Banking in Silence
Banking in Silence
Banking in Silence
THIRD EDITION
FOR 1997
Dr WG Hill
All rights reserved. No part of this book may be reproduced or transmitted in any form or by any
means, electronic or mechanical, including photocopying and recording, or by any information
storage or retrieval system without the written permission of the publisher.
Edited by DJ Morel
A catalogue record for this book is available from the British Library
ISBN 0 906619 47 5
Whilst reliable sources have been sought in compiling this book, neither the authors, publisher nor
distributor can accept any liability for the accuracy of its contents nor for the consequences of any
reliance placed upon it.
Mrs Karl Marx, at the end of a long and bleak life, remarked
"How good it would have been if Karl had made some capital
instead of writing so much about it."
- Will Rogers
The income tax people are very nice. They're letting me keep my own mother.
- Henny Youngman
Contents
TABLE OF CONTENTS
Part I: WHY YOU NEED TO BANK IN SILENCE
Chapter 1: The Lie of the Land 1
Your Banking Profile 2
Consider Your Correspondence 2
Completing the Picture 3
What They Know About you 3
Don't Allow Yourself to Become a Target 5
Go International 6
The Offshore Nest-egg 7
The War on Privacy 7
In a Perfect World 8
The Alternative Solution 9
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Contents
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Part I
Why You Need to
Bank in Silence
Why You Need to Bank in Silence
Chapter 1
THE LIE OF THE LAND
You're alone on a dusty desert road. You've just run out of water. A hot sun bakes down on
you relentlessly from above. Your mouth is dry and you wonder how long you'll be able to
keep it up. The nearest town is a mirage on the horizon, ten miles away. It will be a long walk.
You may not make it.
In one hand, you have your car keys. Your car is parked right next to you. It's a beauty. It
works, is full of gas and everything about it runs like a dream, even the air conditioning. There
is just one problem. The year is 2008 and eco-wackos have taken over this particular stretch
of the desert. They don't like technology, they don't like money, and they don't like cars. They
haven't outlawed cars completely, that would be inconvenient, for they use cars a lot
themselves. They realize that without them the world would come to a halt. Nonetheless, for
all realistic purposes, cars have been banned. You can only drive one if you fill out a form in
advance. Gasoline can only be purchased if you state your purpose on yet another special form.
Private ownership of cars has not been made illegal, but the local media still run headline
stories about so called eco-criminals. As a result, most cars are kept at home, hidden in the
garage. When people venture out, they do so on foot.
Here's the choice you are facing:
Do you hop in your car and zip into town like a breeze? Or do you start the ten mile walk
on foot, with no water and only the baking sun for a companion? If you walk, you may not
make it. If you drive, the townspeople may label you a criminal because these days anybody
driving a car is said to be a bad guy, or so government propaganda would lead us all to believe.
If you think this little tale borders on the absurd, consider what Tom Paine would think of
today's regulatory environment were he, by some wonderful time capsule, to arrive at a
western financial institution. Tom Paine would want to start a second American revolution
immediately if he ever heard of Currency Transaction Reports. Thomas Jefferson would join
him before he could comply with the IRS reporting requirements and file a form 8300. And
Benjamin Franklin would first demand that his face be removed from the hundred dollar bill
and then lecture far and wide on the civil liberties of free men and women, on their inalienable
right to handle their money in whatever way they see fit, free from outside interference.
To the founding fathers, the fact that today people can no longer freely do what they want
with their money would sound as outlandish as our 2008 eco-wacko story sounds to you. Still,
there is a continuing trend in developed countries throughout the world to deny everyone the
basic right to financial privacy. In our modem world, with very little effort almost any
undesirable (whether a government tax inspector, a disgruntled business partner or greedy ex-
Banking in Silence
spouse) can form an all too clear picture of your financial affairs. This information can in tum
lea~ to an even more detailed sketch of your personal life, your loves and habits, perhaps even
a VIce or two you would rather keep private.
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Why You Need to Bank in Silence
cause someone to form the wrong opinion of you if it were one day made public? Don't think
that this is entirely unlikely as one of the standard procedures in any Big Brother investigation
is mail surveillance. Even without opening your mail, the government can form a clear idea of
the people and places with which you correspond. No search warrant is needed to examine the
front and back of any of your correspondence, it is considered to be public information.
Perhaps the mail that you send and receive actually says very little about you. Why? You
have graduated to the electronic age, to the world of voice mail, e-mail and that wonder of
wonders, the fax machine. If so, tread even more carefully. Although such forms of modern
correspondence are convenient, they are far from private. You never know who may be tapping
into your communications. It could be as simple as having the fax you just sent read by the
secretary of your business associate before it is delivered to him. It could be as complex as a
government tap on any and all of your electronic communications, or perhaps your boss
routinely monitors all such communications sent out of the office. The point is that such forms
of correspondence are far from secure and are frequently infiltrated by people who have no
business meddling in your affairs.
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Banking in Silence
course by who ever is in charge of extracting taxes from you. The types of records maintained
include:
II motor vehicle licenses and registrations
II professional licenses
II federal, state and local tax returns
II school records
II birth, marriage and death certificates
II military and veteran records
II police records
II criminal records
II court documents
II deeds
II passport applications
II census forms
II medical histories
II insurance applications
II credit applications
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Why You Need to Bank in Silence
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Banking in Silence
All of the above hassles can be easily avoided by adopting and implementing basic financial
privacy techniques. The theory is simple. The nail that sticks out is the first to get hammered
down according to an ancient Chinese proverb. Quite right. Accordingly, the central tenet of
an approach to financial privacy is to not stand out from the crowd, to adopt an air of genteel
poverty. If you appear to be nothing other than an ordinary Joe going through another day's
work to get through yet another ordinary day, you will dramatically reduce your chances of
being singled out for persecution.
GO INTERNATIONAL
The benefits of achieving a degree of financial privacy go much further than simply allowing
you to keep your assets firmly within your own possession. You will realize once you start
taking steps towards discreet banking practices that there is a world of opportunity out there,
opportunities that would never have presented themselves had you not ventured out.
For example, banking privacy is often accomplished by changing your perspective, and
accordingly your investments, from a national to a global scale. When you start searching out
international banking opportunities, you will quickly discover that you no longer need be at
the mercy of one government. By investing outside of your home country, you gain access to
markets that were previously unavailable. In fact, the most profitable investments are
invariably located offshore, where they are allowed to prosper free from meddling government
interference.
In addition, such offshore banking centers are often far safer than their onshore equivalents.
In the US, the Federal Deposit Insurance Commission (FDIC) provides nothing more than a
false sense of security. The fact of the matter is that they have less than one cent on deposit for
every dollar that they supposedly insure. In contrast, offshore banks in established banking
centers are often more profitable and better capitalized than US banks. If they were not stable
and sufficiently capitalized they would have a hard time attracting customers. Unlike their US
equivalents, they cannot fall back on the false security of the FDIC, meaning that bankers from
these jurisdictions are forced to work harder to keep their banks profitable.
Your government would rather that you remain blissfully unaware of such information.
Local bureaucrats would rather that your money stay locked up tight within national borders
so that they can easily get their hands on it. Most governments institute policies whereby such
international monetary funds are prohibited from advertising and seeking out new customers
within their jurisdictions. Instead, you have to seek them out. It seems unjust to me that your
government goes of its way to insure that you are not informed about your best and most
profitable options. After all, didn't you elect the people in charge of your government in the
first place? Ask yourself, is it really your best interests that they have at heart?
Governments the world over like to keep your funds and assets within easy reach so that
they can grab them when the desire strikes. They constantly tinker with their tax laws, keeping
everyone confused and on guard. Even worse, retroactive changes in tax laws are becoming
ever more popular. What these basically mean is that Big Brother sets up the rules, waits for
you to fall into submissive compliance and then changes the rules once you have. Decisions
made based on the tax law of today have absolutely no bearing on whether or not you will
actually be able to keep your money a few years down the line.
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Why You Need to Bank in Silence
Of course, your lawyer need not get upset about this constant tinkering with the tax law.
Each new change in the tax structure insures him a new and steady stream of revenue. It seems
that in the end your only viable option is to tuck your money away privately where no one can
find it. You will then at least have a fighting chance. In order for Big Brother to change his
mind and take more of your money, he'll have to find it first.
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Banking in Silence
goal they themselves have set. A closer inspection reveals that the common good happens to
benefit Big Brother and the particular political or ideological ideas of the politicians in power.
When sociologists discuss democracy they invariably talk of the social contract. Listening to
them, it sounds as if this social contract is some sort of magic instrument, a cure-all potion or a
secret super-weapon that we all must fear and respect. Truth is, no such contract actually exists.
Nevertheless, just as the priests of old used stories of fire and brimstone to send the masses
running in fear of the coming inferno, today social manipulators cite the social contract. This
social contract states forcefully that we owe some strange sort of dues to society, whatever that
is. To make matters worse, we can never payoff this debt, it is the modem day version of the
proverbial millstone around your neck.
The social contract is a one-sided scam. In theory, it goes something like this. You were
born into our midst. You share our language and our culture. We taught you what you know
(in return for your daddy's tax dollars, but that's another story). So, due to this shared past, we
hold an IOU on your future. You have an obligation to pay, whether you like it or not, not
according to how much you took out, but according to how much you are able to put in. In the
social contract, your debt to society has no limit. Furthermore, the social contract does not end
there. It also gives the rest of us the right to tell you what you can and cannot do. To cap it all,
you were never asked to sign this contract. By virtue of having been born, you are
automatically signatory to this one-sided deal.
Of course, a social contract in the official sense of the word, meaning one actually written
down that we could choose to sign or not, is not such a bad idea. In fact, it is probably essential
to every truly free society, laying out your rights and obligations and those of your counterpart
government, eternal friend and foe. In such a society, victimless crimes would not exist and
arbitrary justice would become a thing of the past. Will the politicians and intellectuals ever
bother to put in writing exactly what our obligations are? Don't hold your breath. The people
in power understand beyond a shadow of a doubt that if they ever put pen to paper to formulate
this social contract, few people, if any, would ever sign it.
IN A PERFECT WORLD
In my opinion, the perfect world is a society that ensures the maximum possible liberty for all.
Such a society is libertarian, as author and visionary Robert A Heinlein describes it in his best
selling "future history" series of books. In this world of his creation, no possible act or mode
of conduct is forbidden as long as one does not damage another. Even an act specifically
prohibited by law cannot be held against someone unless the state is able to prove that this
particular act harmed a particular individual.
Furthermore, if one should willfully and knowingly damage another, the state does not
attempt to sit in moral judgment, nor to punish. As one judge says, "We have not the wisdom
to do that, and the chain of injustices that have always followed such moralistic coercion
endangers the liberty of all." Instead, the convicted individual can choose between treatment
or expulsion. He can separate himself from the state by going into voluntary exile.
This system of justice, based on a pact that each citizen signs of his own free will, is a
thousand times more free than the freedom of our modern democracies. In our world, you are
born into a system but never asked whether you wish to join it or not. The premises and
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Why You Need to Bank in Silence
conditions have already been established and for some reason are simply taken for granted by
the vast majority of the populace. Would it not be better to have a system in which the
government does not impose itself on its citizens?
Will such a perfect world ever exist? Probably not. Which is why I have gone to the trouble
of creating my own path to a stress-free, government-free way of living. I am not a dreamer or
an idealist, I have no desire to change the world for everybody else. Nonetheless I recognize
that today, at the close of the millennium, few governments take an enlightened stance. Instead,
politicians and bureaucrats busy themselves with thinking up new ways to mess with your life
and get their hands on your money. You can strike back by refusing to serve them as a
sacrificial lamb.
No one is more sovereign than yourself. Even if some fool shows up at your door calling
himself "the state" while frantically waving papers at you, you should have the right to slam
the door in his face. Unfortunately, the world ain't so. If it was there would be no reason to
write this report.
In an ideal world, what you choose to do with your own money is your business and your
business alone. Whatever banks you want to store your money in, whatever loops you want to
put it through, should be your decision. If you want to channel your cash offshore or invest it
in a business opportunity overseas, who should object? Where your money goes and what it
does is your business. After all, it is your money. You made it. Anyone who tries to tell you
otherwise usually has an ulterior motive. Watch them closely. He, she, it or they are trying to
get you to fork over part of that cash.
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Banking in Silence
impossible for the PT. Nowhere and everywhere is offshore for the PT, meaning that any bank
account he may happen to hold is automatically offshore.
Anyway, enough on PT. If you would like to learn more about the subject consult my other
reports. PT presents the theory while PT2 presents the practice, including a lot of helpful
advice on practical matters concerning personal privacy. If you would like to learn how to live
a completely private life whether it be how to place phone calls discreetly, how to send and
receive mail discreetly or even how to disappear without a trace, this is the report for you. For
the moment, I will return to the topic of banking privacy. This area is in my opinion one of the
most important aspects of privacy. When governments attack you they invariably go for your
cash. Once you deny them that power, they quickly deflate to a powerless nonentity.
This report is your guide through shark-infested waters. It will show you in detail how to
accomplish a level of financial privacy only dreamed of by most. As you read the following
pages, keep in mind that there is no time like the present to start banking in silence. You never
know when you will have to call such protective measures into action, meaning that the sooner
you get the ball rolling, the better. To begin with though, it is important to understand exactly
what you are up against. We will start by examining your number one threat, government.
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Why You Need to Bank in Silence
Chapter 2
GOVERNMENTS
ON A COLLISION COURSE
Governments in industrial countries the world over are on a collision course. In the past 50
years, they have increased spending dramatically so that it has reached almost ludicrous levels.
Most of this spending has gone into creating a myriad of government programs. Each of these
programs then moves to take on a life of its own, growing and constantly demanding yet more
money to maintain its existence. This movement towards larger government seems almost
irreversible, as it is a direct result of the manner in which government itself is constructed.
Most politicians and bureaucrats operate under one very simple although dreadfully
misinformed theory: more money is the solution to any and all problems. This theory is so
pervasive within government circles, that the amount of funds that one controls is directly
related to his or her status. In other words, bureaucrats have a vested interest in constantly
spending yet more of your money. Once a program has been established, its primary goal
becomes spending every last penny that has been allocated to it. If the organization fails at such
a simple task, rather than being rewarded for spending your money wisely, the director will
receive a paycut as his operation is scaled down and his budget reduced in the following years.
In contrast, if the director spends even more of your money than he was originally allowed,
he will get a pay raise and promotion. Politicians will assume that obviously his organization
must be up to some good as it spent so much money in the preceding year. It will then be
expanded and given yet more money to spend in the following year. Thus, by following this
simple little pattern, the bureaucrats of the world can assure themselves a steady stream of
promotions and advancement as the organizations that they work for slowly mushroom
underneath them. Whether or not these organizations actually do anything useful becomes
secondary to whether or not they can continue to expand and receive yet more funding.
Today, politics is regarded by those too lazy to work for a living as an easy way out. Politics
is simply a profession and politicians speak of their careers as if the voting public does not
even exist. Some of the worst crooks inhabit the US Congress. They have failed their office
miserably. Where else can someone write 532 bad checks for over US $800,000 and not go to
jail? It seems that most politicians of the day are only interested in the prestige of office.
Furthermore, even when they do get the boot, they will not necessarily undergo a drop in living
standards. Most former politicians take to lobbying, an industry in which they are able to earn
even more money than when they were in office. Peddling influence and former political clout
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Banking in Silence
have paid for many mansions in and around such cities as Strasbourg, Brussels, Bonn, Geneva,
Paris and of course the old standby, Washington, District of Columbia.
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Why You Need to Bank in Silence
Apparently the public found it easy to swallow as the rate was only 6 per cent and even that
only applied to those earning US $500,000 or more. That was over eight decades ago, today
the story has changed dramatically. Not only has the tax rate since increased by a whopping
30 per cent, but state and local governments have also entered the game, ensuring that you see
less and less of your money each year. You may not be a slave yet, but half of you is.
Europeans fare even worse. Although overall rates of taxation hover around the 50 per cent
range, many hidden taxes assault the public. VAT, a sort of recurrent sales tax, seems to be the
government's favorite way of raising yet more revenue. Just about everything from fuel to
building supplies to consumer items are taxed at rates that often approach 20 per cent.
Politicians in the US have recently proposed instituting a similar tax. They must understand
that invariably the public grumbles less when these figures are tinkered with than when yet
more money is extracted from paychecks each week.
Nonetheless, even this enormous amount of funding does not cover the annual expenses of
governments around the world. Budget deficits in developed countries have been growing at
truly phenomenal rates. Again, the US is the leader of the pack with annual deficits in the US
$200 billion range, assuming of course that you believe government figures. A more realistic
figure would be twice that amount, but even the government admits that overall it is close to
US $5 trillion in the hole. That's twelve zeros for those of you who are wondering.
These figures are truly amazing when one considers that as recently as 1981, the US
actually possessed net assets of US $141 billion. Then along came a man named Ronald
Reagan and such nice things as positive net worth became a thing of the past. By 1986, the
country had accumulated foreign debt of US $264 billion, that is an overall loss of US $404
billion in five years. During the Reagan years, the US saw larger public deficits than at all
other times in US history. Try running any company under such lunatic principles and see how
long you stay in business.
It was a fallacy to think that a country can survive economically while both increasing
spending and cutting taxes. The eventual outcome is obvious, but yet the public bought
Reaganomics hook, line and sinker. Reagan was re-elected, which presumably was his primary
objective. He has since retired, claiming to have forgotten most of what he did while in office,
although it really need not affect him as he will be long dead before the debts that he managed
to ring up are paid off. His replacement, George Bush, made a great deal of noise about the
fact that America had finally won the cold war. He failed to mention the fact that it has yet to
pay for this victory.
The situation may not be quite as bleak for European countries, but it is still far from rosy.
The welfare state has had a crippling effect on economies throughout the continent. Among
European governments the average budget deficit has rocketed to a frightening 7 per cent of
Gross Domestic Product (GDP). This is the highest level since the end of World War II and
again this number was reached by using government's own fiddled figures. The true picture is
undoubtedly grimmer still. Furthermore, as all developed countries go down together, there
will be no outsiders who can gallop in to save the day. For the schemers and politicians in
charge of these countries, the sad truth is that their foreign friends are just as bogged down as
they are.
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No one seemed to question the fact that if the government can survive for a couple of weeks
minus 800,000 staff members then perhaps it could survive a lot longer minus somewhere in
the area of 500,000 staff members or more. If the US government really wanted to slash
spending, it could start by firing each and everyone among its own ranks who has never done
an honest day's work. More than 80 per cent of the public sector payroll could be eliminated
from one day to the next. This holds true for all developed countries. Taxes could come down
to something resembling humane levels. Even then your government would run a current
account comfortably above five per cent of GDP. Nonetheless, I fear that such a miracle is far
from a realistic possibility. Instead, I fear that governments will resort to far more sinister
methods to save their sinking ships.
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Why You Need to Bank in Silence
year. This printing of unbacked currency may well help out in the short term, but over the long
term the consequences are inevitably nothing short of disastrous. History has shown that in the
end every fiat currency one day becomes less valuable than the very paper it is printed on.
Is such a situation likely with the US dollar? Alarming as it may sound, the only realistic
answer is an undeniable yes if the US continues to borrow at the rate that it has been. As the
US national debt continues to grow, an increasingly large part of the annual budget must go
towards just maintaining interest on that debt. During the US government shutdown, it was
only a series of juggling moves that allowed the US to pay US $30 billion worth of interest
that was due. As Robert Rubin, US Treasury Secretary said, "This is no way for a great nation
to manage its financial affairs." What happens if the next time dear old Uncle Sam finds
himself in such a predicament, such juggling moves are no longer possible? Worse still, what
happens if in the not too distant future the US government finds itself unable to generate the
actual amount needed to cover such debts? The result in either case is obvious, faith in the
ability of the US to payoff its debt will be lost. This lack of faith will set off a series of events
with disastrous consequences.
First, foreign investors who currently hold more than US $500 billion in US debt will
demand a refund, causing the dollar to plummet. Then as the dollar loses value, investors who
hold an estimated US $5 trillion in accounts outside of the US will realize that the dollar really
is not the best currency in which to hold their funds. They will begin to cash in their chips,
trading in dollars for other more stable currencies and gold. The inevitable result: a run on the
dollar that will bring it crashing to the ground. Of course, legislation will be enacted to prevent
the dollars trapped in the US from escaping. Perhaps another banking holiday will be declared,
such as the one of the 1930s that prevented all Americans from gaining access to their funds
stored in American banks.
DESPERATE MEASURES
Of course, the US government is aware that it is hovering near the edge of such potential
disasters. You can rest assured that the politicians in Washington are already busy coming up
with ways in which they can save the dollar so that they can hang on to their precious jobs for
at least a little while longer. The problem is that invariably the solutions that they come up with
will not have your own best interests at heart. Instead, they will be designed to serve the best
interests of government.
Basically, the government is faced with a very simple decision. It must either develop new
sources of revenue or default. The second option is highly unlikely for the reasons that I have
already described. Still, the US government may consider implementing what would amount
to a partial default on its outstanding debt. As Alfred Malabre describes in his book Beyond our
Means, the government could force those who hold government promissory notes to accept
extended maturities on the amounts that they have turned over to Uncle Sam. The government
would continue to pay the interest on such debt, but would grant itself an extension of its own
choosing. In other words, those who have invested in US government securities would have to
wait an extra ten, twenty or even thirty years before they would see their capital again.
Such actions would be brought into play with all of the necessary fanfare to sell them to the
public. Maybe the extension would be said to be necessary to combat some evil and distant
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empire, purposes that Iraq and Libya have conveniently served in the past. Perhaps just the
spread of Islam will be sighted as a threat that must be stopped, or that perennial favorite, the
war on drugs, could be used again to usurp yet more of your basic rights. By employing such
means, the government ensures that even when it decides to steal money that belongs to the
public, most will be willingly led to the slaughter. The vast majority of people today would
rather simply believe the political rhetoric dished out to them than have to actually start
thinking for themselves.
The only thing that will save such hapless lambs is if Uncle Sam realizes that even this
partial default is not in his own best interest. Such tactics could easily cause the US currency
to take a serious plunge in value. Hence, unless the US financial situation becomes even more
precarious, it seems that Uncle Sam will continue with his preferred option, that of finding
additional sources of revenue. For the most part this has taken the form of pulling yet more
money out of the pockets of the populace. This is often accomplished by means of political
smoke and mirrors, meaning that while the words uttered by politicians speak of lower taxes,
their actions go to ever greater lengths to separate you from your money.
To date, this approach has made use of an ever increasing amount of legislation designed to
monitor your every financial affair. As detailed in the following part of this report, it is almost
impossible in this modern age for an American to invest his money anywhere without first
informing Uncle Sam of his decision. All bank accounts and investments in the US are held
wide open for government scrutiny. Similarly, the government demands that it be informed of
the import or export of any significant amount of funds. It seems that it is only fear of the
possible economic consequences that has kept the US from instituting full-fledged exchange
controls. That is, at least for the moment. Once Uncle Sam finds himself in an even more
desperate situation, there is no telling what he may get up to.
CURRENCY RECALL
One tactic that has been much discussed makes use of a currency recall. Such government
schemes have been kicking around in one form or another since 1978, although the most
detailed plan to date surfaced during the Reagan years. During this short eight year period,
more limitations on your financial privacy were enacted than at all other times in US history.
The currency recall proposed by then Treasury Secretary Donald Regan would have worked
as follows. First, all US $50 and US $100 notes in circulation would have been reissued. Then,
without notice everyone would have been required to exchange their previously valid notes for
this new currency within a limited ten day period. At the end of the ten day period, any old
notes still in circulation would no longer be legal currency.
Anyone who exchanged as little as US $1000 would have been subjected to further
questioning. They would have been required to prove that the money they wished to exchange
was not generated through illegal activity and that all taxes had been paid on it. If not, Uncle
Sam would have relieved the unsuspecting victim of his cash and subjected him to further IRS
scrutiny. Thankfully, this plan with its accompanying infringement on our right to privacy
never came to be. Apparently, after analyzing the possible consequences of such maneuvers,
the government realized that such drastic actions may have produced a serious decline in the
value of the dollar. In other words, it feared that if it tinkered too much with the US currency,
people would begin to lose all faith in both the dollar and the government behind it.
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Why You Need to Bank in Silence
So instead of seriously altering and reissuing the currency all at once, the politicians
decided to use a more subtle approach. Since the beginning of this decade, the government has
slowly been instituting what basically amounts to a currency recall. In 1991, it issued a slightly
altered US $100 bill which contains what it refers to as "security" features. This amounts to a
microscopic line of print which circles the portrait and a polyester thread which runs along the
left side of the bill. This polyester thread can only be seen when the bill is held up to a light.
In 1992, new US $10, US $20 and US $50 bills were introduced. During this year, the
government also began its currency recall, instructing all banks to no longer circulate any bills
which date from before 1990. Undoubtedly, possessing a large number of bills which predate
this cutoff point will soon lead to a government inspired investigation.
Still, the biggest changes were yet to come. In the beginning of 1996, an even newer US
$100 note was released. In this bill, the portrait has been shifted to the left. This newer note
was followed by similar instructions to bankers. All previous incarnations of the US $100 bill
are slowly being pulled from circulation, again basically resulting in a currency recall. Similar
methods have been used by countries everywhere. Over the past few years, England has
reintroduced each of its notes, as has Australia. All is done quietly. The new bills are
introduced and allowed to mingle with their predecessors for a while. Then, when everyone is
secure with the new bills, old bills are one day declared to be no longer legal tender. Those that
have not already been turned in to the government become useless.
Naturally, such methods are never said to be for the purposes which they actually serve.
Instead, governments sing different tunes depending upon what happens to be the flavor of the
month. At times, the new currency has been created to help thwart counterfeiters, in spite of
the fact that statistics repeatedly show this to be a relatively minor problem. Not daunted, your
government will say that its new currency has been designed to rid the world of evil money
launderers and drug barons. If it is feeling adventurous, your government may even claim that
the recently issued bills are necessary to help instill confidence in the overall currency. It
seems that there is simply no end to the variety of government invented excuses. They will
provide all but the real reason, which always remains the same. Governments introduce new
currencies so that they can keep an ever more watchful eye on your financial affairs.
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Banking in Silence
of US currency that for all intents and purposes has just disappeared into thin air. Ron Paul, a
former US Congressman, has spoken a great deal about the manner in which the government
has invaded personal and financial privacy. He estimates that currently somewhere in the
vicinity of US $150 billion worth of US currency is "unaccounted for".
Where has all of the money gone? A great deal of it has made its way to third world
countries where it has usurped local currencies as a medium of exchange. This is not the area
that is of great concern to Uncle Sam. Instead, he is interested in the unknown amount that has
either gone into hiding or is currently floating about the ever growing underground economy.
Today, it seems that almost everyone in one form or another deals in black market activities.
Many do so without even realizing that their actions can be labeled as such. If you buy or sell
merchandise privately or even pay maids or babysitters in cash, you are contributing to the
underground economy. According to your government, such activities are illegal, unless you
file the appropriate government forms and, of course, pay the appropriate tax.
As the underground economy grows, an increasingly large part of the overall economy is
hidden from government scrutiny. Naturally, what your government does not know about, it
cannot assess and tax accurately, if at all. In other words, the growth of the underground
economy is a trend that your government is only too anxious to put an end to. Ironically, it is
government actions themselves that have produced this trend in the first place. Increased taxes,
heavy financial scrutiny and the multitude of regulations that have come into effect recently
have worked together to send a lot of money into the fold of the black market. To curb this
unwanted side effect, your government realizes that nothing will work more simply and
effectively than its thinly veiled currency recall.
All Uncle Sam need do is declare that as of a certain date old currency notes will no longer
be valid. This one simple act will force literally billions of dollars out of hiding. Many may
choose not to exchange their money, realizing that anyone changing over a few thousand
dollars will become the focus of unwanted government scrutiny. The government will win in
two ways. First, from the taxes it will demand and confiscations it will conduct. Second, the
millions of dollars that do not surface will also at the end of the day become government
property as the new bills that it prints will never be exchanged for old. This windfall could go
a long way towards helping the US out of its current financial crisis, at least over the short
term. It will be disastrous for many investors concerned with privacy.
20
Why You Need to Bank in Silence
In the beginning, the two currencies would be exchangeable on a one to one basis. Of
course, only certain banks would be granted the privilege of being able to carry out this
exchange. Similarly, the amount of domestic dollars that one could exchange for international
dollars within a given time period would be limited. Then, once the government had created a
currency that can only leave the country under very limited circumstances, it could use these
restrictions to eliminate much of its debt through inflation. Slowly, the domestic currency
would become less valuable than its international counterpart. As the value of the domestic
dollar came down, the number of banks granted the privilege of exchanging it and the amount
that one is allowed to exchange would also decrease. Eventually Big Brother would enjoy the
benefits of having the bulk of his debt denominated in a blocked and virtually worthless
currency.
Meanwhile, the international dollar would continue to float on international currency
markets. The US could then continue its overspending frenzy by borrowing foreign funds,
denominated in the international dollar, which would perhaps be backed by gold. This would
greatly increase foreign purchases of government debt, which have declined sharply over the
past few years, from US $75 billion in 1988 to only US $5 billion in 1991. It is obvious that
foreign investors, unlike many of their American counterparts, have lost faith in the dollar.
Still, the US may well be able to win them back by introducing this new international dollar.
Even though such government practices would obviously violate the basic rights of every
citizen, politicians would face little opposition in selling the basic elements of this plan to the
public. Proposals made by the government to issue new currency notes have largely gone
unmentioned in the popular press. When such stories are carried, the possible implications of
such government tinkering are never mentioned. Instead, the idea is treated with a light-
hearted, even whimsical touch, as if the government were doing no more than moving a few
paintings around some dusty and forgotten museum. In short, even this plan for a two-tiered
currency could be successfully sold to the public if it is brought into action with all of the
appropriate bells and whistles. Again, such new notes would undoubtedly be introduced as part
of the largest government deception to date, the war on drugs. I will have much more to say
about this political nightmare in the following chapter. For now, rest assured that there really
are no limitations on what your government can do while the public just sits back and watches.
If you think such flagrant government abuse is unlikely, you have not paid a great deal of
attention to the actions of governments throughout history. The plan for a two-tiered currency
has been repeatedly proposed by politicians in the US since 1989, when it was first introduced
by the Drug Enforcement Administration. Both this two-tiered currency and outright
debasement of the national currency are completely legal, meaning that the government need
not go to the bother of changing the law before beginning its campaign. (Although even
breaking the law outright rarely presents a moral dilemma to governments.) The fact of the
matter is that your government will do whatever is necessary to keep itself in business. If it
cannot cut back on spending, it will be left with little alternative but to pursue such drastic
substitutes.
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Banking in Silence
22
Why You Need to Bank in Silence
cards. They create a concrete paper trail for any and all transactions. In the cashless society,
the bureaucrat need only log on to his computer to receive a detailed picture about what you've
been up to with your money.
Furthermore, your government would have little difficulty in cornering you if the need ever
arose. In the cashless society, Big Brother need only instruct your bank to cancel your precious
plastic card to flush you out of the woodwork. Without this bit of plastic, you would no longer
be able to purchase even the most basic necessities of life, never mind travel out of the country
and beyond the reach of your government. You would be left with little choice but to give in
and cop a plea with the authorities, one that would obviously work far more to their benefit
than to your own. Many countries have already instituted national debit card systems. Those
who have not as of yet will certainly be soon to follow. Whether you like it or not, the cashless
society is soon likely to become an all too concrete reality.
23
Why You Need to Bank in Silence
Chapter 3
GOVERNMENTS ARE
AFTER ONLY ONE THING
The first thing you have to realize is that all governments, not just your own, are after only one
thing, revenue. Some of them have scruples, but more often than not governments simply do
not care what pretense they use to get their clammy hands on your cash. As a means to this
end, many governments around the world have gone to great lengths to eliminate any and all
banking privacy that you may have been able to enjoy at one time. Although a cashless society
may be the ultimate dream of bureaucrats, for the moment they make do by implementing ever
more restrictive legislation. Most of this legislation is ushered in under the guise of the so-
called war on drugs.
25
Banking in Silence
addict in Harlem? They know, however, that people can be worked up enough to be furious
about the "drug threat" to our children.
New legislation is regularly introduced to systematically erase our basic right to protect our
privacy. Nonetheless, time and time again we are told that such laws, inhumane as they may
be, are necessary to combat crime. This let's "stop crime now and forever" slogan is merely
window-dressing, the sugar coating on such a bitter pill that no free voter in the western world
would ever swallow it if he were told the whole truth. Such tactics have been employed with
such zeal that today almost any transgression on the part of government, no matter how
grievous, can be hidden under the all encompassing umbrella of the drug war.
The plain truth is much simpler than the elaborate tales spun by government bureaucrats.
Drug villains are a convenient enemy. Such an enemy is particularly needed as their
predecessor, the threat of global domination by Soviet style communism, is now a dead joke.
Sixty years ago, a man named Goebbels demonstrated to the world the effectiveness of
inventing a fictitious enemy. He worked for another man named Adolf Hitler and was
responsible for creating propaganda and disinfonnation. His policies managed to score support
for even the most nauseating of Nazi policies by directing hatred towards one group within
society. The Jewish community and its invented international conspiracy was blamed for all
that was wrong in post World War I Germany.
Similarly, in his novel 1984, George Orwell clearly shows the effectiveness of such
techniques. In his portrayal of a possible future Britain, the government keeps its inhabitants
in line and forces them to accept less than savory living conditions by focusing all of their
energy on a largely fictitious enemy. It is indeed strange when fiction becomes reality, but the
sad truth is that these same techniques are being perfected in the US today. Federal agencies
and the US government use the popular media to whip everyone into a frenzy about some
arbitrary enemy, whether it be Khomeni, Gaddhafi, Hussein or most recently the anonymous
drug baron. When everyone is scared out of their wits, this "enemy" is used as an excuse for
the removal of civil liberties. Personal freedom is banned, private money and property is stolen
and financial privacy is torn down, all for the cause of defeating the enemy.
26
Why You Need to Bank in Silence
heroin, on the other hand, commonly fetches as much as US $35,000 per kilo wholesale. This
enormous amount of revenue means that by producing heroin rather than sugar, countries such
as Bolivia, Columbia and Peru ensure that a steady stream of hard currency will move in their
direction. The drug industry is the number one employer in each of these countries.
The drugs industry is also quite likely the largest in existence. Just consider the statistics.
More money is spent worldwide on illicit drugs than on food. At least three Columbian drug
cartel members are rumored to be among the top five richest men in the world. Even their
lieutenants are commonly worth more than such impoverished individuals as the Queen of
England. Drug traffickers operating just in America and Europe are estimated to launder in the
area of US $100 billion a year. This figure is larger than the GNP of 90 per cent of all UN
member states. Similarly, in many countries, the revenue generated by the drugs trade far
exceeds that collected by the government. It doesn't take a genius to figure out who really
holds the power in such banana republics.
The international drugs trade is not some fly-by-night cowboy operation. It has been around
for a long time, will continue to be around for even longer and is highly efficient. Just consider
the outcome of the efforts made by US bureaucrats to date when they actually have tried to rid
America of its drug problem through force. In 1992 to 93, the US spent in the area of US $1.1
billion trying to intercept drug smugglers. Both the US Coast Guard and the US Navy made
use of all of their toys. Fully armed guided missile cruisers constantly patrolled both the Gulf
of Mexico and the Caribbean. The result, according to one classified document issued by the
National Security Council was "abject failure". Of the operation, Attorney General Janet Reno
said, "General interdiction, which has been very costly, does not work."
Still, at least this campaign went a little more smoothly than one arranged by the CIA during
the Bush administration. In a plan designed to catch drug traffickers, government agents
successfully smuggled a ton of cocaine from Venezuela into the US. Three years later it was
discovered by a CBS investigator, that instead of helping government agents in the war on
drugs, this drug shipment made its way to the streets. What did the CIA have to say? Such an
outcome was "most regrettable". Other do-good programs run similarly afoul. One plan in
'Afghanistan tried to convince locals to substitute orchids for opium poppies. The result was
complete failure again. In spite of their good intentions, the missionaries failed to realize that
orchids cannot grow in the Afghan climate.
Even if orchids were better suited to Afghan weather, most peasant farmers would have
decided to stay with their known cash crop. As pretty as orchids may be, they are no substitute
for feeding a family. It is simple economics that would lead Afghan farmers to choose opium
over orchids every time. Similarly, any government reach-out program in the West has quite
the task ahead of itself. Again, it is economics that lead inner city-youth into the drug trade.
Once a poor kid from the ghetto gets used to making a thousand dollars each and every day,
no amount of persuasion will convince him to get excited about a seven dollar per hour job
flipping hamburgers.
27
Banking in Silence
law after law that supposedly would rid the country of its drug problem, but that only
succeeded in robbing you of yet more precious freedom. In other words, the plan worked
brilliantly. If the government had actually cared about the prevalence of drugs in our society,
it would have set out to create better opportunities for people so that they would no longer feel
the need to escape into drug addiction. Although perhaps right from the start, your government
understood that even this approach would have met with little success.
Drug use cannot be wiped out for the very simple reason that, like prostitution, it has been
around from the beginning and will be around long after we are all dead. Some people use
drugs to seek a brief refuge from a reality that is, rightly or wrongly, perceived by them as cruel
and unbearable. Others use drugs to seek relief from boredom. The fact is that there will
always be some people who will take drugs of their own free will, serious and proven side
effects notwithstanding. These people will in turn create a market for drugs and thus ensure
their presence in our society. The obvious question, that no one dares ask, is that if drugs are
always going to be here, then why not eliminate all drug related crime with one almost
deceptively simple maneuver? Why not legalize drugs?
Freethinkers such as Milton Freedom have been arguing that drugs should be legalized for
a long time now. Their arguments invariably make a lot more sense than those put forward by
government in its war on drugs. Most people do not know that narcotic drugs only came to be
outlawed at the start of this century. Sigmund Freud habitually used cocaine. Still, as far as his
contemporaries were concerned, this was his own personal business, not something that
society ought to interfere with through laws or regulations. Before 1913, drug use was
considered a vice. Today, it is a crime only because certain politicians found that stirring up
anti-drug hysteria was good for a few votes. What have their actions accomplished? Since
drugs have been made illegal, their use has only increased many times over.
The use of legal drugs must also be taken into consideration. Very powerful lobbying
groups ensure that killers such as tobacco and alcohol stay legal and freely available. Nicotine
is responsible for more deaths than all illegal drugs combined, yet few talk about banning
cigarettes. Alcohol has also destroyed far more lives than can possibly be imagined, yet history
shows quite clearly that prohibition failed before and would only fail again. Similarly, even
those sheltered behind the highest White House hedge realize that the war on drugs of today
is a miserable failure. The cost is enormous: violence between drug traffickers, increased crime
by addicts, overflowing jails, needless deaths. Not to mention the fact that this war on drugs
has also produced the constant erosion of everyone's civil rights, an invasion claimed to be
necessary by those fighting and losing battle after battle.
In 1989, I wrote in the first edition of PT that when a solution fails time after time, the only
intelligent alternative is to try something else. As every other effort has failed, legalizing drugs
is an issue that at least ought to be studied. Champions of legalization argue that if it is done
properly governments could take the world's largest untaxed industry out of the hands of
criminals and start to exercise workable controls. In addition, through taxes on the newly
legalized drugs, Big Brother could reap tremendous rewards. Indeed, it is surprising that this
alternative has not at least been mumbled by the odd politician here and there. Even the likes
of Bill "at least I didn't inhale" Clinton avoids this entire issue like the plague. Some of his
subordinates, however, have displayed at least a little more intelligence.
28
Why You Need to Bank in Silence
Of the pack originally appointed by Bill Clinton, Jocylen Elders is probably the one who
makes the most sense when she opens her mouth. She was the first black to serve as the United
States Surgeon General and talks about issues that ring clear with every thinking person, such
as a woman's right to control her own life and the need to at least discuss legalizing drugs.
Unfortunately, the world is not quite ready for such sensible ideas to real problems. Jocylen
Elders was eventually relieved from her office in an attempt by Clinton to save his fumbling
career. Her crime? She had suggested that teenagers might actually be interested in the topic
of masturbation. She has since returned to teaching in her home state of Arkansas. We can only
hope that at least a few of the bumbling bureaucrats in Washington actually heard a thing or
two that she said during her brief stay in their midst.
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Banking in Silence
with paper. Top criminals will never let Regulation 4566.AI2 or Rule YX3765 or Decree
ZOOO.II stop them. They simply couldn't be bothered.
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Why You Need to Bank in Silence
31
Banking in Silence
32
Why You Need to Bank in Silence
As a result, America today has betrayed its Founding Fathers and is moving at an alarmingly
rapid rate toward the establishment of a Nazi-style dictatorship.
To those brought up on the Time and Newsweek version of America as ever the land of the
free, these ideas sound like a kooky shooting off his mouth. However, Professor Peikoff is not
a fringe loony or some ignorant extremist. He is Ayn Rand's longtime associate and her legal
intellectual heir. His book is supported with a host of examples and backed up by in-depth
research. I strongly recommend that anyone who wants to understand who controls public
opinion and how they operate read what Professor Peikoff has to say. His book is sold in major
US bookstores or can be ordered by mail from its publisher, Mentor, via the New American
Library, PO Box 999, Bergenfield, New Jersey 07621, USA. Ask for title 0-451-627407 and
send check or money order for US $5.95 plus one dollar for postage and handling.
The fact that the war on drugs is not about drugs means that your civil liberties, once taken
away, will never be reinstated, not even if the public were to one day wake up, smell the
coffee and abandon this war as the lost cause that it is. After all, the war on drugs was only
meant as an excuse in the first place. No one actually expected it to be taken seriously. The
pretense that the government still has the right to snoop will be maintained, even when all
other walls have fallen. Thus, all the money laundering laws that were ostensibly put in place
to combat those ever-so-evil traffickers, will not fail. Tax enforcers simply like these laws too
much to let them go.
Even if drugs were miraculously made legal one day, federal agents will not become
human. Nor will they vanish. They will still be there and they will still have their mean streak,
every one of them. Having lost their phony war may make some of them even more nutty
upstairs. The DEA may undergo a face-lift, even a name change. Some of its most evil and
trigger happy staff may be relocated to other federal positions. The targets may change, but at
heart you will still have the same evil government with the same diehard goal, liberating you
from your money.
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Banking in Silence
34
Why You Need to Bank in Silence
Chapter 4
GOVERNMENTS DON'T PLAY FAIR
The biggest lawbreakers of them all are governments. They routinely expect you to follow
every petty decree they lay down, while they themselves break laws faster than even the most
hardened of criminals. Look at the so-called leader of the free world, the United States. This
regime has been known to invade other countries illegally, kidnap foreign nationals, torture
them, drug them and bring them unconsciously and against their will to the United States
where they mayor may not face a trumped-up trial.
However, kidnapping by government order is not exclusively an American phenomenon.
Most governments will break the law if they feel they can get away with it. If you think that
third world governments head the list of offenders appearing before the International Court of
Human Rights in Strasbourg, think again. Top defendants again and again include such "free"
countries as England, Denmark and Germany, all on human rights abuses. When they claim
innocence, don't believe a word of it.
In the July 1990 edition of the American Journal of International Law (volume 84, no 3,
p 712) Andreas F Lowenfeld (Charles L Denison Professor of Law, New York University)
wrote:
"I urge that no great faith be placed in assertions by the US government that abduction of
persons who ended up in American custody were carried out solely by the police of the foreign
country, that the United States had no knowledge of or participation in torture or that the
foreign country really consented to the operation, though it could not say so publicly."
That you have been dragged out of your bed in a foreign country, kidnapped by government
order, then tortured and drugged by foreign agents is no defence either. In the case of France
vs Argaud, the French government argued that the accused did not have standing to raise an
international law argument; this privilege is apparently reserved for states only. This sentiment
rings well with the traditional Latin line of thought that when push comes to shove, a citizen
is simply property of the state. Cattle, if you will.
In America, this theory is put into practice on a daily basis by one of the most corrupt
government organizations in existence, the Internal Revenue Service. Bloodthirsty bureaucrats
in the employ of this organization can at present boast an almost one hundred per cent success
rate in their quest to bend the public into willful submission. Their intimidation tactics are
often so ruthless that one cannot help but wonder if many IRS agents learned the tricks of their
trade from mafia kingpins.
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Banking in Silence
36
Why You Need to Bank in Silence
37
Banking in Silence
Instead of streamlining legislation and making life easier for all of us, politicians and
bureaucrats focus their attention on getting their greedy claws on more of your money. They
may say nice things about lowering taxes or simplifying legislation, but their actions always
uncover their private agenda. Secretly they have been rallying their internal police force.
Between 1981 and 1991, the amount of money handed over to the IRS to do its dirty work has
soared by more than 50 per cent. Similarly, the amount of agents in its employ has increased
by nearly 40 per cent. Before leaving office, President Bush approved a total outlay of US $7.1
billion for the agency. Yet another US $6.5 billion has been approved so that the agency can
update its computer systems. Not to be daunted, President Clinton joined the bandwagon and
in 1993 added another US $148 million to the US $563 million already set aside for this task,
that's all for one year alone.
How much more money can this agency possibly need? A lot, at least according to the
bureaucrats. In 1992, the IRS estimated the US tax gap to be US $114 billion; that's the
difference between the money it feels it is owed and what it actually managed to collect.
Politicians like the sound of that big juicy number. It means that rather than trying to balance
the budget or cut spending, they can rake in more dough without even having to go through
the bother of raising taxes. What will it cost to please the bureaucrats and make everyone
happy? One study estimates that in order to seriously reduce the tax gap, the IRS would have
to receive three times its annual US $5 billion budget and increase its staff from 120,000 to
nearly 300,000.
Naturally what bureaucrats want bureaucrats get, although perhaps not to quite the extent
that they would like. Each year the IRS hires an extra 2500 agents on average. This extra
manpower has had a tremendous impact on the number of taxpayers audited each year. As of
June 30th 1995, more than 1.4 million Americans had already been audited for the current tax
year. This figure is about equal to the total number audited in all of 1994 and exceeds the total
number of audits performed in 1993. Result, these increased measures brought in an extra US
$183.2 million to the government piggy bank, far in excess of the expected US $100 million.
In short, we can only expect yet more and ever far-reaching increases in government fire power.
Just consider the amount of money and manpower poured into the agency's computer
systems in recent years. In 1993, almost 14 million Americans filed their tax returns
electronically, a figure that must put a smile on almost any politician's face. Computer
processing of returns is more than fifty times more cost effective, not to mention the fact that
computers are far more likely to ferret out that most evil member of the populace, the small-
time tax evader. Overall, the agency is making rapid strides towards eliminating paper returns
all together. In the meantime, the agency makes do by implementing ever more stringent
policies. One program that came into effect in 1996 randomly selects individual returns to be
audited. That is regardless of whether or not the agency suspects that anything is actually wrong
with the returns in question. Yes, one day in the not too distant future the IRS will undoubtedly
attain its ultimate goal, that of auditing each and every tax payer each and every year.
