Hi, I'm Nailabudu, and welcome to Axios Recap, where we dig into one big story.

It's Thursday, October 7th.

Today, we're focused on a surprising tax haven for the ultra-rich.

South Dakota has become a haven for an estimated $360 billion for the wealthy,

according to the leaked financial documents in the Pandora papers.

Even though it's one of the least populated states in the U.S.,

it now ranks as one of the top tax haven jurisdictions compared to the likes of the Cayman Islands in Switzerland.

So how did this rural state become such a draw for the Uber rich?

After this, Axios' Felix Salmon on South Dakota becoming a global tax haven.

And we're joined now by Axios' chief financial correspondent Felix Salmon, who's been reporting on the Pandora Papers' revelation with South Dakota.

Hey, Felix.

Hi, Leila.

Felix, how does South Dakota go from having $57 billion worth of this type of tax haven to $360 billion in just a decade?

Well, it's partly what South Dakota did.

They made it more attractive to people wanting trust.

They allowed like the beneficiary of the trust to be the same person as the person who put in the money in the first place.

But much more important was what the rest of the world did.

The rest of the world basically cracked down on tax havens.

So it didn't matter whether your money was in Switzerland or the Seychelles.

It didn't matter whether it was in the Bahamas or the Cayman Islands. It didn't matter whether it was

in the British Virgin Islands. All of those jurisdictions signed the common reporting standards,

which basically said that if some dubious foreigner had their money and a trust in their jurisdiction,

...