There is a certain irony in the fact that the country most responsible for dismantling global banking secrecy has become, by many measures, the world's most effective provider of it. The United States — through a combination of legislative design, regulatory asymmetry, and state-level competition — now holds a position in the global financial architecture that would have been inconceivable twenty years ago: the world's premier destination for international asset holding, corporate structuring, and financial privacy.

The architecture of American financial privacy

The US position is built on three structural pillars, each of which reinforces the others. The first pillar is the FATCA-CRS asymmetry. As discussed in our March 2023 analysis, the United States imposes extensive financial reporting obligations on foreign institutions through FATCA, but does not participate in the OECD's Common Reporting Standard. The result is a one-way mirror: the US sees into every major financial centre in the world, while sharing only limited information in return.

The second pillar is state-level corporate law. The United States is not a single corporate jurisdiction — it is fifty. And several states have built entire industries around the formation of entities with minimal public disclosure. Delaware, the most famous, processes over one million business entity filings per year. Wyoming, South Dakota, Nevada, and New Mexico each offer distinct combinations of privacy, asset protection, and tax efficiency that attract domestic and international clients alike.

The third pillar is the depth and stability of the US banking system. The United States has over 4,000 FDIC-insured banking institutions, with combined assets exceeding $23 trillion. The dollar is the world's reserve currency, accounting for approximately 58% of global foreign exchange reserves and 88% of all international trade settlements. For international clients seeking a stable, liquid, and globally accessible banking relationship, the US is often the default choice.

South Dakota: the trust capital of the world

No discussion of American financial privacy is complete without South Dakota. Over the past two decades, this sparsely populated midwestern state has transformed itself into one of the world's leading trust jurisdictions, with trust assets now estimated to exceed $600 billion. South Dakota's appeal rests on several statutory features. It permits dynasty trusts with no rule against perpetuities — meaning assets can be held in trust indefinitely, across unlimited generations.

It imposes no state income tax on trust income, provided the trust has no South Dakota beneficiaries. It has some of the strongest asset protection statutes in the country, with a two-year statute of limitations on fraudulent transfer claims and a provision that allows for the creation of domestic asset protection trusts (DAPTs) that shield assets from future creditors. The privacy characteristics are equally significant.

South Dakota does not require trust instruments to be filed with any state authority. Trust information is not part of the public record. And the state's trust company regulatory framework provides institutional oversight without public disclosure. The result is a jurisdiction that offers the legal infrastructure of Switzerland with the regulatory environment of the United States. International families, sovereign wealth funds, and high-net-worth individuals from around the world have increasingly chosen South Dakota as the situs for their trust structures — a trend that shows no sign of slowing.

Delaware: the corporate formation machine

Delaware's dominance in corporate formation is well known but worth examining in the context of international structuring. More than 1.9 million legal entities are registered in Delaware, including 68% of Fortune 500 companies. The state's Court of Chancery provides a specialised, judge-only forum for corporate disputes, with a body of case law that is among the most developed and predictable in the world.

For international entrepreneurs, Delaware offers several specific advantages. Its LLC statute — the Delaware Limited Liability Company Act — permits extraordinary flexibility in the design of operating agreements. Members can contractually modify or eliminate fiduciary duties, allocate profits and losses in any manner they choose, and create governance structures that do not exist in any other jurisdiction's corporate law.

Delaware also offers a degree of informational privacy. While the state requires the filing of a Certificate of Formation, this document need only identify the registered agent — not the members, managers, or beneficial owners. For many years, this made Delaware one of the most private jurisdictions in the US for entity formation. The Corporate Transparency Act will partially erode this advantage by requiring beneficial ownership reporting to FinCEN, but the formation filings themselves remain minimal.

Wyoming and Nevada: the alternatives

Wyoming deserves particular attention. As the state that invented the LLC in 1977, Wyoming has nearly five decades of experience refining its corporate laws. It imposes no state income tax, no franchise tax (in contrast to Delaware's $300 annual fee for LLCs), and provides among the strongest charging order protections in the country — making it difficult for a creditor of an LLC member to seize the member's interest in the LLC.

Wyoming also offers the Registered Agent Privacy Act, which allows the use of a nominee registered agent to further shield the identity of the entity's principals from public filings. Combined with its low costs and efficient filing system, Wyoming has become the preferred state for many international structuring professionals. Nevada takes a different approach, emphasising its statutory prohibition on state corporate income tax and its explicit provisions against piercing the corporate veil.

Nevada also does not share information with the IRS beyond what is federally required — a characteristic that, while not providing any legal protection against federal enforcement, is perceived by some clients as an additional layer of separation.

The international perspective

From the perspective of a non-US person evaluating where to hold assets or structure a business, the United States offers a proposition that no other jurisdiction can match. Legal robustness under one of the world's most developed common law systems. Banking access in the world's reserve currency. Limited outbound information exchange under the current FATCA-CRS framework. And a political and economic stability that most international clients view as a fundamental requirement.

The combination of these factors has led to a remarkable inversion. Countries that the United States once pressured to disclose financial information — Switzerland, the Cayman Islands, Singapore — now find themselves in a world where the US is the least transparent major financial jurisdiction, at least in terms of what it shares with foreign tax authorities. This is not a secret. The Financial Secrecy Index, published by the Tax Justice Network, ranks the United States as the second most financially secretive jurisdiction in the world, after only the Cayman Islands.

The EU Tax Observatory has repeatedly called on the US to adopt CRS or to expand the scope of its existing information exchange agreements.

Conclusion

The United States has not become the world's largest offshore jurisdiction by accident. It has done so through a combination of legislative intent, regulatory design, and state-level competition. For international clients and the professionals who advise them, understanding this reality is essential. The US is not merely one jurisdiction among many. It is the jurisdiction — the one against which all others are measured, and the one whose structural advantages are most difficult to replicate.

At Fidelys Partners, US structuring is a core competency. We work across Delaware, Wyoming, New Mexico, and other states, selecting the optimal jurisdiction for each client based on their specific needs — banking, privacy, asset protection, institutional credibility, or a combination of all four. The US is a powerful tool. Our role is to ensure it is used with precision.

— Fidelys Partners —