38
Why You Need to Bank in Silence
been ignored. Those within the agency that blow the whistle on their superiors quickly find
themselves demoted and penalized. It seems that some code of conduct, not unlike that found
in military organizations, permeates the agency throughout. Undoubtedly the stories of
corruption that do emerge are only the tip of the iceberg concerning all of the dirty dealings
that happen behind closed doors. Still, judging from the size of this tip, the iceberg in question
must be enormous.
Stories of corruption and wrongdoing range from the very top of the organization to the
very bottom. An investigation conducted in 1990 by the Consumer and Monetary Affairs
Subcommittee uncovered incidents of abuse that involved 25 senior officials and spread across
ten different cities. Included in this list was the head of the Los Angeles Crime Intelligence
Division (CID), the agency responsible for examining possible infringements of tax laws. This
government bureaucrat was allegedly operating a system through which fellow clients of his
personal lawyer could obtain immunity from possible tax problems by anonymously clearing
their debt to society by dropping their payment in a particular lockbox. At the other end of the
scale, clerical staff in Florida were successfully indicted on charges of embezzling more than
US $39,000 from the agency.
Bribes in any form on offer to those in the employ of the IRS seem to always be in fashion.
They range from the US $400,000 accepted by an IRS agent - who after accepting such
payment was able to see the tax matters concerning one particular Californian farmer in a more
favorable light - to the cool million that helped another agent come to a similar conclusion for
a much harassed taxpayer in Florida. However, IRS agents have gone to great lengths to ensure
that the nature of their corruption is far more creative and goes far beyond simply taking bribes
to reduce tax assessments.
In 1992, it was uncovered that the branch chief of an IRS compliance center had filed a
host of bogus tax returns using the identity of various individuals that he knew would not file.
For his trouble, he received more than US $500,000 at government expense. Of course, all of
this money plus penalties and interest would have eventually become the responsibility of
those whose identities were stolen in this scam. Fortunately for them, the dirty dealings of this
crooked bureaucrat came to light before the IRS pointed its finger at them. Other agents in both
North Carolina and California allegedly took a more involved stance in the war on drugs, albeit
not on the side usually favored by government officials. They have been accused of both
laundering the proceeds of drug money and using their influence to help prevent a known drug
dealer from being prosecuted.
Of course, above and beyond such incidents of outright corruption, the agency is also
troubled by what basically amounts to the sheer stupidity of those in its employ. This
shortcoming leads to the inevitable result of mismanagement. One favorite tactic is to arrange
for the tax returns of honest taxpayers to mysteriously become "lost in the mail" in an effort
to meet quotas and deadlines. Such practices are common across the US from Texas (where
27,000 tax returns were hidden by IRS employees) to California (where 39 bags of mail
suffered a similar fate) to Philadelphia (where the more expedient method of simply tossing
returns into the trash was used). Of course, such abuse by government employees still results
in fines and interest payments for the taxpayers concerned.
As far as the agency is concerned it can do no wrong. It overlooks minor details, such as
the fact that it openly admits to having lost over two million returns in 1989. It would rather
39
Banking in Silence
not discuss the fact that in 1987 it spent a great deal of time and taxpayer money searching for
a taxpayer who eventually turned up at his last known address, a federal penitentiary. Instead,
the agency and the government behind it would rather get on with the business at hand, that of
putting ever greater distances between you and your money.
40
Why You Need to Bank in Silence
of tall lies levied against you by government, your lawyer will tell you that in order to keep
yourself out of prison you will have to grant your government access to your foreign financial
records. He will tell you to write to your bank abroad giving your consent to allow third parties
from your country to examine all your records. Your lawyer may be right. When you are faced
with having to fight some pretty tall lies coming from the other side, you don't have much of
a choice.
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Banking in Silence
plants indoors. For such flagrant abuse of government policy, the DEA swooped in and seized
millions of dollars worth of equipment. Before the government would return this equipment,
it said that each shop must prove that none of the lights that it had sold were being used to grow
marijuana. In short, the government was holding each individual merchant responsible for the
actions of his clients. This sort of responsibility came with selling what basically amounted to
a fancy lightbulb. Of course, the vendors concerned had a hard time proving anything
concerning the eventual use of their merchandise. The government didn't care, but was more
than happy to hang on to the bulk of the forfeited property.
YOURBANKER~NOTYOURFRIEND
Hotels, motels and garden shops aside, no private businesses have come under as much
pressure to cooperate in Big Brother's war on privacy as your local banker. Governments
around the world have gone to great trouble to gain access to your banking records. In order
to bank in silence you must first be aware that in almost every developed country your friendly
banker has been ordered by law to play detective. Like it or not, bank officers were long ago
converted into unpaid government workers. Banks now routinely employ at least one
individual who is responsible for tracking suspiciously large cash deposits. He is instructed to
look out for large amounts of small bills in particular. If activity within any account exceeds
what is "normal" this bank employee must recommend that his boss contact not the police, but
the nearest tax office.
Many governments have passed new laws that turn money laundering into a crime, along
the lines of aiding and abetting a criminal. In the few jurisdictions that still recognize freedom,
banks have come to realize which way the wind is blowing. They have turned to so-called self-
regulation in an attempt to put their own house in order before government bureaucrats get the
urge to do it for them. As a result, internal procedures for client relationships have changed.
Almost everywhere today all new clients are photographed whether they realize it or not, either
on videotape or by a hidden still camera operated by a switch under the counter. In
Switzerland, all banks as well as almost all law firms have installed taping equipment to record
phone conversations. In the Swiss phone book, a small star next to the phone number
designates that such equipment is connected.
Opening new accounts has also become more difficult because ill is always required.
Today, your new bank will often want to check your references or your background. Several
banks, especially in Switzerland, refuse to accept American clients at all. If they do, they
require that you sign a special waiver prepared just for US citizens. In effect, by signing you
are relinquishing your right to bank secrecy. Simply depositing money has also become more
difficult as many banks will no longer accept cash. All of these restrictions, explained in
greater detail in the following part of this report, show how clearly your banker is no longer
your friend. However, he is not the only individual who has become part of the ever growing
government posse.
Your accountant, your lawyer and your stockbroker must also be added to the list of
potential informants. In many jurisdictions, such individuals are personally liable for criminal
prosecution if they have knowledge of asset concealment, tax fraud or other peccadilloes. In
other words, if your own hired hands don't turn you in they may be breaking the law! New
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Why You Need to Bank in Silence
regulations make these professionals in your home country little more than government agents.
They are like Deputy Sheriffs. If you don't want Sheriff Big Brother to know exactly what you
are doing then for heaven's sake, don't tell the Deputy Sheriff!
These "professionals" are not on your side. They simply cannot be for fear of losing their
licenses, their livelihood and possibly their freedom. As such, accountants and lawyers are the
last persons you should trust with sensitive information or from whom you should seek advice
on offshore matters. Instead, by following the advice given later in this report, you will be able
to set up your own offshore financial structures, without putting yourself in jeopardy by telling
any of Big Brother's recently drafted agents about what you're up to.
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Banking in Silence
checks just started bouncing. His bank said, "Under the law we must turn over all your money
to any IRS agent who presents us with an order. The IRS agent can write it out on the spot
without consulting anyone else." Even after the son spent a fortune in legal fees and
demonstrated unquestionable proof that all but US $10 was strictly his own money, the state
still refused to hand back the money. Such stories have become far too common.
Yet another favorite tactic to separate you from your property is to claim that your property
has taken on a life of its own. This type of civil forfeiture has quite a long history, but until
recently has only been used sparingly. In such cases, it is your property, not you, that is found
guilty and then seized accordingly. In other words, if any illegal activity happens on or in your
property, it is subject to seizure regardless of whether or not you have any knowledge of the
crime committed. Do you own rental property? If one of your tenants decides to become a part-
time drug dealer or even engage in recreational drug use, you may well lose your property.
I hear about such unjust seizures all of the time. One acquaintance, let's call him Victor,
once lost a luxury yacht to government seizure. He used it just a couple of weeks a year. The
rest of the time, he turned it over to a charter company, which in tum advertised and rented it
out by the week to anybody willing to pay the rental. Everybody was happy. The charter
company earned a nice commission while Victor was able to generate income from the yacht
when he was not using it. One week, a nice-looking young couple rented the yacht, claiming
they were going on their honeymoon. In reality, unknown to both the boat charter company
and to Victor, they headed to Mexico and loaded the yacht with marijuana. When they
returned, the US Coast Guard searched the yacht, found the dope, then arrested the couple and
seized the yacht.
Victor only learned about this when government agents visited him and told him to sign
over the title to the yacht. "It is not your yacht any more," they brutally informed him, "It has
been used in a federal crime, therefore it is now by law the property of the US government."
Victor couldn't believe this. He had no knowledge of the crime but yet he still lost his yacht.
Insurance didn't cover him. All of a sudden, he was almost a million dollars poorer, even
though he had not done anything wrong or broken the law in any way.
Of course, if you are unfortunate enough to be charged with a criminal offense, whether it
be real or imagined, you stand a good chance of losing a lot more than just one prized yacht.
You may soon be making an appearance in bankruptcy court as criminal forfeiture laws are far
more all encompassing than their civil counterparts. The US RICO acts allow Big Brother to
not only seize your assets that are allegedly linked to a crime, but also to seize any and all
assets that allow you a "source of influence" over the alleged criminal behavior. A new favorite
tactic of government bureaucrats seems to be to bankrupt defendants so that they can longer
afford their own basic living expenses, never mind the high cost of mounting an adequate legal
defense. In this way, these bureau-rats need not work nearly as hard to prove their case. At the
same time, they manage to add yet more booty to government coffers.
44
Why You Need to Bank in Silence
markedly on the rise. As the cost of mounting a defense to have such funds returned often
exceeds the actual amount taken by government in the first place, many fail to protest their
unjust treatment at the hands of Big Brother. Instead they just take the lashing and walk away.
Perhaps they understand that even if they did mount some sort of defense, nothing would come
of it. Once Big Brother has stolen your money, he will almost never return it. To justify his
actions, the list of offenses for which your property can be seized includes a multitude of what
can only be considered petty offenses.
What happens if you are a two-finger typist and make a few mistakes on one of those
almighty government forms in triplicate? You forfeit the assets concerned. In Texas, US
Customs officials seized a Lear jet because a few typographical errors were found on
paperwork submitted to the Federal Aviation Authority. Again, in New Jersey, all of the
equipment of a construction company was seized. Why? It was discovered that the company
concerned was technically ineligible to participate in three municipal projects it had bid on.
Similarly, US Customs officials seized US $113,000 from a Vietnamese woman. It didn't
matter even slightly to Uncle Sam that this money was meant to be used as humanitarian aid
for families in Vietnam. What had the woman done wrong? According to Big Brother, she had
violated the Trading with the Enemy Act.
In some cases, particularly those concerning cash seizures, not even probable cause need
be demonstrated. A seven year study conducted by Toxicology Consultants Inc, in Miami, has
found that 96 per cent of all currency in circulation in major American cities contains cocaine
residues. Yet law enforcement officials still grant themselves the right to seize cash from you
if one of their sniffer dogs gets excited. Apparently it doesn't matter to them that dear old
Rover will smell drugs on almost all cash currently in circulation. Big Brother likes this
arrangement. It seems that he has even gone to the trouble of contaminating large amounts of
cash himself. In 1985, a DEA lab issued a classified report which stated that the Federal
Reserve itself "may be contaminating the currency through normal procedures". Apparently
belts used in their high speed sorting machines quickly become contaminated with drug
residues from dirty cash and then go on to contaminate the rest of the moolah.
Today, possessing large amounts of cash is considered to be akin to criminal behavior.
According to Big Brother, anyone who still prefers to conduct his affairs in cold hard cash
must be either a drug dealer or money launderer or both. To further its goals, your government
has gone to the trouble of arranging it so that any amount of cash over a few hundred dollars
carried by any citizen anywhere in public can legally be seized. Even hiding large amounts of
cash in your home could lead you to trouble, as your government can also legally break into
your home and tear it apart merely on similar grounds of probable cause or circumstantial
evidence. Any valuables found will be seized as the assumed proceeds of criminal activity. It
is then your responsibility to prove otherwise.
Proving anything regarding such valuables or cash in your possession will be next to
impossible. To begin with, before you can do anything you will have to wait for some
anonymous bureaucrat to file what is known as a civil forfeiture complaint. This could take up
to 18 months. Finally, even if you are successful in getting Big Brother to hand back what is
rightfully yours, he bears no responsibility for any damage that your property may have
suffered while in his care. Not surprisingly, a great deal of seized property simply turns up
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Banking in Silence
missing once the courts tell Big Brother to hand it back. Again, you lose, only this time after
a great deal of expended effort and frustration. Big Brother need not pay any of your legal
expenses even if he admits to having wrongfully seized your possessions; again he need just
show probable cause.
Clearly this outright theft conducted by government is a growing trend. It is being actively
encouraged within every government agency. On offer is one of the best incentives known to
mankind, cold hard cash, your cash that is. Generally, the agency responsible for the seizure
gets to keep part of the booty, often up to 80 per cent of the amount seized. With that sort of
stake on offer, bureaucrats and government stooges run wildly ahead with little regard for who
suffers. In 1991, The Pittsburgh Press released one of the most comprehensive reports on
seizures ever put together. What did they find? That of the 25,000 DEA seizures reviewed, only
20 per cent resulted in the victim concerned being charged with a crime. In other words, in four
out of five cases, those concerned were never charged with any crime. Such statistics that
clearly show how the innocent suffer at the hands of government seizure laws should come as
no surprise. The US Customs Service itself admits that 42 per cent of its seizures are in error.
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Why You Need to Bank in Silence
dollar tax evasion carries stiff prison terms in a lot of countries. In these initial stages, the
enemy sometimes throws insider trading into the case for good measure, just to back you
further into a comer. You naturally protest. This is what is expected. This is actually what the
authorities want you to do. If they can get you furious so much the better. They want to see
you go down fighting like a caged, crazed animal, because venting your anger you protest your
innocence. You are not a multi-million dollar tax evader, nor are you an insider trader or
whatever else they've thrown at you.
A common ploy in more barbaric countries is to charge you publicly with all these crimes
by means of front page headlines and dramatic reconstructions on television. Before you even
know what has happened, your face will be known far and wide for the worst possible reasons.
A Danish friend of mine learned that his government was building a case against him when he
saw his face splattered on the front page of that country's largest newspaper. No papers had
been filed against him formally. He had a clean criminal record at the time. The lies in the
paper, fed to it by misinformed government officials with their own axe to grind, were never
corrected. No one bothered to contact him for comment.
The US commonly makes use of such maneuvers. Public prosecutors with large political
ambitions wreck human lives without second thought, simply to advance their careers. The
more wins they can stick in their belts the better they look in the press. They win votes. You
face the very real risk of losing everything. If you don't look out for yourself and all that's
yours, you can easily become a stepping stone in some bureaucrat's personal career plan.
Furthermore, although such practices may have been born in the US, they are quickly being
exported to lands far and wide. Under the emerging one-world government, US bureaucrats
will be able to tell everybody else what to do and how to behave. American federal agents have
already conducted seminars for Polish, Czech and Hungarian public sector employees,
demonstrating how to investigate so-called economic crimes. They have also conducted
extensive training programs abroad, such as the three-year Justice Department operation
conducted supposedly to boost the skills of Bolivian prosecutors. Increasingly, as foreign
governments observe the success that dear old Uncle Sam experiences in his revenue
collecting techniques, yet more foreign governments will abandon any and all idea of
sovereignty and invite in US bureaucrats to show them the ropes of how to abuse the
unsuspecting public.
Who pays for these far-flung schemes to massage the ego of those in the US
administration? American taxpayers with hard-earned tax dollars that could be better spent at
home. Big Brother confiscates your private earnings, then goes on a wild spending binge that
stretches from Eastern Europe to the jungles of South America. In doing so, your freedom is
inevitably limited. Those lucky enough not to be American can breathe easier for the moment,
but times are changing. Don't be surprised when this sort of Draconian program emerges
without notice in your backyard. If you want an idea of what the future might be like, just look
at some of the lengths Uncle Sam has gone to in the past few years in his continuing effort to
move money out of the private sector and into the hands of Big Brother.
47
Part II
What You're Up Against
What You're Up Against
Chapter 5
BIG BROTHER SETS UP SHOP
You may already be aware of all of the usual methods that can safeguard your money. You may
even make use of such methods from time to time. If so, the bad news is that you may well be
participating in illegal activities. Recent legislation has been introduced in most countries that
makes it all but impossible for you to safely tuck your money away from the prying eyes of
government. Today, if you transfer money offshore, you risk being called a criminal. If you fail
to report such transfers, you will be fined. Repeat offenders go to jail. If you cling to the old
ways of protecting your money, prepare for the pokey. Many countries have begun to give out
jail terms to private first time offenders, even those with no criminal connections.
The amount of legislation introduced in western countries in the past twenty years has been
. truly phenomenal. In 1992 alone, the US introduced 2500 new laws as well as a unbelievable
65,715 new regulations, all encoded in fine print and written in a language that only vaguely
resembles English. Not to be outdone, in the same year the UK introduced 3359 new
regulations, the largest amount in two thousand years of history. Much of this legislation was
undoubtedly aimed at curtailing your freedom, particularly your financial freedom. If you want
to put a little aside for a rainy day, beware. Moving large amounts of currency out of your
country anonymously has probably already been made illegal. Your government wants your
money left at its disposal. Stuck inside your home country, your assets will be limited to
earning interest rates that barely keep pace with inflation.
Once your government tells you that you must keep your money where it can be seen, you
have all the more reason to establish a level of banking privacy. Still, there is no reason to stick
your neck out and take unnecessary risks. In spite of the explosion in recent legislation, there
remain a few legal options. To understand these remaining routes to secrecy, you must begin
by examining exactly what your government has been up to as of late. Again, the US is leading
the way in this war against financial privacy and has introduced a truly staggering amount of
legislation. This chapter deals exclusively with this American legislation, but even those lucky
enough to not be trapped under the finger of Uncle Sam will find that it has much to offer.
Other developed countries around the world are in the habit of following the lead
established by the US, both voluntarily and as a direct result of US pressure. A great deal can
be learned by examining exactly how US bureaucrats have set about trying to close any and
all possible doors to privacy. In the past 25 years, they have been rather thorough, so thorough
that it is difficult to believe that it all began not that long ago, with the introduction of one
incredibly misnamed piece of legislation.
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Banking in Silence
52
What You're Up Against
expected, Big Brother uses a fairly loose definition, meaning that all of the following suffice:
II all securities brokers and dealers
II investment companies
II currency exchange houses
II anyone who sells cashier's checks, traveler's checks or money orders
II anyone who operates a credit card system
II all accountants and attorneys
II the US Post Office
II all automobile, aircraft and boat dealers as well as property dealers and settlement agents
II and just for sure measure, any other institution that the government determines either
constitutes a financial institution or from which such reports would provide "a high degree of
usefulness in criminal, tax or regulatory matters".
In short, anyone that Big Brother would like to squeeze information from could easily fall
within the parameters of this very loosely worded legislation. With the passage of this single
act, the US government successfully cracked open the financial practices of everyone who
lives in or does business in the US.
IS THIS CONSTITUTIONAL?
Although the bulk of the populace accepted the ridiculous provisions of the Bank Secrecy Act
with little hesitation, a few did see through the political rhetoric and question the legality of
the act. The matter soon made its way to the Supreme Court, but in each case the court sided
with the government. This really should come as little surprise when one considers who writes
the large paychecks received by each of the judges involved. After all, if government revenue
were to suddenly take a nose dive, many of those in the employ of government would soon
have to start looking for work, perhaps even legitimate work.
The Bank Secrecy Act was first challenged in the case of California Bankers Association
vs Schultz. Schultz had brought legal action against his bank because it had turned over his
records to the federal government. He claimed that in doing so, both his Fifth Amendment
rights, that which protects one from compulsory self-incrimination, and his Fourth
Amendment rights, that which prohibits unreasonable search and seizure, had been violated.
The courts failed to agree, saying that the records belonged to the bank, not the customer. In
other words, as the records were the property of the bank, the rights of its customer cannot be
used to prevent the release of such information. The opinion was not unanimous, however.
Justice William 0 Douglas lodged a dissent which stated the various problems he saw with the
act. It reads in part:
"It is, I submit, sheer nonsense to agree with the Secretary [of the Treasury] that all bank
records of every citizen "have a high degree of usefulness in criminal, tax, or regulatory
investigations or proceedings." That is unadulterated nonsense unless we are to assume that
every citizen is a crook, an assumption I cannot make.
Since the banking transactions of an individual give a fairly accurate account of his religion,
ideology, opinions and interests, a regulation impounding them and making them
automatically available to all federal investigative agencies is a sledge-hammer approach to a
problem that only a delicate scalpel can manage.
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Banking in Silence
Bank accounts at times harbor criminal plans. But we only rush with the crowd when we vent
on our banks and their customers the devastating and leveling requirements of the current act.
I am not yet ready to agree that America is so possessed with evil that we must level all
constitutional barriers to give our civil authorities the tools to catch criminals."
Justice Douglas goes on to compare the requirements of the act with that of requiring book
stores to keep tabs on the books their customers purchase or the phone company to keep
recordings of all calls made. Although I admire his opinion, I only hope that he has not given
the bureaucrats yet more ideas on how they can limit our freedom.
The second case to examine this act again succeeded in narrowing the basic rights enjoyed
by US citizens. In US vs Miller, the court found that bank customers have no legal right to
prevent the release of financial information held by third parties. The court also found that
Miller, or any other depositor for that matter, does not even have standing to bring such matters
before the court. The court claimed that if anything, it is the bank that should protest against
the release of such records. Yet, in Schultz the court had previously found that the bank could
not invoke the rights of its clients. In short, the court had successfully closed off all possible
avenues to prevent the release of such information. This is particularly alarming as such
records would not even have existed in the first place had the government not forced banks to
start maintaining them.
The final death blow came in the case of Payner vs US. This case came to light because the
IRS used illegal means to gather evidence. After distracting a Bahamian bank customer with
an invitation to dinner by a female agent, the IRS broke into his hotel room and stole his
briefcase. In the briefcase evidence was found that was later used to convict Payner of tax
evasion. Did the court have a problem with such subversive tactics? No, in the eyes of the court
it was all perfectly legal. If nothing else, this case clearly shows that Big Brother will stop at
nothing to get his hands on your money. He makes the rules and then expects you to follow
them. Whether or not he complies is apparently an entirely different issue.
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What You're Up Against
by government bureaucrats. Similarly, information that contains potential security risks or law
enforcement uses are also exempt. This provision has resulted in the bureaucratic practice of
mixing otherwise ordinary records with those that have national security applications so that
the overall file need no longer be shared with those that it is about. Finally, many bureaucrats
interpret the act as only covering paper records and consequently freely exchange their much
more extensive array of computer records.
Another provision in the act expressly prohibited both the federal and state governments
from requiring that one provide a social security number before receiving services or benefits.
This move dealt a death blow to the computers as without this magic number they have no way
of identifying you. Still, not to be daunted, Big Brother worked his way around this restriction
by introducing a host of exemptions two years later and then finally instituting new legislation
that overturned this part of the act. Today, you are legally required to disclose your social
security number not only before receiving benefits, but even before being issued a passport.
Exemptions are clearly one of the favorite tactics used by governments when they find
themselves in a bind. Each year more and more agencies are exempted from all of the
provisions of the Privacy Act. For example, FINCEN, which will be described at greater length
in a following chapter, has been allowed full access to files held by both the IRS and the
Customs Service. In fact, each year according to government census figures, the total number
of records that it keeps on each of us declines. In other words, during the explosion of data
gathering techniques often referred to as the information age, Big Brother claims that he
actually holds less information about the public today than he did twenty years ago. Of course,
he fails to mention the fact that records held by agencies granted special exemption status need
no longer be counted.
The fact of the matter is that sensitive personal information about each of us continues to
be both gathered and exchanged by government bureaucrats irrespective of any and all
legislation that may prohibit such activities. This act was quite likely merely put into practice
in the first place to pacify those concerned with privacy. All the while, Big Brother continued
along his chosen path without concern for technicalities such as the actual letter of the law. If
government had really cared about the provisions of this act, then it would have put a
government agency in charge of enforcing it. As no such agency was appointed, the act has
only ever been loosely observed at best.
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Banking in Silence
unacceptable. The act was watered down to a hollow shell long before it was ever allowed to
pass. Furthermore, the few civil liberties that the act did manage to protect have been
overturned as a result of subsequent legislation. To begin with, a huge loophole which allows
records to be released for use in "law enforcement proceedings" was incorporated into the act.
This effectively means that the IRS, FBI or any other government agency is allowed access
to your records without your knowledge or consent. Remember, tax evasion is considered to
be a federal felony in the US and is punishable by up to five years in prison and a US $50,000
fine. Similarly, state and local police would meet with little resistance when investigating just
about anything.
Obviously unhappy with the act, the IRS immediately set out to overcome its various
restrictions, particularly in the area of informal searches. The use of such fishing expeditions
has long been a favorite tool of Big Brother. In spite of the specific provisions in the Right to
Financial Privacy Act, the courts have repeatedly sided with the IRS, claiming that as it is a
law enforcement agency it is entitled to conduct informal searches without having to go
through the bother of obtaining permission from the courts and without having to notify the
individuals concerned.
About the only protection that the act was able to secure for at least a short time was from
your bank itself. In Neece vs IRS, the bank involved had volunteered information about one of
its clients to the IRS. The court found that a bank, unlike government agencies, must follow
the provisions of the act, meaning they are only allowed to tum over information when either
required by law to do so or when such information is specifically requested by the government.
Still, this small victory has in the end undoubtedly caused more harm than good. The IRS, not
accustomed to having the courts decide against it, vowed that never again would a customer
win against it in this type of case. Since this decision, such a large amount of legislation
concerning reporting requirements has been instituted that it is difficult to imagine any banking
record that could not be turned over to the federal government voluntarily by your bank on
perfectly legal grounds.
56
What You're Up Against
names and addresses of all customers. If you fail to play along and refuse to supply your social
security number, your bank or broker is now required to withhold 20 per cent of any proceeds
that you would otherwise receive. Similarly, barter organizations were drafted into the war.
They must now report any credits accrued by their customers.
Yet more forms, a favorite weapon in the war, were developed. Now, anyone who pays an
"unincorporated entity" more than US $600 in the course of a financial year must share such
information with Big Brother. This act is also responsible for the disappearance of bearer
stocks and bonds from the US marketplace. They are no longer allowed. In addition, anyone
who trades in a previously issued bearer instrument must identify himself with, you guessed
it, his social security number. If you fail to do so, Big Brother will still get his greedy paws on
your money as 20 per cent of your interest will be routed in his direction automatically.
Most frightening of all, the act greatly expanded the powers enjoyed by the IRS through a
direct attack on the Right to Financial Privacy Act. Although the courts had always proven to
be friendly in the past, apparently the IRS decided that it would rather act on its own. Thanks
to TEFRA, the IRS can now gain access to any financial records by simply issuing an
"administrative summons". What exactly is this magical document? It is simply a written, or
perhaps even verbal, request from an IRS agent for your records. Furthermore, such
information can now be used not only in tax cases, but also for any criminal investigation. In
spite of the fact that such legislation obviously flies in the face of the Fourth Amendment, the
courts again found there to be no problem. Just in case you were wondering, sources say that
the paychecks received from the federal government by each of the judges concerned have
continued to arrive on time.
57
Banking in Silence
country and need only display "reasonable cause" to do so. In other words, US Customs can
now search through your baggage, as well as incoming and outgoing mail, without a warrant
or permission from any other authority. What would constitute reasonable cause to merit such
a search? Undoubtedly, the fact that a letter originated from a known banking haven would
prove to be more than sufficient. This legislation basically enabled the US government to
conduct extensive fishing expeditions, allowing it to search the records of individuals who are
not even suspected of committing a crime.
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What You're Up Against
59
Banking in Silence
As the possible penalties are absolutely staggering, it is nothing but foolish to not
understand exactly what the government has decided to make illegal. Again, Big Brother has
granted himself almost unbelievable scope within each of the three areas of this act. The
possible consequences of each are so far reaching that they merit individual attention.
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What You're Up Against
the Enemy Act of 1917? Violating either of these acts could land you in jail for money
laundering. Recently, even violations of environmental laws have been added to the list. In
short, it seems that almost any activity that involves money and financial transactions, or in
other words just about any business activity, could be linked to a money laundering charge. As
a money laundering conviction tends to be easier to achieve and also manages to bring much
larger sums into the government kitty, it is really no wonder that the list of prohibited activities
just keeps on growing.
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Banking in Silence
conspiracy. Under Section 1957, neither is required, as one can be convicted of conspiracy for
merely not taking a person's reputation into account before doing business with him. If an
attorney even suspects that his client is guilty, he may well go to jail for merely representing
him. Placed under such restrictions, many attorneys will undoubtedly choose not to represent
individuals solely because they are known to have a bad reputation. In other words, Congress
has yet again succeeded in turning over a basic civil liberty, that of the right to legal
representation as promised by the Sixth Amendment.
About the only saving grace is that Section 1957 only applies to amounts that exceed US
$10,000. However, related transactions over a 12 month period that exceed US $10,000 are
also enforceable. Admittedly, US $10,000 would buy a lot of hamburger over the course of a
year, but in many large legal cases it would only represent the first of many payments to
competent legal assistance. Furthermore, many in Congress would like to further restrict
American liberties and reduce the limit to only US $3000. If they are successful, the person
who unwittingly sells hamburger to an individual of dubious character may well find himself
sharing a cell with his lawyer.
WHAT IS STRUCTURING?
The crime of structuring, yet another new crime, was also brought into existence by the Money
Laundering Control Act. It came to the attention of the government that many individuals
interested in laundering large amounts of money simply changed their tactics to circumvent
reporting requirements. They developed a process that became known as "smurfing". This
procedure simply made use of a large number of couriers, known as "smurfs", who would
make several deposits a day at various locations. Each would deposit an amount just below US
$10,000, meaning that in the end no CTRs would need to be filed. Over a relatively short
period of time, very large amounts of cash could make their way into the banking system, all
in a manner that remained perfectly legal.
The Money Laundering Control Act brought an end to all of this and made it illegal to
structure transactions in such a way. However, like most of the legislation introduced to curb
money laundering and snare drug traffickers, this act has failed miserably. Once smurfing
became illegal, professional criminals simply changed their tactics again. Instead of using
banks, today they feed their dirty money into the system through other financial operators,
such as money exchangers, money transmitters and check cashing services. In the end, this
new legislation has primarily succeeded in stealing the assets of innocent individuals. For the
most part, those prosecuted for the new crime of structuring first hear of the existence of this
crime when they are arrested. The major problem with these anti-structuring laws is that no
underlying illegal intent need be proven by the government. Merely depositing US $9000 in
cash into an account on two consecutive days is now a crime. Similarly, depositing as little as
US $900 once a month over a one year period may also be labelled a crime.
The penalties for such infractions are almost unbelievably severe. The funds involved
almost automatically become the property of Big Brother. Criminal violations may well bring
an additional fine of US $250,000 as well as a five year stint in the pokey. Civil penalties for
"willful" violation are a bit less severe, but still claim either US $25,000 or the full amount of
the funds involved, whichever is greater. However, indicative of a pattern of thinking that only
62
What You're Up Against
a bureaucrat can follow, you can be convicted of willfully violating the law even if you are
unaware of its existence. Finally, if you are convicted of structuring in conjunction with a
violation of any other law, the fine can escalate to a cool half a million as well as a ten year
stint in the pokey.
It is becoming increasingly obvious that the main intent of the anti-structuring laws is one
and the same with all of the other legislation discussed in this chapter. Undoubtedly, Big Brother
has hit on yet another fantastic little money spinner. According to a 1991 Treasury Department
analysis, over 75 per cent of assets seized as a result of the anti-structuring laws were originally
the property of individuals not involved in any illegal activities. In the modem over-legislated
world, the question of guilt or innocence increasingly seems to be a thing of the past.
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Banking in Silence
in such cases. In other words, if the bank releases your records to the government and ruins
you.r reputation, you have no legal recourse, even if in the end no charges are ever brought
against you.
THE ANNUNZIO-WYLIE
ANTI-MONEY LAUNDERING ACT OF 1992
With the passage of the Anti-Drug Abuse Act, the US attack on personal privacy neared
completion. All of the major legislation was in place and for the most part only a certain
amount of tinkering remained to keep the bureaucrats happy. Much of this tinkering was made
into law in the Annunzio-Wylie Anti-Money Laundering Act of 1992. Again, reporting
requirements were expanded to cover just about any international transaction or "suspicious
transaction". Again, just about any attempt to avoid any reporting requirement now clearly
falls within the domain of structuring. Again, forfeiture powers enjoyed by the government
were dramatically expanded.
However, what is unique about this act is that the government clearly shifted the burden of
monitoring our financial affairs from itself to banks and financial institutions. If bank
managers fail to cooperate, they could literally lose everything as the government has decided
that it has the right to take over the running of any financial institution in the US. Furthermore,
if the bank officer is accused of a money laundering offense, he is prohibited from working for
any other financial institution, even if eventually acquitted of all wrongdoing. If convicted, he
faces a possible ten years in jail and a fine of up to US $500,000.
Increased record keeping requirements have cost banks an absolutely enormous amount in
wasted resources and manpower. In 1991, the American Banker's Association estimated that
complying with just one provision of this act alone will cost US banks at least US $160
million. Still, the banks are left with but one choice, comply or go out of business. The
message is clear. American banks are not your friend. It is in their best interest to keep your
financial affairs an open book, open to the prying eyes of any and all government officials who
express even the slightest interest.
Yet again new legislation has effectively turned the Right to Financial Privacy Act into
worthless paper. Owing to legislation in the Annunzio-Wylie Anti-Money Laundering Act,
even the slight protection that was granted in this previous act has been eliminated. Banks are
now required to volunteer information about any "suspicious transaction" to the federal
authorities. Furthermore, they are not allowed to notify their customer that such an
infringement of his privacy has taken place. In your search for financial privacy, understand
one thing: governments are your number one enemy, banks your number two.
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person first be convicted of a crime before his assets can be seized. Still not daunted, the
federal government went on to encourage states to change their laws. In return, increased
access to federal information was on offer. Undoubtedly the program will soon be further
spiced up with monetary incentives.
The US government also turned its attention overseas, apparently aware that much of its
legislation succeeded primarily in driving funds offshore. Yes, even the bureaucrats heard the
large sucking noise that accompanied the multitude of funds that fled in search of safer
pastures. Never daunted by something as unsubstantial as a national border, the US
government began a program of international pressure, using both its financial clout and its
military power in a manner akin to terrorism. Worldwide, US bureaucrats met with an
absolutely amazing amount of success in their campaign. The face of international banking has
changed dramatically as a result of this ongoing effort.
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Chapter 6
BIG BROTHER GOES
INTERNATIONAL
Soon after implementing its myriad of restrictions and regulations, the US government became
aware that it had primarily succeeded in pushing large amounts of money offshore. Even
according to its own admissions, a large number of ordinary citizens were hiding funds in
banking centers around the world. However, rather than reexamine its own philosophy or
question its own position, the government labeled such individuals as tax evaders and
immediately set about extending its grasp so that it could regain control of these lost funds.
After all, each account opened offshore represented a small chunk of cash that Big Brother had
been point blankly told he was not allowed to touch.
Needless to say, the bank secrecy laws of foreign jurisdictions frustrated Big Brother to no
end. Unlike within its own borders, the US government found it very difficult to convince
foreign banks to allow it to sneak a peak at banking records. Nonetheless, not daunted by
concerns over issues such as jurisdiction and sovereignty, the US pushed forward in its effort to
sculpt the world banking community in its image. It has employed many different tactics,
ranging from skillful political negotiations to threats and bribes to straight out military invasion.
None of these practices seem to trouble US bureaucrats, or the American people for that matter.
It is simply assumed that the world's only remaining superpower possesses the inalienable right
to bully the rest of the countries on the planet until they agree to do things its way.
Over the past two decades, the US government has met with an amazing amount of success
in its expanded and international war on financial privacy. Its reach has extended across
national boundaries around the globe so that it now affects just about every banking haven on
the planet. Not only does Uncle Sam desire to change the practices of his own banks, he also
feels, for some bizarre reason, that he has the right to change the activities of banks over which
he has absolutely no jurisdiction. Consistently, the US government fails to recognize that its
own powers do indeed stop at its international borders.
DIFFERENCE IN PHILOSOPHIES
In a report prepared in 1985 titled Crime and Secrecy, the US government clearly showed its
complete ignorance of financial realities. The title of the report for a start seems to clearly
indicate that the government believes there to be something wrong with secrecy, that the mere
hint of a desire to keep one's affairs private is akin to criminal behavior. (Or perhaps the
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bureaucrat responsible had simply spent too much time reading Dostoyevsky at taxpayer
expense.) This report openly admits that average US citizens are secretly depositing money
offshore. It also openly admits that the IRS is often perceived by the populace as the Gestapo.
Did these realizations lead the bureaucrats to question their own tactics? Of course not.
Instead, they focus on what they perceive to be a problem of a difference in philosophies.
The government admits that it "disdains bank and corporate secrecy to the degree that it is
practiced elsewhere, whereas secrecy is exalted and protected in other countries". This fact
poses a seemingly insurmountable barrier to the minds of US bureaucrats. Those responsible
for this report simply cannot imagine why one would not want all of his affairs to be open to
government scrutiny. The idea that one just might desire privacy for its own sake simply does
not occur to them. They assume that anything conducted with a desire for privacy must contain
a layer of underlying criminal intent. In the minds of these bureaucrats, anyone who is not
willing to display every aspect of his life to an all-knowing and all-seeing government is, by
definition, a criminal.
This mentality has led to the erosion of basic human rights within the US outlined in the
previous chapter. Thankfully, the leaders of many other countries are not of the same mindset.
Nonetheless, the political philosophies of those in power in the US have been responsible for
much more than the mere institution of various laws and regulations. The problem goes much
deeper and has resulted in a change in the very perception of justice in the US. Procedures
considered to be perfectly legal, not to mention commonplace, in the US would not even be
heard of in most other countries around the planet.
For example, in the US, pre-trial discovery rules grant the prosecutor immense leniency. He
is barely even required to work within the framework of the law. During pre-trial proceedings,
the court is allowed to order the production of documents that will not be admissible in court
once actual legal proceedings have begun. All that the government need show is that the
records sought appear "reasonably calculated to lead to the discovery of admissible evidence".
Most common law jurisdictions around the planet condemn such practices for exactly what
they are, fishing expeditions. Instead, they require that at least an indictment be issued before
the government is allowed such awesome powers. In the US, it is perfectly legal for the
government to force its citizens to publicly display even the most intimate details of their lives,
all before any official criminal proceedings have even begun.
If the matter ever does make its way to a grand jury, you can be assured that it will only
hear one side of the story, the prosecutor's. The defendant has no right to display his version
of events and for that matter need not even be notified that such proceedings have begun.
Similarly, if he is called to testify, he will have no right to counsel. The implications of this
restriction are far reaching, as amongst other things the prosecutor will be given free reign to
ask whatever questions he so chooses. If the defendant cannot afford an attorney, no one will
be present to protest even the most outrageous question posed by the prosecutor. Finally, there
is no limit to the number of times that a matter can be brought before a grand jury, meaning
that if so inclined a prosecutor can hassle you relentlessly all without the need to produce even
a shred of legitimate evidence.
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For example, if you invest money in Switzerland, a tax treaty that has been established
between it and the US will allow you to claim back most of the 35 per cent withholding tax
that the Swiss government would otherwise claim as its own. All you need do is file the
appropriate form with the Swiss government and 6/7 of your money will make its way back to
you. However, this information will then be forwarded on to US authorities who will then
make certain that you have claimed the income on your US tax return and paid the appropriate
dues to Uncle Sam. If not, expect a visit from your friendly tax inspector. Of course, your other
alternative would be to not claim the money back and then suffer the 35 per cent withholding
tax.
However, in spite of their best intentions to squeeze every penny out of you, governments
sometimes inadvertently construct such treaties so that they offer an unexpected bonus to the
suffering taxpayer. On a few occasions, such treaties offer tax savings, yes savings, not
otherwise possible. This practice is known as "treaty shopping" and basically involves
investing money offshore where it obtains favorable tax status both offshore and at home due
to provisions in existing tax treaties. In other words, treaty shopping is a perfectly legal way
to reduce your tax burden.
These little loopholes infuriate bureaucrats to no end. The US government is currently in
the process of updating many of its tax treaties in an attempt to close off such benefits. Yet
another example of how Big Brother makes the rules, expects you to follow them and then
changes the rules midstream once he finds out you might actually be winning. Still, even in
spite of such government scrutiny a few loopholes do manage to survive.
The saving grace of most tax treaties is that the exchange of information is generally limited
to routine areas. If specific requests for information are allowed at all, they are generally
restricted to criminal investigations in which an indictment has already been issued. However,
the US government is constantly tinkering with such agreements in the hope that one day it
will be allowed the free and easy access to foreign bank records that it enjoys at home.
Recently, the Swiss government broke off negotiations with the US over such a treaty when
the Americans insisted that a provision be included that would allow the US Treasury access
to Swiss bank records in cases concerning US tax evasion. As tax evasion is not a crime, but
merely a misdemeanor in Switzerland, the Swiss sent their American counterparts home
without the goodies. Unfortunately, such a firm stance by foreign governments, including
Switzerland, during negotiations with the US seems to be more the exception than the rule.
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disguising its intentions, the US government was able to convince banking centers around the
globe to agree to exchange of information treaties. If Big Brother's real concern had been
international crime, then why were banking havens with strong bank secrecy laws his primary
targets for MLATs?
Switzerland was the first country that the US set its sights on. After intense US pressure,
the country eventually agreed to an MLAT with the US in 1977. Treaties have also been signed
with the Bahamas, Barbados, Bermuda, Canada, the Cayman Islands, Italy, the Netherlands,
Panama, Turkey, the United Kingdom and Venezuela. Negotiations are under way with
Australia, Belgium, Colombia, Germany, Haiti, Israel, Jamaica, Mexico, Morocco and Sweden
and may well have resulted in treaties by the time you read this. Memoranda of Understanding
(MOU), similar agreements which call for the international exchange of information, have also
been signed between the US and Brazil, Canada, Japan, the United Kingdom and Switzerland.
Each individual treaty differs somewhat as they are tailored to work within the existing
legal structure of each of the countries concerned. However, they basically allow for the
exchange of information between the countries concerned in criminal cases involving drug
trafficking, money laundering specifically related to drug trafficking and insider trading.
Undoubtedly, the greatest frustration experienced by the US government in its effort to
establish MLATs is that most countries are not willing to allow the release of their records for
matters concerning tax evasion. The US is constantly pushing not only to create new treaties,
but also to expand the provisions of its existing treaties to cover this area.
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The US effectively employed this technique in the case of US vs Field. This case involved
a banker from the Cayman Islands who was jailed on a contempt charge during a visit to the
us. What did the American courts decide? Not surprisingly, they found that a foreign person
subpoenaed in the US to give testimony before a grand jury must testify, even if doing so
would violate a law of his native country. The Cayman banker had but one option, cooperate
and testify, unless of course he wanted to spend the rest of his days behind bars.
This case enraged the Cayman Islands to no end and resulted in increased bank secrecy
legislation in the country. Shortly after this incident, the Confidential Relationships Act was
passed, transforming previous bank secrecy law into sweeping business secrecy law.
Furthermore, in a direct attack on US practices, the Cayman Islands claimed that their new law
applies extra-territorially. The Cayman Islands have since used such legislation to block the
release of records to the US. It is also likely that most Caymanian bankers now rarely if ever
dare to venture across a US border.
Nonetheless, the message is clear: the US will not hesitate to use extreme pressure tactics
to get what it wants. Anyone involved in an activity offshore that the US takes a disliking to
had best take notice of the lesson suffered by Mr Field. A contempt charge is unique in that
one need not be accused of any crime and no sentence need ever be issued. The only way out
of the pokey is to give in and cooperate. This case should serve as a valuable lesson to all. It
does not matter whether you are American or not, if Uncle Sam decides that he would like to
squeeze some information from you, he will not hesitate to do so if you dare to venture on to
US territory.
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The message from Washington is clear. When one of its laws conflicts with the law of a
foreign jurisdiction, US law must take precedence in every conceivable situation. In the eyes
of the US government, US law applies both on US soil as well as foreign soil, to both US
nationals and foreign nationals. In countless cases the US Supreme Court has sided with its
parent government. Conversely, according to US legislation, any American who breaks any
American law anywhere in the world can be prosecuted in the US as if he had broken the law
on US soil. Again US law is applicable in spite of local legislation. Such double standards are
far from rare.
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- only allowing financial institutions that have already waived all rights to bank secrecy
entrance into US financial markets
- limiting the number of direct flights to certain tax havens and requiring that passengers
travelling there obtain an exit visa from the US
- requiring that all banks that do business in the US institute financial record keeping
requirements for cash deposits of in excess of US $10,000 in all of their branches
worldwide
- requiring that loans from tax havens be reportable as income for federal income tax
purposes
- no longer allowing any income tax deductions for any loss resulting from a financial
transaction entered into, with or by an entity located in any designated tax haven
- requiring that US corporations report all income earned in tax havens as US source
income
- requiring that all US domiciled banks report all of the transactions that they conduct with
designated tax havens
- allowing the Secretary of the State to revoke the passport of anyone convicted of any drug
or money laundering offense
- allowing the military to shoot down any planes flying over US soil that are not identified
and that are suspected of carrying drugs
The shape of things to come in the US is not pretty. Much of the groundwork has already
been put in place, it now only remains for Big Brother to close off the few avenues to freedom
that remain. In the US, it is now illegal for an ordinary citizen to hide his money anywhere in
the world, even if this money has been legally earned and all taxes have been paid on it. Every
year in the US, there is a proposal to end the right to habeus corpus, your right to challenge
the legality of a conviction.
Even as the law now stands, US agents are under no legal obligation to obtain a warrant
before searching the homes of both American and foreign nationals, both overseas and at
home. As evidenced by the case of Manuel Noriega, the US also believes that it is perfectly
legal to kidnap a foreign national and forcibly bring him to the US for trial. It is no wonder
that the US now has the highest per capita incarceration rate, even exceeding the figures of the
former Soviet Union and communist China.
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Still, there are a few paths to freedom that remain, even for US investors. This report is
designed to show you these methods. However before we get into solutions, unfortunately a
few problems still remain. You now understand the manner in which the US has made not only
its own banking community into an unwilling accomplice, but has similarly drafted banks from
countries around the planet. Unfortunately, the fact of the matter is that the US is not your only
enemy in the war against financial privacy. The US government may be the Big Brother of
them all, but he undeniably has many little brothers.
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Chapter 7
THE LITTLE BROTHERS
Many countries are beginning to learn from the US example. They have seen the tremendous
amount of revenue that such Draconian US measures bring to the pockets of Uncle Sam.
Undoubtedly, their own revenue demands have led them to consider the method behind US
bureaucratic madness. Through either US pressure or simply a desire to imitate its example,
these countries have set out to follow in the footsteps of their Big Brother. At least forty
countries around the planet have either banned money laundering or are in the process of doing
so. As in the US, these countries have begun to institute their own laws which prohibit bank
secrecy and lay open bank records for government scrutiny.
