ron DeSantis, Florida Governor, and the current Republican bright - young - hope sounds much like Trump and focuses on the same support base. Stars of the Progressive Democrat wing, like Alexandria OccasionCortez, stand too far left to appeal to the majority of the small number of swing voters required to win an election! The problem is new leaders from the extremes of each party are unlikely to seize the key middle ground voters – and will simply widen the bitter polarisation seen in US politics, egging on militia and QAnon supporters. Even moderates will be accused of standing for Left-Wing Extreme Wokery or Right-Wing MAGA Libertarianism – pushing away the key voting constituency. After years of Trump, there are few moderates left on the Republican bench – leading to risks of party fracture on left-right fault lines. Even as the parties struggle to identify their futures, there is the economy to consider. The next couple of months will determine where the US economy is likely to be in November 2024. If inflation continues to ease, the US could be coming out of a thin recession early with growth back online strongly. Or, we may see the US Federal Reserve contending with strong and more persistent inflation, driven by a long and painful global recession and fundamentals like increasing wage demands (which make transitory inflation spikes into long-term cycles of wage inflation), causing interest rates to remain punishingly high. In such as case the US economy may not be immune to a global slowdown – and the election of 2024 could be an economic gift to the right wing. In short, the midterms may simply be a problem delayed for the global economy. All the issues about the role of the US in the global economy and markets remain in play. “The next couple of months will determine where the US economy is likely to be in November 2024. If inflation continues to ease, the US could be coming out of a thin recession early with growth back online strongly.” Finance Monthly. Bus i ne s s & Economy 17
At the height of the global pandemic, businesses found themselves at a crossroads, as traditional banks and financial service models were not able to provide them with the necessary support or tools to operate during a time of uncertainty. How to Help Businesses Thrive During Economic Challenges Bus i ne s s & Economy Finance Monthly. 18
he pandemic sparked a craze in the development of fintech and neobanks that jumped to fill the gap between traditional banking and the needs of SMEs operating in the modern economy. Despite SMEs making up more than 99.99% of businesses in the US, and accounting for nearly two-thirds of net new private jobs in recent decades - banks predominantly tailor their services and products towards retail corporate companies and consumers. Banking has surpassed its traditional understanding in light of the digital economy. The need for more advanced financial services would mean that banks can offer their SME customers a seamless and tailored service that allows them to grow their business and penetrate the marketplace to establish themself among their competitors. Yet, the functionalities of SMEs require a dynamic set of tools, especially during times of economic and financial uncertainty. Stepping out of the pandemic, macroeconomic Finance Monthly. Bus i ne s s & Economy 19
Finance Monthly. 20 Bus i ne s s & Economy problems have left experts suggesting a looming recession on the horizon, as global markets tumble and central banks are unable to tame rampant running inflation. Taking what we have learned from the pandemic, banks, as well as small businesses will need to incorporate more adequate digital banking solutions in the coming months as macroeconomic uncertainty starts to shift consumer behaviour and investor sentiment. Digital banking stretched farther than traditional fintech tools, and today a range of services and products exist to specifically help SMEs overcome challenges that they face within their sector and the financial industry. Digital funding Digital funding seeks to resolve the issues relating to SMEs that require additional funding from their financial provider. Digital funding would mean that both banks and their employees will have more transparent access to SME loan application information. This would enable banks to process requests for funds faster and more conveniently. With the use of digital funding capabilities, small and mediumsized business owners, including entrepreneurs will not only access the funding or financial resources they require, but it helps to speed up the loan process, speed-up credit issuing decisionmaking, and minimise potential complications. Online payments and digital wallets American consumers make an average of 35 payments each month, with more than half of those payments including debit, credit, and prepaid cards according to findings by the Federal Reserve Bank of Atlanta’s 2020 Diary Of Consumer Payment Choice Report. On top of this, research by PYMNTS suggests that on average a consumer now conducts at least two transactions online each day. Among these transactions, 17% of consumers make purchases of retail products online, and 17% purchase food and groceries, with a little more than a fifth using their bank’s sites or app each day to complete transactions. The growing need for online payment systems, including contactless payments, QR codes, and digital wallets would mean that small businesses will need to increase their awareness of how their customers pay for goods and services. For long enough cash has reigned king, and while it does still hold some sort of influence, in the long term, and considering the potentially troubling financial times ahead, SMEs will need to maximise digital payment options through smart and innovative inclusions in their business model. Consumer segment targeting Already we see how companies can target consumer segments within the marketplace through the use of analytical data points provided by social media and online tools. Though these efforts are also becoming more present in the digital banking ecosystem, where banks can establish digital channels that can help run and