• WEALTH PRESERVATION
ISRAEL
Wealth management in a challenging climate
• Reassess risk tolerance: The current climate might require reassessing your risk tolerance to ensure your investment strategy aligns with your current financial situation and goals. It is advisable to measure actual performance against identified goals on a periodic basis. • Stay informed: Keep up to date with the latest economic news and market trends to make informed investment decisions. • Review expenses: In difficult economic times, it is important to review expenses and ensure you are not overspending or wasting money. • Regulatory compliance: Ensure your tax affairs and other regulatory requirements are maintained up to date. • Consult a professional: Consider seeking the advice of a financial professional who can provide guidance on navigating uncertain markets and optimising your investment strategy. Overall, it is essential to stay focused on your long-term investment goals and resist the urge to make impulsive decisions based on short-term market fluctuations. By taking a balanced and informed approach, wealth management can still be successful even in challenging climates. The secret of successful wealth management is succinctly summarised in this well known saying “It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” Let Braude Wealth assist you in achieving your goals in this process.
sanctions imposed on Russia). • Enhanced due diligence (such as are imposed on South African residents and expats due to the FATF grey listing of South Africa due to South Africa not fully complying with international standards around the prevention of money laundering, terrorist financing and proliferation financing). • Differing tax regimes (such as are faced by Australian expats who are exempt from CGT on assets that they acquired before 20th September 1985 but would be taxable in Israel after the expiry of their 10 years post emigration tax exemption). Compliance Regulations and Private Clients Amongst the various compliance regulations faced by Israeli resident private clients, I would note the following: Anti-money laundering laws • Anti-money laundering (AML) refers to the web of laws, regulations and procedures aimed at uncovering illicit funds disguised as legitimate income. • Financial institutions combat money laundering with Know your Customer (KYC) and Customer Due Diligence (CDD) measures. Know your Customer (KYC) • Regulatory compliance at financial institutions starts with a process called “Know your Customer” (KYC). KYC determines the identity of new clients, and whether their funds originated from a legitimate source. • During the KYC process, financial institutions will screen new customers against a list of parties that pose a higher than average risk of money laundering, criminal suspects, individuals and companies under economic sanctions and politically exposed persons (PEPs) which encompass foreign public officials and their family members and close associates.
accurate and up-to-date records of transactions and customer information for regulatory compliance and potential investigations. Data Protection • Data protection measures enable a service provider to safeguard and make data available under all circumstances. • It is also designed to protect sensitive client information. Strategies for Private Clients in Israel We advise the following strategies to assist our clients in navigating the multitude of compliance requirements whilst optimising their financial goals: • Keep paperwork and supporting documentation. • Ensure strict compliance with relevant tax reporting requirements. • Ensure wills and other legal documents are kept periodically up to date. • Work with knowledgeable & licensed professionals in Israel and country of origin. Wealth management can be challenging in uncertain economic climates such as the one we are currently experiencing. However, there are steps that one can take that can help individuals navigate these challenges: • Diversify investments: A well- diversified portfolio can help reduce risk. Consider investing in a mix of stocks, bonds, and alternative investments. • Diversify currency exposure: Ensure currency exposure to match your long-term spending needs.
“M ay you live in interesting times” is an English expression that is claimed to be a translation of an ancient Chinese curse. We do indeed live in “interesting times”, evidenced every time we open the newspapers and read the headlines. Added to the uncertainties that we all face on a global level, Israeli resident investors face additional challenges on a local security and political level, which is compounded by complex Israeli tax and regulatory requirements. Clients of Israeli banks face major obstacles in ensuring that they are able to comply with onerous and ever-changing compliance requirements. Today, the banks will request, as a matter of course, supporting documentation evidencing: • Source of wealth – How was the money made? • Source of funds – Where was money held along the way? • Tax compliance – Have these funds been tax reported in accordance with relevant tax laws? This article aims to explore the effects of compliance and changing taxation on Israeli resident private clients and their financial decisions, and to illustrate the need that these clients have for the assistance of a knowledgeable and licensed advisor in assisting them in structuring and managing their financial affairs. New residents in Israel enjoy a generous 10-year post-emigration Israeli tax exemption on non-Israeli assets. This however does present certain challenges: • These assets are often not tax reported in Israel until after the end
Phillip Braude CEO Braude Wealth
of the 10-year exemption period, which means that there is no supporting tax documentation to satisfy Israeli banks’ compliance requirements. • In recent years, the Israeli shekel has been very strong, and Israeli resident clients need exposure to the shekel as that is their currency of expenditure. By investing in Israeli shekel-denominated investments, they lose the benefits of the 10-year post-emigration tax exemption. (To assist our clients in this regard, Braude Wealth has developed international shekel-denominated investment funds, which would allow the investor to enjoy both the exposure to shekel-denominated investments and the 10-year post- emigration tax exemption). • There is very often a need to restructure one’s financial affairs before the end of the 10-year post-emigration exemption period, before one becomes liable to start Israeli tax reporting. This may also present major opportunities in multi- generational multi-jurisdiction wealth structuring in a tax-efficient manner. Ex-pat residents in Israel face a more complex scenario, which may include: • Complying with laws and regulations in their original country (Americans resident in Israel are challenged by dual tax reporting requirements and additional restrictions such as being limited in investing if PFIC’s – Passive Foreign Investment Companies). • International sanctions (such as are faced by Russian expats due to the
Philip Braude, founder & CEO of the Braude Wealth group, is an Investment Marketer licensed by the Israel Securities Authority. He is also a CPA in the US & UK, and a Trust & Estate Practitioner. Philip has more than 20 years’ experience in wealth management for expatriates in Israel. He has authored various guides aimed at educating and supporting the Israeli resident expat such as The Israeli Tax Guide, Post Aliyah re-structuring Guide, Israeli Regulatory Compliance Guide and many others.
About us...
braudewealth.com/wealth-management
Braude Wealth was founded in 2001. Our specialty is helping English speakers manage their wealth effectively in Israel. We hold terms of business with leading financial institutions in Israel and abroad, providing our clients access to international investment opportunities that are not readily available through Israeli financial institutions. Braude Wealth offers financial planning, investment management, retirement planning, and tax optimisation, and providing US-compliant investment portfolios.
Customer Due Diligence (CDD) • KYC extends beyond vetting a
customer in the initial stages of opening an account. Throughout the account’s lifetime, financial institutions must conduct Customer Due Diligence (CDD) and maintain
+97 2299 215 19 pbraude@anglocapital.com irglobal.com/advisor/philip-braude
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