In emerging economies, there tends to be poor institutional environments characterized by corruption, regulatory uncertainty, underdeveloped intellectual property rights protection and governmental interference. In such cases, direct investment to alternative locations with more supportive institutions in place provides a means of escaping institutional constraints. For instance, in Russia, in 2012, the largest recipients of direct investments were the British Virgin Islands, the Cayman Islands and Cyprus. The investment in Cyprus grew from $206 million in 1988 to $4 billion in 2006.

In Cyprus, in 2012, there was a new law introduced that amended the pre-existing 1992 law on international trusts, now known as the CIT Law. CIT law provides the settlor with a high degree of protection from claims by future creditors. A CIT is deemed validly created if the settlor is of sound mind and of full age. The settlor also has the right to reserve powers in a trust protector, who can make changes to the trust when threatened by creditors. Trust secrecy is also protected as the public register does not disclose the identity of the settlor or beneficiaries. Without a court order, the trustee, protector or any other person shall not disclose this information either. A CIT may be challenged only on fraud of creditor grounds within two years of the creation of the trust. And, it is up to the creditor to prove a transfer to the trust was a fraud. However, any action must be brought within two years from the date of the transfer.

Thus, Cyprus Trusts have become a popular locale for asset protection.