operate specific campaigns directed toward a target audience. These efforts would mean that banks will then be able to provide their customers, in this case, SMEs with relevant information. Businesses will have better access to consumer information in terms of spending behaviour and trends, helping them to adjust their nearterm strategy. It might not be a primary service that banks can provide their SME customers, but in the interim of financial uncertainty and changing economic cycles, it could mean that smaller businesses can remain financially profitable while retaining clientele. Cash flow management Typically small business owners will capture cash flow information through a third-party accounting system or manually capture the daily data. Though specific programs and tools already exist within the digital space, for SMEs it would mean either buying a completely new product or employing someone to complete accounting tasks. In this case, for many small businesses, it would only result in additional capital that could rather
Finance Monthly. 21 Bus i ne s s & Economy be directed towards growth and development. Besides financial implications, cash flow management systems that are pre-integrated within the bank’s existing products or services would mean business owners can directly utilise these resources without the need for additional tools. Cash flow management functionalities can become a punctual, safe, and more convenient way that gives business owners direct access to manage and control their daily operations, and oversee cash flow. Additionally, it could further provide them with a follow-up on economic trends and establish key data points that can be used to develop a long-term growth strategy. Financial data reporting This category ties strongly with how financial institutions, in this case, banks or fintech can provide their customers - SMEs - with the appropriate financial data that can help to improve financial decisionmaking. While banks and fintech may have access to consumer records, SMEs tend to have less transparency in terms of consumer buying behaviour. The financial data set is not only important for SMEs’ customer base, but it could potentially help SMEs access credit assessments with more personalised reports, analyse their financial position and implement more data-driven performance indicators. Thinking in terms of financial uncertainty, businesses will require steady and transparent reports from their financial provider to ensure they can properly plan and manage the business strategies that can help them remain operational during times of unevenly distributed consumer spending. The bottom line Though banks have in recent years caught up with the digital trend that has been introduced by fintech and other startups, their services and products are often still too centred around larger, more dominant customers, including retail corporate businesses and multinational firms. If small businesses want to survive an impending financial crisis, they will not only need to adjust their business model accordingly, but they will also need to consider how their bank is serving them, and providing them with the right tools and resources to overcome financial hardships. Banks are no longer a place of sole financial authority, but rather a deeper look into consumer economics and buying behaviour, a link between the business and the marketplace, and a provider of digital resources that helps to personalise the financial experience for small to medium enterprises. “Despite SMEs making up more than 99.99% of businesses in the US, and accounting for nearly two-thirds of net new private jobs in recent decades - banks predominantly tailor their services and products towards retail corporate companies and consumers.”
Mario Medina was born in the Dominican Republic but moved to the US when he was 9 years old. A Nova graduate, he’s worked for Fortune 500 companies before co-founding Moveo Technologies. Finance Monthly talks all things Moveo Technologies with him over the next pages. Mario Medina Co-founder & CEO of Moveo Technologies Please tell us more about Moveo Technologies. Ground has always been a bit of a stepchild of the passenger transportation industry - air, sea, and rail receiving all the plaudits. Our company Moveo Technologies Corporation was envisioned to bring sophisticated logistics to the passenger ground transportation industry. The process involved not just moving away from fax machines, spreadsheets, and phone calls, which was essential, but to replace reactive dispatching with predictive and proactive systems, including, dispatch to lower incidents. A number of initiatives were undertaken to achieve the lowest incident rate in the industry, chief among them are ISO 9001 certification (a game changer for us in quality management), using machine learning and AI on our in house developed platform, and offering our back-end technology, without charge, to companies serious about passenger transport (e.g., Carnival Cruise Line and a Major League in the US). What makes the company unique? It is a combination of the projects we take on and our vision as a company, both of which put our focus on managing serious Amateurs Talk About STRATEGY; Professionals Talk About LOGISTICS logistics. This affects everything from a single business passenger to the US Army’s OAW (Operation Allies Welcome) where we provided services and managed the stateside passenger transportation for over 30,000 Afghans refugees coming to the US. General Bradley says it best: “Amateurs talk about strategy. Professionals talk about logistics.” What are your favourite things about the sector? I love the fact that the industry has become so receptive to innovation and the appreciation we receive from customers and clients when they get what we do. Bus i ne s s & Economy Finance Monthly. 22