The good news is that in most cases this ban on money laundering is strictly related to
activities linked to drug offenses. Putting your own money through the wash simply to avoid
taxes has remained legal behavior in most parts of the world. Nonetheless, the fact that a string
of financial transactions has been reclassified as illegal behavior in many countries is an
alarming precedent. One never knows when these other governments may one day decide to
institute yet more laws in imitation of the US government. In other words, it is important for
the international investor, or for that matter anyone who recognizes the need for financial
privacy, to pay attention to such developing trends.
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and of itself. However, unlike in the US, you will not be convicted of any wrongdoing, at least
for the moment, if you can prove that you neither knew nor suspected that the monies involved
were the proceeds of illegal activity. Similarly, if you did suspect as much but went to the
trouble of informing the authorities of your concerns, you are not guilty of any crime.
Like the US, the United Kingdom decided to enlist its banks as involuntary soldiers in the
war. In the beginning, banks were required to merely report "suspicious" transactions to the
police. A rigorous set of guidelines was supplied by the National Criminal Intelligence Service
(NCIS) to help banks identify such activity. Making an unusually large cash deposit, suddenly
increasing your number of bank deposits, depositing small amounts of cash by means of
numerous deposit slips and frequently changing cash into other currencies are now only some
of the type of transactions that are likely to land you unwanted attention in the UK. In spite of
the fact that British banks spend millions each year advertising how much they would like to
be your friend, they have proven to be more than eager in their efforts to cooperate with
government bureaucrats. In 1994 alone, more than 16,000 reports of suspicious activity were
filed by British banks.
For some time, the decision over which customers to report and which not to report
remained primarily at the discretion of British banks. Apparently, the government realized that
by instituting a flat reporting requirement, it would only succeed in creating an avalanche of
paperwork that could never be properly interpreted. Nonetheless, in spite of this rare glimmer
of common sense displayed by British politicians, their counterparts in Brussels failed to listen
and eventually succeeded in forcing the United Kingdom to institute a cash reporting
requirement. In the beginning of April 1994, the UK introduced legislation that requires all
cash deposits over £11,400 (15,000 Ecus) to be reported. This initiative stems from a European
Union joint action, although many other EU member states have not been quite so diligent in
following its guidelines. New reporting procedures can also be interpreted to cover all suspect
deposits whatever their origin, including tax evasion.
Ever more stringent policies are constantly being adopted. Currently, the British are
considering legislation that greatly resembles that which grants American bureaucrats almost
unlimited seizure powers. The latest proposals are said to be targeted against so-called white
collar crime, although they are far more likely to succeed in punishing ordinary citizens. Under
a new Criminal Justice Bill recently proposed, courts will need only decide whether on the
balance of probability money belonging to a defendant constitutes illegal profits. If yes, said
money is liable for confiscation. This new policy would replace the existing and much stricter
requirements that the court must first prove beyond reasonable doubt that the funds in question
have been illegally gained, the criminal standard of proof. Like in the US, it will soon become
the responsibility of the accused to prove their innocence, rather than the responsibility of the
state to prove their guilt.
In other words, the UK has turned out to be an excellent student in the war on privacy. The
government seems only too eager to institute even the most barbaric policies favored by US
bureaucrats. Much of this is undoubtedly an attempt by politicians to rid the country of its
image as a haven for dirty money. It is currently estimated that over £2.5 billion are washed
clean each year in London financial institutions. Still, by placing restrictions on each and every
investor, bureaucrats will only succeed in pushing legitimate money offshore where it will not
have to undergo such unwanted scrutiny.
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What sort of behavior would land you unwanted attention? The list includes sudden activity
in a long-dormant account, withdrawing cash shortly after depositing it, making a transaction
that appears to be "out of the ordinary" and refusing to supply requested information.
Regulations also call for banks to pay particular attention if a client tries to open an account
with more than SFr 25,000 in cash or to convert large amounts of cash into foreign currencies.
In modern day Switzerland, such previously accepted practices now basically guarantee you
an unexpected visit from one of Big Brother's agents, assuming of course that the bank is even
willing to comply with your request in the first place.
As mentioned in the previous chapter, Switzerland has also shown an almost unbelievable
willingness to enter into agreements to exchange information with foreign countries. The ease
with which information is handed over has been greatly facilitated by the fact that
Switzerland has also gone to the trouble of redefining a host of activities as criminal,
including money laundering and insider trading. To make matters worse, Switzerland has
gone so far as to agree to release information for cases that do not involve a crime according
to Swiss law. The Swiss government is even willing to freeze assets before an individual is
convicted if the foreign government can demonstrate "reasonable suspicion" that the
customer has engaged in criminal conduct.
The list of offenses for which the Swiss government is willing to step in and order that an
account be frozen seems to grow a little longer every day. Recently fraud, including tax fraud,
was added to the list. Thankfully, a host of other pure fiscal offenses, including both tax
evasion and violation of exchange controls, have not yet fallen into the expanding net. Still,
proposals to change the existing legislation and even reduce the penalties for violations of bank
secrecy laws seem to pop up again and again. There is really no telling when the remnant of
bank secrecy remaining in Switzerland will fall by the wayside as well.
The Swiss have demonstrated their willingness to play along with foreign governments time
and time again. When the Haitian government asked that all private accounts held by Baby-
Doc Duvalier be identified and frozen, it experienced no problem. Similarly, at the request of
the American government, the Swiss did not hesitate to freeze all of the accounts owned by
Manuel Noriega. Examples of such cooperation are far from rare. The Swiss government has
helped out the Romanian government by blocking all accounts held by Nicolai Ceausecu, the
Indonesian government by doing the same for funds held by President Sukarno and again
provided a helping hand to Uncle Sam when it claimed that large amounts of funds were held
in Switzerland by a Colombian drug cartel. Yet more alarming, the Swiss froze all accounts
held by Ferdinand Marcos even before the Philippine government got around to asking them
to do so. None of these examples set a precedent that can do anything but frustrate the
international investor in search of privacy.
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Germany was left with little choice but to make money laundering a crime. They followed this
with reporting requirements for cash deposits of more than DM 20,000. Banks are also
required to alert local police when they suspect that money may be the proceeds of drug
dealing or other criminal activity.
The French have also gone to the trouble of making money laundering a crime, but for all
intents and purposes do not seem to be too keen on enforcing it. The law has yet to meet with
a single conviction. It seems that much like the French law that bans smoking in a public place,
this legislation has to date only succeeded in keeping a few more bureaucrats on the public
payroll. In the meantime, money launderers should not meet with too much resistance in
France, but may still want to consider safer pastures.
In Italy too, it is an offense to launder money, but only in cases concerning kidnapping,
robbery or blackmail. In 1989, the Italian Banking Association decided to play the self-
regulation game and enacted an anti-money laundering code. Member banks are asked to keep
records of cash transactions made for in excess of 10 million lira. They are also asked to
register bearer savings books and turn away any customer not willing to cooperate. However,
like France, these regulations do not seem to be in overwhelming force. The fact of the matter
is that as so many politicians in Italy make frequent use of laundering facilities, a few paths
will always remain open for those with the right connections.
Owing to the high taxes in Scandinavia, these countries have been quick to join the war
against financial privacy and have instituted reporting requirements of their own. In addition,
although structuring in and of itself has not been made illegal, making a deposit deemed to be
"suspicious" has, meaning that depositing an amount just below the reporting requirement
would invariably bring about unwanted attention. For example, in Sweden staff at banks,
insurance companies and similar institutions have been trained in both the new reporting
procedures and how to spot suspicious transactions. The good news, however, is that the
recently formed Finance Police was refused permission to institute a special computerized pre-
detecting register on the grounds that such a system would needlessly collect private
information about innocent people.
Nonetheless, even many of the traditional banking havens of Europe have in one way or
another adopted restrictive legislation. In 1989, Luxembourg made money laundering a crime
and gave the government the right to confiscate money derived through drug trafficking. In
1992, due largely to unfavorable publicity surrounding several incidents of money laundering
in the country, the government went on to claim that any money confiscated would be used to
help fight drug trafficking and money laundering. The government also said that it would
require credit institutions and banking professionals to cooperate in such investigations,
obliging banks to report any activities that they found to be suspicious. Understandably, the
banking community did not take so kindly to such an intrusion into their affairs and, thanks to
their resistance, a compromise bill was later instituted which allows banks to release
information only "on their own initiative".
The Isle of Man now routinely keeps records of any cash deposit of more than £25,000.
Furthermore, even though your communications with your bank in this jurisdiction are
supposed to be confidential, Isle of Man authorities are reported to be so jumpy about money
laundering and its drug implications that they have been known to exchange information with
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UK authorities. Other tax havens, such as the Bahamas and Montserrat, have also instituted
reporting requirements of one form or another.
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INTERNATIONAL COOPERATION
Unfortunately, the war against financial privacy extends much further than the introduction
of similar legislation in various countries around the world. In addition to acting
independently, many countries have realized that a great deal can be gained by increasing
international cooperation. It is now common for departments to work together directly on
cases and to exchange information freely. Ten years ago, international cooperation only took
place between department heads or individuals in similarly high positions. Today, low level
staffers and desk-bound bureaucrats do not hesitate to pick up the phone and call one another
from country to country. Owing to this increased cooperation, many international borders
have been all but erased.
Organizations have sprung up where none existed before to handle the mounds of data
being created. Bureaucrats around the globe have been busy creating fancy logos and catchy
names. In the United States the Financial Crimes Enforcement Network (FINCEN) has been
created. In the United Kingdom, it is the National Criminal Intelligence Service (NCIS). In
France, the Office for the Repression of Large-Scale Financial Crime (TRACFIN). All pretty
names created to sell these organizations to the masses. How many comrades would have so
readily agreed if they knew that these organizations were each created with the express intent
of spying on them, as members of the unsuspecting public.
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Data of all sorts concerning almost every aspect of banking are fed into computers in
countries around the globe and then shuffled across national borders with almost no regard for
the concept of privacy. Super-computers hooked up to international networks further help the
bureaucrats. So do super-faxes, slow but very powerful machines capable of transmitting
accurate signatures, fingerprints and the like to anywhere in the world in a matter of minutes.
Of course, it need not trouble the bureaucrats that just one such machine sets back the taxpayers
an average of US $25,000. After all, no expense need be spared when pursuing that most evil
criminal of them all, the money launderer. Undoubtedly one day soon Big Brother will obtain
his dream, the ability to monitor the financial affairs of every person on planet Earth, obtaining
detailed information about each and every financial transaction as it actually happens.
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individuals will freely change hands, even if those concerned have not been charged with any
crime. Finally, authorities in different countries will step up their activities to help foreign
powers collect taxes. This includes the ability to seize property in a foreign country, even if
there is no dispute in existence with the foreign power in which the property is located.
Even more alarming is the fact that the treaty does not recognize the difference between tax
evasion, an illegal practice, and tax avoidance, the use of legal means to reduce your tax burden.
In this context, simply investing in a foreign country where your hard-earned dough will receive
a tax break could make you the subject of an unwelcome investigation. The only predictable
outcome of such all-encompassing legislation is that the world community will soon be poised
to imitate US-style witch hunts and fishing expeditions, only on an international scale.
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What exactly has the organization accomplished to date? Well, at frequent intervals various
"experts" meet to discuss international "problems" in various locations around the world,
although Paris seems to be a perennial favorite. Not much else seems to have come from the
organization, in spite of the fact that when it was first established every member state loudly
endorsed a proposed blueprint of legislation, consisting of some 40 provisions in all. At the
time, it was said that this legislation would deal a lethal blow to money laundering around the
world. To date, not even one country belonging to this organization has gone ahead and
enacted all of the provisions contained in the blueprint.
In short, FATF like many other bureaucratic creations has served as the meal ticket for a few
lucky individuals, allowing them to enjoy lives of leisure at government expense. It points at
that secret goal lurking in the hearts of all bureaucrats, their unspoken desire to go on a
permanent vacation at taxpayer expense. No one can bungle things quite as well as a
bureaucrat can.
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Chapter 8
COMPUTERS AND YOUR PRIVACY
It can reasonably be argued that no recent development has changed our existence as much as
the computer has in the last thirty years. The computer is to modem times what the printing
press was to the Middle Ages. It is difficult to find even one area of life that has not been
transformed in some way. Everything from large corporations to security and surveillance
agencies to grocery stores have drastically changed the manner in which they operate thanks
to computers. Even forms of popular entertainment, through concepts such as computer games
or computer dating services, have been affected. Furthermore, as the technology continues to
develop, new and more complex uses are routinely introduced. Artificial intelligence, once
only possible in the imagination of science fiction writers, is now an increasing reality.
I bought my first personal computer a little more than ten years ago. It was a Commodore
Vic-20, called such because it contained a whopping two and a half kilobytes of memory. For
a monitor, the machine made use of a regular television set. Options included a very large and
bulky disk drive or a cassette drive that made use of regular music cassettes. Today, for the
same price that I paid for this entire package, you could purchase a laptop with four megabytes
of memory, a 120 megabyte hard disk and built in floppy disk drive. I often see the
Commodore Vic-20 for sale in second hand shops for less than five dollars. As anyone who
has ever bought a computer understands, you are basically assured that whatever you select
will be more or less obsolete by the time you take it out of the box.
This amazing level of progress means that increasingly large amounts of data can be stored
in relatively small places and retrieved with almost unbelievable ease. Whereas in the days of
old, information was collected on bits of paper and then filed away to be all but forgotten,
today such information easily remains at the fingertips of computer operators throughout the
world. No longer are enormous amounts of manpower needed to shift through box after box
of paper in search of the few records pertaining to you. Today, almost anyone anywhere in the
world can compile a rather intricate picture of you by typing a few magic digits into his trusty
computer. This is very bad news for those even remotely concerned with privacy.
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market for themselves by organizing and sorting out such details as the type of shampoo you
use or how often you visit the grocery store. In turn, they sell such profiles to marketing
companies who then deliver to your doorstep ever more persuasive junk mail. Bloc modeling,
as it is commonly referred to, is here to stay. The economics behind it are simply too powerful
ever to allow us to return to more simple times.
Companies, such as Dataman Information Services and PRIZM, exist for no other reason
than to collect information about you and then pass it on to others. For example, when the
World Jewish Congress decided that a little more money would come in handy, it contacted
Dataman. By cross referencing the organization's mailing list of 100,000 names with its own
database, Dataman came up with some interesting figures. The World Jewish Organization was
then able to selectively target the known 250 multi-millionaires as well as the 2500
millionaires on its list. Those who turned out to be worth less than the million dollar cut-off
point were apparently saved from yet another sales pitch.
Almost any legitimate organization could make use of similar techniques, although even
the lone individual can gain access to a host of information concerning your private affairs.
CompuServe, an on-line service that provides access to the internet, also offers a program
known as Neighborhood Reports to its users. For a small fee, anyone can obtain a detailed
demographic report for any zip code in the US. Another service known as Phone File
provides users with the name, home address, telephone number and length of stay for any of
a total of 80 million households. Naturally, once in possession of your zip code, anyone could
cross index this information with the profile available through Neighborhood Reports. Again,
this information is all available to anyone equipped with a basic computer, modem and
telephone line.
Ever more detailed manners in which to monitor your lifestyle are constantly being created.
California Pacific Gas & Electric has recently started experimenting with a program through
which certain household appliances are connected individually to their power supply. This
allows the power company to gather information concerning not only how much power each
of its customers uses, but also how much power for which appliances. In other words, this
company knows everything about its clients from how often they watch television to how
frequently they turn on an eggbeater. They are also able to tum off certain appliances if and
when they choose to do so. Even those who work for this company admit that this program is
at least a bit like Big Brother. One cannot help but wonder if a private company really should
be allowed to intrude to such an extent into the lives of its customers.
Of course, for the most part you can still control t.o some extent this flow of data that is
constantly being created on and about you. Almost all of the information in private databases
is supplied directly, although perhaps unknowingly, by those being monitored. If you don't
want to be in anyone's computer system, don't give them any information to go on. Purchases
made with cash are still transparent, meaning that although convenient, credit cards and debit
cards are to be avoided. Similarly, think twice before filling out detailed questionnaires. Such
surveys come in many shapes and sizes, but they all lead back to one thing, more information
about you in the hands of others. Often companies try to hide their market research in the form
of a warranty card, free subscription offer or something of the sort. Don't fall for it, when
registering a new purchase simply send in the card with the bare essentials; any extraneous
questions can be answered with a simple n/a.
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What You're Up Against
Also, when a store offers you a discount or invites you to become a preferred shopper,
realize that they are out to gather yet more detailed personal information from you. Many
stores try to put you on their mailing list, but then go on to ask a host of irrelevant questions,
such as your telephone number, income or age. Ask yourself if the ten per cent discount on
offer really is worth the accompanying invasion of your privacy. Better still, take the discount,
but join using a false name and providing bogus information. As explained in greater detail
later in this report, you can easily receive mail at an address different than the one you live at
in a name different from your own. By creating this alternate identity, you ensure that your real
self is kept free from such needless snooping and invasion.
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What You're Up Against
you is without a doubt your government. Most governments even go to the trouble of making
you more digestible for the computers of the world by assigning you a permanent number, a
number far more important than any name you could possibly choose. Your taxpayer
identification number is the code that ties all of the various records about you together into a
cohesive whole. Not using this number or giving a false number is usually an offense in itself.
In the US, for example, it is now a major crime, as in a felony not just a misdemeanor, to
"accidentally" use the wrong number, transpose figures or otherwise attempt to defeat the
system.
Countries that do not have such a system are contemplating it. Recently Spain and Australia
adopted a policy that forces everyone to obtain a fiscal identification number. In Spain, even
tourists who want a telephone, electric service or a local bank account must first be turned into
fodder for the computers. In the US, every American must have a social security number. It
has in effect evolved into a de facto national identification number. Even children, at least
those over one year of age, must be assigned this magic number in order to qualify as a tax
deduction for mommy and daddy. Some parents are actually requested to arrange for their
child's social security number before the child is born. Similarly, all passport applications must
now be submitted with the appropriate social security number. This ensures that the IRS can
then make certain that all dues, in the form of taxes, have been paid in full before a
membership card, your passport, is issued.
One is increasingly asked to provide this national identification number in most western
countries for a number of unrelated matters. Even private companies now often use this
number to transform you into computer code for their private databases. Before opening a bank
account, you guessed it, the computers want to know who you are. Similarly, a large amount
of financial transactions, particularly those involving cash, require that you be properly
identified. Even something as simple as signing up for a night class often requires that you
hand over this magic number. The fact that society is slowly reducing each of us to a nine or
ten digit number means that with increasing ease anyone can tap into the various computer
records kept on you. In many countries, the national identification number of each citizen is
more or less public information.
This means that the abundance of information filed under this number, that in private as
well as government databases, is available to any member of the public with the right
connections. Even if a certain file is not legally available, it is often either outright stolen or
illegally sold to individuals that technically have no right to gain access to it. Nonetheless,
even the amount of information freely and legally available is immense. In the US, a company
known as Intelligence Inc offers to compile detailed information on any individual for a small
fee. This information includes everything from social security number, last known address and
telephone number to more detailed tidbits ranging from employment, bankruptcy, criminal
convictions and the like. Indeed, it seems that for the appropriate fee this company will unearth
just about any record kept on just about any individual. In case you had any doubt, there is no
such thing as either personal or financial privacy in most western countries today.
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files contained in the database of one government department, that of the national health system
for example, is accessed by another department, such as the tax department. In addition, with
increasing frequency various government databases that were created independently for
entirely separate purposes are merged into one larger database. In many countries, Big Brother
is rapidly approaching one of his primary goals, that of cross referencing every bit of
information that he holds on you. In other words, it is only a matter of time before all of the
information gathered about your personal affairs becomes readily available to any and every
inquisitive bureaucrat at any and every government computer console.
Such measures to document your every move have long been under way in the US. For
more than twenty years, the government has been exploring ways in which it can pool together
the various bits of information it has collected. For example, in 1977 a program known as
Project Match was born. The program sought to cross reference the personnel files of federal
employees with those of welfare recipients, supposedly in an attempt to ferret out those who
were illegitimately receiving state benefits. However, it is far more likely that this program
was brought about so that Big Brother could justify spending ever greater amounts on his
emerging computer systems. Grumbling from the public about the exorbitant cost of
maintaining the multitude of databases that had recently been created was quickly put to rest
when Big Brother could at least partially justify the expense.
The most amazing feature about this program is that it was ever allowed to proceed in the
first place. Under the Privacy Act of 1974, such an exchange of information was clearly illegal
as it violated no less than three separate provisions set forth in the act. Yet again we see an
example of how issues of legality seldom matter a great deal to governments. As explained in
a previous chapter, the Privacy Act has since been largely dismantled, meaning that the
government need no longer worry about breaking laws to achieve its directives. By 1982, the
government had granted itself almost unlimited power to gather and cross reference
information on each and every one of its subjects. Just two years later, in 1984, the government
matched more than 2 billion records contained in more than 110 databases.
Still not content, Big Brother decided to expand his perspective even further and began to
buy information from private databases. Hence the favorite government tactic of comparing
your reported income against your lifestyle moved to cyberspace. The IRS now holds a single
master file on every American taxpayer. Information contained in these computer profiles
comes not only from government databases, but also from banks, insurance companies, direct
marketing companies and a host of other private data agencies. Computer matching has
become commonplace. One such routine cross references birthday party lists from ice cream
parlors with lists from the Selective Service Administration. Any eighteen year old who
appears on the first list, but not the latter quickly receives an unwelcome visit from one of Big
Brother's emissaries.
EXCHANGING INFORMATION
In addition, the federal government has been actively encouraging state and local governments
to follow its lead. Today it is common for states to exchange tax information with both the IRS
as well as one another. It seems that there really is no end to the amount of information that
Big Brother would like to collect about your private affairs. In Oklahoma, residents are now
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What You're Up Against
required to disclose much of what they own, such as guns, coins, art, business equipment and
the like, to state tax collectors. This information is then made more or less freely available to
both other states as well as the federal government. In other words, just about any bureaucrat
in the US can now easily gain access to a detailed account of the possessions of every citizen
of Oklahoma. Undoubtedly claiming many of these possessions as its own one day is what Big
Brother had in mind when he created such a senseless law in the first place.
Of course, invading your privacy by means of the computer database is by no means limited
to the US. Many other countries have adopted similar policies. Even in computer phobic
Britain, both the Department of Health (DoH) and the Department of Social Security (DSS) are
planning to produce online databases that will contain information on every man, woman and
child in the country. Neither department seems intimidated by the fact that each system will
cost the taxpayer an estimated £200 million, although cost is of course not the only concern of
those interested in privacy. Once captured in silicon, a vast amount of personal information will
become widely available to almost anyone. The DoH system will network all hospitals and
health authorities, meaning that sensitive medical records for millions of individuals will then
be accessible through a terminal anywhere on the network. Similarly, the DSS system will more
or less allow any well connected member of the public access to the name, age, sex, marital
status, income and complete work record of every person in the country.
Other countries, such as New Zealand, also aim to network health service data nationally.
Indeed, more than a third of New Zealand's hospitals are already linked with the national
network. Although these countries claim that strict legislation will protect the privacy of those
on the system, once personal information has made its way on to a computer database there is
nothing that can be done to guarantee that it will not slip into the wrong hands. In fact, the
proposed British systems provide for very few safeguards against this invasion of privacy. On
the DoH system, for example, passing data between doctors and hospitals will not be
encrypted. Furthermore, copyright law does not prevent such information from being used by
other government departments. In fact, unless the system is altered, the National Health
Service will be able to license the information carried in its database to anyone who wants it.
BEWARE OF FINCEN
Increasingly, computers are used to not only collect data about you, but more importantly to
analyze it with the hope that you will be caught doing something that has recently been
reclassified as illegal behavior. The only reason that any information about your private affairs
has been collected in the first place is for this express purpose of creating a new class of
criminals. New government police forces have been created to track down and bankrupt these
individuals who have done nothing more than invest their own money according to their own
best interests. In the US, this quasi-secretive sleuthing operation is known as FINCEN, which
stands for the Financial Crimes Enforcement Network. In the eyes of FINCEN, if you have
money you are automatically guilty until proven innocent.
Since its launch in April of 1990 with a low key champagne reception at the US Treasury
Department, FINCEN has become the most effective financial investigation unit in the world.
It is a state of the art computer snooping agency and is so effective that when Russian president
Boris Yeltsin needed to locate stolen communist party funds, he asked FINCEN for help.
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FINCEN was established by top IRS agent Brian Bruh a few years before his retirement in
October of 1993. In 1991, FINCEN wrote classified reports on 6000 individuals. In 1992, this
number had climbed to 12,000 and by 1993 it had escalated further to a total of 20,000
individuals.
To date, the agency can boast more than 40,000 confidential snoops as well as 715 long
term investigations known as Strategic Analytical Reports. These reports invaded the privacy
of more than 16,000 other individuals and entities. Few concerned ever knew that their
financial affairs were being investigated by a branch of the US Treasury Department that
maintains ties with both the Pentagon and the CIA. The CIA? Yes, Brian Bruh refuses to
discuss his agency's association with the CIA, but he does not deny that there is one. His own
background includes time at the Pentagon in addition to his many years with the IRS.
When facing the public, Brian Bruh claims that FINCEN is all about mapping the digital
trails of dirty money. He lists examples of how the agency has unearthed profits from drug
sales, stolen Savings and Loans money, hidden political slush funds or the financing conduits
of terrorists. He does not mention that in reality what FINCEN does is far simpler. It involves
all of us, not just terrorists, drug dealers and crooked politicians. It systematically collates and
analyzes public databases on a day to day basis. It is the only US federal unit devoted solely
to this kind of work. The reason it is so secretive about its operations is that if the public knew
what FINCEN was up to, the public wouldn't stand for it. FINCEN breaches civil liberties on
a day to day basis. In the eyes of Brian Bruh and FINCEN you need to break a few eggs to
make an omelette, invading privacy and peeking into the personal affairs of each and every one
of us is necessary to catch criminals, so the excuse goes.
A list of the 40,000 or so "criminals" that FINCEN has netted, shows that less than ten per
cent of them are bad guys in the moral sense of the word. The vast majority, or some 35,000
people, were merely trying to keep a bit of their own money away from the grabbing hands of
the taxman. They didn't succeed. Many more are undoubtedly soon to follow. If you ever find
yourself the target of a FINCEN investigation, your chances of outwitting the agency are
almost nonexistent. To begin with, you will not even be aware of the increased attention
pointed in your direction. Furthermore, you will also be pitted against the following forces:
II The Internal Revenue Service (IRS)
II The Federal Bureau of Investigation (FBI)
II The Drug Enforcement Agency (DEA)
II The Central Intelligence Agency (CIA)
II The State Department's Bureau of Intelligence and Research (INR)
II The Secret Service
III Customs Agents
II Postal Inspectors
Each of these government agencies is pooled together by FINCEN, which acts as coordinator
for the attack on your privacy. According to senior intelligence officers, these investigative
units can access the resources of the CIA, the Defence Intelligence Agency and the National
Security Agency. The latter is important, as the National Security Agency routinely intercepts
all data on electronic currency movements into and out of the country. This data then makes
its way to FINCEN.
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What You're Up Against
The implications of having this massive amount of data at the disposal of one government
agency is staggering. Peter Djinis is the director of the Treasury Department's Office of
Financial Enforcement and one of the few Treasury officials close to FINCEN's activities.
Testifying before Congress about FINCEN, he said, "It's the first ever government wide,
multi-source intelligence and analytical network brought together under one roof to combat
financial crimes." In his view if you help your neighbor repair the leak on his roof and then let
him do you a favor in return without declaring the value of this transaction as income, you have
committed a financial crime.
As would be expected, bureaucrats love FINCEN. A senior official in the General
Accounting Office (GAO) claims that it is absolutely necessary. His audit of the agency
avoided the host of emerging concerns about privacy, civil rights and the appropriate role of
the CIA and other spies spying on their own citizens. FINCEN will not reveal how it works or
what it is capable of doing. The few examples that have surfaced have all been very routine
run-of-the-mill jobs that utilize only a fraction of FINCEN's computer power. One concerns a
so-called money launderer called John and was reported by Anthony L Kimery, covering
financial industry regulatory affairs as an editor at American Banker Newsletters. Here, with
the kind permission of the publishers, is his report verbatim.
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The analyst narrowed his quest by searching for CTRs filed for transactions deemed
suspicious. Financial institutions must still file a CTR, or IRS Form 4789, if a transaction
under US $10,000 is considered suspicious under the terms of an extensive federal government
list. There was a hit. A series of "suspicious" CTRs existed in the restaurant's zip code.
Punching up images of the identified CTRs on his terminal, the FINCEN analyst noted that the
transactions were made by a person whose first name was John. The CTRs were suspicious all
right. They were submitted for a series of transactions each in the amount of US $9500, just
below the CTR threshold of US $10,000. This was hard evidence that John structured the
deposits to avoid filing a Form 4789, and that is a federal crime.
Selecting one of the CTRs for an expanded review, the analyst got John's full name, social
security number, date of birth, home address, drivers' license number and other statistics,
including bank account numbers. Plunging back into the IRS database, the analyst broadened
his search for all CTRs filed on behalf of the suspect, including non-suspicious CTRs. Only 20
reports deemed suspicious popped up on the screen, but more than 150 CTRs were filed in all.
A review of the non-suspicious ones revealed that on several, John listed his occupation as the
owner or manager of the restaurant identified by the telephone number on the slip of paper
taken from the arrested criminal. The connection between the name and the phone number
originally given to FINCEN was secured.
The FINCEN analyst then tapped commercial and government databases and turned up
business information on the restaurant showing that John had reported an expected revenue for
his eatery of substantially less than the money he had been depositing, as indicated by the
CTRs. Fishing in a database of local tax assessment records, the analyst discovered that John
owned other properties and businesses. With the names of these other companies, the analyst
went back into the CTR database and found that suspicious transaction reports were filed on
several of them as well.
As routine as such assignments as this case may be, the chumminess between FINCEN and
the intelligence community raises serious questions about the privacy and security of the
financial records of citizens John and Jane Doe, considering the intelligence community's
historic penchant for illegal spying on non-criminals. Given the ease with which the
government can now tap into an individual's or business's financial records on a whim, these
questions have received far too little scrutiny.
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institutions under various acts that have been instituted over the last 26 years. In case you're
worried, here's the partial list:
II Currency Transaction Reports (CTRs)
II Suspicious Transaction Reports
II International Transportation of Currency or Monetary Instruments Reports
II Foreign Bank and Financial Accounts Reports
Operation Gateway is soon to be expanded so that it can allow for direct access. In other
words, every local trooper or sheriff's hoodlum will be able to tap into this database. From the
massive FDB, state governments can download hardcopies of documents principally
containing information on deposits, withdrawals and the movement of large sums of currency.
All Americans are in the base as well as a large number of foreigners. The FDB has nothing to
do whatsoever with the war on drugs or catching criminals. Beware Operation Gateway. It is
Big Brother's electronic eye that watches you and keeps tabs on every move you make.
FINCEN state coordinators will handle the log-ons. They think they're the only ones smart
enough to surf the electronic waves. In their eyes, the 50,000 federal agents and 500,000 police
officers would otherwise wreck the sensitive circuits. Under Gateway, results from all queries
are written into a master audit file that is automatically compared against other requests and
databases to track whether the subject of the inquiry is of interest to another agency or has
popped up in a record somewhere else. If you think this is bad, hold your horses. Your worst
1984 nightmares have only just begun.
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DTS, even the very conservative American Bankers Association (ABA) stated outright:
"We doubt whether there are privacy safeguards that would be adequate to effectively protect
this database from use by government agencies and, eventually, private parties. It is
inconceivable to the ABA that such a database could be used only by the FDIC in deposit
insurance coverage functions. Such a database would provide a wealth of information for
investigations being conducted by the FBI, the Drug Enforcement Administration and the IRS,
to name but a few. Like the baseball diamond in Field of Dreams, build this database and they
will come. Eventually, whether legally or illegally, they will gain access to this database."
The government argues that such a system is necessary, claiming that the FDIC needs this
database. The Federal Deposit Insurance Corporation Improvement Act of 1991 says so. The
government also claims that the DTS database will only be used by the FDIC.
Funnily enough, the FDIC doesn't even want this database. In a 234-page draft report it
submitted to Congress in June 1993, the FDIC argued forcefully against the Deposit Tracking
System. So why is the government still committed? An open secret making the rounds in
intelligence circles is that both the CIA and the top of the IRS are clamoring for the system,
blatantly disregarding privacy issues and matters of civil liberties. Not to even mention the
price tag, which includes the hefty US $12.5 big ones to get the ball rolling as well as an
estimated US $20 million a year for facilities, salaries, benefits and routine hardware and
software maintenance.
The CIA desperately wants this Deposit Tracking System as it will boost the much-hyped
role of economic intelligence gathering. The spooks think that DTS is a boon to their ability
to monitor foreign financial dealings. The IRS, of course, also wants the Deposit Tracking
System as everyone of the 388 million American bank accounts will then be open to detailed
scrutiny at the touch of a button on a remote computer keyboard. Big Brother wants to look
into your bank account, from any IRS office, any time it pleases. Can anything be more
frightening? You may be forgiven for thinking no, but think again. Enter, the real-time
financial Robocop.
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other companies. Such action is necessary, the government argues, so that it can have "nearly
instant time-tracking capability". Hooked into the Deposit Tracking System, the FINCEN
system will be able to identify financial movements the minute they are carried out. If
something looks suspicious the government computer will automatically alert the computers
of the receiving bank, thus red-flagging and halting the payment before the customer even
knows that the transfer has arrived.
FINCEN has a hush-hush US $2.4 million contract with the US Department of Energy's
Los Alamos National Laboratory to develop what can best be described as a powerful "money
flow model", a piece of software that will use artificial intelligence to look for unexplained,
atypical trends and money flows and then single them out for further examination by humans
assigned to monitor the system. The almost US $2.5 million spent at Los Alamos will be
recouped when FINCEN leases its software to other countries. According to Bruce Hemmings,
a former CIA operative whose specialty was financial investigations, the OECD in Paris has a
list of nations eager to get their hands on this snoop-technology. Of course, once the
government, any government, is cornered and has to face questions about the ethics of what it
is up to, it will always turns to the old line about catching drug barons and money launderers.
You know better.
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that you match this profile, you will be detained. Any cash or other valuables that you are
carrying will then be seized as yet another successful conquest in the war on drugs. In other
words, on the basis of a few questions that you answer casually while entering or leaving the
country, you risk being forced to forfeit a portion of your assets.
What is the computer on the lookout for? Although the exact nature of the profile is secret,
a few guidelines have been revealed. Border bureaucrats will apparently take a special interest
in anyone who pays for his airline ticket with cash, travels under a name different than that of
his listed telephone, is traveling to or from any "known illicit drug center" or "money
laundering center", appears nervous or does not check any luggage. Of course, all of the above
activity is perfectly legal, but will still lead to unwanted questioning and the likely seizure of
any valuables, particularly cash, that you are carrying. Moral of story: as you know what the
bureaucrats or on the lookout for, go out of your way to not fit this description. Cross
international borders as all good PTs do, in the guise of nothing more than an eager tourist, a
tourist far too stupid to be taken seriously.
Nonetheless, even this method of crossing borders uninhibited may one day be brought to
an end. Governments are constantly in search of methods that will enable them to keep better
records of your actual movements. Recently, all member states of the EU issued similar
machine readable passports. Not only are these passports almost identical to one another, they
are also almost identical to the type of passport that US authorities have been issuing for nearly
ten years. Rather than typing your name or identification number into a computer, a bureaucrat
need only pass your passport under a laser scanner, much like those used in supermarkets.
Presto, up comes a host of information about you. The whole process makes one wonder how
long it will be before Big Brother starts tattooing bar codes on the back of everyone's head, a
possibility that may not be as farfetched as it first appears.
In fact, researchers at a university in Salt Lake City, Utah have been experimenting with a
better method of ensuring proper identification. By injecting microchips into primates, they
have shown that the animals can then be identified when an electronic scanner is passed over
them. Such a technology could have alarming consequences for the future. Big Brother would
be only too willing to misuse this technology so that he could monitor each and everyone of
us more closely. Although such a blatant invasion of our basic rights is, understandably, many
years away, it is not impossible to imagine. Big Brother could first introduce this technology
in prisons, claiming that it is necessary to track the whereabouts of criminals. Then, he could
ask parents to voluntarily bring in their children to be implanted with microchips, claiming
that then if the child were ever kidnapped, he or she could easily be found. Before long, all of
the population will have been reduced to the exalted status of yet more bits of information for
the computers.
Although this highly regulated society will in all likelihood never be realized in our
lifetimes, it does underline the basic point of this chapter. Computers have not been kind to the
concepts of personal and financial privacy. They have allowed governments to monitor both
your activities and your actual movements with a level of scrutiny simply not possible before.
The only saving grace of these inventions is that, ironically, they are also responsible for the
recent boom in offshore banking. Banking in relatively remote locations was made possible by
the electronic revolution in fund transfer mechanisms. Today, it is possible to keep a careful
eye on your finances from the comfort of your armchair, even when your funds are stashed
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safely halfway around the world, which brings us to our next step in your quest for silent
banking. Now that you understand exactly what you are up against, it is time to start
considering some possible solutions. It is time to enter the world of offshore banking.
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Part III
Opening Your
Offshore Account
Opening Your Offshore Account
Chapter 9
THE MANY ADVANTAGES
OF OFFSHORE BANKING
The best first step to take in your quest for financial privacy is to move at least some of your
dough away from the prying hands of Big Brother. In the modem world, this does not mean
burying a box of gold coins in your back yard and then making sure that your hiding place
remains a secret known only to you. Instead, your path to financial freedom involves making
use of one or more offshore banking facilities. (Although not telling anyone where you have
stashed your hard earned cash is still good advice, even in the days of cyberspace banking.)
What exactly is an offshore banking facility? Quite simply, it is any banking institution located
outside of your home country.
The process of opening an offshore bank account need not sound daunting or intimidating.
It is often just as simple, if not easier, than opening a bank account in your home country. If
you think that the offshore option is only viable for those of incredible wealth who live a jet-
set international lifestyle, think again. Ordinary individuals from countries around the planet
have discovered the many advantages of offshore banking. Even if you only have a couple of
thousand to squirrel away, why not start up your international portfolio today? Once your
money is liberated from your home soil, it will be free to grow offshore, unrestricted by the
many restraints forced on you by your home government.
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of revenue for the government piggy bank, but more importantly ensures prestige and
promotions for those responsible.
At the same time, those bureaucrats not interested in making the big catch tend to focus on
the targets who are easiest to catch. In other words, if you follow the basic PT principle of low
profile in combination with a level of banking privacy, you can keep your financial affairs your
own business even in our modem over-regulated world. The solution is simple. If you, the
ordinary law-abiding citizen, make it difficult or inconvenient for your government to closely
scrutinize your financial affairs, it will in all likelihood move on to an easier target. Tucking at
least some of your money away safely in a distant but stable banking haven is an excellent first
step in this direction.
Finally, remember that although the US has met with a great deal of success in prying the
lid off of banking secrecy in tax havens around the world, it has also met with a great deal of
resistance. The war is not lost yet. Countries that offer banking secrecy as a product understand
that they cannot appear to be too weak in the face of US threats and demands. It is in their best
interest to protect your banking privacy, for if they fail in this regard much of their business
and industry will quickly evaporate. Furthermore, if you increase the level of protection on
offer in such banking havens by employing many of the techniques explained in this report,
you can almost guarantee that your banking records will achieve a level of privacy considered
by many to be all but lost in the modern world.
GREATER PROFITABILITY
Many who venture into the world of offshore banking do so originally to achieve a level of
banking privacy. However, the benefits available go much further. Freedom from government
interference means not only that Big Brother is no longer allowed to snoop into your affairs;
it is also means that market forces are left to work of their own accord. In this way, a level of
efficiency is achieved that is simply not possible once government snoops enter the scene. The
myriad of legislation introduced in many countries does not only bring about extra hassles for
you and your banker, it also deals a death blow to banks, rendering them far less profitable than
they would be if left alone.
Just consider the cost that banks tally up when meeting all of these regulatory requirements.
It is currently estimated that in the US, somewhere between 10 and 20 per cent of bank
earnings are now used to pay for regulatory compliance. This results in a staggering overall
loss of US $100 billion per year for the US banking community. Of course, it is not the banks
that are forced to pay this exorbitant bill. As any business would, your local bank does not
hesitate to pass on such costs to you, whether it be in the form of increased fees or reduced
interest rates. In the end, it is you that loses money by banking exclusively with the local bank
around the comer.
To make matters worse, government interference does not stop there and goes on to cost
you a whole lot more. The Federal Reserve System further restricts banking activities,
demanding that banks hold back a certain amount of their funds. Who hangs on to these funds
for safekeeping? You guessed it, Big Brother does. Does he pay any interest on these deposits
that he ties up and renders useless? Of course not. On the other hand, offshore banks need not
comply with these restrictions and can therefore make use of a larger percentage of their
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holdings. With a larger amount of their capital invested, offshore banks can in turn pass on
greater profits to you.
Furthermore, there are a host of other minor but costly regulatory constraints that affect
banks in highly regulated jurisdictions. Offshore banks operate free from all such restrictions.
They are not required to lend money to certain borrowers at below-market rates. They are not
obligated to purchase certain types of debts or securities, such as government debt. They are
not affected by credit ceilings that prohibit their onshore competitors from going after certain
types of profitable business. There are no limits on the rates at which they can borrow and lend
money, meaning that the bank itself is free to decide the interest rates that it can offer on your
deposits.
GREATER FLEXIBILITY
This lack of restrictions also means that offshore banks enjoy a degree of flexibility that is the
envy of their onshore competitors. For example, the Glass-Steagall Act prohibits banks located
in the US from dealing in the securities and brokerage business and from offering investment
counsel. Instead, you have to make use of a second financial adviser or stock broker and pay
the resulting multiple fees even though your bank only serves as a part-time depository for
your funds. Conversely, banking havens such as Switzerland and the Bahamas have universal
banking laws which allow banks to engage in many types of investment activity, such as
investment management, trust management or precious metals brokering.
By making use of one of these banks you are able to develop a rapport with just one
individual who can oversee the bulk of your financial affairs. You are no longer required to use
banks as a place merely to stash your dough, paying their hefty fees for the privilege and then
duplicating these fees by paying your stockbroker or portfolio manager yet again. Offshore
banks can offer a multitude of investment services, including mutual funds, precious metal
funds, currency funds, foreign government bonds, managed accounts and the like. Ironically,
to receive such services from an American bank, you will have to conduct your business with
it outside of the US itself. Apparently, even Uncle Sam realizes the sense in such practices but
for some reason wants to keep his populace happily unaware of such possibilities.
Furthermore, your bank is free to invest your money in a far more varied portfolio and thus
ensure you a proper return. Many domestic banks are restricted from investing in certain areas,
such as real estate or commodities. Many onshore banks are also limited as to the amount of
time that your money must spend in certain types of investment. Your portfolio manager is not
allowed to move funds about quickly, reaping the rewards of his investment savvy. By moving
offshore, you can select jurisdictions free from such senseless regulations and ensure that your
money is able to achieve its full potential in the hands of a skilled investor. In fact, it is for
these reasons that many domestic banks establish an offshore facility. Otherwise they would
simply never be able to achieve even a fraction of the possible profits available.
Finally, offshore banks are free to engage in types of business that their more conservative
onshore counterparts would shy away from. They can offer loans rejected as too risky by
mainstream bankers, such as financing for new businesses or those dealing in unexplored new
areas of opportunity. They can also provide insurance services to clients, again covering such
"risky" areas of investment. For example, in the area of malpractice insurance, premiums have
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Finally, by banking offshore, not only will you receive higher interest payments, you will
also receive it for a longer time if you make use of the time-honored tradition known as the
"float". In short, if your bank is located in some distant locale rather than around the comer, it
will take much longer for your checks to travel from where you write them to the bank, a
process which can take up to 30 or 40 days. During this time, you will continue to receive
interest on the money that sits in your account. When dealing with large amounts of money, or
a string of small payments over time, this added little bonus can add up to tremendous savings.
Of course, as will be explained in greater detail later in this report, you should be extremely
careful when making payments from your account to not disclose its whereabouts to any
person or organization that may be anxious to get their hands on your money.
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in need of favorable relations with foreign banking entities. In short, this means that the
government has no choice but to smile favorably on any loan that you arrange with an offshore
bank. If instead of arranging the loan directly with an affiliate, you filter it through an offshore
bank, you can conduct everything with the grace and smiles of your local politician. At the same
time you can get on with the business of looking after what are clearly your own best interests.
By stashing at least some of your money in a secure offshore banking environment, you no
longer need be subjected to such senseless and prohibitive government restrictions. Political
upheavals and their subsequent currency fluctuations also need no longer affect you. If you
have reason to fear the implementation of currency restrictions or, worse still, the outright theft
of your cash for government purposes, offshore banking can grant you a level of protection
simply not possible onshore. By banking offshore, you can see to it that your funds are held in
several secure currencies in various spots around the globe, insuring your financial well being
even if the most unpredictable of future consequences should arise.
INCREASED OPPORTUNITY
Furthermore, by investing money in an offshore banking center, you are granted access to
markets and investments previously unavailable. The enormous diversity of the amount and
types of investments on offer is nothing short of staggering. Many Americans, conditioned by
their government in the belief that civilization stops at US borders, fail to see the tremendous
potential. At present there are more than 70 US based international funds and more than 500
such funds based offshore. There is also an abundance of global funds which specialize in
foreign bonds, currencies or other types of securities.
It is only by banking offshore that you can gain access to the booming Eurodollar market.
This trading market exists mainly in unregulated cyberspace and has enjoyed tremendous
growth over the last two decades. Even according to US government statistics, the Eurodollar
market grows at a rate of 27 per cent a year and plays a role in the international economy that
"cannot be underestimated". What exactly is a Eurodollar? Put simply, it is a dollar on deposit
outside of the US. As these dollars were traditionally located in London and other parts of
Europe, the term Eurodollar was born. Today, due to excessive taxation on profits, these
deposits have moved to other banking havens, such as the Bahamas or the Cayman Islands.
Still, the term Eurodollar persists.
The attraction to this market is again, higher interest rates. Deposits have a fixed maturity
and are always paid interest. Tranche CDs are the most common manner of tapping into the
market. They operate like bonds and often come in bearer form, meaning that they also offer
a completely anonymous way of investing your money. Interest rates far outperform onshore
equivalents, often reaching up to 15 per cent. Tranche CDs commonly come in denominations
of US $5000 or US $10,000 and enjoy a large secondary market which increases their liquidity.
You will frequently find them advertised in international finance publications. As with any
investment, research the market fully before taking the plunge, but most of all remember that
there is a world of opportunity out there for those willing to venture out.
The fact of the matter is that the US is now a mature economy. For the investor willing to
take a gamble, true potential in the international market lies off the heavily beaten path.
Recently, the Taiwan Fund outperformed all other international funds on the market by
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returning a whopping 228.2 per cent. Or consider the stock market of South Korea. While
much of the rest of the world rocked and swayed on that fateful day of the late eighties now
known as Black Monday, the Korean market did not even register a ripple. Instead, it went on
shortly after to achieve new record highs. Or you may want to consider investment
opportunities in the Pacific Rim where corporate profits are rising steadily and GNP gains in
the area of six per cent are commonplace.
