SIOUX FALLS, S.D. (KELO) — South Dakota has become a safe haven for people looking for a place for large sums of money. The Pandora Papers, an investigation by a worldwide group of investigative journalists, found that South Dakota has become a popular place for rich foreigners to keep their money, often to avoid taxes. However, supporters of the growing industry in the state, say they believe the positives outweigh the negatives.
In 1980 under Governor Bill Janklow’s watch, South Dakota changed its usury laws, attracting Citibank and 400 jobs from New York. Other banks and thousands of jobs would follow. For a state that relied on agriculture and tourism, this is a huge part of our history. Now decades later the focus has shifted to creating friendly laws around trusts.
“There is some overlap, the methodical way the legislature went about creating fertile soil for the credit card industry I think was all at once and very intentional the way that the legislature has created fertile soil for the trust industry has been much more gradual over time and I don’t think it was quite as intentional form the beginning,” said Tom Simmons.
Simmons is a professor at the USD school of law, he also serves on the Governor’s Task Force on Trust Administration Review and Reform. While money combined with secrecy can attract those who are involved in wrongdoing, Simmons says South Dakota is creating a clean industry that generates hundreds of high-paying jobs.
He says trust companies go through the same regulatory inspections banks go through. So in that aspect, he says there is transparency, but when it comes to the general public…
“So, in the same way, I can’t go down to my local bank and say I would like to know how much money Tom Hanson has in his bank account right now and they won’t tell me, the same response would be given if I went down and said I would really like to know if Arnold Schwarzenegger has a trust with you folks, it’s a private financial account, so the confidentiality to the general public is a different thing than the transparency to the regulatory bodies,” said Simmons.
Simmons says it’s hard to tell, however, he could see the trust industry in South Dakota continue to expand, especially with overseas customers.
“A lot of my students are working in the trust industry, they’re great jobs, they enjoy them and they are raising families in South Dakota, where otherwise they may have left,” said Simmons.
South Dakota’s Division of Banking lists 106 trust companies in South Dakota, 94 of them are based in Sioux Falls.