What are the challenges you frequently face and how do you resolve them? The biggest challenge by far is managing growth. We have grown 20 times larger as a company in the last 3 years. Ironically COVID was a huge challenge when business dropped off a cliff. But the resolution, was just realising that we were handed one of the greatest opportunities to make fundamental changes, improvements and super housecleaning. We developed the AI algorithms for dispatch, got the ISO certification, and landed the service and logistics for managing, scheduling and delivering officials to every Major League game when they could not fly. What are your goals for the future of Moveo Technologies? The two big ones in the pipeline are a planned expansion to reach 250 Metropolitan Service Areas (MSAs) over the end of 2025 (We are currently serving over 100 MSAs domestically and internationally). We also plan an ‘uber’ (pun intended) high-end product that includes private jet service and yacht service. Finance Monthly. Bus i ne s s & Economy 23
Taxation Awards2022 FM WINNERS EDITION OUT NOW Click here or visit www.finance-monthly.com for more information Year upon year, the Finance Monthly Taxation Awards recognise and celebrate excellence across the increasingly diverse and dynamic tax industry – highlighting firms and individuals who work diligently to provide essential tax services. Monthly Finance
Banking Financial Services 26. The Time to Start Planning Your Wealth is Now An Interview With Óscar Cousillas Meeting the Challenges of Pillar 2 Reporting 30.
T: +1 832 903 0155 E: ocousillas@miuratrust.com W: www.miuratrust.com “When we think about wealth planning, some people believe it is still “early” in their lives to discuss it, but the reality is that the sooner we plan for it, the better.” Bank i ng & F i nanc i a l Se r v i ce s 26 Finance Monthly.
We speak with Óscar Cousillas, Partner and General Manager of Miura Trust, part of the Miura Group with a presence in the US, Switzerland, Panama and Spain. Óscar works exclusively with Wealth Planning clients in the US, Latin America and Europe and shares his insights into the industry with us over the next few pages. The Time to Start PLANNING YOUR WEALTH is NOW Óscar Cousillas, TEP Partner and General Manager of Miura Trust Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s 27
28 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s Who needs help with wealth planning? In my view, everyone should look for advice on wealth or succession planning. Each individual case is different and understanding your options early on will help match your ambitions and aspirations with actions. Today, it is very common to get consultant services for financial investments either through a financial adviser, reviewing prestigious publications or listening to experts. This has become a mundane practice as it is tangible and it yields shortterm gains that make it even more attractive. On the other hand, longterm wealth planning is perceived as something in the distant future that is often not that optimistic and appealing to individuals. Let me share an example that helps illustrate the different options and recommendations that adapt to different circumstances. If we have a person who is a US citizen, lives in the US and is married once with two kids. This is quite a different profile that might not need the same level of depth as a person who isn’t a US passport holder, lives in a different country, is divorced and has children from different marriages, as well as a family-run business with siblings. Both individuals will benefit from wealth planning. However, the tools and services offered to each will be different. The core target audience for wealth planning is residents in countries that are going through political and/or economic turmoil. It is a common practice for these individuals to invest their wealth in a different country than the one of their origin to ensure they can protect their wealth. They do so to ensure that their wealth will be managed according to their wants and needs and will be protected from local contexts. Unfortunately, in my experience, most people do not realise the importance of wealth planning until they are more mature in life or retired. It is never late, but at this stage of life, it is usually late to maximise the benefits, flexibility and outcome that can be managed with a long-term outlook. The pandemic has helped many of us realise how vulnerable we are and how quickly our lives can change. I hope that as we go back to a new normal, people keep this in mind and reflect on planning their future to ensure it is aligned with their expectations and aspirations. What are the key mistakes people make? From my perspective, there are three common mistakes. The first and most common is that people think that there is a “one size fits all” solution. Word of mouth is usually a great way to spread information but when it comes to wealth planning, some people want to replicate what they have heard from families, partners, friends or neighbours. The reality is that usually each individual’s situation, wants and needs are different and therefore the “best” outcome of the planning can be quite different from case to case. A second common mistake is to think that once the planning is done, it is done for good and it should not be revisited. This is not accurate as our personal context, the economic environment, and the laws and regulations can change, and we might need to adapt to meet the trustees’ goals. Finally, sometimes and even without bad intentions, some local advisers or accounting advisers that are close to the individual can begin to provide advice based on what they have heard. However, in many instances, this may not be their camp of expertise and they can provide misleading information or generate false perceptions of what would or wouldn’t work for the individual. When working with a wealth planning specialist, you will be guaranteed that you’re looking beyond the context of today. An experienced professional will recommend solutions that make sense for the future while minimising any associated risks. They’ll look for alternatives that result in saving money and avoiding future bureaucracy and unnecessary costs. An international wealth planner is a qualified professional that not only has the precise knowledge of local regulations for each individual but also those of third countries where investments usually take place.