My point is not to give specific investment advice as much as to underline the tremendous
potential if you make a move to the international. Your first step in this direction is to open an
offshore bank account. Maybe later you'll want to open a business offshore or go all of the way
and become a PT. Anyone who thinks that the best market to tap is the American market has
missed the boat. The international market is huge and has tremendous purchasing power. The
fact of the matter is that more than 95 per cent of the people on this planet live outside of the
US and that this population is growing 70 per cent faster than that of the US. As the world
population continues to grow to reach truly astronomical numbers, it is those who have set up
international investments spanning the globe who will reap the rewards. For more information
on the international investment arena and the range of profitable opportunities on offer, consult
a copy of Adam Starchild's The Wealth Report available from Scope International.
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more impressive when one considers that although the bulk of the profits enjoyed by these
companies come from offshore, the bulk of their expenses and staffing requirements do not.
Today, the offshore banking industry has developed to the point that just about every
successful corporation in the world is somehow involved. From ffiM to General Motors to
Merril Lynch, to Firestone Tire and Rubber Company to even some lesser known corporate
bodies such as Thrifty drug stores of Los Angeles, all have jumped into the offshore banking
industry. Following their example, many private investors have realized the tremendous
potential available in the offshore marketplace. The result has been the steady and growing
movement of capital from highly regulated jurisdictions to offshore banking centers.
The US in particular has suffered tremendously at the hands of its own senseless legislation.
Whereas in 1970, US equities accounted for more than two-thirds of the world's stock market,
currently slightly less than one-third of the world equity market remains on American soil. As
restrictive American legislation continued to grow, the amount of American money invested
offshore increased by 600 per cent between 1985 and 1990. Today, more than 70 per cent of
the world's stocks and 55 per cent of its fixed income are invested in overseas markets. This
is undoubtedly a trend that will continue as long as governments around the world fail to
understand that no amount of restrictions will ever convince investors to stop looking after
their own best interests.
THE DOWNSIDE
Of course, in spite of the tremendous potential available in the offshore marketplace, you
should approach any and all investments on offer with the same healthy skepticism that you
use when considering an onshore investment. Furthermore, the difficulties of investing in
places far from home mean that you have the added obligation of diligently doing your
homework before stepping into uncharted waters. These difficulties may also mean that you
should employ a slightly different approach when choosing your investments.
For example, you must expand your horizons so that you no longer consider everything on
the basis of one currency. If your portfolio rises in value while the currency it is held in
depreciates on the world market, you could still end up coming out with an overall loss.
Conversely, even if your portfolio does not in and of itself perform terribly well, you can still
make a killing if it is held in a strong currency that increases in value. The best of both worlds
is obviously a strong investment portfolio held in a rising currency. Many offshore banking
centers are very flexible in letting you choose which currency you would like your account to
be held in. By doing the appropriate research and obtaining at least a minimal understanding
of the world currency market, you can turn this feature into a very profitable advantage of
offshore banking. By leaving everything up to chance or merely staying with your home
currency out of habit, you could lose a bundle.
You should also try to invest offshore in a sensible manner so that you are not swamped
with exorbitant commissions. For the small investor this more often than not means taking
advantage of an offshore bank that can also offer investment advice and fund management
services. Investing directly from your home town in offshore markets quickly wipes out any
profits, never mind privacy, enjoyed by the regular investor. The problem is that your local
investment adviser is simply not positioned properly to take advantage of international
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opportunities. To place your order he must make use of an offshore investment adviser,
meaning that you in turn will be forced to pay multiple fees. Obviously, it is far more sensible
to avoid the hassle and invest directly overseas through an offshore bank that enjoys universal
banking laws.
Similarly, by investing directly through an offshore bank you can also overcome another
limitation of investing overseas, that of limited information. If your investments are located in
distant markets, it may not be all that simple for you to keep track of how well they are
performing. Furthermore, to maintain the privacy of your offshore account, you will not want
to engage in frequent correspondence with your bank. In an ideal world, you will only receive
information from your bank at your request, preferably when you are outside of your home
country. This means that you will have to come up with some other way of keeping track of
your investments. You can do this by placing your account in the care of a trusted professional.
Alternatively, if you would rather go it alone, you can keep your investments simple enough
so that you can monitor their progress through information available in a local national
business paper.
Moving some of your money into the international market also means that you should pay
more careful attention to international developments. If your home country decides to
introduce yet more restrictions on your ability to invest outside of its jurisdiction, you should
be prepared to respond accordingly, again with your own best interests in mind in spite of what
Big Brother may get up to. Similarly, you should stay abreast of the political situation in the
countries where you maintain accounts. Many investors have lost huge amounts of money
simply because they failed to notice the writing on the wall. It is never beyond the realm of
possibility that your newly chosen banking haven may decide to start imitating your home
country and, no longer content to simply hold your money, decide to start claiming some if not
all of your cash as its own.
Many of these possible problems can be circumvented simply by making the right decisions
from the start. You should strive to deal only with established professionals in banking havens
that have a proven track record. Much of the information in this report is dedicated to helping
you in this purpose. Nonetheless, let it be said from the start that just because you have
ventured into the international marketplace does not mean that you should leave your common
sense at home. Employ the same level of caution when considering an offshore investment that
you would when considering one located closer to home. Finally, remember the most basic rule
of investment advice, if it sounds too good to be true, it probably is.
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When it comes to minding your money, you could not imagine a more fiendish adversary
than your home government. It will always and consistently act with its own best interests at
heart. A little over twenty years ago, the Mexican government went so far as to nationalize all
of its banks and seize large amounts of funds on deposit. It was not the first to resort to such
measures and will undoubtedly be far from the last. What are the chances that Uncle Sam may
make use of similar means to extricate himself from the terrible mess he has gotten into? If
history be your guide, the chances are pretty good.
In the past, the US has not hesitated to freeze bank accounts and seize funds from those
unpopular or unable to respond. During World War II, Uncle Sam froze all German and then
subsequently all Swiss assets in the country. In 1956 during the Suez Crisis, all Egyptian
accounts were frozen by both the US and the English governments. More recently, in 1980
President Carter froze all Iranian assets. Accounts were frozen and assets seized regardless of
the individual involvement of those concerned. Even those who were publicly in favor of US
policy suffered. With such a track record, do you really think that you should pay heed to a
word that your government says about offshore banking? The reason that your government is
so adamantly against offshore banking is simply because it realizes that it no longer enjoys
supreme power over you once your money has been moved to a safe haven offshore.
Furthermore, although overly regulated countries around the planet try to prohibit their own
citizens from moving their money offshore, they simultaneously establish programs with the
direct intent of attracting funds from the nationals of other highly regulated jurisdictions. Even
the US has entered the game of offshore banking. Controlled by the International Banking Act
of 1978, offshore banks are allowed to establish branches in the US for the purpose of dealing
exclusively with nonresidents. Known as International Banking Facilities (IBFs), these
offshore banks go against the trend in offshore banking. Owing to excessive government
meddling they have met with only very limited international success. Apparently offshore
investors don't trust Uncle Sam and his myriad of regulations. Instead they instead have placed
their money in more friendly locales.
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legitimate and hefty profits. These honest businessmen more often than not produce a product
that is not only more profitable than your local bank, but also a safer place to stash your money.
The type of regulations that banking havens avoid are generally of the sort that would create
reporting requirements or limit the area of financial activity that banks can enter into. Beyond
that, banks are regulated in much the same manner as they are in developed countries around
the planet. For many tax havens, the bulk of their economy depends on their banking industry.
Just one bad apple is all that it would take to ruin a reputation of stability that has been built
up over decades, if not centuries. Carefully selecting a banking haven with a strong reputation
for stability behind it ensures that your money will be safe from all but the most unpredictable
of possible catastrophes. Diversification into several banking havens dotted around the planet
may be able to prevent even this.
Americans in particular are persistent in the delusion that only their own country can offer
an adequate level of banking security. The truth could not be further from this ridiculous
assertion. The US has had more bank failures than any other country in recent history. As
explained at the very beginning of this report, the Federal Deposit Insurance Commission
(FDIC) provides nothing more than a false sense of security. Although at one time the FDIC
may have offered real protection, today it is common for depositors to receive only 25 cents
on the dollar in the wake of a bank failure.
Furthermore, as banks know that they can always fall back on the government and rely on
it to bail them out of a bad situation, they do not employ optimum management techniques.
Not to mention the fact that FDIC "protection" comes with a price tag, requiring that US banks
fork over a certain percentage of each account to cover this so-called insurance. This in tum
means that US banks are rendered less profitable yet again. Offshore banks may not be able to
point to this flimsy protection, but they can instead underline their long history of stability.
Many Americans also fail to understand that American banks on average are fairly small
players when compared to their international competitors. Of the top 25 largest and strongest
banks in the world, only one, Citibank, is American.
Offshore banks realize that as they do not operate under the protection of a restrictive
government umbrella, they must reassure depositors through the manner in which they run the
shop. It is only their size and level of capitalization that shows both clients and potential clients
evidence of their overall stability. Offshore banks also understand that the competition
between them and even between offshore banking centers is fierce. The only tool that they
have to attract customers is the product that they offer. No government is going to step in and
save them by forcing certain types of customers to do business with them. In the end, this
means that they are forced to work harder to provide you with both a superior product as well
as superior service.
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The story is entirely different back at home. Most domestic banks survive primarily on the
basis of their investment portfolios, meaning that they pay far less attention to individual
customers and individual accounts. Do you really think anyone at your bank would lose sleep
if you were to walk in tomorrow, remove all of your money and pledge never to do business
with "this horrible bank" again? Of course not. No one would care because your domestic bank
realizes that before the door even closes behind you, someone else will be lining up to hand
over his money. Most domestic banks know that they can relax and rely on their long-
established reputations. After all, what choice do you have? You have to do business with at
least one of them.
Anyone who has tried to open a simple checking account will understand what I am talking
about. One would assume that any bank would be overjoyed with the prospect of someone
walking in off the street and handing over his money. Not so. Instead, domestic banks bombard
you with questions and a host of forms, all with an abundance of those stupid little boxes to be
filled out in triplicate. Is your account opened right away? No. First the bank has to run a credit
check on you and make sure that you are the sort of person whose money they can take. If the
computer gives one wrong answer or, worse still, has never even heard of you, you and your
money are summarily turned away.
Offshore banks sing a different tune. They are often willing to rollout the red carpet even
for little old you. As they are restricted from advertising in many jurisdictions, many are forced
to wait for you to come to them, meaning that they realize how valuable both you and your
money are to their operation. They understand that they cannot just sit back, they must do
something to entice dollars, pounds, marks and yen from distant shores into their own
institutions. Foreign banks who cater to international investors are also aware that you have a
multitude of investments to choose from. Unlike banks at home, they realize that you are not
trapped into doing business with them by some overpowering governmental authority.
Offshore banks will be more than happy to hold on to your money for you, as they should
be. Even deposits of only a few thousand are welcome by many banks, particularly if you are
interested in investing it over the long term. This gives the bank the freedom to invest your
money wisely while assuring you a safe return. You need not worry about what your money is
up to, as the entire arrangement has been established from the start. Alternatively, if you are
willing to invest more sizeable amounts, there is no telling the lengths that your bank will go
to keep you, a prized customer, smiling and content.
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Chapter 10
FINDING YOUR
OFFSHORE BANKING HAVEN
Before making your first entry into the world of offshore banking, you should familiarize
yourself with the many options available. Just about every country on the planet is interested
to some extent in attracting your money to its shores. Some have gone to the trouble of
instituting very attractive laws concerning banking and financial privacy. Many have
established themselves as tax havens, realizing that the best way to attract your money is not
to claim that any of it is government property.
Every year it seems that yet another country joins the growing club. Some last and become
part of the regiment of established banking havens. Others falter the minute there is a change
in political administration. Your job as an international investor is to distinguish the good from
the ugly. Armed with the right information and the knowledge to ask the right questions, this
process need not be any more difficult than gathering information to open an account at home.
Start with the basics:
WHO'S IN CHARGE?
Avoid investing large amounts in countries that have yet to form a solid and lasting political
structure. Such banana republics may periodically offer unheard of returns on your investment,
but the political wind need only change slightly for all of your funds to sprout wings and fly
away. Keep the bulk of your assets in more stable and established banking havens, but
remember all of the time that even the most stable of countries can fall apart almost overnight.
What would happen if the Cayman Islands were suddenly taken over by a political coup or
if Quebec is one day successful in its bid to achieve independence from Canada? The new
group of politicians ushered into power may well decide that all funds held in banks,
particularly that belonging to foreign investors, is the property of the new government. The
fact that nowhere in the world is one hundred per cent stable underlines one of the basic needs
for international diversification in the first place. If your money is stashed in several countries
around the planet, some of it will be safe even if a totally unexpected tum of political events
wreaks havoc in one of your banking centers. By keeping all of your chips at home, you risk
losing all when the unexpected emerges in your backyard.
Of course, even though no environment is completely stable, some countries definitely offer
a degree of security unheard of in others. Such drastic changes in power often build up slowly,
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giving the investor plenty of warning to move his money to safer pastures. By making the right
decisions from the start and keeping your eyes open for possible changes in the political
landscape, you should be able to avoid all but the most unpredictable of future calamities.
Before investing in any foreign country, closely examine its history. Many countries of the
world have a tradition of regularly confiscating privately owned banks, security holdings,
foreign investments and private bank accounts. Avoid such dishonest political manipulations
like the plague. Any government that has recently, within the past hundred years, nationalized
a bank or private account is a potentially dangerous place to leave assets.
WHAT'S ON OFFER?
Your new banking haven should not have a withholding tax for foreign account holders. If it
does, this tax should be easily avoided as it is in Austria and Switzerland by means of a
fiduciary account. Of course, if your activities are likely to become more complex than simply
opening a foreign investment account, you may also want to seek out a jurisdiction that will
enable you to avoid corporate tax, estate tax and the like. Similarly, you should seek out a
country that will not hinder your activities with other forms of senseless bureaucratic
interference, such as by means of currency controls.
Taxes and other government restrictions aside, the one aspect of your new banking haven
that cannot be stressed enough is that of banking privacy. Indeed, many investors originally
open offshore accounts for no other reason than to ensure that their financial affairs will no
longer be an open book, readily available to the prying eyes of any and every government
bureaucrat. As detailed in the previous part of this report, most high tax jurisdictions have long
since dispensed with the basic ideas of freedom and the right to a fair trial. This intrusion into
the private lives of individuals applies not only to citizens, but also to foreign investors. If a
country is willing to snoop on its own citizens, it is also more than eager to snoop on foreign
depositors. Sometimes it will do so at the request of a foreign government, but most of the time
it will invade your privacy for its own selfish ends. In recent history, the US government has
arbitrarily seized the private accounts of all Germans, French, Japanese, Iranians, Kuwaitis and
others for political reasons. Moral of story: avoid investing in a country that takes too much of
an interest in anyone's financial affairs.
Instead, seek out banking havens that recognize and promote the value of banking privacy.
This task is not as easy as it at first appears as many countries that claim to offer bank secrecy
do so only on an informal basis. In many jurisdictions, banking privacy is based on a tradition
rather than legally binding legislation. If your banker turns over information about your
account to your home government, he will be acting unprofessionally, but will not be breaking
the law. Other countries have what are known as confidentiality laws, which allow the local
government access to your bank records but prohibit it from sharing this information with a
third party. Of course, under the threat of intense foreign pressure, the local government may
decide, perhaps by magically finding a new loophole in its legislation, that for this particular
situation it need not pay attention to its secrecy laws.
In general, the best places to stash your cash are those countries that have gone to the
trouble of instituting solid banking privacy legislation. Your country of choice should see the
value of such legislation and honestly have no desire to sneak a peak at your private records.
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The privacy laws that they have enacted should carry stiff penalties, including possible jail
time, for anyone who violates them and tries to pry open the banking records of a third party.
Of course, many countries that do have strict bank secrecy legislation have also been the first
to come under attack in Big Brother's war against financial privacy. This means, particularly
for US passport holders, that such jurisdictions may have become far too high-profile to
remain desirable. Americans will also find that many banks in some of the more notorious
banking havens are simply be no longer willing to do business with them, for fear of US
reprisals.
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depositors. After all, politicians love nothing more than to blame all of the ills of the society
that they have created on a convenient scapegoat. What better scapegoat than a bunch of
wealthy foreigners who lack even the basic right of representation?
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For these reasons, most Americans opt to bank offshore in the Caribbean, most Europeans
make use of European banking centers and most Australians choose those in the Pacific. These
banking havens are close, often in the same time zone as their investors, and generally allow
for visa-free travel for those from nearby countries. The problem with this strategy is that if
problems ever arose at home, either with your government or a private litigant, the first place
that they will look for your hidden dough will be in those banking centers that are only slightly
offshore. By stashing at least some of your money halfway around the world, you have created
a degree of security simply not possible if you are not willing to venture too far from home.
Furthermore, in choosing a banking haven, there is more to think about your newly chosen
location than simply your ability to visit your money with ease. Your money must also be able
to easily make its way to and from your new banking center. Although advances in the
communications age ensure that nowhere on this planet is truly remote anymore, some locales
are more connected to the mainstream than others. If your money cannot move quickly into
and out of international markets, you will be missing out on one of the primary benefits of
investing offshore. As opportunities emerge in various parts of the world, you should be able
to take advantage of them quickly and then also quickly move your money and its resulting
profit back to your safe haven. Of course, if you are merely interested in stashing some of your
money overseas as a protective measure and have no desire to invest it in international
markets, this feature may not be of such importance. Instead, certain other considerations, such
as your ability to plan your inheritance freely and dictate who receives your money when you
no longer need it, may take center stage.
Obviously, the bankers of your banking country should also be fluent in your language.
Fortunately, English is the universal language of international banking, business and the
airways. Unless you bank strictly locally, any major international or offshore bank will have
officers that you can communicate with in English. You will also want to make certain that the
telecommunications infrastructure of your banking haven is efficient and that the staff running
the show are both competent and professional. Finally, as you will undoubtedly be visiting
your money from time to time, your banking haven should be a location that you find
desirable. Why not combine a vacation with your jaunt abroad to see how your money is
growing? This task should not be difficult as all of the major banking havens of the world are
located either on sunny tropical islands or close to the cultural attractions of Europe.
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stay true to their promises over the long term is actually quite limited. For a start, investors of
all nationalities should avoid depositing a significant amount in any third world bank or Arab
bank. The Muslim idea of banking is so foreign to the English speaker that there is no common
ground. Receiving interest from a bank or paying interest under some interpretations of Islamic
law is an offense. In some countries, such an infraction of the law calls for capital punishment,
in other (more lenient jurisdictions) only amputation of the hands is required. I am not joking.
This is the law in Iran! I would not deposit my money in any offshore branch of a bank with
such rules in the home country. As to general morality and honesty, some Mexican bankers I
have known make Jesse James and John Dillinger look like honest men. While I'm throwing
stones, the Mexican government also has a long tradition of luring in foreign investment and
then confiscating it.
Similarly, many other banks that are more than eager to attract your money are best avoided.
These include banks of ex-communist countries who are now courting the offshore private
investor as well as the host of banks in places like Hong Kong, Panama, Cost Rica, Malta,
Uruguay and Gibraltar who are pumping for high net worth private clients. The vast majority
of people and politicians in these places are socialist oriented. They are Leftists, as they are in
Mexico and most of South America. When times get tough, the local politicians will think first
of defaulting on their international obligations and second of confiscating the local assets of
foreign depositors. For them, foreign investors are a golden goose to be roasted at the first sign
of tough going. They don't care if in the process they lose all of the golden eggs.
Politicians don't think of long term effects. In most countries, confiscation of private
property is considered by the leftist majority a moral and proper thing to do. I would give all
such thieves a pass. The only exception would be the branches of major international banks in
Gibraltar and Panama which are probably okay for short term funds, up to a year. This leaves
the major European banks as just about the only serious choices for stashing serious money. The
best countries are the British offshore islands, plus Liechtenstein, Luxembourg, Switzerland and
Austria. Austrian banks and savings institutions will even open a totally anonymous passbook
account where the bank itself does not know the customer's name or address.
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first sign of trouble, run like Bambi. When Bambi, the Disney creation, smelled an enemy he
ran like the wind.
The best rule when it comes to looking after your money is to keep a large portion of it
liquid. If and when a newspaper refers to your institution as "loss ridden" or "financially
troubled" simply transfer your money elsewhere. Forget about loyalty to a bank or a banking
center. In fact, consider changing banks every year or two just on general principles. If
negative political changes in your banking country seem to be coming, move out smartly. A
PT is always aware and agile.
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Chapter 11
FINDING YOUR OFFSHORE BANK
Once you have chosen the location in which you would like to open your offshore account,
finding a friendly bank is far easier. Just as there is no limit in choice for countries to bank in,
there are also literally thousands of banks based in countries around the plaret understandably
interested in the idea of holding onto your money for you. As with their host countries, some
offshore banks were established decades ago and enjoy a long history of stability. Others are
the pet project of some individual with more money than sense and close down almost before
they have even opened.
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knock the price down to US $245 per year. Overseas shipping and handling charges by DHL
cost an additional US $38.25.
You could also write to the local embassy or consulate of your chosen banking jurisdiction.
This will probably produce a packet of brochures and articles all about both the country and
its banking community. The only drawback is that each bit of information will have been
edited to only show the sunny side of things. Governments, like most sentient beings on this
planet, constantly try to rewrite history so that they come out smelling pretty. Still, amongst all
of the hype you may be able to find a few useful pieces of information.
Local yellow pages are also a good way of to discover previously unknown banks within
your chosen jurisdiction. If you cannot find a copy of the appropriate yellow pages at a nearby
library, you can order the telephone directories of over 120 countries through a company based
in Florida. Ask for the "International Directory Telephone Supply Catalogue" from Mike
Armon, Armon Publishing, PO Box 785, Ormond Beach, FL 32074, USA. Send three
dollars to cover postage and handling.
ESTABLISHING CONTACT
Of course, when sending for information from any offshore bank, you should be careful not to
call attention to your activities. From the very first letter of inquiry you should strive to be as
low-profile as possible with your offshore bank. Many governments routinely open
international mail, particularly if it is known to have come from a high-profile banking center.
The Mexican government used to confiscate all foreign mail that contained the word "bank"
in its return address. As many Swiss banks no longer put their return address on
correspondence, the US government now regularly opens all mail that bears the tell-tale post
code of areas known to contain a large number of offshore banks. In short, the message is clear.
When opening your offshore account, do not operate from your home or place of business. For
that matter, do not even communicate with banks using an address in your home country.
Instead, make use of a maildrop or mail forwarding service located in a nearby country.
Many Americans establish mail services in Canada to receive sensitive mail. Europeans make
use of a neighboring country so that they can then either easily slip over the border to pick up
their mail or have it forwarded anonymously to them. If at all possible, pick up your
correspondence from your foreign maildrop in person. If not, make certain that your mail will
be forwarded in plain, boring envelopes. For an extra layer of security, do not even reveal your
actual address to your foreign maildrop. Instead, receive such sensitive mail at a local maildrop
and then pick up your mail in person so that no possible link can be established between your
place of residence and your offshore account. The best places to receive mail offer 24 hour
service in a completely private environment. You receive a personal key to a private box which
you can visit whenever the desire strikes.
During your initial stage of inquiries, there is also no reason for you to write to banks using
your real name. They will just as willingly send out information packets to Ms Minnie Mouse
as anyone else, although a name that calls far less attention to itself is probably advisable. If
you would like to know more about how to communicate from anywhere in the world in a
completely private manner, consult my other report on the subject, PT2. It contains a wealth
of information on low-profile and privacy techniques, including a detailed section on the use
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of maildrops. If you are just interested in finding a cooperative maildrop, the Worldwide
Maildrop Guide published by Scope International lists in detail over one hundred maildrops
based in countries around the world.
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familiar sounding names such as Prudential Bank & Trust or Chase Overseas, they sadly lured
unsuspecting depositors into parting with their funds.
Before investing one penny in a brass plate bank, make certain that the individuals running
the show are bankers, not wealthy individuals who decided one fine day that it would be fun
to own a bank. You can tell a great deal just by analyzing the local rules and legislation. In
some jurisdictions it is almost ridiculously easy to open a bank. Avoid banking in these areas,
they attract far too many con artists and dreamers. Solid banking havens, such as the Cayman
Islands, Bermuda and the Bahamas, have much stricter regulations concerning the registration
of brass plate banks. The mere fact that the proprietor must first put up a large amount of cash
before proceeding ensures that the newly created bank owner is at least serious about the
undertaking. Still, more than being just serious in his intentions, this banker, or at least those
calling the shots for him, must also have the benefit of many years experience in managing
other people's banks behind him. A proven track record for the current operation of at least ten
years, if not more, is also more than warranted.
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why not diversify into a foreign currency and allow yourself the luxury of placing both your
assets as well as the bank in which they are stored outside of the grasp of your home
government. Many offshore banks allow you to maintain your account in the currency of your
choosing and allow you to move all funds from one currency to another quickly and easily.
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that in many cases merely choosing the right bank in the beginning is of vital importance in
creating a layer of banking privacy.
TYPES OF ACCOUNT
The offshore banking industry offers a much wider range of account types than most onshore
banking jurisdictions. The options vary from simple savings accounts to accounts designed for
the sole purpose of tax avoidance to accounts where the bank invests and oversees your money
on your behalf. All of the various types of account offered by offshore banks can be grouped
into a few categories. Although the names of such accounts may change from bank to bank,
the basic design behind each of them is more or less the same. They are as follows:
Current accounts are the most common type of account. They generally come with a check
book or debit card and can sometimes be linked with a credit card. The required starting
I
balance is low, but the amount of interest paid is also generally low. Some banks allow for
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multi-currency accounts, meaning that you can deposit and withdraw funds in any of a number
of currencies. You can also easily change either all or part of your account into the currency of
your choice.
Deposit accounts are generally a good place to store money over the slightly longer term.
They offer higher interest rates, but restrict your ability to get at your money by requiring that
you provide sufficient notice or sacrifice the interest earned. Starting balances are also
generally higher with many banks requiring a minimum deposit of somewhere in the area of
US $10,000. The amount of interest paid depends upon the amount deposited as well as the
time period for which it will stay in the account. It also depends on the currency in which the
account is denominated, stronger currencies paying less interest.
Twin accounts basically combine a high interest deposit account with the convenience of a
current account under one all inclusive number. The bulk of the funds on deposit are kept in
the high interest account while a smaller amount is kept in the current account for day to day
use. If you one day find yourself overdrawn, the bank would then merely transfer money from
the deposit account into the current account. Thus, the need to maintain two different accounts
is eliminated.
Fiduciary accounts allow you to invest in high tax markets, even your home country,
anonymously by using your bank itself as a proxy investor. For example, if you maintain an
account in a Liechtenstein bank but wish to hold part of your overall portfolio in German
marks, you could instruct your banker to open an account in Germany on your behalf. The
marks would be purchased in Frankfurt and then held there in the bank's name, although the
interest earned is paid to you in Liechtenstein. For the record, it appears as if the bank is acting
on its own initiative, meaning that if you happen to be German you would no longer be liable
for German tax. Of course, the bank charges a fee, usually one quarter of one per cent of your
principal, for providing you with such anonymity. You also receive a slightly lower interest
payment than you would if you made the deposit on your own.
Certificates of deposit are a way to earn much higher interest rates than is on offer through
deposit accounts. In short, your funds are loaned to the Eurocurrency market at the current rate
for the currency in which the CD is denominated. CDs usually come in bearer form, meaning
that they can be freely and anonymously traded. They enjoy a large and active secondary
market. They vary a great deal in terms of the maturity of the investment, ranging from almost
overnight to up to five years. Best of all, banks do not withhold any tax on the CDs that they
issue, meaning that with a little creative planning your money can earn hefty interest payments
tax free.
Precious metal accounts allow you to invest in precious metals via your bank. The bank will
then store the metal in its vault on your behalf. The advantage of opening up this type of
account is that by combining your resources with that of other bank clients, you can purchase
precious metals at a far more competitive price. Of course, such an account does not generate
any income but should be seen more as a safety net. The bank will also generally charge an
annual storage fee that is usually in the area of one half of a percent of the value of the metals
on deposit.
Investment accounts are usually only offered by larger banks. They allow you to invest your
funds in commodity markets with the help of your bank. They usually take the form of a
mutual fund in stocks, bonds and other commodities and are overseen by the bank itself. The
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required starting balance is somewhat hefty, generally coming in at around US $50,000. These
accounts also usually come with rather high front-end costs as well as significant management
fees, but as long as the markets are performing well a good investment account will on average
prove to be more profitable than a simple deposit account.
Managed accounts work much like investment accounts but allow you to choose where to
invest your funds. Instructions of what to buy and sell are sent to the bank by phone or fax. It
is also possible sometimes to hold the actual commodities purchased in the bank's name rather
than your own and thus grant yourself an extra layer of privacy. The price for such convenience
takes the form of a minimum deposit requirement of somewhere in the area of US $250,000.
Safekeeping accounts allow you to deposit bonds, stocks and other valuables. The bank will
then manage the overall portfolio deposited, redeeming the bonds when they mature and doing
whatever need be done with the valuables entrusted to them. Of course, such convenience
comes with a price tag which usually means a fee of approximately .015 per cent of the market
value of the portfolio they are maintaining.
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Chapter 12
OPENING AND MANAGING
YOUR ACCOUNT
The manner in which you open your offshore account is of vital importance. If done properly,
you will have created a truly private account located in a distant but secure land. If done with
little regard for your privacy, your home government or anyone else that would like to bring
your money back to your native land will have little difficulty uncovering your moves. Hence,
it is important to know exactly how to go about opening your account before you even make
contact with a single bank.
To begin with, you should consider whether or not you want to open your account in person.
If it is at all possible, I suggest that you take the time to make a trip to your new banking haven
when first opening your account. This will not only give you the opportunity to explore the
country, but will also allow you to research each of your potential banks far more thoroughly
than you could from your armchair at home. If you are planning to invest a significant amount,
request to meet with the manager of each bank. If one is not willing to take the time to see you,
he is giving you a clear sign that your money belongs in a different institution.
If you cannot take the time to travel to your new banking haven or are only planning to open
a small account, most banks are also willing to open accounts through the mail. By following
the guidelines detailed in this chapter, you need not sacrifice any of the privacy that you would
enjoy by opening your account in person. Whatever method you choose, remember from the
start that it is important to appear professional and to give the impression that you have the
means to invest in your chosen institution. When visiting banks, don't dress as if you just
walked in off of the beach. When writing to them, send a professional typed letter. Many
banks, both offshore and onshore, do not even bother to read handwritten correspondence sent
to them by prospective clients.
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request for detailed personal information or even a request for detailed references is a clear
indication that you should find another bank. The best of all account applications merely asks
for your name and your signature, but unfortunately most banks demand a great deal more
when opening an account.
In the modem overly regulated banking world, almost every bank will request to see your
passport, or at least a certified photocopy of it, before opening an account. Although there are
some creative ways around this restriction, if you want to remain one hundred per cent inside
the law, it is best to provide a copy of your actual passport. Your account will then be opened
in your real name, but need not be linked to your real address. As for the rest of the little boxes
on an application form, only tell the bank what it needs to know. If you have ventured offshore
in the first place to gain a level of privacy not available at home, don't make the mistake of
immediately reducing your offshore life into digestible bits for the computers of your new
banking center.
In addition to filling out and signing an application form, there are a number of other forms
that you may be asked to sign when opening an account. Your new bank, much like any
onshore bank, will probably send you a signature card so that it can keep a copy of your
signature on file. Depending on the type of account that you open, you may also be asked to
fill out a power of attorney form which will make it easier for your heirs to gain access to your
funds if something should happen to you. Other forms ranging from fiduciary agreements to
mail forwarding instructions to an acknowledgment that you are acting on your own behalf
may also be put in front of you.
Of course, you should read everything and understand its implications before signing on the
dotted line. As in all such matters, the important bits will generally be found in the fine print
and hidden somewhere on the back of the form. Some banks, particularly those in the Bahamas
and Switzerland, now routinely ask prospective American clients to sign a waiver of
confidentiality form. In other words, the bank itself wants to maneuver its way around the bank
secrecy laws of its host jurisdiction and thus avoid any possible conflicts with Big Brother. It
is definitely not in your best interest to sign away your right to bank secrecy. To do so entirely
negates one of your major reasons for banking offshore in the first place. If asked to sign such
a form, find another bank, if necessary find an entirely new banking jurisdiction.
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bank by fax, but in many cases actually move your money about by fax. Many banks require
that they receive a copy of your actual signature before carrying out your instructions.
However, a growing number of banks are willing to consider your faxed signature to be
sufficient if it is accompanied by a predetermined password. In other words, any time a fax
comes through with both your signature and the appropriate code word, your bank will assume
that the fax has come from you. To receive such a service you will generally have to grant you.r
bank indemnity against carrying out instructions not sent by you if your password is somehow
stolen. Moral of story, when operating your offshore account not only should your password
be a secret known only to you, but the very existence of the account should be known to no
one other than you and your new bank.
When faxing your bank, never use your own machine. Instead, use a copy shop or a service
bureau where you are not known. Or fax from gas stations. Germany, France, Denmark and
Britain all have service stations equipped with fax machines. Most airports in the US, Europe
and Asia have coin or card operated fax machines. If the machine is card operated, use a
prepaid phonecard. Never use a credit card. In Germany, even major railway stations have fax
machines as part of the line of phone boxes. No operator handles your fax and the fee is
deducted from the credit of your prepaid phonecard. If you are in a country where services are
not so advanced, use a hotel where you are not staying. Walk in from the street, ask for a favor
and offer to pay for it, but remember that most hotel faxes will go out with a sender's ID.
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OBTAINING A REFERENCE
Most bankers want a reference mainly for the record. The world is full of swindlers and con
men who pretend to be someone else in order to divert (meaning steal) funds that don't belong
to them. Bankers do not need the aggravation of being involved with customers who immerse
them in litigation or unfavorable publicity. If you come in with a simple story explaining why
you want a secret account and do not plan any fancy or illegal financial shenanigans, most
banks in offshore banking centers will open an account for you as long as you show a passport.
Most individuals who have tax or domestic problems do not want a foreign bank to contact any
professionals or bankers in their home country.
If you mention the common problems of a possible divorce or the avoidance of confiscatory
taxation, most offshore bankers will give you an understanding ear. None will ever want to be
helpful to common criminals, terrorists, drug dealers and the like. If they are hard-nosed or
don't like your looks or smell, they may insist upon some sort of letter of introduction or
reference. If faced with such an obstacle, you can always ask a bank in your home country for
a general letter of introduction. Have them address the letter "to whom it may concern" rather
than a specific bank. If your home banker asks why you need such a letter, simply say that you
are considering opening another account without mentioning the fact that it just happens to be
located in a terribly secret offshore banking center.
Such letters normally say something to the effect of, "Mr Curt Customer has been a valued
client for X years and is highly recommended." They need not say anything more. If you
mention to your new banker that you do not want anyone in your home country to ever find
out about the existence of your new offshore account, he will in all likelihood never check your
reference, at least if he has any sense of ethics. You can also point-blank ask him if he intends
to contact your reference. If he says that he will, you can then simply say that you will have to
take your business elsewhere as you regard such an action to be a serious breach of
confidentiality. Normally however, once your new banker has his document for the file, that is
enough for him.
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your home country. For example, an Argentinian wanting a Gibraltar account can simply walk
into the Buenos Aires office of ABN-Amro and have them finalize the paperwork with the
bank's home office in Gibraltar. Anybody can do the same thing, but be aware that in terms of
your privacy the cost of such convenience is very high.
Yes, opening accounts in this manner will save you time and money. In a few days you can
open hundreds of accounts in all major banking havens of the world. Just be aware that
opening offshore accounts at home is not low-profile. The local bank manager in your home
country will know about your business. Since he is operating under local laws and banking
regulations, he may even have to report the existence of your "foreign" account to your home
government. You can sound him out about this first, but never forget that the more people who
know about your business, the less private it is. As the world is today, you need all the privacy
you can get.
The only use that the onshore branches of offshore banks have for those concerned with
privacy comes into play when you have already traveled outside of your home country. For
example, assume that several years ago you opened up an offshore account with a major bank
located in the Cayman Islands. Eventually you decide that you would like a second foreign
account in a different banking haven. One year while visiting your money held in your first
account, you walk into the branch of a large Austrian bank located just down the street from
your first bank in the Caymans. Later that day, you are the proud owner of a second account,
this one located in the European banking haven of Austria. Such maneuvers mean that rather
than having to travel to each of your chosen banking havens separately, you can save both time
and airfare by making use of branches located where you happen to be when you venture
outside of your home country.
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importance. As I have said several times in this report, if your new account is to be kept secret,
it should be known only to you and your new banker. In other words, don't leave any evidence
lying around or stowed neatly in your briefcase that spells out in clear black and white all of
your so-called secret activities. You must never keep paperwork, statements or even the name
and address or telephone number of your offshore bank written down or on your person. How
then will you remember it? You should keep such delicate information in a code that is neither
obvious or easily broken. Mirror writing (gnitirw rorrim) or writing backwards is so obvious
that even a child could decode it. Be more creative.
Information related to your offshore activities should also definitely not be kept in a safety
deposit box in your home country. Such boxes can be easily opened by a creditor or tax
collector without your authorization. If you absolutely need to store some bits of paper or
plastic related to your account, use a safety deposit box in a foreign country. If you can arrange
to have this box under a different (banking passport) it will be doubly secure. Just make certain
that, as with your account, your potential enemies never find out about the existence of your
deposit box. Again, my other report on personal privacy, namely PT2, contains a great deal of
additional information on topics covered in this chapter. It covers a wide range of personal
privacy topics, including the use of codes, how to send and receive mail privately, how to make
use of hotels as one-stop PT shops and the like.
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satisfied they could ask for a refund without returning the merchandise. The bureau-rat also
informed them that, if they felt defrauded in any way, they could register their complaints
with him.
As a result of this letter, Mike was deluged with requests (forwarded to him by the
government) for refunds. Actually, they were from less than two per cent of ':111 past customers
on the lists that had been confiscated from him, but 20,000 refund requests all at the same time
involved more money than he could afford to payout. There were three bona-fide complaints
that Mike's Miracle Last Forever US $9.99 knife blade couldn't cut much after eight years.
One of these complainants had used it to open several hundred tin cans! The government
encouraged him to bring suit for himself and all other knife buyers over the years. He did bring
such a class action and won a treble damage judgment of eight million dollars that sent Mike
into bankruptcy. Had he been able to pay it, most of the award would have gone not to the knife
buyers, but to the clever shyster lawyer for his attorney fees.
Finally, as a result of his inability to issue all the requested refunds immediately, Mike
found himself facing criminal charges of mail fraud and organized crime under the RICO Act.
To make a long story short, he received a five year jail term. Mike had never, in his worst
nightmares, imagined this kind of woe could befall him. With tears in his eyes, he told me that
most of the miracle kitchen knives sold up to ten years ago were still in service, as if being
honest and selling an honest product was any defense!
Consider his situation - most of his problems could have been avoided if he had no records
on file in his office. If anything over a month old was stored elsewhere, the government would
have been able to seize at best 8000 current customer names, not a million. The moral of the
story is clear. All your outdated files should be periodically destroyed. Those retained for
possible future reference should be microfilmed if your budget will stand it. The microfilms
should then be hidden, although not at your home or office. It is exceedingly important that
computerized information be regularly dumped from your hard disc. If it is necessary to keep
computer files -for possible future reference, these should be kept on discs or tapes at a secret
place, again not at your office or your home.
What is a suitable secret place? You could rent a garage in a nearby town, preferably in a
different name and keep old records and other such documents there. Don't tell anyone,
especially your wife, girlfriend or employees the location, or even that such a place exists. For
reasons discussed elsewhere, never leave any records at all stored with your own lawyer or
accountant. Some towns have public storage facilities where you can rent the size of storage
space you need, be it a small closet or a warehouse that will hold five cars. Records at your
home and your office are the logical first stop hunting grounds for your enemies. They don't
always go after the other guy. When your home or office is raided by the latter-day Gestapo,
you'll be glad that your sensitive papers and valuables are safely and secretly filed elsewhere.
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collection of receipts for a year or a series of personal letters may paint an intimate portrait of
one's life that could be used against you. Time and time again private investigators and
government agents have mined precious information out of garbage cans that is then used
against people for blackmail, lawsuits or even criminal prosecutions. When the time comes to
dispose of sensitive documents they should be shredded, burned or cut up into small pieces.
Dispose of them in various public or community garbage bins (not your private can) so it is
impossible to identify you or put together an entire document from the scraps.
A friend of mine collected copies of Penthouse magazine that contained articles about the
Trilateral Commission. These were kept in his desk drawer at work. When he left the company,
he also left behind five of these magazines. Later, he learned that when his new employer
called his old boss for a reference, this former employer said, "He's okay if you want a guy
who spends his working days looking at porno photos in sex magazines." The employer then
related that my friend left a "huge trove" of girlie mags "hidden in his desk". As a result of this
incident, my ultra-conservative friend was fired from his new job before he started! Thus, you
see that even seemingly unimportant things left where others can find them may cause
unexpected future problems. When you make a move or throw something out, be sure it can
never be used against you. Destroy it totally!
In another instance, an individual I knew was a little too hasty when cleaning out his
apartment before moving. He dumped his spring cleaning debris out on the street in plastic
bags next to and not inside of the garbage cans as required by local ordinances. Some months
later he got a police citation and a large bill for the offense of "dumping". It appears that
among his papers and junk were several advertising flyers addressed to him. These were used
by the police to get his name and trace him to his new address!
If your privacy and freedom are important (and they should be!) use a pen-name or alias
wherever possible. Get into the habit of promptly shredding or destroying any letters, bank
statements, correspondence, files or mailing labels on adverts or periodicals that arrive in the
mail for you. Keep as few papers as possible. Every year or so, get rid of all records that you
no longer need. When you dispose of any personal papers, shredding or burning is always best.
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Part IV
Moving Money
Anonymously Across
National Borders
Moving Money Anonymously Across National Borders
Chapter 13
MOVING MONEY ACROSS
NATIONAL BORDERS
Once your offshore account has been opened, you will then be faced with the greatest obstacle
to silent banking, that of anonymously moving money into your account. The bureaucrats of
many countries around the world have already made it difficult for you to invest your money
where you want without having to inform Big Brother of your intentions first. Big Brother
does not like the idea that your money may one day wander to new places over which he has
absolutely no control. He would much rather that it stay at home.
The good news is that in spite of such ongoing efforts by government, there are still ways
in which you can move your money legally and anonymously to anywhere on this little planet
that you see fit. This chapter explains in detail the various methods available. It does not,
however, explore each in great detail in light of the many reporting requirements and
restrictions that have been brought into play. This topic is instead reserved for the next chapter.
Once you understand the basics, you can then formulate a plan to work your way around the
government reporting requirements that affect your particular situation. To begin with,
however, you must first understand the basics.
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Of course, you will want to pay careful attention to the manner in which you travel to and
form your banking center. Try not to raise too many eyebrows, particularly if you are
frequently making your way back and forth. Pay cash for your ticket if doing so will not set
off any alarm bells. See to it that your passport is not stamped by your new banking
jurisdiction. To be on the super-safe side, you may even want to consider traveling to your
bank via a third and neutral country. For example, rather than traveling directly to a Caribbean
tax haven, many Americans choose to first make their way to Canada. They then fly from this
neutral country to their banking center and then back to Canada before returning home. The
US authorities are left with no clues to go on save evidence of a harmless trip to a nearby
friendly country.
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The one problem with all of these methods that make use of other people is that they all
break the golden rule of banking privacy. There is only one person, namely you, that you can
rely on to keep a secret. Whether or not others can is doubtful. Every time you let someone
else - spouse, friend, family member, courier, client, customer, anybody - know that your
offshore account exists, you run the risk of some day having your activities exposed.
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deposit with a relatively small amount of cash, say US $25,000 to US $50,000. After an
account is opened, it is easier to feed it with cash (even in a country where cash deposits are
monitored or restricted) by making a large number of smaller cash deposits in other branches
of the same bank. You could then add to your new account slowly with similar small amounts
of cash until your entire nest-egg is securely tucked away in your offshore account.
Another approach is to open up a number of small accounts in your chosen banking haven
and later consolidate them. In Switzerland, most banks will accept a maximum cash deposit of
100,000 SFr from a new customer. This is around US $84,000 or about £55,000. Accordingly,
to open a Swiss account for £1,000,000, it would be necessary to either make 20 trips or to
open around 20 different accounts in cash at various branches or other Swiss banks and later
combine them into one big account. Of course, you could cut down the number of accounts
needed by making several cash deposits in each of your various accounts.
POSSIBLE PROBLEMS
You will want to be careful when using such techniques that you do not violate any structuring
laws that are in place in your chosen jurisdiction. Such laws make it illegal intentionally to
avoid reporting requirements by breaking a single large cash deposit into several smaller
deposits. Structuring deposits to keep your banker happy in a jurisdiction that has not made
such maneuvers illegal is a method that can be of great use to privacy seekers. Structuring
deposits in a country that has instituted Draconian laws against such practices could land you
in a heap of trouble. Many banks monitor all deposits, even those coming in through separate
branches, and will quickly notice a string of smaller cash deposits. In other words, make sure
that you understand what the ground rules are in your chosen banking haven before
formulating your plan.
In those jurisdictions that are not yet completely under the thumb of Big Brother and the
Bureau Rats, you may still enjoy a certain amount of leniency not only in matters such as
structuring, but also in the entire area of cash deposits and withdrawals. In more moderate
jurisdictions, exceptions to the rule are still possible. Once you have a personal relationship
with a banker, he can make special arrangements with you regarding the confidential
movements of cash anywhere in the world. Even today, an established customer in Switzerland
or any of the other major banking havens can deal in unlimited amounts of cash as long as his
banker feels the source of funds is legal. Once you have established such a relationship, your
only problem then will be actually lugging your cash from one country to the next. To make
matters easier, why not carry less?
Most people believe that Switzerland has the highest denominated bills. Their thousand
franc note is worth around US $840. Canada also has C $1000 notes that are worth about US
$860. But Singapore, with a strong, well accepted currency has S $10,000 notes in common
circulation. They are worth just over US $7000. Using Singapore banknotes, the equivalence
of US $14 million can be crammed into an ordinary attache case. One million can be stuffed
in a pocket or belly money-belt! If any reader knows of any other high-value banknotes, please
let me know for future editions of this report. Just don't write in about Italy where everyone
pays for dinner with 100,000 lira notes. It may sound like a lot, but is actually worth less than
one hundred dollars.
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To be on the safe side, don't buy an international cashier's check in a foreign currency.
Instead, simply buy a national one in the country's local currency. Your offshore bank will be
able to exchange it anyway. There will be a record of the exchange later, but this will not
matter as long as you do not have to positively identify yourself when buying the cashier's
check. In other words, it is important that you keep your name out of this original transaction
so that the eventual record created cannot be linked to you. In all likelihood, this record will
also not carry the name of your offshore bank as generally one large bank in each country
handles the clearance of foreign checks for smaller banks. In Britain, most of this is done by
Barclays Bank.
When buying your cashier's check have it made payable to your offshore bank but don't use
the word "bank" and similarly don't fill in the address and the country of your offshore bank.
If you will be sending the check to Julius Baer Bank of Zurich, for example, simply have the
issuing bank write it out to "Mr Julius Baer" or "J Baer". The bank will have a record of this
but no more information to go on, meaning that their record will be worth next to nothing.
Another school of thought says, leave it blank altogether. Ask the bank to make it out to
blank. The bank may find this strange. You will probably be lectured about the risk you are
taking as anybody can cash a blank check. This is true, which is why as soon as you leave the
bank you should fill in the name of the recipient yourself. From a privacy viewpoint this option
beats all. Yet you don't want some stupid, underpaid bank teller thinking "how strange" and
then filing a Suspicious Transaction Report. Asking for a cashier's check made out to no one
is strange in itself. It is enough to prompt raised eyebrows, unless you have some justifying
story. (I am going to buy a car this afternoon, but I am wavering between two sellers, so I
prefer to fill in the name myself later, once I've made my decision.) You really shouldn't play
it too fancy.
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conspicuous way, they are unbeatable. You can convert US $1,000,000 into perhaps ten pieces
of paper (ten bonds of US $100,000 each) and carry them on your person. In many countries,
a border guard has the legal authority to confiscate any cash you carry in excess of reporting
requirements if you fail to declare it. (Why any country would make it difficult to import cash
in the first place remains a mystery, but that's how the world works.) However, most countries
will not give a second glance to US $1,000,000 or even US $2,000,000 as long as it is in the
form of bearer shares or bonds. Again, the US government swims against the tide and requires
that you report any bearer instrument worth in excess of US $10,000, but more on how to deal
with this infringement of your privacy in the following chapter.
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It should be noted that bearer bonds are investments - places to put your money and earn
interest. They can be just as fickle as ordinary bonds. If the interest rate quoted on your bearer
°
bonds is 1 per cent and general interest rates suddenly skyrocket to 20 per cent, then the price
of your bond will naturally slip by 50 per cent. If, on the other hand, general interest rates
plummet to 5 per cent, your bearer bond will double in value because it promises a rate of
interest (10 per cent) that is double that obtainable elsewhere. Of course, for our purposes in
this chapter, bearer shares and bonds are covered purely and simply because they are one of
the easiest ways for you to move large amounts of money into your offshore account
anonymously. Whether you hold on to bearer bonds until maturation or cash them in as soon
as they arrive at your new account is entirely your decision.
Just remember that once deposited in your new account, you can easily instruct your bank
either to hold on to bearer securities or to sell them and deal with the proceeds as directed. At
home, be certain when purchasing bearer securities that you do so anonymously. Otherwise
you may inadvertently create a paper trail (albeit one that is very difficult to follow) if you buy
bearer securities in your own name through a stockbroker or bank. Explain to your stockbroker
when making the purchase that confidentiality is your objective. A good stockbroker will
arrange for an anonymous purchase.
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Bearer bonds are extremely valuable as a monetary tool, but you should guard yourself
against hoaxes by buying only from a bank or a large, thoroughly reputable brokerage house.
Don't be satisfied just because you have seen an ad for a brokerage house (or even a bank) in
a newspaper and thus reckon that the outfit must be legit. Two decades ago, an unknown
individual referred to by investigators as "Dr No" placed ads in several international bank
registers for The Bank of Sark, a bank that does not exist and has never existed. Dr No did not
do this to attract customers or business, but merely to make the name linger in the memories
of bank managers everywhere. After buying and placing these ads for three consecutive years,
he managed to pull off an international swindle with cashier's checks and bearer bonds based
on the mere perception created as to the bank's existence. He got away with more than US
$100,000,000 - a cool one hundred million bucks. Both Interpol and a lot of banks and
investors are still wringing their hands over the affair. Dr No is still at large.
So, when you go to buy bearer bonds, check the scene out carefully and gather as much
information as you possibly can. Place calls to good, old brokerage houses and merchant banks
such as Manufacturers Hanover, Prudential Bache, Merrill Lynch or Goldman Sachs. Check
out everything before taking the plunge.
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country no matter what may happen in the future. Bearer bonds exist now - use them before
this door closes. Cash is great but bulky. A million pounds doesn't buy what it used to, but it
still takes up a lot of room. Even in 1000 SFr notes we are talking about roughly 2000 bills. If
you are using US $100 bills, the equivalent number is about 15,000 greenbacks. In terms of
keeping cash on your person, I reckon that you can get away with carrying 600 or perhaps even
1000 bills of any denomination strapped to your legs and in a money belt. That's about the limit
before you have to start carrying a brown paper shopping bag. (This is the preferred method of
transporting large amounts of cash, low-profile style.) How does gold compare? Not well.
Gertrude Stein would say that a pound of gold is a pound of gold is a pound of gold. Fine,
but an ounce of gold is still only about US $360 - making a pound of gold a measly US $5500.
With a bit of effort, you may be able to drag a Samsonite filled with 50 kilos of gold (and the
Samsonite may hold) but that is still only a bit more than US $550,000. Then you have to
transport the stuff. The last time I moved a mere million dollars in gold it broke the axle of a
heavy-duty baggage cart at Zurich airport. It took three porters to lift my suitcase. When
leaving New York there were no reporting requirements at the time for gold and, likewise,
Swiss Customs didn't care if you imported 20 tons of the stuff.
Bearer bonds were born in a pre-computer world. Stock and bond exchanges around the
world are slowly changing from bearer to registered shares. In other words, now that the world
has got hooked on silicon, the days of the bearer bonds may be numbered. Get yours and lock
them in a box.
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foreign transfers "on behalf of a client" without revealing who this client actually is. Account
information is also not disclosed as all transfers are normally routed through one of the bank's
own accounts for such purposes.
Investigators usually can't be bothered to go through the legal procedures required in each
of the foreign banking havens involved to uncover where your money has gone. Often this
process can take up to six months in each country. Thus, if you need to put obstacles in the
way of investigators, you can arrange for one or more passthrough accounts to be set up before
wiring funds. This approach will cost a bit of money and may also necessitate that you go in
person to wherever the banks in question are located to arrange the matter. Don't count on
being able to do it from behind your desk.
Americans will also face the additional obstacle of having to convince their bank to wire
funds abroad in the first place. Banks in the US have been instructed by the IRS to monitor all
wire transfers closely, particularly international wire transfers. Although it is still legal to move
money beyond US borders, Big Brother has gone to great lengths to make such maneuvers as
difficult as possible. If your bank for any reason suspects that you may be wiring your money
abroad for the purpose of money laundering, which in the modern world can be something as
simple as investing it abroad and then not paying tax on the forthcoming profits, it may well
refuse to transfer your money all together. Be aware when approaching your onshore bank that
you will be bombarded with questions if you do not habitually transfer large amounts of money
offshore.
Also, be aware that Big Brother increasingly plays dirty. As most banks do not care much
for bank robbers, drug dealers or child pornographers, they will usually give much faster,
voluntary cooperation where evidence is given that the money involved originated from such
illicit sources. In other words, Big Brother may well plow his way through each of your
passthrough accounts in no time by issuing trumped up charges against you. This unfortunately
has been the experience of more than one unhappy reader. As Big Brother's financial
predicament becomes increasingly desperate, be aware of this very real threat. In short, it may
be advisable to be even more creative in your quest for banking privacy.
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perhaps even a letter of reference for each of your passthrough accounts. Needless to say, each
passthrough account should be located in entirely separate banks, not just different branches
of the same bank. You should also, of course, conveniently forget to mention the fact that your
money will only be roosting with said banks for a short while. Don't forget that banks do keep
records not only of your account transactions but also of any enquiry ever made about you.
Some - in fact, many - banks have been known to studiously keep even Christmas cards
mailed to them by satisfied customers!
If you are moving large amounts of funds in this way you should be aware that it is likely
to cause raised eyebrows when you walk into a bank where you are not known with a suitcase
full of cash that you just collected from Bank Number One, your first passthrough account.
The degree of this interest will vary according to the jurisdiction in which you conduct such
business. In some countries, a large cash deposit is anything above US $5000. These countries
tend to be the ones cooperating with the so-called war on drugs. They are a party to all sorts
of liberty-threatening treaties. Avoid them if at all possible!
Nonetheless, even in more liberal locales, if you make a habit of depositing large amounts
of cash, you may soon find yourself a better-known character in the local banking community
than you wish to be. Bank employees often frequent the same restaurants and bars. You do not
need Mr Lee, your friendly teller from Bank Number One chatting to his friend, Mr Yu, the
lovable, huggable clerk from Bank Number Two about how one customer - you - took out US
$6,000,000 in cash that morning. It might just set Mr Yu thinking - and talking - about the fact
that he had someone deposit that same in amount in cash just before lunch. That sort of talk is
all that is needed to establish a trail.
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Chapter 14
WHAT TO DO ABOUT
REPORTING REQUIREMENTS
Now that you understand the basic methods available to you for privately moving money into
your offshore account, you can begin to prepare a plan that takes into consideration the various
reporting requirements that have come into effect in your home country. For the most part, this
recent legislation is designed to block your attempts at achieving banking privacy in two key
areas. First, you will have problems moving large amounts of money, particularly in the form
of cash withdrawals, out of your onshore accounts. Second, you may well also be required to
report what you are up to when you attempt to bring your money beyond the borders of your
home country. Some countries go so far as to prohibit you all together from taking your money
with you when you leave home.
This chapter is dedicated to exploring ways around each of these restrictions. Of course, the
specific rules and regulations vary from country to country, meaning that before you attempt
to move even one red cent into your offshore account, see what your local legislators have been
up to. You will then know which of the strategies described in both this and the preceding
chapter is the best method for you to use. Once you understand the obstacles that have been
put in front of you, you will be able to adapt the game to suit your particular circumstances.
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Other privacy tools were soon to follow and now even dealing excessively with cashier's
checks, money orders or traveler's checks could also mark you as a criminal. In some
countries, it is now almost impossible to buy any of these instruments without first identifying
yourself. Often, you are only allowed to purchase a money order in a bank at which you hold
an account. The check is then paid for not with cash, but with funds drawn from your account
which thus creates a paper trail. Some banks in the US today refuse to sell money orders at all
for amounts of more than US $3000, whether or not you are willing to identify yourself.
What then is a person to do if he happens to live and keep all of his money, at least for the
moment, in one of the unhappy overly regulated jurisdictions that imposes such restrictions?
Yes, Big Brother has been very thorough in his attempt to block off any and all possible routes
to bank secrecy. However, one thing that he did not count on is that his very reporting
requirements and the massive pressure that he has put banks under has done little more than
succeed in burying bureaucrats in mountains of paperwork, composed of bits of paper that are
absolutely useless unless they can be properly sorted and analyzed.
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For example, in the US, exemptions may be granted to residents who own and operate a
sports arena, race track, amusement park, vending machine company or theater. Furthermore,
proposed legislation will grant further exemptions to several hundred large companies. In
addition, banks will be given the authority to apply for exemptions on behalf of known
customers. In short, this means that even in America, the Big Brother stronghold of them all,
forming a good relationship with a banker can work wonders. Yes, you will have to own a
business that falls within the very narrowly defined limits set up by the federal government,
but choosing the right type of business could be your road to freedom from almost all reporting
requirements. Avoid investing in an automobile, airplane or boat dealership as these sorts of
business have been specifically denied exemption status by existing legislation.
Yes, admittedly this is the long way around reporting requirements. In my mind, it would
be much easier to simply file a few pieces of paper and then break free completely from the
restraints put on you by government to embark on the life of a PT. Nonetheless, if you are
determined to stay in an overly regulated country and do not mind the day to day running of a
qualifying business, this method could well present a way for you to deal in large cash
transactions as much as you please. Whatever method you choose, once you have successfully
converted your money into either cash or other similarly untraceable instruments, it is then
time to look at hurdle number two, that of moving money out of your home country and into
your offshore account.
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home country and the countries through which you will be traveling before setting off to move
money into your account.
Whatever the situation, do not simply ignore reporting requirements as the penalties that
you may incur are severe. Ignorance of the law is no excuse. Big Brother will just as happily
seize money from an innocent traveler completely unaware of the law as from an international
drug swindler. Actually, it is the poor traveler who is far more likely to suffer and for whom
these very laws have been designed in the first place. Drug swindlers changed their tactics to
work their way around such reporting requirements quite some time ago. Furthermore, thanks
to terrorists, you can expect increased security at airports each and every time you board an
international flight. At every international airport, both your carry-on as well as your checked
luggage will be x-rayed before it is allowed on the plane. It is also becoming increasingly
common for all passengers to be frisked as they make their way through airport security.
The message is that if you have a large amount of cash on you before boarding an
international flight, they will know about it. Even just carrying a little bit over the required
limit will almost automatically lead to the forfeiture of all of the funds in your possession.
Once Big Brother has his hands on your money, it will prove to be almost impossible for you
to get it back. If you are at all in doubt about whether money or assets in your possession are
reportable or not, either diligently fill out the required report or convert such assets into
another form that you know will be safe from Big Brother's greedy claws.
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Before Big Brother can take your money, he will still be left with the enormous task of finding
it first. It's a big world out there.
Furthermore, many clients have told me that customs officials at many US border points do
not have the proper report forms. Hence, instead of filling out one of Big Brother's reports in
triplicate, they are simply told to "forget about it". Thus, as is typical with any government,
Big Brother's iron fist is rendered impotent by bureaucratic bungling at the front line. Big
Brother is not invincible. Most bureaucrats are buried under an avalanche of paperwork and
forms. The wealth of information that they hold on you is only brought together if you do
something high-profile that triggers a closer look into your affairs.
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interest in numismatic pursuits. In fact, even in spite of the letter of the law, it has been
reported that customs officials will ask the market value of coins rather than just allow you to
declare them at face value. Yet again we have an example of how Big Brother makes the rules
and then suddenly starts interpreting them according to his own designs when he uncovers
something that is not to his liking. Furthermore, like gold, coins made of gold are heavy. You
will not be able to transport a significant amount of money invested in rare coins to your
account without raising a few eyebrows here and there. This approach may be legal, but it is
definitely not low-profile.
For these reasons, you may want to consider moving your money in a completely
anonymous manner by first converting it into other collectibles less likely to call such attention
to themselves. Anything that is small, valuable and preferably not metallic is ideal. Stamps,
jewelry, books, antiques, art work - all of these are possibilities. Just make certain that you
know what your are buying. As with coins, you will probably have to break the paper trail
when you sell rather than when making your purchase. This method offers an almost foolproof
way around even the most heinous of all reporting requirements. Although countries are quick
to prohibit the export of cash or other liquid commodities, they usually do not limit you from
taking physical possessions with you when traveling abroad.
Even in the US, you can legally cross any border flagrantly flaunting millions of dollars
worth of jewelry. Of course, you'll want to be careful that while waiting in the airport to board
your flight you do not become another number in the appalling crime statistics of this country,
particularly in big cities. As in all such matters, low-profile is the best policy. Rolex watches
are one of the more liquid forms of jewelry. Why not wear a few on each wrist and ankle the
next time you leave the land of Uncle Sam? Just be sure to purchase from a reputable dealer
andhold on to your receipt to prove that the watches really are yours when it comes time to
sell. Rolex watches are also one of the most commonly counterfeited types of jewelry. Some
of them look amazingly genuine.
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usually knowledgeable about ways of beating the system. They, too, occasionally shuttle
money out in spite of currency restrictions and regulations. If you can, talk to industrialists, top
doctors, plastic surgeons, importers, large manufacturers, bankers or rich politicians. A quiet
talk in private with employees of the local American Express office could also produce results.
As a foreigner you usually have more options than a local. Some foreigners even make money
exploiting this advantage and helping others.
If you are stuck abroad and don't have the benefit of an ear to the ground, try to discuss
options with the locals. One worldwide consultant that specializes in the area of currency
restrictions is David Ward, a specialist in company formation. He has solved riddles in most
"problem" countries. Contact his firm Ward & Company, The Old Workshop, Marygate
Lane, Bootham, York Y03 7BJ, UK. Tel: +44-1904-639225.
Currency restrictions are never serious problems. There are always loopholes, some of
which are legal, some not so legal. Fortune 500 companies will have to stick to only the legal
solutions which may sometimes involve a bit more effort. An interesting read on the subject
which details creative problem solving on all continents is called Unblocking Your Funds. It is
available from The Economist Intelligence Unit, 40 Duke Street, London WIA IDW, UK.
Tel: +44-171-830-1000 ext 961 or Fax: +44-171-499-9767. Those who can offer assistance in
working your way around currency restrictions may also be useful for other purposes. If
lowering your profile is your aim, an informal chat with some of them could produce a wealth
of helpful information.
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Chapter 15
THE LONG HAUL
By following the advice given in the previous chapters, you can anonymously move money
into a completely private bank account located in a secure offshore haven. Once having
accomplished this, however, you must then turn your attention to long-term considerations.
Yes, many governments are not content to leave your money alone once it has picked up and
departed for safer lands. They still for some reason feel that they have a right to know every
detail about your financial transactions. They also arrogantly demand that you hand over part
of the revenue that your funds generate offshore. The fact that they have done nothing to help
your money grow does not matter. The fact that their ridiculous and restrictive policies were
responsible for driving your money away in the first place, similarly, is not of the slightest
concern to the bureaucrats. In their minds, your money is their money, no matter where it may
be, no matter where it may go.
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primarily in driving money offshore to nearby tax havens, such as Luxembourg. Not to be
deterred, German bureaucrats set to work to uncover the activities of thousands of long-
suffering German taxpayers.
According to recent reports, more than 2000 customer of Commerzbank AG who maintain
accounts in Luxembourg have come under intense scrutiny. Thousands of customers at
Dresdener Bank AG are also undergoing more of the same. Homes of bank customers have
been entered and searched. Bank employees who have advised clients to transfer money across
the border are currently being identified by investigating officers. How have the bureaucrats
come across the information that led them to discover the existence of these offshore accounts?
A thief broke into both banks but rather than stealing money chose to steal the very files sought
by the German tax authorities. Once this individual was arrested, rather than being returned to
its rightful owner, said file passed into the hands of government agents. How convenient.
In the UK, although one is not required to disclose the existence of an offshore account, one
is required to disclose any income earned from such accounts and, of course, pay tax on such
income. Like most other countries, Britain has also seen a massive amount of money make its
way to offshore banking centers. Over the last two years, offshore deposits have risen to a total
of £7 billion, an increase of over 50 per cent. Aware of this flow of funds, Inland Revenue has
recently issued a warning that heavy fines await those who are not willing to cooperate and
report income generated offshore. British tax authorities are particularly concerned because
they know that once money reaches offshore centers it is notoriously difficult, if not impossible
to trace. Still, not to be deterred, a government spokesman recently said, "If people are doing
it, we can find out about it. In total we retrieve about £4.7 billion as a result of compliance
activity." In other words, as with all other governments, there really is no limit to what the
bureaucrats may get up to in their continued attempts to separate you from your money.
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As a result, if you choose simply not to tell your home country about your offshore account
you could one day find yourself in a heap of trouble. Like all other reporting requirements, the
penalties that can be incurred in the US for not disclosing the existence of a reportable account
are severe. Fines of up to a quarter of a million dollars as well as a five year stint in the pokey
are possible. Furthermore, although the IRS previously did not attempt to prosecute offshore
account holders who did not report their accounts provided that they at least reported all income
earned offshore, today the story is quite different. Government tax agents relentlessly pursue
any and all possible convictions. Recently, a physician in the state of Michigan was fined US
$50,000 and imprisoned for nine months because he had failed to report offshore accounts that
he held over a three year period. What was he convicted of? Money laundering, meaning that
he will branded with a label that has become synonymous with drug trafficking for the rest of
his days, unless of course this hapless soul sets off for free lands and the life of a PT.
Bearing in mind the possible consequences of not reporting your offshore account, it may
then seem that the only possible thing to do is give up entirely and not even venture offshore
in the first place. What's the use of a private offshore account if you only have to tum around
and tell Big Brother all of the gritty details once the account has been opened? Happily,
however, there is a third solution. Even for Americans, there is a way to structure your offshore
investments so that they all remain perfectly legal yet need not be reported. Unlike all other
reporting requirements, structuring your offshore investments to avoid having to report the
existence of an offshore account has not (at least yet) been made illegal. Make arrangements
now to take advantage of this freedom as it is undoubtedly only a matter of time before yet
more legislation is introduced to block this one remaining legal route to privacy.
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manage your overall portfolio. All such foreign investments can, however, be stored perfectly
legally and with one hundred per cent anonymity in an offshore safety deposit box.
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United Kingdom, as it carries many ads for such funds. Make certain that you use an address
based outside of the UK when writing (the magazine cannot legally be distributed inside the
country). Financial Times Magazines, Greystoke Place, Fetter Lane, London, EC4 IND.
Tel: +44-171-405-6969 or Fax: +44-171-831-2181. For yet more information on offshore
mutual funds, consult the World Mutual Fund Survey written by Gary A. Scott. Gary A. Scott,
World Mutual Fund Survey, International Service Center, 3106 Tamiami Trail North,
Suite 264 P, Naples, FL 33940, USA.
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Perhaps the best feature of Swiss annuities is that they offer almost unbelievable protection
from creditors. According to Swiss law, insurance policies - including annuity contracts -
cannot be seized by creditors. They also cannot be included in a Swiss bankruptcy procedure.
Even if a foreign court expressly orders the seizure of a Swiss annuity account or its inclusion
in a bankruptcy estate, the account will not be seized, provided that it has been structured in
the proper way. This basically means that you must designate either your spouse or your
children as beneficiaries. Once structured in such a way, liens cannot be attached to such
assets. You can then breath a little bit easier, assured that at least part of your overall portfolio
will remain safe even if the most unpredictable turn of events should come to pass.
Again, the only problem with Swiss annuities is, as with all foreign investment products,
they are prohibited from advertising and even soliciting business in most countries. If you
would like to find out more about Swiss annuities you will first have to contact an agent. The
agent can then send you information about various Swiss annuities. Agents do not actually sell
annuities, but just provide information on the subject. If you decide to go ahead and buy a
particular product, you can then contact the concerned financial institution and pass your
money on directly to them. Three agents who can provide information on Swiss annuities are:
Volcon, SA, PO Box 949, 1211 Geneva 3, Switzerland or BEFI Consulting, AG,
Leibachstrasse 5, 8123 Ebmatingen, Switzerland or Jurg M Lattman, AG, Baarerstrasse
53, CH-6304 Zug, Switzerland.
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BRINGING IT BACK
If, however, for one reason or another, you need to bring some of your funds stashed offshore
safely back to your home country, make certain that you do so in a way that will not call
attention to your activities. This basically means that you should follow the same rules as when
moving money into your account and employ more or less the same procedures. For a start,
never transfer funds directly from your offshore bank to your home country bank account. Not
only would such an approach eliminate any and all privacy associated with your offshore
account, but the money deposited will also be considered taxable income unless you can show
conclusively that it is a tax-free gift from someone likely to have made such a gift. If the donor
is a foreigner, the local tax collector may still be able to stick you with a gift tax.
As when depositing money into your offshore account, the best way to withdraw funds is
the old fashioned way, in person, in cash. You can combine this excursion to your offshore
bank (or one of its branches) with a vacation and then return to your home country with an
amount of cash legally under reporting requirements. Just remember that as when traveling to
and from your banking haven to deposit funds, when making the trip to withdraw funds do so
in as low-profile a manner as possible. You could also instruct your bank to withdraw funds in
cash and then mail them to you. Just make certain that the amount is small enough to not
trigger any reporting requirements. It is also a good idea, as when sending cash to your bank,
to route the money through a maildrop in a nearby neutral country. A suspicious looking
package bearing a return address in a terribly secret banking haven could well be all that is
necessary to start an investigation into your affairs.
If your offshore account comes with a check book, you can gain access to your funds by
writing checks, but only outside of your home country. For reasons already explained, never
deposit a check from your offshore account in your home account. Not only would this
approach raise eyebrows far and wide, but it may also take well over a month for the check to
clear and for you to gain access to your funds. If you frequently travel outside of your home
country, you may want to open an account that comes equipped with a Eurocheck book.
Eurochecks can be written and cashed quickly and easily in 41 different countries, look out for
the special blue and red EC symbol in places that you frequently travel. Alternatively, you
could contact your bank and ask them to send you an international money order in your local
currency or in the currency of a nearby foreign country. Just make sure that bank is not
identified as sender and that the amount of the money order does not set off any reporting
requirements. When cashing the money order, do so in a bank at which you are not known.
If you need to move a large amount back to your home country, consider setting up another
offshore account in a nearby country. This second account could then be used as a bridging
account. First, instruct your offshore bank to wire funds to your new bank. You can then hop
across the border from time to time to visit your new account and retrieve your money. As this
second account is much closer to home, you can make your way to and from it more frequently
and at much less expense. Still, remember that structuring your withdrawals from this account
so as not to trigger reporting requirements as you bring your money into your home country is
illegal in many places. As innocent as such a practice may seem, it can still land you in jail.
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A WORLD OF OPPORTUNITY
By employing the privacy tactics explained in both this and the preceding chapters, you will
soon enjoy the benefits of a completely private account. At first, you will probably want to be
fairly conservative with your account. You may be content to open a simple deposit account,
move a few thousand offshore and then wait until you are certain that the waters are safe. Once
you begin to feel comfortable with the idea of no longer having all of your chips right at your
fingertips, you can begin to move more sizable amounts into the offshore arena and take
advantage of the investment opportunities available. Just remember to play by the same rules
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that you would at home. Diversify early, moving your money into different areas of investment
and storing it in several stable currencies.
Eventually you may want to open up several offshore accounts in entirely separate offshore
banking havens. By following the same procedures as you did with your first account, you will
soon be able to create many entirely independent investment entities. As you open up future
offshore accounts, avoid connecting them to your other offshore accounts as well as your home
base. If an angry ex-spouse or taxman on the war path one day unearths one of your offshore
accounts, the remainder of your portfolio will remain safely outside of his or her reach.
At some point in the future, you may also want to turn your attention to ways in which to
protect your offshore investments against any and all future restrictions that may be enacted.
If your home country were to one day institute full exchange controls and demand that all
money held offshore be brought home, you may still be granted an exemption if you have
established links with your offshore banking haven. For example, if you own property or even
just a timeshare in your chosen jurisdiction, you may be able to convince the bureaucrats that
your offshore account is necessary as you frequently vacation on this sunny tropical island
(that just happens to also double as your secret banking haven).
Yes, as a general rule it is a bad idea for a PT to buy property, but if for one reason or
another you are determined to stay in a highly regulated jurisdiction, owning property in a tax
haven may well provide the needed security to keep Big Brother's policies from becoming too
restrictive. Alternatively, you could open up a small business offshore as this would not only
allow you to keep your money where you see fit, but would also provide the opportunity to
reap some of the tremendous profits available in the offshore marketplace. Whatever paths to
secrecy you choose, just remember that although it may be difficult to legally move your
money about in a private manner, it is not impossible. No matter how many restrictions and
reporting requirements Big Brother introduces, there will always be ways around them. As
long as you stay aware of the writing on the wall, there will always be a way for you to bank
in silence.
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Part V
Banking Havens
of the World
Banking Havens of the World
Chapter 16
BANKING HAVENS
Depending on who you ask, between 50 and 100 of the 200 odd countries in the world are
banking havens or tax havens, sometimes both. Where to draw the line is often hard to establish.
A lot of havens are designed only to attract foreign investment. Locals that live in the country
and companies that conduct business locally usually pay hefty rates of tax. Some banking
havens that offer bank secrecy to foreigners forget all about this secrecy pledge when it comes
to protecting the interests of the local depositor. A commonly heard figure is that the world is
home to around 80 tax or banking havens. Of these, less than a fifth are true tax and banking
havens in all aspects, but this is changing. Even countries normally thought of as high-tax, red
tape bureaucracies hold secrets that few outsiders ever get to know about.
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account or multiple account foolishness, no lengthy forms to fill out, no minimum balances,
no humming and hawing. Once known, you can bring in a mixed bag of foreign bank notes in
any amount and deposit it all to your account unconverted. There is no counting charge such
as those imposed in Switzerland of up to two per cent. You could also use your money to buy
francs, pesetas, dollars, pounds, marks or whatever happens to be your fancy. The exchange
rate for customers is close to interbank rates.
You can earn very respectable interest rates on passbook savings accounts or deposit
balances in any currency. You can elect (at slightly lower interest) to have a no-notice, no-
penalty account that you can withdraw 100 per cent of your money from at any time. Interest
is calculated on a daily basis and posted to your passbook twice yearly. Furthermore, your
Andorran bank will also invest your money in CDs, time deposits, stock and bond transactions
or on most major bourses. You can engage in gold, silver or platinum bullion transactions.
Arrangements for loans and margin are practically identical to Swiss setups and include Swiss
type arrangements to avoid sales taxes on delivery of physical gold or silver bullion. Andorran
banks cannot yet trade in futures and options on your behalf, but will probably be able to handle
more complex trades by the time you read this. In short, Andorra is highly recommended.
Whether you need assistance in opening a bank account, obtaining a residence permit or
locating property to rent or buy, a local organization known as Servissim is the first place to
go for assistance. Servissim can also receive telex messages and provide maildrop services for
you. (Your bank may also be able to provide this service. Many Andorran banks will rent you
a little private post office box in their vault!) Anything you want to accomplish or do in
Andorra, just ask Servissim. They try hard to make it happen. If they cannot manage it, they
are genuinely apologetic. Contact: Simon Binsted, General Manager, Servissim, SL, Roc
Escolls 3-4 A, Ave Meritxell, 20, Andorra la Vella, Principat d'Andorra. Tel +33 628 860
414 or 861 148 or Fax +33 628 863 797. For more information on Andorra, consult The
Andorra & Gibraltar Report, my special report on this favorite mountain retreat.
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accounts available, the Austrian Wertpapierbuch. These accounts, which allowed one to invest
completely anonymously in international stock and commodity markets, are now no longer
available anonymously. All previous account owners are now required to identify themselves
if they elect to use the trading facilities of the account.
Anonymous Sparbuch or savings accounts, for which even the bank does not know your
name, are, however, still available. (If you are interested in making use of one of these wonders
of anonymity, consult the more detailed entry on the topic in Chapter 20.) Numbered
investment accounts - for which your name is known to only a few individuals in the bank -
are also still available, and, of course, even normal accounts opened in your own name are
protected by Austrian bank secrecy laws. Bank charges in Austria are about half those of
Switzerland. By means of your bank, you can invest in a wide variety of commodities,
including stocks, mutual funds, CDs and bearer bonds. There is a 22 per cent government
withholding tax on interest. This tax is paid by the bank out of your account without
compromising bank secrecy. Your name is never known to the government. Alternatively, you
can avoid this withholding tax by investing in short or long term bonds or by making use of a
fiduciary account.
The major problem with Austrian bank secrecy is that Austria as a country is highly reliant
on exports. It must therefore maintain friendly relations with its European neighbors. As with
Switzerland, the politicians of this banking haven will eventually be left with little alternative
but to cooperate with the growing international movement against bank secrecy. In a few cases,
Austria has already lifted bank secrecy. In 1991, the country froze all accounts owned by
former Panamanian dictator Manuel Noriega. Further accounts that have been linked to drug
trafficking charges have been frozen. For the moment, it seems that those of us not involved
in such high-profile activities can happily achieve a level of banking privacy in Austria.
This will probably continue to be the case for at least the next ten years. The Austrians are
vehemently opposed to the idea of caving in to foreign influence and altering their long
tradition of bank secrecy. Nonetheless, if Austria is one of your chosen banking havens keep
your eyes and ears open. Bank secrecy in this country is slowly eroding and remember, there
is no telling when your government may cook up charges against you to get the records it is
after. For more information on how to take advantage of banking secrecy in Austria, consult
The Austria & Liechtenstein Report by Dr Reinhard Stern, published by Scope International.
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nominee bank accounts are available from many Bahamian banks. As for official bank secrecy,
the Bahamas has some of the toughest legislation in existence. Under the Bank and Trust
Companies Regulation Act, no bank employee or anyone else who may come in contact with
bank records can disclose information to anyone - including foreign tax collectors - about the
activities of an account holder. Those found guilty of violating the provisions of this legislation
face a fine of up to US $15,000 as well as a possible two year stint in the pokey.
The fact that the Bahamas is located so close to the home of Big Brother headquarters has,
however, turned out to be somewhat of a disadvantage for the country. Claiming concern over
the possible use of the Bahamas as a money laundering center for drug traffickers, US
authorities have done all that they possibly can to eliminate bank secrecy in the country. The
result of their efforts is a Mutual Legal Assistance Treaty (MLAT). This treaty allows for the
release of information in cases that involve activities defined as criminal by the laws of both
countries. Still not pleased, however, US authorities pressed on and managed to include
provisions in the treaty that allow information to be released in cases involving a number of
offenses that are not considered to be crimes under Bahamian law. The list of such activities
currently includes racketeering, insider trading and a number of other similar offenses. Tax
evasion has not yet fallen into the expanding net, although undoubtedly US officials are doing
their best to remedy this "defect" in the existing treaty.
Of course, all of this increased attention has done little to endear Bahamian bankers to their
American clients. Many banks in the country now require that Americans relinquish their right
to bank secrecy before opening an account. A small number of banks are not willing to open
accounts for Americans at all. For those who live in the heartland of Big Brother, the Bahamas
may be conveniently located, but it is certainly not low-profile. The IRS is well aware of the
fact that many Americans hide a bit of their money in private accounts on the islands. It
actively seek out records concerning such accounts and has been known on occasion to cook
up fictitious allegations to achieve its desired results. Anyone who opens an account with
anything other than a US passport, however, can still expect full protection from Bahamian
bank secrecy. The country has not signed a tax treaty or an exchange of information treaty with
any other country, meaning that it does not exchange information with anyone other than
Uncle Sam.
Finally, the Bahamas is also a common jurisdiction for the establishment of offshore
corporations. Such an entity, known as an International Business Company (ffiC), is relatively
easy to create. All of the paperwork can be processed in 24 hours. The fees for running such
companies are also among the lowest in the world. Companies can be established for as little
as US $1000. Maintenance costs are often half of what they would in other Caribbean banking
havens. Best of all, Bahamian law does not require that the beneficial owners of the company
be revealed. All sorts of methods for screening your identity, including the use of bearer and
nominee shares, are possible.
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In a recent issue of Banker International Jane Morrison wrote, "Belgian banks are taking
action to shake off their image of being under-capitalized and of low profitability. Costs are
being slashed, computerization stepped up, new services offered and capital increased in a bid
to improve their international ratings". The only problem with Belgian banks is that generally
the interest on offer is fairly moderate, coming in at around three to six per cent. Still, reduced
interest rates may be a small price to pay for low-profile banking.
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After tourism, the second largest industry in Bermuda is offshore companies. Those who
make a living out of this industry understandably do not want to do anything to jeopardize it.
As with the opening of a bank account, forming a company in Bermuda is somewhat more
complicated than it is in other jurisdictions. It is also more expensive. To begin with, bearer
shares are not possible for exempt companies. Nominee shares can be arranged, but the identity
of the beneficial owners of the company must be revealed to the Bermuda Monetary Authority.
The authority, however, cannot reveal these names of beneficial owners of record without a
court order. As when opening a bank account, strong references must be submitted as nominees
are also required to have personal knowledge of those on whose behalf shares are held.
Nonetheless, the fact that truly anonymous company ownership is not possible in Bermuda
has done little to deter people from taking advantage of what is on offer. More than 5000
offshore companies are registered in the jurisdiction. Collectively, they bring in a total of more
than US $200 million in foreign exchange each year. Most of these companies are the
subsidiaries of US parents. Undoubtedly such international corporations understand that the
financial services available in Bermuda are of top quality. Attorney and accountants are
abundant and rank alongside their counterparts in Switzerland. Similarly, Bermuda offers an
excellent telecommunications system, a high standard of living and a literacy rate of virtually
100 per cent. Bermuda is also easily accessible from most parts of the continental US.
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During the last couple of decades the pound has had a trading range of between US $1.25
and US $1.90 for most of that time. At the extremes, the pound has gone as high as US $2.50
and as low as US $1.05 - for brief periods. There has been very little change in the pound in
recent years against European currencies as the pound was, until the fall of 1992, in an
internationally sanctioned currency stabilization arrangement. The Isle of Man, Guernsey,
Gibraltar and Jersey are probably all equally good places to keep your money in a major
British bank or building society. Another thing to consider is that there are fewer
misunderstandings when your banker is a native English speaker. These locations are also
widely considered to be good areas in which to establish an offshore corporation or trust. Each
has slightly different benefits on offer.
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and people look puzzled. At best they will stop, think for a minute and then say something
about how Sark is that funny place that doesn't have any cars. Only the very enlightened think
of Sark as a tax haven or business center. For years a handful of people have been quietly
going about there business from this tiny island in an entirely low-profile manner. Sark has
never been actively promoted as an offshore center and thus offers almost unheard of
confidentiality. The island is home to two one room banks that allow access to stock brokers
allover the world. Sark "residents" can thus make use of some of the world's safest banks
while enjoying solid bank secrecy. To find out more about the opportunities available on Sark
and on how you can make use of the services available consult The Channel Island Report,
published by Scope International.
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of the new residences and offices still stand empty. Everybody is waiting for Hong Kong to
arrive. Nonetheless, life in Gibraltar is gearing up to compete with the best of the European tax
havens. UCITS investment funds, licensed to carryon business throughout Europe, can now
be incorporated in Gibraltar. So can all sorts of banks and plain vanilla offshore corporations,
subject only to an annual license fee in lieu of taxes. Many yachts worldwide call Gibraltar
home. Through registration in the Gibraltar Ship Registry, they fly the British Red Ensign
while at the same time benefiting from what amounts to a flag of convenience that exempts
them from more onerous rules, taxes and regulations.
Best of all, Gibraltar is not averse to shady dealings. Banks tend to ask very few questions,
as some 500,000 account holders know. The territory also does not currently maintain any
double-taxation agreements and does not exchange or disclose information with any other
governments. Prime Minister Bossano even offers a rather balanced view on money laundering.
He says: "Most of us are against the laundering of money stemming from violence, drugs and
other crimes. This is obvious and well known. But rules intended to stop this kind of
whitewashing, by turning the act itself into a crime, will undoubtedly hit everyone else except
the criminals. The drug cartels will not let a couple of EU directives stop them. They will just
find other ways to achieve their goal. If they cannot do it peacefully through EU banks they
will do so with violence and terrorism." A more direct way of saying no to the Brussels dictate
on money laundering has probably never been heard from a politician.
Located bang in the middle of the best sunspot of the southern Mediterranean, Gibraltar is
probably the most strikingly beautiful of all European tax havens. Here, you can bank in the
morning, set up an offshore company or trust during lunch and then have a picnic on the
rugged side of the rock, where wild monkeys play. As a result of its British influence, tea and
scones, fish and chips and even "bangers" are all to be found in Gibraltar. Other staples of
British life - fog and endless drizzle - are not. By car Gibraltar is only an hour away from the
large expat communities of Marbella, Mijas and Feungirola. Foreigners descend on Gibraltar
daily, not just because of its secret banking, but also to shop. Gibraltar with no VAT and next
to no import duties has some of Europe's lowest prices for Japanese made electronics. Food,
on the other hand, is expensive. The locals drive across the Spanish border to the nearest hyper-
mercado to do their shopping. Life for them is not as pleasant as it is for the many no-taxed
offshore companies and banks located in Gibraltar. Personal full-time residents pay income
taxes at standard levels of up to 50 per cent!
Gibraltar is a good place from which to do business. Unemployment stands at an invisible
two per cent. Inflation is lower than four. Economic growth does not seem to have stopped.
Under new rules, foreigners coming to live in Gibraltar can now negotiate a flat rate personal
tax on an individual basis. Corporate profits are either exempt from tax or, if you choose to
operate under a different section of the local legislation, taxed at a very reasonable two per
cent. For this two per cent, the government actually gives back some return - hospitals,
schools, an honest legal system, local English language radio and television, effective policing
and even (compared to nearby Spain) clean streets. For more on Gibraltar, read my Andorra
& Gibraltar Report, a two-in-one set comparing the tax havens bordering Spain.
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Banking Havens of the World
Perhaps the most interesting aspect about the Isle of Man is that it is the only European t~
haven that is actively encouraging immigration. The government announced recently that It
would like to attract 10,000 new immigrants before the turn of the century. What's on offer?
Residents pay tax on their worldwide income at the maximum rate of 20 per cent, but there are
many exceptions. In fact, most international financial transactions are carried out entirely tax
free. The only other tax on the island is a small social security tax which is paid by employers
and employees. For more information on the various opportunities available in this tax oasis,
consult The Isle of Man Report written by Charles Cain and published by Scope International.
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The British Virgin Islands can also be used as a jurisdiction in which to open a simple
offshore bank account. It is, in fact, a fairly low-profile area for banking. There is no official
bank secrecy legislation, but as in most other British colony tax havens, information
concerning account holders is protected by a history of confidentiality as well as common law.
The British Virgin Islands is also one of the few Caribbean tax havens that does not maintain
a tax treaty with the US. A long existing tax treaty between the two was terminated in 1983
when officials from the two governments could not reach agreement on basic issues, even after
long and drawn out negotiations. There are six main banks present on the islands.
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authorization. Anyone found guilty of violating Caymanian bank secrecy faces steep fines as
well as a stint in the pokey.
Nonetheless, like other successful banking havens, the Cayman Islands have experienced
problems as a result of their tremendous success. Several scandals, including allegations that
a BCCI branch on the islands laundered billions of dollars, have done little to enhance the
image of the Cayman Islands as a reputable banking center. Not keen on rocking the boat too
much, Cayman officials have given in to some US demands. In 1988, they became signatories
to a Mutual Legal Assistance Treaty (MLAT). As in all other cases, this treaty allows for the
release of information in cases that involve a crime according to the laws of both countries,
meaning that the treaty is primarily limited to cases involving either drugs or large-scale fraud.
Tax evasion is not an offense that will lead to the relaxing of bank secrecy laws.
Two years later, under yet more pressure from US officials, bankers adopted a code of
conduct. Suspicious cash deposits of more than US $10,000 are now no longer welcome on the
islands. Cash deposits that fall below this amount or that are not seen as suspicious are still
apparently not a problem. In other words, as in other closely monitored banking havens, once
you develop a relationship with a particular banker, you will probably be allowed to do just
about whatever you please. Nonetheless, the Cayman Islands are definitely a high-profile
banking haven. US officials are more than aware of the fact that many American taxpayers
have decided to hide a little of their dough in this sunny tropical paradise. Anyone who travels
frequently between the US and the Caymans should expect that his movements will be
monitored by US officials. This could well lead to a government inspired tax investigation.
The fact that the Cayman Islands appear so high on the IRS hit list makes this banking
haven a poor choice for Americans. Of course, those from other countries - or even Americans
who can open accounts with any passport other than one issued by the US government - can
still expect to be protected by Caymanian bank secrecy in just about any conceivable
circumstance. The Cayman Islands have not entered into a single tax treaty with any country.
Caymanian bankers, however, have recently become far more diligent. Expect to be asked a
few questions as to the origin of your money. You may even be asked to provide one or more
verifiable references when opening a new account.
Finally, like most other Caribbean havens, the Cayman Islands is also a popular
incorporation center. The process involved is relatively simple, albeit somewhat more
expensive than in other nearby banking havens. Exempt companies are required to file an
annual informational return, although the actual beneficial ownership of such an entity need
not be revealed. Annual shareholder meetings are likewise not required, but company directors
must meet at least once a year in the Caymans.
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is widely spoken and understood. The fact that Cyprus has become host to Greek and Turkish
tensions means that if you are in search of a nice stable tropical island in which to stash your
hard earned money, look elsewhere. The main benefit that Cyprus offers the tax-oppressed is
as a place to register offshore corporations, particularly for shipping companies. Companies
registered in Cyprus that derive their income from outside of the country and are controlled by
foreigners pay only a 4.25 per cent tax.
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loosely regulated banks are best avoided for investment purposes. Private banking and high
interest rates are also on offer in Croatia, Latvia and Lithuania. Even war tom Yugoslavia was
offering interest rates of 15 per cent long before there was even any hope of bringing an end
to the civil war. Finally, if you would like an indication of how a large cash deposit might be
handled in Bulgaria, consider the fact that when the country sold off more than 1600
previously state owned industries, it announced that unlike similar sales in other former
communist countries, scrips or vouchers would not be acceptable methods of payment.
Instead, they preferred good old untraceable cash.
A great deal of "dirty" money is undoubtedly flowing across national borders that were
previously blocked by the Iron Curtain. So far few investors have tried to withdraw their cash,
meaning that so far no problems have arisen. Yet one should remember that in 1979 Mexican
banks offered a government guaranteed 19 per cent interest rate on dollar deposits when the
going rate was closer to nine per cent. After attracting many millions of dollars, the rules of
the game were changed. Funds could only be withdrawn in pesos. After conversion, deposits
were reduced in value to a point where they were worth less than the original deposit. The
countries of Eastern Europe may turn out to be more honorable than Mexico, but unless their
economies get into high gear, they will not be able to pay back the interest that they have
promised in hard currency.
Cautious investors will stay clear of deals that may in the end give them a pocket full of
worthless East European currency. Still, emerging markets are where the action is. A little
snooping around in any of these countries and a few local contacts could well produce
lucrative deals to import, export or pioneer the manufacture of some product or service much
needed in any of these emerging economies. Of course, the fact that none of these new banking
havens have a proven track record means that significant passive investments should be
avoided. A little speculative investment could, however, produce quite fruitful results.
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Kong is one of the most densely populated areas on the planet. It is also the leading southeast
Asian center for both commerce and finance and is currently positioned as the world's third
leading financial center, after New York and London. Hong Kong has issued licenses for more
than 160 banks which conduct business from more than 900 offices scattered throughout this
tiny stretch of land. The area is also home to a further 130 foreign banks which have been
given permission to open foreign branches in the colony. In short, Hong Kong is an area of
incredible prosperity, poised on the edge of communist China.
The wild East of the money business has long been Hong Kong with its influential stock
exchange and no questions asked gold market. This may, however, all be about to change. All
eyes are on Hong Kong to see what will happen on the 1st of July 1997. After one hundred
years as a British crown colony, this capitalist outpost will return to China. Although still
technically communist, in many ways the modern Chinese system offers far more freedom to
do business than our own western style democracies. China has promised to keep the capitalist
trappings of Hong Kong in place for at least another 50 years. The six million Hong Kong
Chinese are hoping that they can believe the leaders of Red China. Old habits of totalitarian
rule could well die hard.
For the time being, Hong Kong is an excellent location in which to maintain an offshore
bank account. The services on offer are of top quality. English is not only widely spoken, but
is the official language for commercial activities. Better still, account holders are protected by
strict bank secrecy and a long tradition of confidentiality. Information will only be released in
cases that involve criminal proceedings. Hong Kong does not maintain a tax treaty nor any
other exchange of information treaty with any other government, although it is apparently in
the process of negotiating a Mutual Legal Assistance Treaty (MLAT) with the US government.