29 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s As an example, for us in Miura, the word “client” does not exist. Our philosophy is to offer truly personalised service and therefore refer to people as our “guests” and “partners”. It can seem like semantics but it fully reflects our mindset on service. Once we define a structure, we are committed to working together in evaluating alternatives, making decisions, and pivoting if the needs or environment changes. What are the key differences between global and boutique firms? The first and most important difference is that a global firm has thousands of clients from across the globe and within their peer group, they “fight” with other similar companies for clients. Their business model is similar to a wholesaler and the clients are numbers that help drive efficiencies in resources. Regardless of the individuals’ characteristics, they focus on a short-term gain for each customer as they are aware that there will be high turnover as individuals also move from one firm to another looking for better fees. The revenue stream is mostly driven by new structures or dissolved structures that generate fees from the individuals. On the contrary, a boutique firm is looking for a win-win relationship focused on long-term retention as opposed to short-term gain. The firm focuses on the “partner” or “guest” satisfaction that will generate added business. This means that the focus is more on the quality relationship than the quantity. The offering becomes personalised and strives to avoid over costs generated by a mass approach. Another key difference is that often global firms “recommend” solutions that are first and foremost beneficial to the firm. The approach is more about “trends” or “internal interest” than the clients’ benefit. Those firms function under the assumption that clients will leave them sooner or later – they are like “constructors” who build what others recommend in a moment with the materials they have in stock. A boutique firm has different objectives and key performance indicators. Here, the main objective is to drive excellence in the design of the structure and strive to leverage the most sophisticated tools and materials to find an ideal solution for each ‘partner” or “guest”. The wealth planner acts like an architect during the design of the process but then also finds ways to improve and optimise everything once the structure is implemented. The key performance indicator for a boutique firm is the excellence and satisfaction of their partners. Is there a global solution for wealth planning? There isn’t. There can’t be one wealth management solution that will fit every person’s goals and objectives. Each individual is unique and therefore, each solution should be personalised. Some larger organisations try to standardise their solutions and offer global products that drive internal efficiencies, but this does not translate into benefits for the individuals. Do you think that the pandemic, the political turmoil, and the ongoing war in Ukraine make wealth planning more urgent? It’s not so much about urgency as it is about starting now. A good analogy for this is the case for health insurance. When we are healthy, we never think about it but when we need it, we feel extremely grateful that we have it. When we think about wealth planning, some people believe it is still “early” in their lives to discuss it, but the reality is that the sooner we plan for it, the better. What advice would you give to anyone who reads this and is not sure whether they should look for a wealth planning adviser? Everyone needs to start thinking about their wealth as early as possible, especially in the current uncertain environment. Timing is critical so book an appointment with a wealth planning adviser now!
30 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s Meeting the Challenges of PILLAR 2 REPORTING Russell Gammon CSO at Tax Systems
31 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s In two short years’ time, multinationals with a consolidated revenue of over €750 million must establish tax strategies for meeting Pillar 2 requirements, ensuring the world’s largest companies pay a global minimum tax of 15%, no matter the location of their operations. Inevitably, one of the key challenges ahead lies in how finance functions comply with providing 150+ data points, some of which might not be captured in source systems. If this wasn’t enough, the requirements get more complex and verbose when operating internationally. The answer lies in global data integration and collaboration from a single platform. Currently, corporate tax can be a manual, spreadsheet-driven task, conducted every twelve months and then submitted to HMRC or other local regulators. The complexity in the calculations lie in tax specific adjustments, to be made in the computation. In addition, there are different rules for various sectors, such as oil and gas, and finance, as well as exemptions for significant assets and machinery. Needless to say, completing accurate tax returns takes time and effort.