Even if such a treaty is eventually brought into effect, it would undoubtedly not allow the
exchange of information for cases involving tax evasion.
Although Hong Kong is not a full-fledged tax haven, it does offer foreign depositors a
number of incentives for investing in the colony. Hong Kong income tax is based on source.
All non-source income is tax free, even if it is eventually brought into the colony. Capital gains
earned elsewhere, along with foreign income from sales, dividends or interest are exempt from
local taxation. There are also no foreign exchange controls and only very few import duties -
imposed primarily on cigarettes, liquor and medicines. Best of all, in 1982, Hong Kong
abolished its withholding tax of 15 per cent on foreign currency deposits. Currently,
government revenue is generated only on domestic income.
This freedom from import duties and other restrictions has allowed quite a number of Hong
Kong's inhabitants to run trading companies, shipping firms and import/export operations. A
lot of these setups are merely in the business of re-invoicing. All staff do is take paid receipts
before re-exporting goods to high tax markets. Hong Kong has an estimated 10,000 fully legal
re-invoicing operations. Most of these are housed in closet sized offices that, due to a chronic
housing shortage, also double as bedrooms at night. Other forms of offshore corporations are
also abundant. It is estimated that over 125,000 foreign and local groups have incorporated in
Hong Kong. Most of these companies are tax-free subsidiaries of either US or European parent
companies. No financial accounts need be filed and nominees can be used throughout the
entire operation. The cost of setting up such structures is also remarkably low.
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In the future, anything could happen to Hong Kong. The colony could die, like .Shan~hai,
or with a little luck it could become one of the major banking havens of the next millennium.
Old Hong Kong may still have some spunk left in it yet. Should things g? w~on~, ~ong Kong
Chinese also have a two year escape valve in nearby Macau, where taxation IS similarly based
on the territorial principle. Whether or not the Chinese will protect and preserve these two
crown jewels remains to be seen. It stands to reason that Chinese officials have p.roba~ly
learned a lesson from the disastrous policies that they originally imposed on Shanghai. China
is slowly opening up to a capitalist way of thinking. After all, what alternative does it have?
Although the current political instability surrounding Hong Kong may mean that it is best to
wait before taking the plunge, Hong Kong definitely merits continued consideration as a
banking haven.
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difficult for even a creative businessman to ply any sort of decent trade. Honest resident agents
who can operate your offshore company and take care of its day to day dealings are also often
hard to find. When doing business, you are beset by incompetent hangers-on everywhere you
go. Ba.dly educated officials are a true pain in the behind, a real burden to anybody who has
~ver tned to ~o anyt?ing in Jamaica besides soaking in some sun on the beach, although locals
Intent on selling their wares can even make this simple activity a true nightmare.
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Banking Havens of the World
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Banking in Silence
the five richest in per capita income and personal wealth, meaning that it is reasonable to
believe that Liechtenstein could cover any local banking test with flying colors. The Prince who
is the major stockholder in the conservative Bank in Liechtenstein might have to sell a few art
works from his collection of several hundred old masters, but at US $50 million a pop, he seems
to be a better guarantor than the US Treasury. The Prince is debt free and has lots of assets, that
is a lot more than what can be said for what is allegedly "the greatest nation on Earth".
Liechtenstein is also a favorite jurisdiction in which to establish offshore corporations and
trusts, as the jurisdiction has what is often called the most flexible company law imaginable.
The most popular form of offshore structure is known as the anstalt (establishment) and is said
to be all things to all people. Still, such offshore entities are definitely not low-profile. The IRS
as well as several European courts have refused to recognize the anstalt as a legal entity. Other
types of offshore structure may prove to be more appropriate. Also, playing the offshore trust
game in Liechtenstein is definitely not cheap. Although company law may be flexible in this
jurisdiction, one pays dearly to make use of it. Other offshore centers may well offer the same
service at more than half the price. As with all things in life, shop around.
Other problems with Liechtenstein? For native English speakers, the fact that the official
language of Liechtenstein is German may cause a few problems. Perhaps you would be more
comfortable dealing with a native English speaker. Also, if you only have a small amount to
invest offshore, Liechtenstein is probably best avoided. Generally, the banks of this tiny
mountain haven prefer to deal with only high net-worth individuals. Finally (although some
would see this as a benefit) it must be said that Liechtenstein is somewhat difficult to get to.
There are no major airports nearby. From Zurich, you can reach the country by either a one
hour bus ride or a combination train and bus ride. Alternatively, it is a one hour scenic car ride
on the freeway from Zurich. In other words, by banking in Liechtenstein, you may make it
difficult, time consuming or expensive to visit your money. Still, if you like the idea of
spending some time skiing in a beautiful mountain retreat while taking care of a little business,
Liechtenstein may be perfect for you. For more information on what this tiny banking haven
has to offer, consult The Austria & Liechtenstein Report by Dr Reinhard Stern, published by
Scope International.
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Banking Havens of the World
haven of many wealthy individuals who desire maximum confidentiality, good service and
more reasonable charges - generally about 40 per cent lower than those imposed by the Swiss.
Accounts in Luxembourg may be held in any currency. Furthermore, unlike Switzerland (as
there is no withholding tax on interest paid to foreign depositors) the use of fiduciary accounts
to circumvent national withholding tax is not necessary. Luxembourg has also been successful
in attracting many German depositors interested in avoiding the withholding tax and various
other bits of restrictive legislation that have recently come into force back home. Luxembourg
subsidiaries now handle about 5 per cent of all German banking operations as well as almost
half of the total foreign assets of German banks.
Although its bank secrecy laws only date back to the early part of the last decade,
Luxembourg does enjoy a long tradition of banking confidentiality. Under current legislation,
banking information can only be released to a foreign government if the depositor has been
charged with a crime that is related to the account and is also a crime in Luxembourg. As
Luxembourg does not have an income tax, tax evasion is not a crime. Tax fraud, however, is a
crime and could lead to the release of information. Also, unlike many other jurisdictions, a
violation of bank secrecy legislation in Luxembourg is only a civil offense, meaning that your
privacy may be better protected elsewhere.
Still, such limitations have done little to stunt the growth of Luxembourg as a banking
haven. A total of 187 international banks have opened offices in the country. It is hard to name
one major player which does not have a branch or wholly owned subsidiary there. German
banks alone have established over two dozen subsidiaries in the country. The biggest banks in
Luxembourg are Bank Internationale a Luxembourg (BIL) and Banque Generale du
Luxembourg. Each is locally owned and operated. They are smaller than their Swiss
competition which means that they are more difficult for Big Brother to control. Both banks
are very solid and, like all banks in Luxembourg, have plenty of staff members who speak
English. In fact, the general job requirement for any bank officer in Luxembourg is fluency in
English and German. Other major players are the Deutsche Bank and Dresdner Bank, both of
which are German owned. You will also find all of the old standbys including Barclays, Lloyds
and Citibank. A complete list of all banks in the country can be obtained by writing to: Lucein
Thiel, General Manager, Association of Banks in Luxembourg, Luxembourg.
Luxembourg is also home to a vast number (over 1000) of investment funds. Many of these
are sponsored by major banks. Some are no-load. Others charge as much as a 7 per cent
commission to get in as well as up to 5 per cent per year off-the-top for management fees. One
of the leading funds (in terms of performance) in Luxembourg is Fleming. The Fleming
Flagship fund, for instance, has outperformed stock market indexes by about 80 per cent since
it was started around 1989. More recently, some fund managers have expressed fears that many
stock indices are poised to take a sharp downward turn. Any fund that has been the leading
performer in recent years is statistically more likely to be near the bottom next year than a
consistent mid-level performer. Had I written this section a few years ago, I'd have said that
the top performer was the Gaia Hedge Fund, which climbed almost 100 per cent every year for
several years. Then in 1992 Gaia slipped by a staggering 67 per cent! Not so good for new
arrivals. Performance like this is what makes many decide that it is better to let a bank manager
handle their funds with the main objective being capital preservation rather than capital gains.
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Banking Havens of the World
maintained by the bank. In other words, later investigations would not be able to uncover t~e
identity of the payee. Banks are also willing to hold all mail on instruction. In short, Malta is
a good country to store a small chunk of your overall portfolio. The fact that b~nk secrecy has
only recently been enshrined in law makes the country somewhat less than desirable as a p~ace
to hold the bulk of your offshore nest-egg. For more information on Malta and the vanous
opportunities that this little known banking haven presents, consult The Malta Report by Ross
Shaw, published by Scope International.
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The article that this journalist went on to produce quickly aroused the attention of all of Big
Brother's agencies, who until that time where apparently unaware of what was happening in
~he Se~chelles. The Financial Action Task Force (FATF) used evidence gathered by this
journalist to prove that the Seychelles had officially established itself as a money laundering
center. Interpol distributed copies of the article to financial institutions across the globe. All of
this commotion caused a great deal of embarrassment for officials on the islands, who quickly
changed their policies. There are no reliable figures as to the amount of money that flowed into
the Seychelles before modifications were made to the EDA, but there are rumors that several
hundred million dollars took up what was on offer. What does all this mean? The Seychelles
has in just a few months earned itself a rather black reputation. Many banks are undoubtedly
unwilling to accept transfers from financial institutions located in the Seychelles. In short,
unless you want to earn the reputation of an international money launderer and drug trafficker,
take your money elsewhere.
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Banking Havens of the World
get their hands on the records that they wanted in the first place. In 1991 alone, more than 800
breaches of bank secrecy laws were allowed by the Swiss courts.
Switzerland has also increasingly expanded the scope of what it considers to be criminal
behavior. Both money laundering and insider trading were recently made illegal in the country.
In 1992, the Swiss Federal Banking Commission issued guidelines which require that bankers
report any account holder whom they suspect of money laundering. Similarly, cash has come
under attack and reporting requirements on cash transactions of more than SFr 25,000 have
been enacted. New regulations also require that any person who conducts business with a third
party's assets be made aware of the beneficial owner of these funds. In other words, nominee
accounts, which are still freely available in many other banking havens, are no longer on the
menu in Switzerland. Even the anonymous Swiss numbered account has been eliminated and
is today only of use to Hollywood script writers.
Are the days of Swiss bank secrecy numbered? It seems so. The international pressure
brought against Switzerland to tinker with its secrecy laws has been absolutely enormous. In
many ways, the country has been a victim of its own success. The Swiss are dedicated to
maintaining whatever remnants of bank secrecy they can, but the cards are simply stacked
against them. In 1984, a referendum was passed by a 2: 1 margin in favor of continuing bank
secrecy in the country. In 1991, the country broke off talks with US authorities when they
began to push for the open exchange of information in cases involving tax evasion. Such
initiatives, however, have done little to stop the overall trend away from bank secrecy and the
introduction of restrictions on banking practices in the country.
Switzerland applied to join the EU in 1992. Such membership would again bring about yet
more limitations on banking privacy. Much of the recent initiative taken by the Swiss to
preserve what bank secrecy remains available in the country appears to be too little too late.
Perhaps the Swiss are simply concerned with preventing an exodus of capital entrusted to their
safekeeping. After all, Switzerland is far from what can be considered a tax haven. The country
imposes a 35 per cent withholding tax on all interest and dividends earned within its borders.
This tax can be avoided by investing money through fiduciary accounts, but as the original
reasons for investing in Switzerland disappear, most of the money based there will
undoubtedly no longer be inclined to deal with such hassles.
That all said, it must also be admitted that in spite of the many holes that have appeared in
Swiss bank secrecy, Switzerland even today is the yardstick by which all other financial
centers are measured. Swiss bankers enjoy an international reputation that is second to none.
The country is both economically and politically stable, as it has been for centuries. While two
world wars raged around its borders, Switzerland remained blissfully neutral. The country also
enjoys a low rate of inflation and one of the world's strongest currencies in the Swiss franc, a
currency that is backed 154 per cent by gold. Swiss banks are undoubtedly among the strongest
and most stable financial institutions in the world. They offer a full range of services to
investors as well as a wide variety of investment opportunities in stocks, bonds, precious
metals, insurance and most other financial services.
Those wishing to set up anything in neutral Switzerland should start by studying The Swiss
Report, written by Marshall Langer and published by Scope International. Langer has lived in
Switzerland for years and it shows. He knows his stuff. After you have read his report you will
know whether or not to proceed with the obvious first step, opening a bank account in
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Switzerland. The country has over 500 banks to choose from, all of which differ in what they
have to offer. Many are not willing to do business with Americans for fear of possible
entanglements with US officials. Others insist on a personal recommendation before
proceeding. Others are only willing to deal with clients who wish to invest in excess of US
$50,000 or more. While yet others accept accounts with no minimum balance. Deposit US $10
and you're in business.
A local contact can be extremely helpful. From time to time, I receive offers from Swiss or
resident foreigners who would like to lend a hand by acting as facilitators. Usually, they charge
too much. One American resident recently charged US $1000 just to assist in opening an
account. I did not do business with him. I prefer cheap to feed, eager and seemingly honest
advisers. One such helpful contact is: Office Services, Jupiterstrasse 56, CH·8032 Zurich,
Switzerland. Tel +411 382 0356 or Fax +411 382 0153. They will let you do everything by
mail and do not ask too many questions. They are also fast and will not cost a fortune. Their
literature and information is free.
However, it may be that like myself you have grown a bit weary of Swiss banking in the
days of Big Brother. Of all the world's lands, this country may well be the most pristine,
orderly and outright antiseptic. Switzerland is loved by many of us as an agreeable place to
spend a weekend or enjoy a short holiday. When you go to Switzerland as a tourist, enjoy
crystal-clear lakes, high snow-peaked mountains and green sparkling valleys alive with
flowers, just don't expect full-fledged banking privacy.
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need not be revealed, as bearer shares are possible. Company stock can be held by just one
person who can also act as both director and secretary for the company. There are also no
requirements that an annual report be filed, a registered office be maintained or ~nnu~l
meetings be held. In fact, those responsible for establishing an offshore company III this
jurisdiction need not even set foot on the islands. The entire process of incorporation can be
handled in as little as three days.
If all you are interested in doing is opening a simple offshore account, a few of the major
international banks, including the Bank of Nova Scotia and Barclays have established branches
on the islands. The Turks and Caicos have not signed a tax treaty with any country nor do they
maintain any other exchange of information treaties. A few public scandals have brought some
unwanted attention to the islands, but for the most part island officials seem determined to
attract only clean money. How they will go about the process of separating the good from the
bad remains to be seen. In the meantime, the Turks and Caicos offer private banking with
airtight bank secrecy. Big Brother has not yet been able to punch any holes into what may well
be the toughest bank secrecy legislation in existence.
One must remember, however, that the Turks and Caicos do not enjoy the centuries long
tradition of banking confidentiality that can be found in other nearby banking havens. The fact
that the Turks and Caicos have only recently entered the international banking arena means
that many financial services have yet to find their way to the islands. Similarly, direct flight
connections to the islands are not as abundant as they are for some of the other more
established Caribbean banking havens. Nonetheless, the Turks and Caicos have definitely been
successful in placing this tiny community - with a total population of less than 10,000 - on the
map of international finance.
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that relations with more shady money larks would. Transfers from the US to places like the
Cayman Islands or the Bahamas are under close surveillance. Similar transfers to either the
Jebel Ali or the UAE would not raise any eyebrows. Smart folks have been moving their smart
money through the Jebel Ali Free Zone recently.
T~ bring foreign. inve~tment to the Jebel Ali, the UAE has sponsored full page ads in leading
EnglIsh-language financial and economic publications over the past few years. The ads are all
t~e s~me. They show a fresh-faced, educated businessman quietly going about his business,
nmeties style. The headline reads: "He hasn't paid tax since 1987. He transfers his money
overseas. He's known throughout the Middle East. And the only auditor looking for him is his
golf partner." What businessman caught up in the bumper to bumper fears of the crumbling
West of today would not want such a blissful existence?
These four headline sentences, coupled with the photo of a happily optimistic tax avoiding
banker are aimed squarely at all money managers fed up with the way most western countries
have made it difficult, in many cases even illegal, for them to do business. The slogan for this
marketing campaign is "Freedom to do Business". There are no laws to bar you and no
regulators to make your life hell or scare away your clients. Nearly every type of business is
welcomed with open arms. For customer service or marketing requirements, contact the Jebel
Ali Free Zone PR department at: PO Box 17000, Dubai, UAE. Tel: +971-084-56578, Fax:
+971-084-56073 or Telex: 47398 DPA EM.
Complete tax freedom is a matter of course for residents. Corporations are given a
minimum 15 year tax holiday. When these first 15 years run out, expect another 15 to be added
on top of them. Unlike most other places in the region, complete foreign ownership of any
company is allowed, as is the transfer of all profits to wherever desired. No authorization in
any form whatsoever is required before such transfers are carried out. This freedom from
government interference has prompted many banks and financial service companies to set up
shop in Jebel Ali. Many multinationals have also moved in. The likes of Nike, ffiM, Philip
Morris, Reebok, Citizen, Caltex, Airwell, Star Energy, Aiwa, Mitsubishi, Sony, Black &
Decker, York, Schlumberger, McDermott, Shell and Air Products can all be found in the area.
The United Arab Emirates earns its money on oil and oil royalties, so they are not too busy
collecting taxes. The world's largest man-made harbor is in Dubai, housing the Jebel Ali Free
Zone. From a statistical point of view, there are plenty of customers in the area. The region
surrounding the Persian Gulf is home to more than one billion people. Right now, few of these
folks buy Reebok shoes, watches from Citizen, cars from Mitsubishi or air conditioners from
York or Airwell, but this could change. In the large free trade area, you will find small western
villages where alcohol and nightlife is available. You can play tennis and golf with other
expats. You can live and work there. If you are not keen on traveling, it is possible to live your
entire life inside one of the western compounds. Local labor is cheap and you will not have to
pay import duties on anything that you bring in. Export duties do not exist either. As they say,
"We're open for business!"
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Banking Havens of the World
created. Devolution is a growing trend. Many of these new countries quickly ins~itute
legislation or policies specifically designed to attract foreign inves~~ent. .Other established
countries enact bank secrecy legislation or foreign tax exernpnon policies WIth much the same
intent. They understand the economic incentives of becoming a tax or banking haven and ar~
keen to emulate some of the success stories already described in this chapter. Each year, It
seems that the list of worldwide tax havens grows a little bit longer.
Are there more possible surprises in the Caribbean? Perhaps. Keep your eye on Grenada,
the independent island state that got its fifteen minutes of fame when it was invaded by the
United States more than ten years ago. Grenada is located north of Trinidad and south of St
Vincent. When Grenada acquired independence in 1974, the government claimed that income
tax would be abolished. This has still not happened, but we are waiting. In 1986, company tax
was reduced to ten per cent, all income from abroad was made tax free and even more reforms
were promised. Stay tuned. Maybe Grenada will be the next new hot thing.
Malaysia, the former British colony, is another possible contender for tax haven status. This
country uses a roundabout version of the principle of territoriality as the basis for taxation. As
long as your profits are derived from abroad, you are not liable for income tax. This exemption,
however, only applies for as long as you keep your profits abroad and do not bring them into
Malaysia. Most foreigners living and working in Malaysia pay some 15 per cent in tax. If this
sounds excessive, Malaysia has developed the latest addition to the international list of tax
havens, its own little pearl, a newcomer called Labuan.
Labuan is the latest Asian banking haven. It is hard at work trying to attract foreign banks.
On offer is freedom from taxation as well as freedom from not only currency restrictions, but
also from all other government rules and regulations. At least this is what the Malaysian
authorities have promised. To my ears, it sounds more like hype than reality. In the real world,
banking supervisors always want to meddle. In a few years we will know how Labuan's bid
for banking haven stardom has fared. The timid will wait and, in the meantime, stick to
established, well-known European banking havens. For pioneers, Labuan is open for business.
In the Middle East, Jordan has recently positioned itself as another would-be investment
haven. By passing various pieces of legislation that were supposed to be accommodating, the
Jordanian authorities have on several different occasions tried to attract foreign investment. It
was thought that with a base in Jordan, these funds could then be happily invested worldwide
and then payout tax free profits to investors in various countries. This plan was designed to
cater to the needs of the tax oppressed in the Arab world, although none of this was spelled out
quite so explicitly.
The response has been nil. Neither banks nor other foreign financial institutions ever came
to Jordan to set up tent. Some odd-ball tax advisers with their own drum to beat may advertise
Jordan as the Next Big Thing in tax havens. So far, based on all indications, this is simply not
true. If you are an Arab, you can launder money through Jordan, but that is about it. For the time
being, the country offers nothing else. Nonetheless, keep an eye on Jordan as the situation could
change fast, but until you have proof of such a magical transformation, hang on to your money.
Another up and comer could be the Maldive islands, with a little luck. The Maldives, an
independent republic in the Indian Ocean, is found just south of Sri Lanka. It consists of
between 1200 and 2000 coral reef islands. The exact number depends on whether or not you
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count at high tide! The Maldives has made most of its foreign currency from tourism. This
could change now, with the government eagerly trying to make its country look the part of a
1990s style tax haven.
Yet another emerging tax haven could be found in the Republic of China, as Taiwan insists
on calling itself. Foreigners can get special tax concessions if they bring manufacturing
industries to the island. This is part of a government job creation scheme. New banks will be
treated with a hands-off approach and next to nonexistent tax rates by the Taiwanese authorities.
Other countries that have recently made grumblings about their desire to become tax or
banking havens include Egypt, Mauritius and Sri Lanka. North Korea also recently announced
that it has created what it refers to as a "free trading zone". The problem with these and all
other would-be havens is that they have no track record. The only assured prediction for the
future is that things will change. In a changing world, it is usually best to turn to the more solid
and stable banking havens, those that have proven their commitment to managing your money
over the course of decades, if not centuries.
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Part VI
Advanced
Banking Strategies
Advanced Banking Strategies
Chapter 17
OFFSHORE CORPORATIONS
AND TRUSTS
How can offshore companies help you bank in silence? Some claim that they are essential.
They say that without an offshore company (or two or three or ten) you can never have true
bank secrecy. When you look closer at those making such claims, you usually discover that
they are resident agents or that they are in some other way connected to the industry of setting
up and managing offshore companies for others. Nevertheless, a few independent, unbiased
advisers also recommend offshore companies as a way for you to lower your financial profile.
Others say that offshore companies are more trouble than they are worth. They are expensive
and can raise red flags. PTs have other and far better silver bullets at their disposal. So what
are you to believe? The truth, as always, is never a case of either/or. Nothing is ever entirely
black or white. Do you need an offshore corporation? That depends on what you are doing,
how you make your money, who you deal with and how you want your money to enter your
system later on. Perhaps a thousand dollars invested in a basic offshore company is money
well spent. Perhaps not.
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Banking in Silence
insulate you, they say, but all too often advisers make bad business decisions, are not available
when you need them or get into difficulties unrelated to you but still steal from you to cover
themselves. Ferdinand Marcos, when his personal financial records were splattered allover the
newspapers, was charged with many crimes even though his advisers assured him that
everything was legal. There is little or nothing one can do in business, politics or tax avoidance
that cannot be turned into a criminal prosecution. The best protection may be to do whatever
you are doing without witnesses or paperwork. The best advisers try to get people off on their
own, conducting their business affairs in complete privacy.
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Advanced Banking Strategies
restrictive regimes, nationals are currently taxed on income generated by foreign corporations
that they own and control. No tax deferral is allowed except in certain very limited
circumstances. Of course, the other alternative is not to tell your government about the
arrangements you have made, not pay the tax and then hope that you will never be found out.
The bad news is that theoretically this is still tax evasion, meaning that your elaborate offshore
empire has achieved no more than a single bank account opened in the proper manner could
have. Moral of story? If all you want to do is cheat on your taxes, why go to all of the trouble
of forming offshore companies in the first place? The main reason for using offshore
companies is legal tax avoidance, not criminal tax evasion.
OTHER ALTERNATIVES
Many advisers claim that you must establish an offshore corporation or trust to protect either
yourself or your business from unforeseen consequences. While they are right in claiming that
such protection is a necessity in our modern world, their preferred solutions often cause more
problems than anything else. In many situations, while offshore entities may provide part of the
solution, the bulk of the answer still lies in working with another living, breathing kindred spirit
rather than a paper entity created to supposedly protect you. The best solution is usually to work
with someone on a quid pro quo basis. You do something for me, I do something for you.
For example, assume that you have a friend who is setting up a publishing operation in
Germany. He lives outside of the country, but works through an offshore company. He knows
that the German FISC is often a lot like the IRS and will not hesitate to use its arbitrary powers
to close down whatever they do not like. As a result, this friend has structured his operations
so that all companies involved are "collapsible" and therefore insulated from whatever may
happen. If one of his companies is attacked, he simply closes it and then starts up again the
very next day with the same books and trading name, just a new address and company.
He does, however, have a problem with the trading name. He does not want to be the
proprietor of it. As a German citizen, he knows that his assets, including the trading name, can
be seized by a tax court and made the property of the government with little fuss on the part
of government bureaucrats. Offshore advisers would probably suggest that he set up an
offshore trust that can in turn own the trading name. While this strategy may work, your friend
knows that his government could also easily overlook the trust and grab the trading name by
court order anyway. He could then fight the court order and probably win in so far as the
foreign trust is legally established and managed properly. But then again, he may not win the
appeal and in any case, such a court procedure could drag on for five years or more, all the
while ensuring his business remains closed down.
His best solution would be to find someone, a live person of flesh and blood, not a German
citizen, to manage the trading name, sign licensing contracts and so on. To make the whole
setup look kosher in the eyes of the authorities, this person would need to be an ED citizen not
domiciled in a tax haven. This person could be you, perhaps. In return, your friend could help
you obtain your own objectives. This story is just one suggestion involving a particular case.
There are many more. Often the best solution to a problem is to get other people, preferably
PT friends, to help you. They are not in this game for money. Like you, they are interested in
pointing the short end of the stick at governments and tax gatherers. You can find some of these
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Banking in Silence
contacts in the classified section of The Mouse Monitor, the privacy newsletter published by
Scope International.
LIMITED CIRCUMSTANCES
Finally, I must again say that rather than going to all of the bother of setting up an expensive
network of offshore corporations and trusts, it seems much more sensible to me to simply do
away with all such shenanigans and become a PT. The best way to protect your ass and your
assets is to make them disappear. Keep your mouth shut and arrange for the paperwork and
passports to be in place. Privately move your assets to a safe offshore jurisdictions and then,
when the time is right, make sure your ass follows - preferably before you are served with
process in any serious lawsuit. As a PT, you will find that one of the beauties of life is that you
are free to do exactly (read that word twice) what you feel like doing. You can go where you
want to go, live where you want to live, pay the taxes you feel like paying and do as much or
as little work as you feel like doing. This freedom is priceless.
However, I also understand that for various reasons many individuals are not able to simply
pack up and embark on the roaming life of the PT. There are also those who, for personal
reasons, will not or cannot make use of the many low-profile PT tactics. You may be one of
them. If you feel queasy about banking through an alias or pen-name, then offshore
corporations and trusts may be of some use to you in establishing banking privacy. (Just
understand that such legal entities are not the wonder cure-all that many offshore advisers
would have you believe.) There are also a few limited circumstances in which the use of
offshore corporations and trusts may be necessary for any individual, even someone who
already enjoys the full and free life of the PT.
One such situation in which offshore corporations and such are worthwhile is where an
active business is involved. If there is no better way to get a regular cash flow of royalties,
commissions or interest out of a given country without paying withholding taxes, such legal
entities may be necessary. In addition, offshore trusts, foundations, holding companies and the
like may also be able to insulate you from some types of business-related lawsuits if you are
running a business or professional practice, although this can usually be done more cheaply
with liability insurance or secret offshore accounts. You may also want to establish offshore
companies in some jurisdictions so that you can take advantage of either unique legislation
(such as freedom from VAT in Gibraltar) or of government goody programs that have been
established (such as in Ireland to attract new business).
As far as passive assets are concerned, the only situation in which offshore legal entities
may be necessary is if you are getting on in years and have heirs or beneficiaries that can't
manage money on their own. I regard setting up such trust arrangements as a last resort! If you
are young and in good health or if you have a child, wife or partner you can trust, it is better
to keep your offshore passive money in a pen-name, making advance arrangements for
disposition in the event of your incapacity or premature demise. On the other hand, if you fit
into one of the few above categories, this chapter has been included exclusively for you. That
said, it is time to get down to business.
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Banking in Silence
CHOOSING A JURISDICTION
Choosing a jurisdiction in which to form an offshore corporation or trust is not entirely unlike
choosing a place in which to open an offshore account. In short, you want to select a stable
jurisdiction willing to cater to your needs. Your new place of business should not have a history
of enforcing foreign judgments or of openly cooperating with foreign high-tax governments.
It should view your newly-formed corporation or trust as a completely separate legal entity
from yourself that is not responsible for any judgment that a foreign creditor or taxman may
one day levy against you personally. Criteria, such as the language in which you will have to
conduct business, are also important. It should be easy for you to run your company, in a
language with which you are comfortable.
You also want to select a country that will protect your right to privacy. There should not
be any filing or reporting requirements. The best offshore jurisdictions allow for companies to
issue bearer shares. These shares are not registered in an individual name, but instead are the
property of whoever happens to possess them. Such shares are as anonymous as good old cash.
Whoever holds on to them, owns the company. Another alternative (albeit one that is more
expensive) is to have nominees stand in for the actual shareholders. In some cases, these
nominees even serve as officers and directors of the company. The true owner remains
anonymous, but maintains control of the company by proxy. By employing either of these
methods, it becomes just about impossible for a foreign government or creditor to determine
the true owner of the company. In this way, the true ownership of whatever the company
controls, such as a bank account, also remains anonymous.
Yet another important consideration when choosing a place in which to establish an
offshore corporation or trust is, of course, cost. You want to select a jurisdiction that imposes
minimal charges for both forming a company and for maintaining it over the years. Local
professionals, such as accountants, solicitors and company formation agents, should be at least
moderately cheap to feed. The cost of maintaining a registered office should also be affordable,
but if all you are interested in doing is opening a bearer share company and then using it to
open an anonymous bank account, such formalities will only push up the cost of your
operations. It would be better, from the start, to simply choose a more liberal incorporation
center that does not require that you maintain a registered office. Finally, the jurisdiction that
you choose should not raise red flags that call attention to your affairs. For this reason, many
people choose to incorporate in popular tourist destinations. Any undue attention can be
explained away as an innocent holiday on the beach.
Just as there is no perfect location in which to open an offshore account, there is no perfect
place in which to establish an offshore corporation. The previous part of this report includes a
wealth of information on forming corporations in various offshore jurisdictions. To make
matters even simpler, however, there are a few jurisdictions that stand out as particularly
desirable locations. The British Virgin Islands and Liberia, which both offer bearer share
companies, are favored by many due to low government fees and local cost of operation. Turks
and Caicos recently attracted many new customers when they lowered their government fees,
although local professionals have yet to follow suit. An international company established in
Hong Kong is not likely to rouse undue attention, as the city is a legitimate financial center.
Gibraltar is also widely used as an incorporation center due to the fact that it enjoys ED
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membership but is exempt from some of the more cumbersome bits of ED legislation, such as
VAT. Even Nevada and Wyoming in the US are used by some, as bearer share companies and
nominee directors are possible in these two states, located smack dab in the middle of Big
Brother territory. Which jurisdiction will meet your needs is, of course, entirely dependent on
your particular circumstances.
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one thing that you should understand about this type of trust, however, is that, despite what
advisers may claim, it will not provide any great degree of tax relief or asset protection. For
that matter, any trust established in your home country will be of little use against a creditor
or the taxman. Similarly, revocable trusts in which the grantor maintains the right to collapse
the trust at any time and reclaim his assets will provide no asset protection and are still liable
for estate tax. The type of trust that allows even the slightest chance of achieving a level of
banking privacy or of legally avoiding taxes is an offshore irrevocable trust. Once established,
this trust becomes a distinct legal entity that is completely independent from its founder.
In order to achieve any level of asset protection, you must appoint different individuals to
the various roles involved in forming an offshore trust. Some advisers say that it is best not to
name yourself as a beneficiary at all. Others say that you should just see to it that you are not
the only beneficiary. Yet others claim that it is best to name a well known charity as
beneficiary, so that the true beneficiaries can remain undisclosed. The major problem in
deciding whether or not to designate yourself as a beneficiary is that courts in high tax
countries have been known to force the repatriation of assets if the grantor of the trust
continues to benefit from his assets in any way. For this reason, you should make certain that
if for some reason you must name yourself as a beneficiary, you stipulate that you are only
allowed access to income generated by the trust, not its capital. Hopefully, this would, in tum,
limit the amount that a creditor may be able to seize from you.
It is also dangerous to appoint yourself as the trustee of your offshore trust. A court in your
home country could then very easily force you to bring back home any funds sought after by
the taxman or any other creditor. Instead, it is best to appoint an independent foreign trustee.
This could be a person that you know, who is willing to help you cater the trust to your
personal needs. Alternatively, it could be a foreign bank, trust company or professional
management service. The primary requirement is that whoever serves as your trustee should
be foreign, meaning not subject to any rulings that may one day be issued by courts in your
home country. Your appointed trustee should, of course, also be someone that you can trust.
You will be giving them control over a chunk of your assets. Some advisers say that you
personally can serve as a trustee, as long as you are not the sole trustee. If things were to one
day turn sour, you could then simply resign, leaving complete control of the trust in the hands
of your foreign trustee partner.
The only role that all advisers agree you can fulfill when forming an offshore trust is that
of protector, meaning that you can at least maintain indirect control over your assets. Again if
things get sticky back home, you could then distance yourself from the trust by resigning as
protector and leaving the trust entirely in the hands of those you have employed in your chosen
offshore jurisdiction.
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The major disadvantage in using offshore trusts is that you must give a great deal of control
over your assets to other people. If you insist on having too much of a say in how your money
is spent or invested, it will in all likelihood not provide any protection. In the event of a
lawsuit, your home government is likely to ignore your offshore trust and demand that all
funds involved be repatriated. Increasingly, governments cut through the myriad of paperwork
drawn up by trust formation agents to concentrate on the actual substance of an offshore trust.
If they do not perceive any true separation between you and your money, they will determine
that the assets which you so generously donated to your offshore trust are still your individual
property. Your offshore trust will then be labeled as nothing more than a sham, created to evade
taxes or to escape the demands of a creditor.
Many advisers claim that you can form an offshore trust and then transfer everything that
you own, right down to the family home, to its safekeeping. This strategy is risky at best. Filing
for bankruptcy shortly after forming an offshore trust would almost certainly invalidate the
trust in just about every high-tax jurisdiction. Also, physical property will always remain
subject to the jurisdiction in which it is located. Courts are very unlikely to believe that your
home is no longer your property if you continue to live in it without paying for the privilege.
They simply will not care that the property technically belongs to your recently created
offshore trust. At the very least, you should establish an arms length arrangement, through
which you pay fair market value to rent your home back from the trust.
In order for an offshore trust to stand up in court, you must genuinely distance yourself from
your money. This means that it will be difficult for you to benefit personally from your assets
without invalidating the trust. You are also likely to incur tax liabilities on your own money
once you do successfully manage to bring it back home. For example, one often used tactic is
to arrange to borrow your money back from the trust. Yes, using this method will allow you to
openly spend your money at home, but what most advisers forget to mention is that in some
high-tax countries, such a loan is liable for taxation. On the other side of the coin, if you
distance yourself too much from your offshore trust, any donations that you make to it could
become liable for steep gift and excise taxes. Many advisers also fail to mention that as far as
US citizens are concerned, the transfer of assets to offshore trusts must be reported to the IRS.
It must, however, be said that offshore trusts can be extremely useful in some limited
situations, primarily as a means of passing money on to your heirs. Offshore trusts may well
be the only alternative if your children or other beneficiaries are not capable of handling
money on their own. Consider trusts to be a living will, through which you can give your
money away in advance, yet control to some extent the manner in which it is invested and
distributed. In general, such offshore legal entities work best only where a large amount of
passive assets are involved. If you are dealing with less than US $300,000, the whole operation
will probably prove to be too costly to be worthwhile. For more information on how to use an
international trust as a way of leaving money to your heirs, see Chapter 20.
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know how profitable the business that they seek to insulate will be. Others want to wait before
forming an offshore trust, thinking that there is no reason to go to such lengths until their assets
are actually threatened. Offshore company factories will tell you not to wait. Understandably,
they have a vested interest in pushing their wares and keeping their businesses afloat.
However, unlike their advice which says that everyone and their uncle can benefit from an
offshore company or two, it is actually best not to wait once you have decided to establish an
offshore corporation or trust.
The reason for this is that it is easy for authorities to look through or set aside a certain setup
if the sole purpose for establishing that setup was to avoid tax or escape the demands of a
creditor. This is sometimes called piercing the corporate veil. It is quite easy for a tax
prosecutor to prove in court that you only established the new chain of command, so to speak,
when you found out that you would have to pay mucho tax. A court will also push aside any
arrangements you make to protect your assets after a creditor lays claim to them. In some
jurisdictions, such protective measures taken after things turn sour may even constitute
fraudulent or criminal activity. If, on the other hand, you can show that you have always used
a certain setup, in rain as well as in sunshine, you have a strong defense. No court will rule in
favor of the taxman or a creditor if you can prove that your manner of operations was not
solely established to avoid taxes or escape the demands of your creditor. Best of all, your
opposition is also likely to realize that they will lose, meaning that instead of mounting a case
against you, they will move on to greener pastures.
EMPLOYING A PROFESSIONAL
Forming an offshore corporation or trust is one area of banking privacy in which you will be
left with no choice but to make use of the services of an adviser or company formation agent,
at least briefly. The good news is that there are certainly no shortage of advisers operating in
the offshore arena who will be only too be pleased to help you out, for the appropriate fee of
course. Choose your offshore advisers carefully.
Before deciding to establish an offshore trust, research the topic thoroughly. The legislation
involved is incredibly complex, involving two or more distinct jurisdictions. Also, remember
that your trustee will, in effect, be given control over part of your money. If he is dishonest or
gets into trouble, your money could well develop wings and flyaway. Deal only with reputable
trust formation agents and be highly skeptical whenever anything that sounds too good to be
true is promised. When forming an offshore corporation, work only with people who will let
you run the show and who are not interested in granting themselves signing powers or any
other form of undue control over your business. Look for individuals who share the view that
the more you can do yourself, the better.
The more complicated your offshore operations are going to be, the more diligent you must
be in choosing an informed and reliable adviser. If you will be employing a management
service for your offshore corporation or establishing an offshore trust, then make certain that
you feel comfortable with your adviser. The two of you will be working together for quite
some time to come. The best way to find a new adviser is through friends or associates who
already employ the services of an adviser or two. For those of you who do not know anyone
who might be able to recommend a helpful adviser, the names and addresses of a few advisers
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that can assist you in the formation of an offshore corporation or trust are provided in the
Resource List at the back of this report.
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Chapter 18
BORROWING MONEY PRIVATELY
Most banks do not like the idea of allowing you to deposit your money with them in a private
manner. They like even less the idea of allowing you to borrow their money without disclosing
everything about yourself, right down to the name of the family pet. In general, banks require
a host of disclosures and credit checks before they are willing to tum over even one red cent.
The more money you want to borrow, the more invasive their demands become. Once a loan
has been issued, banks also usually reserve the right to call in the loan at any time, for any
reason whatsoever. This means that if one day your bank needs to raise a little revenue to
please stockholders or decides to institute an entirely new lending policy, you could summarily
be asked to hand over the entire outstanding balance of the loan. Claims that such money has
been invested in a business or other such venture will fallon deaf ears.
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For this reason, in order for a loan to be truly private, it should be known only to you and
to the lender. You should not have to state the purpose for which you wish to use the borrowed
funds. Most banks will understandably want to know a great deal about you before agreeing
to issue a personal or business loan. New regulations also mean that your home government
will be informed of the existence of a new loan and the purpose for which it was issued. In the
US, for example, banks must maintain a detailed record of all loans issued for amounts in
excess of US $5000. This information is then available for the perusal of bureaucrats and the
taxman. Credit reports will also be updated not only when the loan is issued, but also as each
repayment is made. In short, this all means that if you wish to borrow money privately, you
must seek out other alternatives than the traditional bank loan.
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Whatever method you choose, there is no requirement that you inform the bank of what
you intend to use the borrowed funds for. Nor are you required to fill out any forms other than
the original credit card application. You can increase the total amount you can borrow by
obtaining multiple credit cards from different banks. If your credit rating is good, it is
relatively easy to collect a whole wallet full of credit cards. Banks will literally fall over
themselves to issue you their bits of plastic. One PT friend of mine, who left the US over five
years ago, still receives the occasional pre-approved credit card application in the mail. All
they ask him to do is sign on the dotted line - no forms to fill out, no detailed questions to
answer. Once he sends in this application, his new credit card is promptly dispatched to his
US maildrop.
Of course, one problem with this approach is that it can get rather expensive when annual
fees pile up. One way around this problem is to seek out those credit cards that do not impose
an annual fee. These are becoming increasingly popular as banks realize that they can make a
lot more money through the exorbitant interest rates that they charge than the small amount
that they request annually for the privilege of holding on to one of their cards. While cash
advances are anonymous, they are also almost unbelievably expensive. You are not only
charged an up-front fee when the advance is issued, but will start paying interest on the
borrowed money, compounded daily, the minute that you receive it. There is no grace period
as there is with traditional charges.
If your credit rating is good, shop around, don't just sign up for any old credit card. There
are a few banks out there that attract customers by offering very competitive interest rates.
Another problem you might experience if you do pile up a nice little collection of credit cards,
is that other more traditional means of borrowing money may be closed off to you. As each
credit card is issued, the amount of credit that you have been granted will make its way to your
credit report. Banks may be reluctant to loan money to you when your credit report shows
what is known as high-credit availability. You may have to do some sweet talking to convince
the bank that you can handle the total amount of credit that has been issued to you. On the
other hand, the availability of credit by means of an overdraft, will generally not appear on a
credit report.
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may at this very moment be sitting quietly neglected in your safety deposit box. The bank will
hold on to your property and allow you to borrow a certain percentage of its value. Such loans
will generally not require a credit inquiry, but in most western countries you will still have to
supply your taxpayer identification number. You may also have to supply a declaration of your
overall net worth if you will be borrowing a large amount of money. The good news is that the
interest rates charged on such loans are far more reasonable than that charged by other
alternatives for borrowing money privately, although you could get into problems if the value
of your property declines sharply after you borrow against it.
The final type of collateralized loan that you can use to borrow money privately is the most
common, the home equity loan. These are particularly popular in the US, as the IRS allows one
to deduct the interest paid on a home equity loan, but not interest paid on other similar loans,
such as a loan used to finance the purchase of a new car. Make sure that you read the fine print
before agreeing to a home equity loan. Some banks have been known not to put a limit on the
top interest rate that they can charge. Others make use of bizarre repayment schedules, such as
only charging interest on the loan over the repayment period and then requiring that the entire
principal be repaid in one lump sum at the end of the term. Yet other banks that offer variable
credit limits, charge interest on the entire line of credit issued, not just the amount borrowed.
Still, home equity loans do offer a relatively private way to borrow money. No credit check
should be required as the loan will be secured against your home. If you stop making
payments, the bank can come and take possession. You are not usually required to disclose the
purpose of the loan. In fact, some home equity loans come in the form of a credit limit and a
check book. You can then write checks to finance whatever you desire. You can even write out
checks to yourself to receive untraceable cash. There are few other alternatives that allow you
to borrow large amounts of money in such a private manner. Just make sure that you read the
fine print before signing on the dotted line.
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have been created to serve other purposes, they can be of great assistance to those in search of
privacy as banks tend to ask far fewer questions when issuing a secured credit card. ..
To get a secured credit card you will need to give the bank a monetary guarantee. ThIS IS
done by depositing a sum equal to or larger than your credit limit in an interest bearing savings
account. If you would like a US $2000 credit line, you will need to deposit at least US $2000
with the bank to calm their fears that they may, in the future, experience a loss on your account.
Some banks require more. It is common for secured credit cards to qualify for only an 80 per
cent credit line on the amount deposited. A few banks will allow a 150 per cent credit line, but
these banks understandably tend to ask more questions. You may also have to pay a one-time
card processing fee, which can range from as little as US $20 up to as much as US $600. Prices
differ so make sure that you shop around.
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in the US, you a~e not resident there for tax purposes and hence do not have a social security
number. Alternatively, you could open an account that pays out no interest or simply allow the
government to deduct its share from the interest that your account earns before it is paid out.
Yet another method that is favored by some is to provide a fictitious social security number.
There are, in fact, books that provide charts of social security numbers arranged according to
state and date of birth. Unscrupulous souls have been known to peruse such material and come
up with an appropriate number to fit their personal situation. I have even heard of individuals
using such techniques to claim state benefits. While using such a method to simply open a
small bank account may well go undetected, it still cannot be recommended. Not only is the
method illegal, but, if the ruse were ever uncovered, it could also end with all of your deposited
funds being confiscated by Big Brother.
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this report so that other PTs and privacy minded individuals can benefit from your experience.
If you are interested in venturing off on your own, with a little homework you should soon
be able to collect a multitude of secured credit cards. In the US, these bits of plastic have
become something of a boom industry. The search for additional banks that are willing to
provide secured credit cards need not be difficult. You can start by examining the classified
sections of American tabloid newspapers, such as the National Enquirer. Mercenary sheets,
such as Gung Ho and Soldier of Fortune, also often carry classified ads for secured credit
cards. Alternatively, you may want to acquire a copy of The Insider s Guide to Bank Cards
with no Credit Check by Randy Gorchoff. This guide, which is updated annually, gives
detailed information on the secured credit card programs on offer by more than fifty US banks.
Although this book is basically aimed towards a consumer audience and contains advice that
goes against banking privacy principles, such as a recommendation to never carry cash, it still
offers a vast amount of information for only US $19.95. It can be ordered through: Eden
Press, PO Box 8410, Fountain Valley, CA 92728, USA. Make sure you also request a copy
of their catalog detailing other privacy titles on offer.
A FEW WARNINGS
The major drawback to secured credit cards is the fact that most banks offering them are
located in the US. Remember that as far as banking is concerned, the US is just about the worst
jurisdiction in the world in which to do business. It does not matter whether you are a local or
a foreigner. Laws and reporting requirements still affect you and still change all of the time.
Worse yet, your bank is under no legal obligation to keep you abreast of new changes in the
law. That is your job. If you slip up and forget to file some silly form that you never even knew
existed, you could still find yourself in a pile of trouble.
In the secured credit card business, it is also a good idea to avoid middlemen. There are a
number of companies that have sprung into existence claiming to be able to assist you in
acquiring a secured credit card. Many of these companies directly target a European market
and do nothing more than make use of a few basic privacy principles and techniques, such as
maildrops. To my knowledge, most of these companies are honest, but they are just not cheap
to feed. You may also have to wait quite a long time before you receive your credit card and
incur yet more expenses along the way. It is easier to simply deal with banks that issue secured
credit cards directly, taking the proper precautions if you do not live within the US. As far as
middlemen are concerned, use them only as a last resort and realize that in a business where
complete strangers ask you to send them thousands of dollars through the mail, there are bound
to be some crooks.