32 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s The impact of BEPS 2.0 Into this already complex landscape arrives the Base Erosion Profit Shifting (BEPS) 2.0 directive, a key cornerstone of the last G7 summit, which is designed to harmonise corporation tax on a global level. Aimed at limiting the impact that businesses can create by shifting profits offshore, everyone will effectively pay at a minimum rate of 15% to companies, regardless of jurisdiction, via the implementation of a so-called “top-up tax”. The rules will apply to around 500 UKheadquartered businesses. Let’s say, for example, you have 50% of your business in the UK and the rest spread across 20 EU countries. You’re not likely to have a dedicated tax function in each jurisdiction; you’re more likely to outsource it to local experts. However, for BEPS it is vital to calculate it all and feed it back to HQ. The real challenge lies in the data you need to gather, especially if you operate across borders – and you might not even be collecting or reporting on it yet. Deferred tax is probably the main area that will be required for BEPS reporting, but in many instances won’t be housed within your ERP system or other dedicated software. For those using Excel, it can be a long, manual process. Instead of relying on complex spreadsheets, which are prone to human error, BEPS may push you to create a single, trusted source of all data. This will ensure you can draw on all the necessary components for any new reporting requirements. Centralising and streamlining data But, how do we centralise our data in an efficient way? Many companies rely on their ERP systems as a natural first choice. The problem here is that lots of these companies will have complex legacy systems that date back years, making it a real pain to collate data. SAP4HANA and Oracle Fusion are good modern versions of ERP but even they won’t necessarily gather everything you need without a significant spend to customise them. It is also important to bear in mind that corporates typically consolidate returns at a group “Everyone will effectively pay at a minimum rate of 15% to companies, regardless of jurisdiction, via the implementation of a so-called top-up tax.”
33 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s level, and BEPS requires an additional level of consolidation, at a country level. This sounds trivial and obvious but in most instances, it is far from it. There’s a range of system implications, so you need to assess your technology from a data capture and calculation perspective and then check the gap analysis. Undoubtedly, there will be missing data, so you’ll need to figure out how to capture it. Introducing automation The alternative to all this manual work is to introduce automation on an integrated, tax-specific collaboration platform. The collaboration aspect is important: if you have people working across 15 countries, you’ll have local people completing their local spreadsheets and emailing them to HQ, who will then laboriously copy and paste the contents into one central document. Wouldn’t it make more sense to have one secure portal everyone can access and upload their figures to? Finding a partner who can integrate your existing systems, and extract and collate the right data automatically will be a huge benefit. Too often, people expect to do it all from their ERP system but that’s more like the first step in a longer journey. ERP systems don’t typically cater “out of the box” for all tax-sensitive items that will be required for Pillar 2. You need to take the information from the ERP, integrate it with the tax return process, and make it available to those needing it. Thus, you can avoid spending months trapped in Excel with an approach that is quicker, more accurate, and controlled which gets it right, first time. Some might panic in the face of BEPS requirements but there is plenty of time to do the work. It’s a big change but addressing it needn’t require lots of money or throwing teams of people at it. By thinking about the whole process – both upstream and downstream, and by introducing end-to-end integration – you can successfully compile, collaborate and complete your Pillar 2 compliance. What’s more, BEPS requirements will likely change, as it is something of a moving target; an integrated tax platform will also help you evolve in tandem with the directive and complement your own company’s growth. “The alternative to all this manual work is to introduce automation on an integrated, tax-specific collaboration platform.”
Innovation 36. 40. Financial FinTech Metaverse Monopoly: 5 Tips for Getting Onto the Digital Property Ladder Top 5 Cryptocurrencies to Invest in Right Now
F i nanc i a l Innov a t i on & F i nTech 36 Finance Monthly. Jawad Ashraf CEO & Co-Founder Virtua METAVERSE MONOPOLY: 5 Tips for Getting Onto the Digital Property Ladder
Finance Monthly. F i nanc i a l Innov a t i on & F i nTech 37 The digital real estate market had a ‘boom’ moment last year as excitement around the metaverse triggered a 700% rise in the average metaverse property price. According to DappRadar, the ten largest virtual worlds have generated over $1.9bn in digital real estate sales since their conception. This period included many multi-million pound transactions from metaverse real estate firms and big brands, plus individuals - including one user who spent $450,000 on a plot of land neighbouring US rapper Snoop Dogg. It is now estimated that the digital real estate market will continue to grow 31% year-on-year for the next six years. “Nearly half (48%) of all Americans and a third (33%) of all Brits are more likely to buy digital land than physical property.”
Amidst a cost-of-living crisis, the thought of investing cash into owning virtual property in the metaverse might sound absurd. But big brands such as Nike, Gucci, Sony and Spotify have already spotted the opportunity to reach new audiences and are hedging their bets that the metaverse is here to stay. The spike in average digital property prices also shows that many people may still have disposable income to invest. For younger people unlikely to get a foot on the ‘real’ property ladder any time soon, virtual property is offering a cheaper and more accessible alternative. For brands and users alike, the potential unlocked by blockchain technology in the metaverse is alluring. Concepts such as decentralised governance and token-based micro-economies have the power to revolutionise transactions and the nature of ownership. Cryptocurrency communities are hopeful of a future detached from current conventions, operating outside of the financial turbulence and uncertainty in physical markets. Recent data exploring digital land ownership confirmed this shift in attitude towards digital ownership. With the average price of a plot of land at $3,300 in June 2022, research from Virtua found that nearly half (48%) of all Americans and a third (33%) of all Brits are more likely to buy digital land than physical property. The research also found similar figures (46% of all Americans and 30% of all Brits) think that digital property will provide a more significant return on investment than bricks and mortar in five years’ time. It’s important to remember that, as with any purchase, nothing is guaranteed, and it is always important not to ‘hit and hope’ for profits that may not materialise. Nobody should be spending more than they can afford, especially on assets that they don’t fully understand. So it’s absolutely crucial, especially for first-time buyers, to be well-informed before they take their first steps onto the digital property ladder. Here are five recommendations to consider before making your first purchase: Know what you are dealing with Before you start acquiring digital real estate, you should have a relatively good understanding of the technical mechanisms, for example, smart contracts and land deeds, that impact the buying and selling process. Digital properties are digital assets that come with similar logistical features that you’d expect to see on the printed and digital documentation provided by real estate agents in the physical world. Whilst the blockchain does autonomise this process, the absence of a centralised third party to help manage your acquisitions and activity requires you to assume more responsibility. Whilst you can purchase metaverse property through digital brokers and property managers, there isn’t currently any regulatory or licensing stipulations that they operate under, so working with reliable third parties will also be down to your own due diligence. F i nanc i a l Innov a t i on & F i nTech 38 Finance Monthly.
Get a wallet Purchasing a metaverse property means that you are purchasing a digital land deed. The deed itself is a unique piece of code which stores all of the transactional history and values of the property on the blockchain, verifying your right to ownership by adding a layer of code. In order to complete a transaction (whether it be buying the deed or selling the deed on) you will need a digital wallet that is compatible with the specific cryptocurrency that the particular metaverse platform uses. Until you’ve selected and set up the right kind of wallet and relevant cryptocurrency, you will be unable to make any investments - so be sure to do your research and have everything in place. Choose your metaverse platform wisely As in the physical world, location is important when choosing your virtual HQ. Naturally, there are influential factors about a place that we weigh up when considering where to live. It’s the same with the metaverse. As with physical property, the value of digital land can fluctuate according to the popularity of its location. Factors such as brand and influencer interaction, user engagement, gamification and creative initiatives within a particular metaverse will all play a factor in determining the value of your digital property now and in the future. Don’t go in blind It might sound obvious, but it’s true: know what you’re buying. Firstly, are you buying a plot of land on which you can build a property? Or are you buying a property that is already built? If you’re buying a plot of land without a property, what kind of property are you going to build? Are you familiar with the architectural design tools that will allow you to build something competently? Are you planning to buy a home that your avatar settles in, or are you investing in a property that you plan to develop, customise and either rent out or sell on? These are all questions you should ask yourself. As within the physical world, having a clear strategy for your purchase is totally necessary. Consider utility Remember that a digital property and its accompanying land deed is a type of NFT. The greater utility an NFT provides, the more valuable it can be. With digital property utility can come in many forms. The most obvious would be their foundational traits such as flexibility to design and build on and also having space to showcase digital artwork. A metaverse platform might also add exclusive perks to your land deed, adding unique traits and boosting its value. For example, owning a property in a more desirable location might afford users the luxury of having rights to vote on conditions and procedures of that particular metaverse, or perhaps having access to useful resources that can be deployed in gamified aspects of the space. Finding out the utility that your land deed provides should be a priority in your purchasing decisions. Interested in making your first acquisition? Sign-up to the Virtua Prime white list to learn more. Finance Monthly. F i nanc i a l Innov a t i on & F i nTech 39
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