A few readers have written with warnings of at least one fraudster who remains active in
this field. He changes his name and his company name about every second or third month.
Recent aliases of his have been Hunter B Thomas, Tyson Walker and Mr A Barr. He also hops
from country to country and shows a fondness for warmer climates in the American
hemisphere. Honduras, Costa Rica and maildrops based in Florida have all served as business
bases for him. If you encounter companies with grand names, offering to secure credit cards
and asking for one to two thousand dollars minimum, be wary if they are located in sunny
climates. This one operator has so far been able to elude authorities, partly by selecting mostly
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European victims, partly by always keeping his own whereabouts unknown and always
refusing to meet anybody in person.
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Chapter 19
MORE OFFSHORE STRATEGIES
There are a number of advanced offshore strategies that mayor may not be able to help you in
your search for financial privacy. Some of these strategies require that you work through an
offshore corporation or trust. Others have been designed to avoid the expense and hassle of
such legal entities. Yet others are the pet projects of certain offshore advisers who have
discovered that they can earn a tidy living by offering bogus advice on the "virtues" of a
particular privacy strategy. This chapter is dedicated to cutting through the advertising rhetoric
that so frequently surrounds such advice. Instead it simply spells out the basics of a few of
these advanced privacy techniques.
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to its most solid customers. The major selling point of a back to back loan is that it is tax
neutral. You are allowed to bring home secret offshore funds and then spend them freely, often
unconditionally, without ever having to pay a penny in tax for this privilege. PTs can stop
reading right here. They don't need back to back loans, unless they are engaged in business
somewhere and pay taxes or are in a special situation where for some reason, such as
bankruptcy, alimony or some other court intrusion, cannot show that they are earning a lot of
money. Those who don't pay taxes normally don't need to shield income.
Back to back loans, sometimes referred to as arms length loans, are one of the preferred
ways of getting money back into your home country without having to pay taxes on it. Black
money earned from moonlighting or selling goods in the informal economy can make a stop-
over in the foreign bank account of an offshore corporation, then come back to you as loans
granted not by the corporation, but by the bank itself or by one of its correspondent banks in
your home country. Back to back loans are also used as a way to borrow money for personal
or business reasons. As you are, like Prime Minister Pindling, living off loans, you have no
personal property that can be seized or attached in court proceedings. You are then on safer
grounds from creditors, ex-wives, bankruptcy, foreclosure, IRS liens and all the other ills of
the world.
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loans, but tailor-made solutions don't exist. The bank will be sympathetic and will listen. It
will want to help you. After all, you are offering it yet another chance to make a buck. Don't
just skirt over the details or assume that all can be arranged with just one phone call. It can't.
You have to play an active part in giving yourself the loan. This will involve some meetings
and at least one trip. No standard packages exist.
Try to keep as little in writing as possible, at least concerning the mechanics behind the
deal. If you are resident in one of the high-tax countries where stamp duties on loan contracts
are the norm to make them legally binding and thus acceptable to a snoopy taxman, make sure
that the agreement is signed in a foreign jurisdiction so as to avoid having to pay what is, in
effect, just another tax. It is always best to work exclusively with banks in foreign
jurisdictions. For even more added secrecy, have someone else visit the bank to set everything
up. At best, the bank doesn't even know you, except as a third party who obtained a loan. Your
resident agent acting as a director for your offshore company may be that someone else willing
to visit the bank and put everything together. If you yourself assume that role, it may be wise
if you are not at the same time also the borrower. Have a third party borrow the funds, then
lend them to you or someone in your circle of influence.
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loan, it seems likely that it would be relatively easy to arrange one by pledging an all cash
security. Praetorian Finance Services claims to pride itself on its flexibility.
Of course, all of this flexibility comes with a heavy price tag. Although inexpensive when
compared with establishing and maintaining an offshore trust or company, this program is
much more expensive than arranging a back to back loan on your own. A fee of US $2000 is
payable annually. This covers interest on the credit facility, administration fees, due diligence
fees and, of course, the premium for your insurance policy. Costs, without allowances for "tax
efficiencies" that may arise, range from 3.3 to 8.8 per cent of the gross value of the line of
credit facility. If you are interested in this program, contact: Praetorian Finance Services, PO
Box 13-745, Christchurch, New Zealand. I am in no way involved with this company. I
know almost nothing about them, save the fact that I have not heard any adverse comments.
Please write and let me know how you get on.
GOING IT ALONE
The major problem with using a private company to establish a back to back loan is that one
day that company may attract more attention than you would like. If the company that you use
were ever to become subject to a Big Brother investigation, a number of your private financial
records would fall into the hands of government taxmen. There would then be no end to the
number of questions you would be asked. For most individuals interested in establishing an
arms length loan, it seems best to go it alone. Even if you work on your own and deal directly
with a friendly bank, however, an offshore company is not essential. What really matters is that
you have funds in an account abroad and that you can tie these funds down to serve as a
security deposit for your loan. That the funds are held in a company name is an added benefit.
It will give you some measure of secrecy if the bank ever decides to lift its own secrecy and
sell you out.
Whatever arrangements you use, you will eventually have to pay back the loans. Or will
you? Start by working with long term loans, twenty to thirty year terms. If you can secure a
loan by real estate, all the better. You then have the added benefit of turning your house into
"no go" territory for greedy creditors. There is already a first mortgage on it - yours! As an
aside here, as explained in the previous chapter, US taxpayers will have to secure back to back
loans with personally owned real estate if they expect to be able to deduct interest payments.
The IRS tax code only allows the individual to deduct interest payments made on loans held
against personal real estate. Using a real estate secured back to back loan to pay for a new car,
a vacation or college tuition is a great way of keeping your interest payments deductible.
With twenty or thirty year loans, the payback date is a long way down the road. When that
time comes you can always adopt the attitude of all western governments. They are heavily in
the red. Instead of repaying their national debts, they simply borrow more. You can do the
same. Back to back loans are flexible. Twenty to thirty years from now you will no doubt have
made enough to grant yourself another loan. The key concept here is rollover financing. Don't
worry too much about the long term. Tax rules change. Problems disappear. In the long run,
we are all dead. So go ahead, borrow more. Rollover finance will keep you happily in hock
forever. Your friendly bank or loan company will always be pleased to lend you more, even if
you are not the former prime minister of the Bahamas.
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Of course, as I have said throughout this report, you should look into what your local
politicians have been up to before making any decisions concerning your financial privacy. A
few countries have made it illegal to lend yourself your own money, if that makes any sense.
Others require that you must disclose the fact that you never expect to repay a loan. Such a
loan would then, naturally, be reclassified as income and liable for income tax. Still, the
general rule in most countries is that no income tax is due on borrowed funds until and unless
the loan formally becomes "fugitive". If you need the cash for a new car - or for your
daughter's wedding - then who is entitled to say that you owe taxes on money which you have,
presumably, already paid 40, 50 or even 60 per cent income tax on when you first made it?
TREATY SHOPPING
Another method that you may be able to use to move funds back to your home country without
having to pay tax on them is commonly known as treaty shopping. This method may be the
only alternative available if, for one reason or another, you cannot accept a loan, but instead
must own the funds outright in your own name. Treaty shopping basically involves the art of
combining the laws of two or three different countries. By matching their double taxation
treaties, often perfectly legal tax loopholes can be unearthed, loopholes that the bureaucrats
never expected when they first drafted the laws.
For years a popular treaty shopping ploy involved Ireland. Ireland does not tax dividends.
When first drafted, most of the Irish double taxation treaties also exempted such income from
taxation in the other country involved in the treaty. In other words, due to the treaty, dividends
earned in Ireland could be tax free not only in Ireland, but also in the high tax country in which
one is resident. Another aspect of many of these Irish treaties allowed Irish companies to
receive royalties without having to pay a withholding tax at source. Such an Irish company
could license a trademark to a chain of businesses, receive income tax free and then payout
dividends tax free. For years this ploy was the ultimate in international tax planning. Some
even made sure that their Irish company was not required to pay tax on profits by taking
advantage of brainy Irish accountants and of the many special provisions in local Irish
company tax law.
You can still save tax dollars by operating exclusively in Ireland, but many countries have
become wise and will soon be amending their double taxation treaties with Ireland. Some have
already done so. As is often the case, governments scramble to close loopholes as soon as they
become widely known. Similar arrangements, whereby one could legally avoid withholding tax
on US investments by taking advantage of a treaty in existence with the Netherlands, have also
summarily been brought to a close. Politicians and bureaucrats feel that by taking advantage of
such gaps in the law, taxpayers are abusing the system. Here we see yet another blatant example
of how governments set up rules for everybody to follow, but then change these rules as soon
as it looks like somebody may just be winning the game without having to cheat.
Still, in spite of the efforts of governments to close off all paths to freedom, treaty shopping
remains quite common. The world is rich in double taxation treaties and many of them are pure
virgin fields just waiting to be mined. Top accountants do not advertise it, but they all know a
trick or two. For a fee they will share their knowledge. Such an investment in a little advice is
usually money well spent. My standard recommendation is that one should shy away from
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lawyers, accountants and all other leeches. Nonetheless, if you are trapped in high-tax hell with
no means of escape other than treaty shopping, a little professional advice could work wonders.
Just remember to be skeptical of all that you hear and never to stop thinking for yourself.
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Chapter 20
ANONYMOUS ACCOUNTS
In order for an account to be truly anonymous, no one, including the issuing bank itself, should
know who the true owner of the account actually is. No references should be requested and no
identification should need to be shown when opening the account. Some anonymous accounts
are not even held under a specific name, but rather are bearer accounts. Other accounts have
fictitious or fantasy names attached to them and are protected by a password. Needless to say,
in a world that continues to grow increasingly fond of reporting requirements and the like, such
truly anonymous accounts have become a rare and much valued commodity.
As governments the world over try to gather more information on each and everyone of us,
a few countries have decided to go against this growing tide and offer something that has
become all too rare in the modern world - true banking privacy. Some independent
organizations also claim to be able to make the necessary arrangements for private accounts as
well as private credit cards. As a result, a few truly anonymous bank accounts do still exist.
Some enjoy long and stable histories. Others were only created recently to meet the growing
demand for banking privacy. This chapter examines three private accounts that other readers
have found to be of value. They may well also prove to be invaluable to you in your search to
keep at least a small portion of your financial profile your own private affair.
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bearer account, one need not produce any identification when conducting transactions. Better
still, even when opening the account no identification or references are required. There is no
need to obtain alternative identification, mailing addresses in other countries, professional
references and the like. In order to open a Sparbuch account, an Austrian quite simply walks
into any branch of any bank in Austria, deposits an appropriate sum and walks out five minutes
later with the Sparbuch.
The fact that Sparbuch accounts are located in the well-established banking haven of
Austria makes them all the more secure. Austria is no backwater banana republic that only
recently decided to attract money from distant lands. Almost thirty years ago, the country
enacted its own bank secrecy laws to mirror those of neighboring Switzerland. This legislation
represents some of the toughest bank secrecy laws in existence. In short, these laws mean that
an Austrian bank employee who knowingly reveals anything about a client's affairs will soon
find himself in the pokey. Austrian authorities respect the fact that banking records are the
personal and private property of those whom they concern. As a result of this belief, Austria is
the only developed country in the world that allows one to legally open and maintain a bank
account in total anonymity.
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owners worldwide as possible. If necessary, a Sparbuch may be sent in the mail to pay back a
debt. It could be left in a sealed envelope with a will to beat immoral probate taxes or even
donated to Greenpeace, if the owner is so inclined. Many people also use Sparbuch accounts
to collect money owed to them without revealing anything about their own location or
financial affairs. Money from a third party can be deposited in the account and then withdrawn
by a hired hand. The owner waits outside the bank to receive the money and then can deposit
it in any account he likes, all without the worry of creating a paper trail.
Sparbuch accounts are completely safe. Although it is not strictly necessary, each account
is issued with a code which is needed whenever withdrawals are made. This code is not one of
those horrendously forgettable four digit codes issued by credit card companies, but can
actually be chosen by the customer himself. The way it should be. Who better to know what
combination of letters and digits is the easiest to remember than the individual who actually
owns the account? This code can also be changed at any later date by new owners of the
account. All they need do is visit the issuing branch of the bank with the passbook and fill out
a form with both the old and new code words.
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losing cash. There are ways of getting a duplicate passbook if you have a photocopy of a lost
or destroyed one, but this is often a long and frustrating process. In other words, guard the
passbook as you would any other object of value.
OPENING A SPARBUCH
The major problem that most individuals face when trying to open an Austrian Sparbuch is that
such accounts are theoretically only available to Austrians and those who are resident in
Austria. There are several ways around this problem. One is to opt for a foreign account. This,
however, means that you will have to show your passport. A photocopy will be taken and the
account will then be opened in your real name. In addition, all banks are required by law to
provide the Austrian National Bank with the names, addresses and passport numbers of all
foreign account holders. In other words, opening an account yourself (unless you are a resident
of Austria) means that the bank will maintain a record of your real name and address along
with a photocopy of your passport, as will the Austrian National Bank. This defeats the entire
purpose of opening a Sparbuch in the first place.
Of course, you could simply forget to mention the fact that you are neither a national nor a
resident of Austria and hope that the bank clerk is none the wiser. This approach also has its
problems, not the least of which is that your impersonation will not go over too well if you
think that danke is a new flavor of ice cream. However, even if you are not averse to the idea
of spending a couple of days in Austria and even if you have mastered German and are
sufficiently versed in the art of persuading bank clerks to do what they really ought not to be
doing, think about it. If the purpose of having a Sparbuch is to fully and completely avoid
leaving any clues that may eventually lead to yourself, including fingerprints, why show up at
the bank in person? Bank employees have, on occasion, been known to have frightfully good
memories. Why not consider letting someone else do the job for you?
How? There is one loophole in the Austrian banking laws that allows local attorneys to open
Sparbuch accounts for clients, without disclosing the identity of the beneficiary owner of the
account. Recent rumblings in the Austrian press, however, mean that this loophole in the law
may soon be closed. Owing to the peculiarities of the current laws, any new legislation will
not affect old accounts as these will be registered as normal accounts, not as accounts
belonging to foreigners. Scope has established contact with an Austrian lawyer who can open
Sparbuch accounts for you. You need not show any identification or fill out any forms, not
even the modest and unthreatening form required of Austrian residents!
Sparbuch accounts are delivered "off the shelf' as either anonymous (passbook holder
accounts) or under a fantasy name if desired. Each account comes complete with an easy to
remember code word and a standard opening balance of 100 Austrian Schillings (US $10).
Please send £250 or US $400 to Scope International and your anonymous Sparbuch will be
promptly dispatched. If you require the account to be in a specific fantasy name, please add
£25 or US $40 to bring the total to £275 or US $440 and allow one month for delivery. Feel
free to request that accounts be sent to a name different from your own (after all, that's what
this game is all about) or to no name at all. Of course, maildrop addresses are also more than
adequate. Scope keeps no files concerning these accounts.
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does not bother to ask for any identification from those to whom it issues corporate cards. In
short, by becoming an "executive" of this company based in Malta, you can have a card issued
in any name desired without needing to show any identification or submit to a credit check in
any form. Of course, the company does not really employ those to whom it issues cards, but
then what the bank does not know will not hurt anyone, will it?
The major downside to this program is that, as is usually the case, anonymity comes with a
steep price tag. As the Maltese company does not know who you are, but is still liable to pay
your bills, it demands a security deposit of twice the credit limit that you request. The
minimum credit limit allowed is £1400, although there is no maximum limit. The company
also requires that you pay a one time setup fee of £1000 - supposedly to discourage people
from using the program for less than one year - and an annual administration fee of £175. The
security deposit will be placed in a separate client account and returned when you leave the
program. Any interest that it earns will, however, be kept by the company. In other words, the
minimum amount that one must pay to participate in this program is £3975. This includes a
£2800 security deposit, a £1000 non-refundable setup fee and the first annual £175
administration charge.
To participate in the program, Sinbad asks that you send him the name in which you want
the card as well as a name and mailing address. Of course, he also asks for your money in the
form of either an international money order or credit card number. Why anyone would pay for
an anonymous credit card with one that is not, is a mystery? The card will be sent out by first
class registered mail within 28 days. Sinbad also offers other banking privacy products, such
as Lithuanian certificates of deposit and Zimbabwean currency call accounts. Both of these
accounts can apparently be established without showing any identification. The Lithuanian
certificate of deposit is also said to offer an amazing (almost unbelievable) 35 per cent interest
on hard currency. More information on either of these accounts costs £90 each.
I know absolutely nothing about Sinbad as well as the legitimacy of the products that he
offers. All I can say is that while I have not heard anything positive about these products, I
have also not heard anything negative about them. As in any situation where you are asked to
send money to someone that you do not know, my advice is to proceed with extreme caution.
These programs may well be legitimate. They could equally be a government plot to entrap the
innocent. Buyer beware! At the very least understand that this sort of contact absolutely
demands the use of a maildrop. No one seems to understand this more than Sinbad himself. He
asks that you write to him by way of The Freebooter. To contact Sinbad directly and find out
more about his programs, he asks that you place your letter in one envelope with his name on
it and then place that envelope in an outer envelope. Post the whole thing to: Henry Morgan,
PO Box 191, St Peter Port, Guernsey GYI 4NL, Channel Islands, UK. Henry, who is the
publisher of The Freebooter, will then send your letter on to Sinbad, contents unseen. Finally,
please let me know how you get on with Sinbad. Other readers will undoubtedly benefit from
your experiences.
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everything to it. It combines offshore trusts, anonymous banking, secured credit cards and,
believe it or not, multi-level marketing. The plan basically involves the formation of an
offshore irrevocable trust in Belize. The trust then opens a bank account which in tum acts as
collateral for a Visa-secured credit card. Credit cards can apparently be issued in any name. It
is even said to be possible to have multiple credit cards issued in different names, each name
representing a different beneficiary of the trust. As all of this is carried out in the offshore
jurisdiction of Belize, no government reporting forms or taxpayer identification numbers need
be supplied.
Before the trust can be formed, however, one must first become a member of the PILL
organization. This costs US $200. As the program involves multi-level marketing, one must
also pay upline before forming the trust. This costs a further US $200. An additional US $200
is then necessary to actually form the trust. All further funds will then be deposited directly
with the trust. The trust must contain a minimum security of US $1500 before it can open a
bank account and receive a secured credit card with a credit limit of US $1000. In other words,
if you are not interested in participating in the multi-level marketing program, an initial cash
outlay of US $2100 is necessary to receive a bank account that contains US $1500 and acts as
security for an anonymous credit card with a US $1000 credit limit. The actual cost to you of
setting up the whole operation is US $600.
If you would rather go the multi-level marketing route, you need only pay the initial US
$200 membership fee. You will then, however, have to locate other individuals interested in
the program and convince them to join at US $200 a pop. You will have to sign up three people
to get the whole ball rolling. The first pays upline on your behalf. The second forms your trust.
The third funds it with an initial US $200. Each person thereafter also funds your trust account
with an additional US $200. Before you can receive the credit card, you will have to have at
least US $1500 in your account. This means that you would have to convince more people to
join the program or further fund your own account once it has been established. Of course,
those people that you have brought into the program will then also be scurrying around trying
to find other participants to get their own trusts established. This is not so bad for you, though,
as in theory you will receive a further US $40 for each person that they sign up.
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great deal more than just the PILL program, were seized. Both she and her elderly mother were
detained for questioning. Did she own any offshore bank accounts? Who was she working for?
Was she connected with Cuba? She was accused of supplying false Visa cards and threatened
with immediate imprisonment. Then, Big Brother, for some unknown reason, lost all interest.
Her case was shunted to a junior bureaucrat and more or less summarily dismissed. Almost one
year after this sequence of events, no charges have been filed and nothing more has been heard
on the matter. Her records, however, still remain in government possession.
Further investigation has since revealed that a little high-powered back scratching may have
been responsible for her nasty experience. Apparently, a Belgian journalist saw her
advertisement in the local newspaper and sensed the possibility of a scandal. In more than one
country, the press has taken more than a passing interest in the PILL program. In the UK,
various articles have accused the program of being everything from a danger for chronic
debtors to a haven for tax evaders, money launderers and the like. The one thing that all
journalists seem to be in agreement on is that the PILL program, in their opinion, is up to no
good. Nonetheless, in spite of their accusations, no one has been able to prove that the program
is illegal, fraudulent, dishonest or subject to criminal proceedings. All accusations of criminal
wrongdoing on the part of PILL promoters remain just rumors, at least for the time being.
If you are interested in participating in this program, however, the above stories make it
clear that a low-profile is essential. The principals behind the PILL organization claim to be
residents of Florida. This means that it may well be only a matter of time before the IRS
decides to take a look into their organization. If and when this happens, all participants in the
program will undoubtedly become the subjects of unwanted government investigations. If you
shield your identity by using a pen-name and a maildrop, however, you would limit the extent
of possible damage to whatever you have actually invested in the program.
That all said, it must also be mentioned that, for some time now, promoters of this program
have been advertising in the classified section of The Mouse Monitor. Scope has not received
one complaint or any indication of adverse results or losses. This is particularly encouraging
as the response to these advertisements has been fairly substantial. If you would like to
participate in this program, contact: Prosper International League Limited, PO Box 401,
Mile 49 Hummingbird Highway, Belmopan, Belize, Central America Tel +1 407 679 2959
Fax +1 407 679 5039. In future issues of this report and The Mouse Monitor, both myself and
Scope International will keep you updated on developments with this program. Please write
and let us know how you get on.
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heirs! In some countries, after periods of inactivity, the government lays claim to the money. In
most states of the US, this period is only five to seven years! Furthermore, the fact that you have
taken the necessary precautions to avoid excessive taxation during your lifetime should also be
taken into consideration. There is no reason your tax planning strategies cannot continue to
function admirably long after taxes have ceased to be a problem for you personally.
It is a rare but happy case to find both a father and son who can agree on basic banking
privacy principles. Assume instead that when a non-filer and previous taxpayer dies that his
heirs will be tangled in red tape and caught deep in the claws of the taxman. They will be
forced to pay all sorts of crazy estate duties and inheritance taxes before they are allowed to
inherit their money. All claims for money held offshore will have to proceed according to
whatever formalities are required in your home country as well as according to those required
in the country in which the account is actually held. This may mean two probate proceedings!
This process could eat away 20 per cent of the estate even before taxes, not to mention that it
will introduce all sorts of delays and complications. For must of us, dying in a way approved
of by government carries a heavy price tag.
Our previous taxpayer may not like this. He lived his life in freedom, not paying voluntarily
to the taxman, but there is nothing he can do about it because he is dead. If you plan ahead,
however, you can make sure that this situation does not apply to your estate when you die. If
your money is already safely tucked away in a tax-free and bureaucracy-free zone, you can
make sure that it stays there even after you leave it. It is relatively easy to arrange your affairs
so that your estate can not only avoid probate, but will also not become liable for estate and
inheritance taxes. It is up to you, however, to make the proper arrangements so that your
money will be taken care of even after you no longer need it.
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want to leave an envelope in safekeeping at his offices, sealed with an embossed glob of wax.
Give him instructions that it should be mailed to a specific address in the event that you do not
establish any sort of contact with the law office before the 31st of December in any given year.
This set up is to run indefinitely, which is to say that as long as the lawyer hears from you, he
is to keep the envelope in his possession and not send it out. Make sure to prepay, topping up
the account every ten years or so. At present rates, US $ 50 to US $100 per year should cover
everything. If you pay US $500 to US $1000 at the outset, you are covered for the near future.
You can have more than one envelope or you can leave an identical envelope with two
different and unrelated law firms, in two different countries. If one lawyer moves, goes under,
cheats or simply forgets to mail out the envelope, the other will still come through. In your
letter, inform your heirs that they will probably be getting the same envelope twice. In mailing
out your secret will, your lawyer does not need to elaborate. You should not tell him what is
in it. He only needs information on a need-to-know basis, just like everybody else. That way,
emotions or greed will not prevent him from doing his job, which is to simply send the
envelope off when required.
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it is too easy to forge the signature of a dead person and that there should be a great deal of
formality required to pass assets upon death. However, as estate court proceedings have turned
into a way to give lawyers, administrators, executors, appraisers and a grand assortment of
other politically appointed parasites a big chunk of your estate, people now go to great lengths
to avoid probate.
Your offshore bank will be glad to have one of their legal staff go over the various options
you may have available, explaining the costs, advantages, and disadvantages of each. One of
my favorites is to simply have your heir sign the relevant papers to open a joint account or give
him signing power over an account during your lifetime as well as after your death, but not
reveal the location of the account. This information can then also be delivered when necessary
by means of a private letter entrusted to a third party. To take control over your money, your
heir will not need to present a death certificate or even a power of attorney. This money is, for
all intents and purposes, already his money, but as he cannot locate it, there is no worry that
he may develop grand plans on how to spend your money while it is still yours. Once again,
remember the basic rule: always share information only on a need-to-know basis.
FORMING A TRUST
An arrangement favored by the wealthy (who may wish to put some time and distance between
an heir and his inheritance) is to form a Liechtenstein anstalt or foundation. A similar trust
arrangement is also common on the Isle of Man and many other tax havens. Almost all avoid
probate. The trustees simply deal with the funds in any account as directed in a trust document
executed before you die. No probate is necessary and the trustees are unconcerned with
inheritance or estate taxes. You can have such a trust in the US or the UK which will also avoid
probate. Trusts established in such high-tax jurisdiction will not, however, avoid estate and
inheritance taxes which could eat away most of the estate.
Let's assume that your child or heir (like most of our kids) is a complete idiot. Shortly after
your death he will, if he has the power to do so, transfer your estate funds to his local bank in
whatever high-tax country he lives. There, local authorities will no doubt confiscate all of your
money for taxes. They will also demand another sum for penalties, interest and taxes that were
evaded during your lifetime. If your heir had a brain in his head, he would leave your money
where it is and take the advice of bankers and an independent lawyer based in the country in
which your offshore account is located. As a general rule, your heir should quietly spend or
invest abroad - just as you do! I cannot stress how important it is to have a talk with your
potential heirs or beneficiaries on how to handle the funds you intend to leave them. Without
such instructions, a multi-million pound or dollar inheritance could become nothing more than
a major liability.
In a real case, the widow of the richest man in Sweden in the mid-1980s ended up owing
more to the government than two times the value of an inheritance that she was stupid enough
to declare honestly. She was forced into bankruptcy and only narrowly avoided prison! May I
humbly suggest that you buy your potential beneficiaries a copy of Banking in Silence. Put a
big red circle around this section. Insist that they read it once a day for a year. If
incomprehension is apparent you can be sure that your heir is too stupid to deal with your
money in a rational manner. That is when you can and should set up a trust or foundation so
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that he gets only the income or half the income for X years. The funds can then be distributed
to his children. It is your money. Fortunately, you can still protect it against being thrown down
the pan, even after you are no longer around personally.
What you do with your money is your affair, but look into how you may be able to protect
your children against their own foolishness by means of trust arrangements. To set up a
Liechtenstein foundation, ask for the free brochure from the Bank of Liechtenstein's Treuhand
AG. Write: PO Box 683, FL-9490 Vaduz, Liechtenstein. Any branch of any major bank will
also have information and brochures on setting up trusts and foundations. The Royal Trust
Company (any branch) is particularly knowledgeable and helpful in this regard. Bank trust
departments are better than lawyers because they will assign an experienced staff lawyer to
discuss your needs, offer suggestions and quote prices without charging you anything. They
want your account and asset management business.
As a result of this motivation, they will sometimes set up trusts and corporations at a
discount from what you'd spend doing it on your own, in order to lock you into using their
services. This mayor may not be good for you. The only way to get good advice is to shop
around and perhaps ultimately, hire an independent lawyer or accountant for a second or third
opinion on your best options. The only thing to remember is never to discuss or set up anything
intended to be secret or offshore with the aid of lawyers, accountants or bankers located in your
own country of residence or citizenship. Dealing with local professionals who are obligated to
keep records and report such arrangements to the authorities defeats the whole purpose of the
exercise.
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Part VII
Creating Your Own
Bank Secrecy
Creating Your Own Bank Secrecy
Chapter 21
ESTABLISHING ROCK SOLID
BANK SECRECY
Governments today can pass just about any law that they desire, no matter how ludicrous it
may seem. Increasingly they are able to convince the general public that even the most
intrusive forms of legislation are necessary. Their excuses are wide and varied. They almost
never even hint at the true underlying reasons for such actions, but still most people happily
swallow government rhetoric and assume that all is done for the common good. Of course,
each new law basically boils down to one thing - money. Your money that is and how to make
more of it travel from your pockets into the government piggy bank.
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reason whatsoever. The entire PT concept involves moving to where your desired behavior is
legal and thus avoid ever achieving the unwanted and unnecessary status of the "lawbreaker".
Yes, I agree that one can argue that as governments pay little attention to their own laws,
citizens should be perfectly entitled to do the same, but unfortunately this is not the way the
world works. Big Brother will not hesitate to crack down on anyone who violates any of his
petty decrees. After all, trapping the innocent is the very reason that such inhumane legislation
was established in the first place. Also, in my opinion, there are still far too many legal paths
to freedom available even in the most overly regulated of countries. It makes no sense to brand
yourself as a criminal from the very outset.
The advice contained in the following pages is intended primarily for those who live in truly
free jurisdictions and are still able to invest their money where and how they see fit. These
lucky souls can still achieve a level of banking privacy unimaginable in most parts of the
modern world. This part of the report is also meant to serve as a warning for those still resident
in more restrictive jurisdictions. It's intent is to keep you informed of all possible options. If
some fast-talking adviser comes your way and promises to establish solid bank secrecy in a
few easy steps, you can at least then evaluate whether his proposed methods are legal or not.
As I have said throughout this report, it is absolutely necessary that you look into what your
local bureaucrats and politicians have been up to before taking even your first step towards
financial privacy.
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The lesson to be learned is that no one is immune. It is dangerous to trust completely in the
secrecy laws of any jurisdiction, however watertight they may appear. Laws change. They can
be overturned or overthrown. They can be conveniently forgotten. Investors who desire
complete privacy and protection for their assets should build their own wall of secrecy, a wall
impregnable by even the most determined of government bureaucrats. They should not expect
some foreign bank to provide secrecy as a ready-made product. Fortunately, you can create
your own bank secrecy without your bank even being aware of what you are up to. What your
bank does not know, it cannot tell.
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newer variation. If the use of aliases bothers you or makes you think of yourself as vaguely
criminal, just remember that criminals have to come up with many ways of working their way
around the authorities. Those same methods can be used legally and effectively for self-
preservation when governments themselves engage in criminal conduct against you. If your
name was Hyman Cohen and you were a citizen and resident of Nazi Germany, your life in
1941 wasn't worth a bean. However, with a set of papers identifying you as Adolph Schmidt,
you at least had a chance of making your way to another country and to safety. Even today,
there are many situations in which alternate identities can save the lives of innocent people.
Consider hijackings, for instance. These days it seems that fanatical Muslims like to make a
statement by killing the Americans and Brits first. They don't stop to ascertain the personal
views of their victims, they just shoot to kill. Under such circumstances, isn't it a good idea to
carry some sort of documentation that identifies you as a neutral Canadian or Belgian?
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The possibility that your home country, or the country in which you currently reside, may
one day undertake some unpopular action against the country in which you keep your money
is reason enough to keep at least some of your money in the name of someone from a different,
preferably neutral, country. The residence address provided to your bankers should also be
from a neutral country, such as Switzerland, or in a tax haven, such as Monaco, Andorra,
Bermuda or the Channel Islands. In this way, if the unexpected one day comes to pass, your
money will still be safe. After all, it is no longer your money, but currently under the care of
your alter ego who hails from and currently lives in a country that offends no one. Of course,
once you become a PT and have neither tax liabilities nor the likelihood of lawsuits, you can
dispense with such smoke and mirror tactics and settle on just one name.
Should a PT eliminate his alternate identities all together after moving abroad? One never
knows what the future may bring. It is not a secret that burglars often steal checkbooks and
credit cards. With your sample signature, they can loot your personal accounts. If you have
some assets registered in a second name, then even a thief or a blackmailer would never be
able to find out that these assets do in fact belong to you. If you want to keep secrets from a
spouse, she or he might just believe your story that you are advising a childhood friend on his
investments. You can use such a story to explain your second identity to people who
accidentally come across papers concerning your alias. Any account dealings or telephone
calls pertaining to the mysterious Joe Bifstik then have nothing to do with you personally. You
could have a safe deposit box full of gold coins or similar little treasures (rubies, emeralds,
pearls, diamonds and bearer shares) in the name of your good old pal and classmate, Mr
Joseph Bifstik.
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in the future. Be prepared. One possibility is to use a library card with a dummy address or the
address of a maildrop so that the bank can then verify where you "live". Another possibility is
to make use of a foreign language utility bill as a means of identification. As part of the overall
credibility of an offshore banker is his ability to handle international clients, he will be
reluctant to admit that no one in his institution can read Chinese, Thai or Korean. The actual
record that goes into the files for the account is then also equally useless to any and all
government snoops. Of course, any and all correspondence that your bank sends to you would
then come to your Asian "home", but as I said earlier, the best of all offshore banks never send
out any mail or correspondence to account holders.
OTHER ALTERNATIVES
Are there any places on this little planet where you can still open an account without having
to show any identification? Are there any places where bank tellers are known to be
notoriously stupid or at the very least willing to buy any lame story? Many countries in Eastern
Europe, particularly in the more remote regions, may prove to be amenable. Africa is a sure
thing, but then who wants to deposit money in Africa? Asian countries may also prove to be
more than slightly sympathetic. Macau and Taiwan are said to give an understanding ear to the
international depositor with large amounts of cash. I have also been told that it is possible to
open a bank account in Thailand by showing something that "looks like a passport".
As a general rule, you may encounter less bureaucratic tape when opening an account in
small villages and remote areas, rather than in large financial centers. This rule even holds true
in such renowned banking centers as the good old standby of Switzerland. The smaller
branches of banks in countries where foreigners do not normally open accounts may also prove
to be willing to cater to your needs. In short, one wants to find a bank that has no fixed set of
procedures established for when, out of the blue, a wealthy tourist shows up who - believe it
or not - actually wants to leave some of his money behind.
Another option is to consider opening an account through the mail. Many banks are willing
to accept a photocopy of a passport and do not request that the document itself be sent to them
for inspection. It is a little known fact that photocopiers have sometimes been known to
muddy, if not outright transform, characters of the alphabet. Many banks do not ask for a new
copy of a passport even if the first copy sent is nothing more than a completely illegible
smudge that only vaguely resembles a passport. I have also heard of one individual who simply
ignored the bank's repeated requests that he submit a replacement photocopy of his passport.
What happened? The bank eventually stopped asking. Although such tactics cannot be relied
on, they do produce fruitful results from time to time.
Where can you find such a friendly and ignorant bank? Although I know of a few banks
who only request that you submit a photocopy of your passport, I dare not list them here for
fear that they would then be soon forced to change their policies. I will, however, say that I
have heard that one reputable Canadian bank in Austria asks for only a notarized signature
when opening an account. This bank offers checking accounts in most major currencies. A few
banks in Singapore are also willing to open accounts through the mail and will accept a
photocopy of a passport for identification. Finally, the offshore branches of many English
banks located in either the Channel Islands or the Isle of Man may also prove to be helpful.
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Creating Your Own Bank Secrecy
Village Bank
Cash Flow Street
Jersey, Channel Islands
United Kingdom
Confidential
We hereby confirm that the above named, Davy Crockett Esq, of 22 Homestreet,
Anytown, USA, is a client with our bank, the Any town Savings and Loan
Association, license number XXXXXX.
Mr Crockett has been banking with this institution for the past eleven years, to our
utmost satisfaction. He is known to us as an honest citizen of impeccable repute
and financial integrity. He is highly regarded in the community and among
professionals in the state. We can unconditionally give Mr Crockett our best
references. Should you have any queries regarding this or other matters, please do
not hesitate to contact me personally by telephone, telecopier or mail. I assure you
of my personal devotion.
Most sincerely,
Billy J Banker, Jr
Managing Director
There are still a few free-thinking bankers out there. Depending on the circumstances, some
of them can still be counted on to lend a helping hand in times of need. Friends are sometimes
willing to go that extra mile for you. This is not a service anybody sells, at least not yet. It
cannot be advertised. Study the classifieds in newsletters geared to free-thinkers and PTs. One
day you may come across an ad from a friendly banker somewhere. For a fee you may then
be able to get the bank to testify how Mr Scoopy Doo has banked with them for the past
number of years. This can then in turn help Mr Doo get a bank account opened on the other
side of the globe.
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poorer sections of large urban centers as they cater to the needs of illegal immigrants and
others whose credit ratings are not up to snuff. Some have the word "bank" boldly displayed
in their windows, but don't let that fool you. They are not banks and therefore can be a little
more lenient when dealing with new account holders.
These companies often offer checking accounts. Some offer accounts that pay small
amounts of interest, but then you would be required to provide your social security number
when opening such an account. The benefit offered by such accounts is not their revenue
raising ability, but their ability to store your money privately even in the fatherland of Big
Brother. Of course, as such institutions are largely unregulated, some of them have turned out
to be nothing more than loosely veiled scams. The other drawback to such institutions is that
Big Brother is already very much aware of them and how they might enable you to work your
way around some of his silly restrictions. Increased government scrutiny may soon bring even
this last remnant of banking privacy in America to a screeching close one day in the not too
distant future.
In the UK, completely anonymous accounts are available through various bookmakers in
the country. For example, William Hill will allow anyone to open what is known as a Phonabet
account in just about any name desired. Not only do you not need to show identification when
opening the account, you don't even need to provide a sample of your signature. An address is
only required if you would like to receive statements, but then why would you? The account
is controlled by a plastic card that contains your account number. Whoever holds said card is
presumed to be the owner of the account. Withdrawals can be made easily (although your alter
ego will have to sign for them) at any of the 1600 branches of William Hill located throughout
the UK. A minimum deposit of £50 is required to open the account, but there is no restriction
on the maximum balance allowed. Still, as with all matters concerning banking privacy, you
should operate your account in a manner that will not call undue attention to your activities.
Remember, there is nothing stopping your alter ego from discovering yet another side of his
personality and opening another account. Check your local business pages when in the UK for
the nearest branch.
Of course, the major drawback to such anonymous accounts (those available in both the US
and the UK) is that they are not connected with the international banking system. Although you
can store your money in a financial institution (probably a better hiding spot than under your
mattress at home), it will not earn any interest nor can it be invested in securities or bonds.
Such accounts simply represent an anonymous way for you to deposit your money within
relatively limited geographic areas. Still, this alternative may be all that is needed for small
amounts of money over the short term. Perhaps such accounts can simply serve as a safe haven
for your cash until you have the opportunity to collect it together and make the next trip to your
sunny offshore banking haven.
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Creating Your Own Bank Secrecy
systems are now too sophisticated to work your way around. Europeans know that in most
countries their home banks automatically report all accounts to the government's tax computer
at the end of the financial year. This automatic filing tells the government the balance of each
account as well as the (taxable) interest made during the year. Why the automatic filing and
the automatic exchange of data files? Ask the government and it will tell you that this is all
necessary to make sure that everybody pays his proverbial fair share.
Loophole alert! Who are, legally, not supposed to pay their fair share in western European
high tax countries? Who are, with full government consent, exempt from paying anything?
Foreigners. Plus nationals living outside of their home country, expatriates. This loophole not
only gives tax freedom to foreigners and expatriates banking in a particular country where the
automatic exchange of data with the government tax computer is in place, it also gives,
amazingly, a sort of limited bank secrecy. When a resident national opens an account, he will
have to give his national ill card number. In countries where no such card exists, or where it
is voluntary, he instead gives his national tax contribution number. In the blueprint drawn up
by government planners, theoretically there is no way for a resident national to open a bank
account without giving a number that can then later be cross-referenced with the tax computer
files.
Now ask yourself, what happens when a customer shows up wanting to open a bank account
who does not have such a number? In some countries (Spain, for instance) he is told to go get
himself a tax contribution number, even though he does not pay tax nor is he supposed to pay
tax. However, in most countries, governments and banks alike think that this is plain silly.
Only taxpayers are, after all, supposed to be on the tax roll. He who is obviously and without
a shadow of doubt exempt because he is a nonresident foreigner or a national now living
abroad will not be coerced onto the tax rolls. He will not be required to get a tax contribution
number. Instead, he will be allowed to open his account without any citizen ill number at all.
At the end of the year, only accounts with tax reference numbers are sent to Big Brother's
central tax computer. Exempt accounts are not reported at all. This is all legal and the way the
government wants it. There is no point in automatically reporting the account balances and
interest earnings of foreigners or expatriated nationals as they are not supposed to pay the
slightest tax anyway. As no automatic filing or central reporting takes place, you will have
some semblance of bank secrecy. Of course, your bank will tell anybody everything if asked,
but if no one knows that your new account exists, no one will be able to find out who or where
to ask. Even in the Haunted Houses of high tax nations, the local banks will keep your name
and address out of government computers.
For a bona fide foreigner or expatriate living outside of these high tax countries, it is not
difficult to open up such a tax free account. However, if you are a national (and a resident) of
such a country, your task is a little more difficult. How do you prove something which is not
true? How can you make the bank believe that you are an expatriate, not living in icy Sweden
but residing in sunny Spain? In fact, you are a Swedish Swede from Sweden, living in Sweden
and supposed only to be able to open accounts with your taxpayer ID number and the
subsequent automatic government computer cross-reference. The bank will not take your word
for it if you simply claim to live abroad. It will want some sort of proof. However, it will also
not cross-check the proof that you do provide with foreign government records. Instead, a
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Banking in Silence
foreigner account will be opened for you on the spot. The proof you need to give the bank is
your. residence perm~t, the card showing that you have the right to live in the foreign country
that Iss.ued the perrmt. Do bank clerks know what a residence permit from another country
looks like? Of course they don't. Which is why you, with a little finesse, can get all the so-
called residence permits you want.
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Creating Your Own Bank Secrecy
officials far too many tax contributions never found their proper destinations in the past in
almost all Latin countries.) To get your tax number, you have to give a Spanish. address. A.ny
address will do even an Apartado (post office box) that you rented ten minutes earlier.
Alternatively, you could use your hotel's address or make a deal with. a local lawyer. or
maildrop. They advertise in English language papers such as The Entertainer on the Spamsh
Costa del Sol.
Unlike official residence permits which can often require up to two years of bureaucratic
nightmares, a Spanish taxpayer identification number can be obtained in a few easy steps over
the course of a couple of weeks. You must first go to the central police station and apply for
what is known as a numero identification extransero. This involves filling out a white form,
showing your passport and stating your intentions. "I will be vacationing here a lot and would
like to open a local bank account for expenses." A form will then be mailed to your Spanish
address in approximately two weeks. You must then take this form to the Hacienda, Spanish
tax office, and obtain your numero identification fiscal, taxpayer identification number. This is
actually the same number, only now it appears on a smart looking card imprinted with a lot of
officialese in Spanish, an impressive looking seal and, most importantly, your name.
Now you're ready for phase two. Return to Sweden or wherever you live. Enter a bank in
a city where you are not known. All bronzed and expatriate-looking, tell them your true name
because they will want to see your passport anyway before opening an account. You then tell
them that you are an expatriate Swede now living in Spain, and that you want to open an
account. "I still have a few business dealings back here in old Sweden," you say, "so I figure
it would be convenient for me to keep an account here too. Of course, the account will have to
be a foreigner account, since I am an expatriate now and as we all know, expatriates and
foreigners don't pay tax to Sweden, nor do we get our accounts reported automatically every
year to the Swedish government tax computer."
The bank will want to know your Spanish address. Use the hotel, your lawyer, your
maildrop or the post office box you opened in Spain. Next, the bank will want to see proof of
your expatriate status. So, acting like a million dollars, you whiff out your snazzy-looking new
ill card from Spain. The bank teller is almost blinded, a more official looking card is seldom
seen on those shores. "Ah yes," you say, "It just so happens that I have here my residence
permit. I assume that will do." Any Swedish bank teller will buy your story simply because no
Swedish clerk has the faintest idea what a Spanish residence permit is supposed to look like
anyway. Just make certain that the document you shove over is a jiffy thing with seals, official
signatures and, of course, your name printed on it. Depending on the country, it may even carry
your foreign address "proving" that you are an expatriate.
Most holiday destinations have some version of the Spanish tax contribution number card.
The Latin countries are the easiest, as they will sign up all comers, then issue the cards fast and
free of charge. You won't get it on the spot, but it will be sent to your address there in a few
days or a week. Ask about this when you sign up. In Portugal, you want the numero
contribuente. In Brazil, you want an NIC-number. Greece, too, has cards, as does Cyprus and
Malta and all the countries of South and Central America.
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Creating Your Own Bank Secrecy
schemes, but there is still a lesson to be learned from these stories, even if all you would like
to do is hide a little dough in an account whose location is known only to you. My final piece
of advice in this chapter on creating your own rock solid bank secrecy is the most basic of all.
It also underlines the most common mistake made by any and all interested in achieving bank
secrecy. In short, in order for your secret bank accounts to be kept secret from your potential
enemies (creditors and tax collectors) they must be kept secret from everyone.
In creating your own bank secrecy, you must never give your game away. This involves
much more than just keeping your trap shut and not bragging about your offshore account,
although such diligence is also definitely of the utmost importance. It is amazing how many
people cannot keep themselves from telling any who may care to listen about their brilliance
and financial genius. Nonetheless, generally speaking, it is not a stranger that you meet in a
bar or at a ball game that will later tum you over to the tax collector or blow the whistle on
you. After Big Brother, you must include on your list of potential enemies your spouse, your
lover, your business associates and even your own kids. Bank secrecy begins and ends with
your ability to keep your own secrets. All is lost if one day you open your mouth and tell a
potential informant (meaning anyone) about your clever method of concealing your assets.
Don't share such sensitive information with another living soul, not even people you trust.
Does your wife need to know how you have hidden your money? In nine cases out of ten, she
doesn't, so don't tell her.
Make a habit of sharing information only on a "need to know" basis. Drop false hints so
that investigators will be led on a wild goose chase should they ever try to pursue your cash at
some point in the future. Every two or three years, move to transfer your assets to new and
even more secure accounts. Make sure that you once again break the paper trail completely.
Moving assets before someone else moves in to seize them can mean the difference between
poverty and prosperity in your future.
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Creating Your Own Bank Secrecy
Chapter 22
DOING THE WASH
There is no dirty money, there are only dirty people. Every thinking person agrees that
blaming money for all of the world's ills is superstition. After all, money is only a piece of
paper or a coin, a commodity to trade with. Yes, there are evil people who do evil things with
money. The most evil of them all are those who believe that they have some unearned right to
other people's money. These people believe that if you don't hand over your money
voluntarily, they can grant themselves, by some higher and totally inexplicable virtue, the
right to take your money from you by force and then use it to line their own pockets. If you
refuse and hide your money where it cannot be found, you are called evil through some
warped reversal of logic. Realistically speaking, it is those who would like to separate you
from your money who are evil.
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Banking in Silence
trillion dollars per year, that's US $1000 billion dollars or about five times the entire GNP of
France! Making themselves look even more stupid, these silly bureaucrats went on to bicker
about the basic definition of money laundering.
In doing so, they revealed the artificial concept of making money laundering a crime in the
first place. These hearings soon made it overwhelmingly clear that the whole idea of making
money laundering illegal was nothing more than an excuse to use the law as another shake-
down racket. What everyone did in the sixties right through to the eighties has now been
outlawed. A whole host of perfectly sound and legal business transactions have now been made
subject to rules and government decrees. Many have, at the stroke of a pen, been made illegal.
If you do business the way your father did - and your grandfather before him - you are now
committing a felony. This state of affairs has spread from the United States to most of the other
democracies in the world, fuelled by a phoney propaganda-created fear of drugs.
The only undeniable outcome of this new legislation is that thousands of Americans and
foreigners alike have been indicted on money laundering charges. Similarly, banks around the
world are constantly wary of having the finger pointed at them, with good reason. In 1993, no
less than 400 banks in the US were under investigation for money laundering activities. A veil
of secrecy shrouds these actions. And no wonder. Reputations are at stake, as are astronomical
sums of money. The large number of banks involved is testimony to how difficult it is to define
money laundering. After all, what separates a transaction that a banker views as a series of
perfectly normal, legal movements, from that which an investigator will tum around and call
money laundering?
Banks almost always opt to settle out of court. They realize that proof is elusive. Banks also
know that as governments run their own court systems, they almost always win if allowed to
see their day in court. After all, in the famous words of federal prosecutor Sol Wachtler: US
courts will indict a ham sandwich. Big Brother knows full well that most banks settle out of
court. This is the very reason for such secrecy in the first place. It is also the reason that a large
number of banks are under investigation. US banks routinely pay millions of dollars to the
government in restitution (or penance, to be more precise) as the outcome of money laundering
cases. A quest for justice was not the reason for the 1986 clamp-down on money laundering.
The real reason? Big Brother was short of cash.
IS IT ILLEGAL?
Furthermore, political rhetoric and media hype in most western countries completely deny the
fact that money laundering, even today in the traditional gangster sense of the term, is not
illegal in the vast majority of countries on this planet. You may be forgiven for thinking that
money laundering is always a crime no matter where it is carried out. Most people are probably
of this mistaken assumption. Flashy CNN reports and covers of Time and Newsweek
magazines, depicting the latest batch of money launderers that governments actually manage
to catch, do their bit to reinforce this stereotype, the stereotype of money launderer as arch-
criminal.
However, such reports invariably fail to mention that fewer than 15 per cent of all the
world's countries have instituted laws that make money laundering in itself a crime. Of course,
best known among these countries is the good old USA. American courts view laundering as
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Creating Your Own Bank Secrecy
an incentive for criminals to carry out more crime. Then again, American courts hold a lot of
silly opinions with which more civilized countries would neve~ c~mply. The latest, ,making
gang membership a felony, rings all too true with the totalitarian concept of crime-by-
association. If you choose to freely join a club or an organization (in this case called a street
gang) you automatically face prison time if found out. It does not matter that you yourself do
nothing wrong. The association is enough to send you down for some hard time. No wonder
freethinkers are deserting the United States in droves, not even South Africa would dream of
treating its blacks this way. Only Cuba, North Korea and China still have laws whereby the
simple membership of an organization can land you in prison.
Getting back to money laundering, my point is that despite popular media hype and despite
the fact that some countries have passed laws to combat money laundering, in nine countries
out of ten it remains perfectly legal. Outside of the US and its vassal states, most countries
view money laundering realistically. They know that laundering cannot be made illegal. They
realize that laundering is simply stringing together a number of often quite legal moves to form
a finished process which, in effect, will have washed dirty money clean. Through their court
judgments, these countries have made it clear that as long as every single move of a given
procedure is in and by itself legal, then they have no power to outlaw the finished picture.
To use a motoring analogy, these countries are saying that you are free to own and operate
a car, but if you drive too fast or if you drive recklessly, you are breaking the law. Viewed in
isolation, there is nothing illegal in owning a car. Yet one can easily break the law, it all
depends on how the driver behaves. This makes sense, just as two and two makes four.
However, some countries fail to see the logic in such statements. Instead, they insist on
brandishing the money launderer as the most heinous criminal of them all. Politicians and the
media alike continually foster this image, causing many to almost tremble at the very mention
of the words money laundering. So, to restore common sense and rational thinking, let's take
the bull by the horns and look at exactly what money laundering is all about.
A LITTLE HISTORY
It is often said that the term money laundering was first coined by Al Capone to explain how
he introduced his illegally earned gains into the system through a string of coin-operated
laundromats scattered around Chicago. It's a nice story, but it's not true. In fact, the term
money laundering did not come into use until long after the industry that it describes was up
and running. This enormous global industry was started through the efforts of a single man.
Meyer Lansky was his name. In terms of physical appearance, Lansky did not look much like
the typical Hollywood presentation of money launderers. He was a short, unassuming man
who used his brain rather than muscle to get what he wanted. Born in Poland but raised in New
York, Lansky earned himself a few titles that would undoubtedly have amused him. He has
been called everything from the mob's accountant to the godfather of money laundering.
Lansky learned a great deal about how the times were changing around him by following
the example of Al Capone, who was convicted and sent to Alcatraz on charges of tax evasion.
Determined to not fall into a similar trap, he came up with the idea that any money that the IRS
does not know about is "theoretically" not taxable. He also discovered that money invested
outside US borders was for all intents and purposes safely tucked away beyond the grasp of the
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Banking in Silence
taxman. What the taxman cannot find and count, he cannot tax. Lansky soon set up shop in
Havana where he mastered the art of concealing the source of his and of other people's money.
He developed the technique of layering account records and made use of many offshore bank
accounts, primarily in the Bahamas and Switzerland. Almost single handedly, Lansky
transformed Havana into an overnight boom-town, but all of this was quickly brought to an end
when Castro descended from the mountains and took control of Cuba.
Not deterred, Lansky soon cut his losses, relocated to the Bahamas and considered himself
fortunate for having learned an important lesson. Political stability is of the utmost importance
where any investment is concerned. Soon his operations were up and running in Nassau. "It's
better in the Bahamas," he told friends on several occasions. Today, this island chain uses those
very words to promote its tourism industry. No one disputes that Meyer Lansky developed,
refined and nearly perfected the techniques used even today in the Bahamas and all other tax
havens around the world to confuse foreign government investigators. He mainly deposited
funds with banks in Switzerland, the Bahamas and Panama. His stratagem was simple and
involved hiding behind and operating through otherwise legitimate enterprises, thus blending
in and avoiding detection. Like Darwin, Meyer Lansky believed that invisibility offered the
best protection of all.
Lansky was not prone to strong-arm tactics. His genius was in understanding the power of
money. All the methods that Lansky invented are the very same methods employed today by
those with something to hide. Not just in the Bahamas, but in other countries, too, the device
Lansky set in place in the early sixties has evolved into an awesome machine. The techniques
that he developed are undoubtedly responsible for keeping the economies afloat in dozens of
small countries scattered around the planet, known as tax havens. The industry that he
established has grown at a truly astronomical rate. Today it is estimated that somewhere in the
area of US $100 billion to as much as three times that amount is washed clean each year. This
figure means that the underground economy (after foreign exchange and petroleum) is the third
largest industry in the world.
Ironically, in spite of his immense reputation within money laundering circles, Meyer
Lansky was never interested in money laundering in the official sense of the term. He was
merely interested in hiding funds in safe and secure offshore accounts. There is no evidence to
suggest that Lansky ever intended to reintroduce into the mainstream economy any of the
money that he squirreled away in offshore accounts. Hence, his title as the godfather of money
launderers is a little undeserved. Instead, that title should probably be bestowed on an
individual that might not come to mind so readily, Richard Nixon. It is in relation to the
Watergate scandal that the term first appeared in print. As reporters dug deeper, it was
discovered that more than US $750,000 in donations to the Nixon campaign fund had been
laundered through Mexico in order to disguise the identity of the donors. Some of this
laundered money was then used to finance the infamous break-in at the Democratic National
Committee headquarters on 17 June 1972.
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Creating Your Own Bank Secrecy
for the coining of the term money laundering, they are equally responsible for much of the
money that is laundered globally each year. When they are not actually doing the washin~
themselves, their dirty policies force the hands of others. For example, when Gulf all
laundered more than US $4 million a few years ago, the money ended up in the crooked hands
of Korean and Bolivian politicians. Lockheed Corporation laundered approximately US $25.5
million through a trust based in Liechtenstein. Where did all of the money go? Into the pockets
of corrupt Italian officials. Lockheed later made use of the laundering facilities of a company
known as Deak-Perrera, only this time the US $8.3 million laundered made its way into the
pockets of Japanese politicians.
Politicians of all stripes still regard the notorious bustarelle (envelope stuffed with cash) as
an inalienable birth-right. As the Italian experiences since 1992 have shown, no amount of
"clean hands" investigations will ever change this basic fact of life. Two years of police
investigation and almost daily arrests have done little to deter the incorrigibly corrupt. The
money paid out in bribes and as the result of other dirty dealings is often invested in local
businesses, usually through the assistance of friends or family members. Clever politicians
invest in other regions of the country, usually with little if any paperwork. Investigators, at
least those who are not totally corrupt themselves, are left with little, if anything, to go on.
One tactic, widely used in Campania and Calabria, is to boost the value of an inheritance.
There, somebody always seems to be dying. And surprise, when the heirs look into the
financial matters of the deceased, they find that they stand to inherit a lot more than anybody
ever expected. Unknown bank accounts turn up. A secret safe full of dollars suddenly comes
to light. Even though it cannot be proven, the local community usually has an inkling of what
is going on. In 1994, Pino Arlacchi, one of Italy's top Mafia experts, conducted a survey with
800 members of Confindustria, an organization of industrialists. He asked, "Are there
companies in your area financed with money of dubious origin?" Almost 62 per cent
responded that yes, there certainly was.
Furthermore, when politicians are not asking others to launder bribe money on their behalf,
they are generally participating in such activity all on their own. Political bigmen of all shapes
and sizes make a habit of sending a little retirement fund overseas in case the political climate
at home suddenly takes a tum for the worse. Ferdinand Marcos, not content with making ends
meet on his annual salary of US $4700, managed to hide as much as US $5 to US $10 billion
in security funds that he stashed in the US, Switzerland, France, England, Italy, Panama and
Australia. He screened everything behind a myriad of holding companies and trusts, a system
so complicated that it is said he, himself, often became confused as to which assets belonged
to which shell company. Still, he would have gotten away with it all had he not been so greedy
and settled for a little less. The sheer magnitude of the amount of money that he illegally
redirected into his own pocket caused an international embarrassment and left the Philippine
government with no choice but to at least make a show of sorting through the tangled web spun
by Marcos.
Hiding government money in personal offshore accounts also seems to have been a favorite
activity of the leaders of the former communist world. The Ceausescus of Romania hid their
loot in secret accounts in Switzerland. Erich Honecker, of East Germany moved more than US
$260 million out of his communist Utopia just hours before the Berlin wall fell. Saddam
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Banking in Silence
Hussein is said to have hidden as much as US $32 billion to protect his close family and friends
in case his regime one day comes crumbling down around him. Undoubtedly, every dictator
throughout Africa, the Middle East and Central and South America engages or has engaged in
similar self-preservation tactics. We only find out about the ones that get caught. The rest get
off scot-free. When things at home turn sour, they simply move abroad to enjoy a life of leisure
on their ill-gotten gains. In effect, they become PTs, only they come to such status not through
their own hard work, but by deceiving and stealing from the very people they claim to
represent. Ask yourself, whose best interests do such political bigmen really have in mind?
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Creating Your Own Bank Secrecy
The Iran-Contra Affair is another perfect example of how politicians flagrantly violate the
will and desire of the people who put them in office. Although all of the details of this scandal
will never be fully known, the basic plan seems to have involved selling arms to Iran in
exchange for the release of American hostages. The proceeds from such sales were then
washed clean through various Swiss accounts and routed to South America to fund the
Nicaraguan Contras. Just to make the whole story a little sweeter, the proceeds from illegal
drug sales were apparently also put into the system. It is said that as much as US $50 million
entered this wash cycle over a two year period, although the Contras deny having ever received
anything near that amount. Apparently it did not bother those involved in this scandal that
Congress had specifically prohibited the provision of such aid to the Nicaraguan Contras.
In fact, such flagrant and illegal violations of American policies did not seem to upset the
American people too much either. Most, undoubtedly, did not understand the implications of
the scandal as the facts were slowly buried in more than 250 hours of testimony heard by the
Senate Select Committee. This testimony includes sworn statements from 29 witnesses and
over 250,000 pages of documents. The whole affair became far too complicated for the
average American taxpayer to follow. Most wanted nothing more than the television coverage
to end, and for their daytime soaps to return. Some Americans even went so far as to call for
the immediate election of Oliver North to the presidency. Somehow, a man involved in a
massive scandal, a scandal that involved laundering the proceeds of the illegal sale of drugs
and arms, had become a hero in the eyes of the average American.
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the most powerful men in the world. Their decisions affect the course of elections and political
crises in countries everywhere. They operate completely outside of the law. Undoubtedly, the
extent of their intrusions into the world political scene would be utterly shocking if it were ever
to be revealed.
During the early years of the Reagan administration alone, the CIA financed a massive
number of covert operations that stretched into just about every comer of the planet. Money
was sent to right-wing forces in Mauritius to provide assistance in their campaign to overthrow
the country's leftist government. Millions made their way to Libya, where it was hoped they
would be influential in toppling the government led by Colonel Gaddhafi. Hundreds of
millions were channeled into Afghanistan to support the Mujahedden rebels in their fight
against the Soviet Union. In fact, records produced by the White House and the CIA suggest
that the CIA undertook no less than 60 separate money laundering campaigns during the first
six years of the Reagan administration alone. This money then made its way to finance various
covert operations conducted by the agency. It has also been suggested that Ronald Reagan
himself knew of and perhaps even approved of each and everyone of these operations.
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known that although the CIA possessed damaging information concerning BCCI, it did not
pass this information on to any other government agencies even though it was technically
required to do so. Why? Crooks were not the only ones that were using BCCI to launder
money. Government money laundering was a part of the overall plan almost from day one.
The US National Security Council as well as the CIA apparently made use of BCCI to
launder money and maintain slush accounts. Some of this money washed through BCCI made
its way to Afghan rebels. It has also been suggested that the MI6 maintained a similar special
relationship with BCCI. It was with the help of BCCI that North Korean Scud-B missiles made
their way to Syria. Similar BCCI assistance allowed Saudi Arabia to purchase Chinese
Silkworm missiles. When it came time to locate guidance systems for these missiles, BCCI
assistance was again called upon to broker a deal with Israel. Although the full extent of BCCI
involvement in government covert operations will never fully come to light, we can gain a
little insight simply by looking at a list of prominent BCCI promoters. Such a list includes:
Jimmy Carter (US), Carlos Menem (Argentina), Alan Garcia (Peru), Javier Perez de Cuellar
(the UN and Peru), Lord Callaghan (UK), Julius Nyerere (Tanzania), Indira Gandhi (India),
Willy Brandt (Germany), Mohammad Zia ul-Haq (Pakistan), Ferdinand Marcos (Philippines),
Saddam Hussein (Iraq) and Manual Noriega (Panama). While not all of these individuals
laundered money through BCCI, some of them certainly did.
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business partner. In August 1991, these three individuals were each sentenced to a whopping
505 years without parole. Did the three murder babies in their sleep? Did they sell nuclear
bombs to Saddam? Did they try to assassinate the president? Or did they flush the LA drinking
water with poison gas? None of the above. Their crime was selling and buying gold and thus,
in the process, helping to launder criminal money. Their old, respectable and, in all other
respects, totally legal jewelry business was infiltrated by undercover agents. As a result, in late
December 1990, they were each convicted of 25 felony counts of money laundering and
conspiracy, with each count drawing a ridiculous 20 years imprisonment. In August 1991, they
were individually sentenced to serve 505 years without parole. Prior to conviction, none had a
criminal record.
The message that these stories broadcast is loud and clear. If you happen to have close
contacts in government circles, then the recent wave of money laundering legislation need not
affect you. Politicians can continue going about their dirty business just as they always have.
They need not worry about falling victim to the host of new laws that have been ushered in,
such restrictions were never meant to apply to the likes of them. Instead, governments have
made money laundering illegal so that they can point the finger at ordinary people, who
engage in exactly the same conduct that they do. While politicians and those with links to
people in positions of power will be let off with a light slap on the wrist, others will not fare
nearly so well. Big Brother means business and is dishing out harsh sentences to those who
get in his way.
The story of these two Armenian jewellers and their Argentinean business partner shows
quite clearly how serious Big Brother takes his laws when confronted with a target. These three
received one of the harshest prison terms ever handed out by a US court for activities that are
not even considered to be a crime in over 180 countries. In the vast majority of countries, the
crime conveniently referred to as "conspiracy" does not exist. Similarly, in most countries on
this planet, money laundering in itself is not a crime. It all depends on the circumstances. As
the circumstances have it, these three would have got off scot-free in almost every other
country in the world. Had they been doing business in Germany, they would have got two
years. In England, perhaps three. France would probably have given them four years in jail,
while it is doubtful that Italy would have even bothered to prosecute them at all. The big
mistake that these three made was to conduct business within the most government-oppressed
nation on the globe, the human rights abusing USA. Because of this and nothing else, they will
die in a maximum security prison.
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to such techniques, many choose to take a more direct route. They charge ahead to implement
their ideas, doing away with niceties, such as keeping the public informed of their activities or
staying within the bounds of the law. They opt for action over an endless series of fruitless
debates.
While such conduct in public officials is unquestionably corrupt, it does still offer a
valuable lesson in understanding how things work in the real world. Sometimes, the best way
to get something done is the direct way. The fact that politicians have reserved money
laundering as an activity that only they are allowed to participate in, should be more than
enough to convince you that such practices merit further investigation at the very least. After
all, it is only when you have come to a full understanding of all of the banking privacy
practices available, that you can begin to formulate what is truly your own best approach to
banking in silence.
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Chapter 23
GETTING DOWN TO THE BASICS
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need to go to the cleaners. There has to be something to clean. Dirty money comes in basically
two forms. The first is the sort that professional money launderers deal with, namely illicit
proceeds, the profits generated through illegal activity. The second operates on a more homely
level, this tainted money is the result of moonlighting or black work. None of the readers of
my reports fit into either of these two camps, so money laundering, strictly speaking, is not
necessary. First of all, I don't write books for crooks. Secondly, money made in a
straightforward manner rarely needs cleaning. Once money has been included on your tax
return and tax has been paid on it, there is no need to wash it white. It already is white.
Furthermore, no readers of my reports need to moonlight or work black off the books. With
the advice contained in my series of reports, everyone can use the secrets of the super-rich to
stitch together a life plan where tax evasion is simply not necessary. With a modicum of prior
planning, everybody can escape tax legally. Money which is legally earned tax free is not
tainted money, so there is no need to launder it. Of course, there are a few exceptions to this
rule. You may feel safer hiding your money in case a heavy-handed and arbitrary government
(in other words just about any government) decides one day to claim yet more of your money
as its own. This possibility is the reason that many choose to hide at least some of their
legitimately earned money in secret accounts. Once the paper trail has been cut and money has
been transferred abroad, no one, not even a tyrannical government, will ever be able to find it.
In countries where politicians are notoriously unstable or have proven themselves to be
crooks, one is well-advised to spirit even legitimate earnings abroad. Most African countries
have currency restrictions that outlaw the free flight of capital. When there is the added risk
that money may be confiscated or frozen by government order, smart money resides abroad.
In the 1970s, the Soviet Union confiscated all bank deposits routinely, time after time. In 1990,
the Brazilian government froze all accounts that contained more than US $1000. After a long
wait and several suicides, depositors were finally allowed access to their money. By this time
it was worthless. Inflation had eroded the value of these accounts beyond recognition. Smart
money meanwhile hid abroad, cloaked in bank secrecy.
Other examples of white money washing itself black? In Scandinavian countries where
wealth taxes easily chip away one per cent of every home or business owner's assets per year,
prudent and responsible citizens understate the value of their assets. Without telling anyone,
they put their legitimately earned, tax-paid white money away in secret bank accounts abroad.
In effect, although no one has ever owned up to it, turning it black. This reverse money
laundering is money laundering nevertheless, and just as legal or illegal depending on your
country and the laws that it has brought into force lately.
TRANSFERRING IT OFFSHORE
Beauty, as they say, is in the eye of the beholder. So, it seems is taintedness. What you consider
to be tainted money may well be lily-white to the next guy. Even governments rarely agree
when defining what is tainted and what is not. Funds that make their way out of countries with
exchange controls may become tainted at home, but are still crystal clean in most other parts
of the world. Similarly, money that has escaped excessive taxation will become tainted at
home, but will still be clean in countries that do not have taxes and hence have no laws that
tum tax evasion into a crime. It is all relative. What I consider to be tainted money is money
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that the taxman has extracted by force, but what he and his cronies call tainted money is money
that has, somehow, escaped his tax. Liberated money!
As countries around the world have expanded the legal definition of money laundering, so
too have they expanded their corresponding definition of tainted money. Today, even
something as harmless as an undeclared gift from Grandma is considered to be tainted money
- subject to immediate confiscation - in some countries. This has led many investors to take
matters into their own hands and secretly move a little money offshore, transforming their
money into a tainted, but secret stash placed safely beyond the grasp of politicians. Those who
reside in countries that have gone so far as to institute full-fledged exchange controls have
been particularly resourceful in their attempts to secure a safe nest-egg in an offshore locale.
The methods devised by professional money launderers in their attempts to move large
amounts of money out of restricted jurisdictions constantly seem to become yet more varied
and original.
One tactic often used is known as the identical suitcases trick. The laundryman boards the
plane carrying two suitcases, one packed with personal items, the other stuffed with cash.
When the plane lands, he makes his way through customs carrying only the suitcase filled with
money. If stopped at the border, he acts mortified when he sees the contents of his luggage and
hastily makes his way back to the plane in the company of government officials. "See, this is
my bag, my god they do look alike though, don't they?" he says, opening the other suitcase
and showing them his identification and clothing stuffed inside. The money contained in the
first suitcase is then written off as an expense of doing business.
An even more industrious individual from South Africa smuggled money out of his country
in a fake cast. To be safer still, he first placed a call to the airport and provided an anonymous
tip concerning what he was about to do. When this businessman hobbled into line to board the
plane, he was naturally stopped and searched. Officials told him that they would have to
remove his cast. He screamed and hollered, creating a scene, demanding that he be allowed to
call his lawyer, threatening to sue everyone in sight. During the commotion, his plane left
without him. His lawyer finally arrived and the cast was removed to reveal - absolutely nothing
but a pale leg. The next day, this businessmen hobbled on to the same flight, the recipient of
embarrassed smiles all around, his cast filled almost to breaking with tainted money.
Other professional money launderers simply rely on employing the right type of people to
do their dirty work for them. They understand that custom officials cannot stop and search
everyone. Instead, they are forced to rely on profiling. Such profiles single out those who are
likely to break the rules. A single, well-dressed woman who is traveling alone will almost
always be stopped. Government profiling has shown her to be the sort of person who will buy
something expensive while on vacation and then fail to declare it. A young couple traveling
abroad for what appears to be the first time, will be waved through with the assumption that
they are too scared to try anything. A businessman in a wrinkled suit who looks like he would
much rather be at home with his family than abroad on a business trip, will similarly meet with
little resistance.
However, readers of this report need not worry about such government profiling or other
illicit ways in which to move money out of one jurisdiction and into another. Parts III and IV
of this report provide a detailed approach for anyone interested in moving money into a
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completely anonymous offshore account. The methods detailed show how to create a private
stash offshore without breaking the law, even in the face of the plethora of money laundering
legislation that has recently been introduced. In short, readers of this report can move money
privately into their offshore accounts without ever acquiring the unwanted title of money
launderer, without ever being forced to reclassify their money as tainted money.
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discover an antique vase, hidden in the attic and covered with dust. Alternatively, such antique
treasures can turn up at a yard sale, sold by an old man, who had no idea how valuable the
piece of property was that he so easily parted with. These commodities are then "sold" at
auction and turned into legitimate cash.
Another favorite of money launderers is the cash business. In Italy, these often take the form
of the pizzeria, but such pizzerias don't need to make any pizzas to profit. In other countries,
the video arcade game business fits the bill. Any business or chain of business will do, as long
as it is common to receive payment in cash and not to issue receipts bearing the name of the
customer. Have you ever noticed that owners of coin-operated laundromats seem to frequently
get into legal trouble on totally unrelated charges? Now you know why. For more ideas on cash
operated business, consult the PT Booklist provided by Scope International. Here you will find
several titles on how to own and operate underground businesses that deal almost exclusively
in cash. You will also find a host of other titles available that are of special interest to PTs and
free thinkers.
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Even so, offshore legal structures can sometimes help those locked in high-tax jurisdictions
work their way around taxes. As discussed at greater length in chapter 19, arms length or back
to back loans are a way in which you can legally gain access to your money without having to
pay tax on it for the privilege. Similarly, searching for loopholes in tax treaties, known as
"treaty shopping", can also enable you to legally maneuver your way around excessive
taxation. Another option may be to have your offshore company refund "expenses" that you
incur on its behalf at home. Such money is not liable for taxation.
It is a good idea at this stage to sit down with a local tax adviser. He can tell you what is
tax free and what is not. Then find a way to channel your foreign loot into what could
eventually become a tax-free gain for you at home. Ask a lot of questions, but let him do most
of the talking. Don't tell him anything important, but use your head. Also read between the
lines of this and similar reports. Not all information is fit to print, unfortunately. Sometimes,
you simply have to be creative. Such tactics remain an ugly necessity for resident taxpayers
forced to support high-tax welfare states.
THE AMERICAS
Bahamas, Canada, Colombia, Ecuador, Panama, United States (in particular Houston, Los
Angles, Miami and New York), Uruguay, Venezuela.
EUROPE
Austria, Germany, Hungary, Liechtenstein, Luxembourg, Netherlands, Russia and the Baltics,
United Kingdom, Switzerland.
ASIA
Hong Kong, Nauru, Pakistan, Thailand, Vanuatu.
ELSEWHERE
Nigeria.
Banks based in the money centers of the countries that appear on this list all have experience
with money laundering. Some are under surveillance. If you want to bank in silence, you are
well advised to shy away from these countries and instead conduct your business where banks
have had little experience with money laundering and can be counted on to be far less cautious.
Of course, in the course of doing perfectly legal above the board business, every normal
law-abiding international businessman will have to bank in some of the countries that appear
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on this US money laundering list. This does not make him a money launderer by default. Just
because the UK, for example, is on the list does not make every Englishman banking in his
own country a money launderer. What the US list does do is make banking personnel in the
countries above suspicious whenever a foreigner shows up. Foreigners wishing to open a bank
account in mainland Britain will find it next to impossible. The banks, scared of money
laundering and other abuses, simply do not want your custom. If you are a foreigner, try cold-
calling the next time you're in London. Walk up to any bank counter and ask to open a current
account. The experience is chilling. You will normally be turned down flatly, given the cold
shoulder and shoved out of the door with some lame excuse. This happens to most foreigners,
not just those that are suspected of money laundering practices.
This list also makes authorities the world over look extra closely at large money transfers
to and from the countries on the list. Try not to conduct too much of your business in any of
the above countries. If you have to, like most of us, make sure that your business is legitimate
and totally above-board. Make sure that should the need ever arise, you can explain the
purpose of any transfer of money between accounts or between countries.
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laundering into a crime may make a great sound bite for the cameras, but as virtually any
banker will tell you, such policies do not make much sense in the real world.
The mere fact that you are using certain low-profile techniques that professional crooks
have developed successfully will not make you a mobster. What it will do, however, is
guarantee that you can bank in silence. After all, this is your entitlement, almost a human right.
When laws make it impossible to live your life openly and publicly, you will need to hide some
of your more sensitive financial affairs underground. Honest citizens are babes in the woods
when it comes to protecting themselves against government abuse. This is why we must learn
from those who have for years and years successfully beaten the system and gotten away with
it. If you are ready to beat the bureaucrats, start taking notes. Pick up some of the pointers the
professionals are using. Copy the money launderers when they pull off a success. Imitate them
step by step, but also remember that not all of them are smart. As for the ones who fail, learn
from their mistakes. Find out what they did wrong, then head in the opposite direction.
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sure that your computer is secure so that outsiders will have no way of entering your system."
Such advice has managed to keep more than a few individuals out of mounds of trouble. For
example, when the Iran-Contra affair started to make headline news, Reagan himself was able
to deny any and all knowledge of any wrongdoing. I urge you to get a copy of my The
Computer Privacy Report which tells you how to keep your computer affairs confidential.
Ronald Reagan came out of the scandal, slightly tarnished but still respectable. George
Bush actually managed to go on and win the next presidential election. These examples offer
an important lesson for any PTs who may one day find themselves in a sticky situation. Follow
the examples of the pros. As no documents concerning the involvement of either the president
or of the vice-president with Iran-Contra were found, nothing could ever be proven. When you
are dealing with any information that could one day be construed in the wrong light, take extra
care not to keep any written records of your activities.
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yourself in Atlanta in the late 1980s, with a divorce case or a greedy ex-wife breathing down
your back, you would probably not have thought twice about asking Brown and Carrera to hide
a bit of your cash on a distant sunny island. Be glad you didn't.
The two lured many people into their trap, foreigners as well as Americans. Along the way,
they made friends with freedom-loving bankers allover the world. Some gave them helpful
advice and valuable tips to use back home. Many swapped names of contacts in the US,
including contacts in US banks. Some of these bank officers were then visited by the
undercover agents. In a typical case, Cesar Diaz and a special agent of the IRS, working
undercover of course, interviewed a bank officer at the Continental Illinois National Bank
located on Madison Avenue in New York. The bank officer taught the undercover agents how
to set up an account for wire transfers without arousing the suspicion of her bank's legal
department. Such information was then used to prosecute all and sundry.
STAY LOW-PROFILE
Bruce Perlowin used to enjoy a joint or two on occasion, but he was fed up with having to pay
inflated prices to crooks and criminals. "Why don't I skim the profits myself?" he thought. He
decided to buy direct from the wholesalers, cutting out the middlemen. This was in 1975. Ten
years later on his way to a yoga course in Detroit, Perlowin was arrested on board an airplane.
Slight and self-effacing, bespectacled Bruce Perlowin liked yoga. He also liked to do things
right and loathed his colleagues in the drug business. To avoid capture, he retained a research
firm in Berkeley, California, commissioning it to determine what mistakes major drug dealers
made and reveal the weak spots of law enforcement tactics. Using the results, he erected a
counter-intelligence barrier with state-of-the-art electronics, including antennas, beepers and
radar to evade detection. He even built a US $3 million fortress in northern California's
Mendocino County, complete with bulletproof walls, an electrified stairway and a sophisticated
communications center connecting him to his marijuana businesses in other countries.
Bruce Perlowin was helped by lawyers and accountants who laundered money mostly
through Panamanian corporations, banks in the Cayman Islands and a trust in Luxembourg.
According to an article in the Chicago Tribune, he attributed his downfall to an addiction to
greed. "I wanted to own everything," he said. Bruce Perlowin was paroled in 1992. Looking
for a job he sent around his resume, advertising his organizational skills and his experience in
import/export. He also mentioned that he used to be the manager of "a fleet larger than the
navy of most countries" and "a money laundering ring that extended from Las Vegas to banks
in the Cayman Islands". This experience helped him land a US $25,000 a year job with
California-based Rainforest Products Inc, an importer of nuts from the rainforests of South
America. Bruce Perlowin still smokes pot.
Another purveyor of illegal substances whose downfall can be attributed to greed is Thomas
Mickens. Only 24 years old when he was arrested in 1990 in New York, Thomas Mickens
already owned a fleet of expensive cars including a Rolls Royce. He also owned more than 20
properties, among them houses, stores, condominiums and a yacht anchored in a secluded
California cove. Today, he is serving 35 years for trafficking, cleaning his money and then
evading tax. He laundered his money by burying cash in legitimate investments, often with the
complicity of lawyers, accountants, merchants and real estate agents. Mickens had diamonds,
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sapphires and emeralds implanted into his teeth. If his tastes had been less ostentatious, the
police conceded, he may have gone undetected - mainly because no one bothered to file any
Form 8300s, even though all merchants are supposed to do so when they receive more than US
$10,000 in cash.
The Rolls Royce alone was purchased with US $165,000 in cash. The dealer did not file
anything. He justified his action, or rather lack of action, by saying, "I am not a cop. My
business is to sell cars." Fair enough. By the end of 1991, a survey revealed that almost 60 per
cent of US car dealerships failed to comply with IRS requirements to report cash transactions
exceeding US $10,000. If this is the number the government will admit to, the true figure is
much, much higher.
These dealers are not charged, simply because an all-out effort to "do justice" would make
the IRS look ridiculous. Big Brother likes to have the ability to prosecute just about anyone.
He knows that the fear of possible prosecution is enough to strike fear into the hearts of those
who would otherwise be hard to keep in line. For the benefit of the press and the cameras, the
IRS will occasionally put on a road show. In New York, fifteen people representing five
Manhattan car dealerships were arrested in just one such show trial, involving Mercedes-Benz,
Ford, Nissan, Acura and Mazda. The dealers accepted cash without filing the required IRS
Form 8300. All except one were willing to accept pen-names and homemade IDs on papers.
You can still do such deals, almost anywhere in the world, as long as you deal directly with the
owners and don't discuss anything with a floor salesman.
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it is enough just to look out for a few key tell-tale features and then arrest these individuals.
Bonkers, but they believe this! So watch out if you are a single male wearing black attire and
driving a car with out-of-state license plates. US agents will soon be hot on your trail. The
pokey will be your next stop. This memorandum is a prizewinning example of exactly how
stupid some of Big Brother's foot soldiers can be. Still, this is the mental profile that
government agents work with when trying to impersonate a money launderer or privacy
consultant. They overdo their act, using some sort of a gangster script rather than what they
should be using, a Freedom Fighter script.
Consider the example of federal agent Johnny Featherly. Pretending to be private banker
Jimmy Brown, he met a courier in the bar of an Atlanta hotel. The courier tried to hand over
US $94,000 as a deposit. A true privacy consultant would have written a receipt and then
cordially thanked the courier. Instead, federal agent Featherly pretended he was a high-up
hoodlum and improvised as if Hollywood cameras were rolling. He acted outraged. He told the
courier that he did not work in bars much less take money stuffed in shoe boxes like some
lowlife street peddler. He added that he never touched cash personally, that was the work of
underlings. Besides, he fumed with an air of disgust, the amount was hardly worth his trouble.
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If an American bank does not comply with a government order, it loses its banking license
and thus its right to do business. Foreign banks have to pay, too. Abroad, the US cannot take
away the licenses of banks that do not operate in America. So instead of hundreds of millions
of dollars, the trend so far has been that foreign banks are only asked to payout a fraction of
the laundered funds. In one such case, a Panamanian bank was ordered to pay US $5 million
for alleged infractions made by the bank's clients in the US. Foreign banks could simply laugh
and walk away, but so far, all have paid. If they don't, the US has the power to tell
correspondent banks in the US to freeze all US based assets and accounts that belong to the
bank and its clients. This would inevitably cost the foreign bank more than what the US asks
for in the first place.
The US is a master of dirty dealings. Home banks are told to pay millions of dollars to the
US government in what in blunt terms can be called pure blackmail. Fines and restitutions are
always levied in the US $1 million to US $10 million range when foreign banks are concerned,
simply because the United States has less muscle to flex against foreign counterparts. There is
evidence to suggest that before the US settles on an amount, it looks into the total value of
assets held stateside by the foreign banks and its clients. The government then hits on a figure
roughly 10 to 20 per cent below that amount.
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Chapter 24
PUTTING IT TOGETHER
If you are like your author, you are one of the fortunate few who can call themselves Prior
Taxpayers. We have left the clutches of Big Brother. We are Planet Trotters, roaming the world
in search of new experiences and pleasures while helping kindred spirits aspire to our level of
liberty. Petty government decrees and the senseless policies of bureuacrats no longer pose
problems for us. We go where we want to go, do what we want to do and pay as little or as
much tax as we feel like paying. We live our lives as we see fit and enjoy a commodity that
has become all too rare in the modern world, freedom in the truest sense of the word. For most
PTs, however, life was not always so sweet.
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Even if they hire private investigators to dig up dirt on you, they will come up with nothing.
You are banking in silence.
No one will ever be able to uncover your credit card statements, your cancelled checks or
any other form of sensitive information that should be known only to you. No one will ever be
able to prove what you own, where you keep your assets, who you work with, where you spend
your vacation time, who your friends are, what money you paid to what political causes or
anything else of the sort. This is true privacy. If you think that tax avoidance is what banking
in silence is all about, you are wrong. Far more important than not paying to Big Brother's
henchmen is the fact that you, finally, will be the owner of your own life. No one will ever be
able to meddle in your affairs, unless you let them.
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funds and money market funds can also be found, all vying for your business and all willing
to serve you strictly by mail order. Some will issue check books and credit cards at no extra
charge in whatever currency you choose. Resident Abroad can be found at all well stocked
newsagents, especially those found in expatriates centers. You can also order a sample copy
from: Resident Abroad, Subscriptions Department, PO Box 461, Bromley, Kent, BR2
9WP, UK. Tel +44 181 402 8485, fax +44 181 402 8490. Another sure source is the
international edition of The Economist, my own favorite weekly news magazine. In each issue,
you will usually find two or three banks pitching their wares.
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Every day in the press, you can read stories about how evil you are if you decide to bank in
a country other than the one in which you happen to have been born. Forget this gobbledygook.
Follow your own good common sense and stay true to your instincts. Don't buy into
government propaganda and newspaper lies. Who is the bad guy? Everyone who won't let you
live a free, peaceful life in which you can do what you want to do as long as you do not hurt
anyone else. Government employees are often the most dishonest crooks of all. The case of
DEA agent Darnell Garcia readily illustrates this point. This is just one case of many that
uncovers federal agents caught with their hand in the cookie jar, stealing your money.
During the 1980s, Garcia and his colleagues looted heroin, cocaine and millions of dollars.
At one point, he traveled to Switzerland and deposited US $2 million in personal bank
accounts. Garcia then moved his stolen loot to the Luxembourg branch of the Swiss Bank
Corporation. He continued to maintain an account at Union Bank in Switzerland. Each account
stuffed with at least a million dollars. Ironically, it is such crooks in government, not the
ordinary Joe who is simply concerned with protecting what is his, that give offshore banking
a bad name.
302
Creating Your Own Bank Secrecy
303
APPENDIX A
Resource List
APPENDIX A
RECOMMENDED ADVISERS
Marshall J Langer is a tax lawyer with Shutts and Bowen. He comes highly recommended
as he is very ethical, responsible and professional. Charges are about US $600 per hour. Good
for international tax planning, especially for individuals who are considering changing
countries, acquiring a second citizenship or expatriating from their home country. Langer is
author of The Tax Exile Report and The Swiss Report, both published by Scope International.
He is also the author of Practical International Tax Planning, published by the American
Practicing Law Institute and available through Scope International for £150 or US $250
airmail post free. Langer can be contacted directly through: Shutts and Bowen, 43 Upper
Grosvenor Street, London WIX 9PG UK. Tel +44171493 4840 or Fax +44171493 4299.
Jon Golding is a well known speaker on the private investor circuits in Europe and North
America. Through his company Sterling Westminster, he is able to assist in almost all offshore
investment matters, from establishing an international trust to providing introductions to
prominent bankers in key banking havens. He specializes in helping nonresidents of the UK
establish and administer international investment portfolios. His policy is to help you help
yourself. Write for information on the Global Nest-egg Account: Sterling Westminster
International Ltd, Independent House, 178 Brompton Road, London SW3 IHQ, UK. Tel
+44 171 581 3551, Fax +44 171 581 3671 or E-mail 100526,[email protected]. Jon
Golding is also the author of The Tips and Traps of Going Global which shows you how to
build a global nest egg safely and profitably. It is a treasure chest packed with gems of global
wisdom. Copies are available from Scope International priced at £201US $32.
Marc Harris holds a master's degree in business administration from Columbia University
and passed the certified public accountancy exam at the ripe-old-age of 18. In 1985, he
established the Firm of Marc M Harris, Inc in Panama which offers a wide variety of
international investment services, including everything from indexed asset allocation
portfolios to a full range of international insurance products. The firm also provides assistance
in the establishment and administration of offshore trusts, corporations and insurance
companies. It even offers an offshore secured credit card program. Contact: The Firm of Marc
M Harris Inc, PO Box 6-1097, EI Dorado, Panama, Republic of Panama. Tel +1 507 263
6900 or Fax +1 507 263 6964.
Mark Skousen is a good man to have on your side. He is resident in the US, which means
that there are some limitations on the type of advice that he can give on a personal basis. He
does, however, still give out his best ideas without fear of prosecution in his books and
newsletter. Skousen knows the ropes, speaks at many foreign seminars and conferences (best
307
Banking in Silence
time to talk with him) and is the author of over a dozen books on financial privacy, survival,
Swiss banks and the like. Write for a sample copy of his popular and unorthodox newsletter
Forecasts and Strategies at 7811 Montrose Road, Potomac, Maryland 20854, USA. Tel +1
301 424 3700.
Harry D Schultz is a consultant for all PT and investment matters. US $40 per minute.
Send advance payment (minimum US $1200) in US dollars to FERC, PO Box 622, CH-1001
Lausanne, Switzerland with questions and your phone or fax number. Retainer US $112,000
per year. Harry Schultz is the world's most expensive adviser, listed as such in the Guinness
Book of World Records. As his newsletter takes about 200 hours to produce each month, it is
a bargain at US $275 per year. See the section on PT newsletters for more information.
FINANCIAL NEWSLETTERS
Adrian Day s Investment Analyst is a monthly advisory newsletter which features commentary
on major markets and sectors worldwide, as well as specific global stock recommendations.
Day also frequently gives readers advance alerts and analysis of pending legislation that
threatens financial privacy. The perceptive stories and sound financial advice contained in this
newsletter have often produced good results for me. Available for US $87 per year. Contact:
PO Box 6644, Annapolis, Maryland 21401, USA. Tel +1 800 433 1528.
The Outside Analyst is the only newsletter that actually compares stocks globally. Editor
Paul Melton, author of the Financial Times Investor s Guide to Going Global, offers highly
regarded independent advice to individual investors and financial institutions alike. Ten issues
per year, including two double issues, for US $39 each. Send your request and payment to
Scope International.
308
Resource List
The Financial Privacy Report, edited by Mike Ketcher, is a monthly newsletter that
provides squeaky clean advice for the small business owner in the US. Contains a lot of
information on how you can protect yourself from the more excessive rampages of the IRS.
Single issue US $15, one year subscription US $144, two year subscription US $282. Contact:
PO Box 1277, Burnsville, MN 55337, USA. Tel +1 612 895 8757, Fax +1 612 895 5526.
Gary Scott's World Report may also help you make the right decisions when structuring
your offshore investment portfolio. Scott was one of the first in the US to realize the significant
benefits of offshore investment. Although his newsletter shows a definite American bias, it still
offers a great deal of valuable information for all offshore investors. Contact: International
Service Center Inc, Suite 264, 3106 N Tamiani Trail, Naples, Florida 33940, USA. Tel +1
941 261 1222.
PT NEWSLETTERS
The Freebooter, edited by Henry Morgan, as its subtitle states is designed to help you protect
your ass and your assets. Each issue is packed with information on just about every topic of
interest to PTs, including frequent articles on banking privacy and asset protection. This
newsletter often contains the type of advice that your lawyer or accountant would not even
dare suggest. Sample issue US $8, one year subscription (6 issues) US $58, two year
subscription (12 issues) US $96. Contact: PO Box 494, St Peter Port, Guernsey GYI 6BZ,
Channel Islands, UK. Fax: +44 171 223 4295.
Harry Schultz International Newsletter, issued every six weeks, is an interesting mixture of
investment advice, political updates and philosophy. It also has a regular PT section. I strongly
suggest a trial subscription to this stimulating newsletter of original ideas. One year
subscription for US $275. Readers of this report can receive a sample copy for US $25, half
the regular price. Please send your enquiry and payment to FERC, PO Box 622, CH-I00,
Lausanne, Switzerland. Indispensable for the PT.
International Living Newsletter is a wonderful monthly bulletin with interesting ads. A
subscription is not expensive, but write for the current rate as it is due to change shortly before
we go to press. This newsletter offers many ads on vacation home rentals and exchanges, as
well as great travel articles, plus a section on travel bargains. News of interest to PTs and
nomads not found elsewhere. Highly recommended! Send US $5 for sample back issue
to:International Subscriptions, Agora Inc, 14 West Mt Vernon Place, Baltimore, MD
21201, USA.
RECOMMENDED MAGAZINES
The International also provides good information for international investors at a price
(free!) that can't be beat. Contact: Greystoke Place, Fetter Lane, London EC4A IND, UK.
Tel +44 171 405 6969, Fax +44 171 831 2181.
Just remember that any magazine, newspaper or periodical that you do not pay for is an
advertiser supported sales tool. Expect such publications to say only nice things about their
advertisers. The following are not free and therefore will hopefully provide a more unbiased
analysis of investment opportunities.
309
Banking in Silence
~esiden~ Ab~oad, '?he Magazine For Expatriates", contains terrific classified ads and good
articles, ThIS thick, slick, monthly magazine costs about £53 per year for Europeans and or £61
per year for subscribers from the rest of the world. It can be found at all well stocked
newsagents, especially those found in expatriates centres. You can also order a sample copy
from: Resident Abroad Subscriptions Department, PO Box 461, Bromley, Kent, BR2
9WP, UK. Tel +44 181 402 8485, Fax +44 181 402 8490.
Investment International is another good magazine. Contact: 4 Tabernacle Street,
London, EC2A 4LU, UK. Tel +44 171 638 1916, Fax +44 171 638 3128.
Investment Trusts Magazine examines exactly what the title says it does. Investment trusts
are the UK equivalent of US closed end mutual funds. Contact: Flaxdale Printers Ltd, 5
Malvern Drive, Woodford, Essex, UK.
RECOMMENDED NEWSPAPERS
The International Herald Tribune, Paris. The Financial Times, London. The Wall Street
Journal, New York. The European, London.
All of these are available at all international hotels and magazine stores.
310
Resource List
havens, expatriation and so on is International Tax Planning, also by Marshall Langer. Both
titles are available from Scope International.
For a comprehensive treatment of the subject, consider reading Diamond on Tax Havens,
the original "old standard" for offshore operations. Contact: Matthew Bender, 11 Penn Plaza,
New York, NY 10001, USA. Tel +1 212 967 7707.
One expensive, but very good, book on the subject is Tax Havens and Their Uses, Special
Report No 186, by Carol Doggart, published by The Economist, a respected British business
magazine, at: 25 Saint James's Street, London SW1A lHC, UK. Tel +44 171 839 7000.
Price £75.
Butterworth's Tax Haven Encyclopedia is a loose-leaf binder on the subject. It is available
from Haslbury House, 35 Chancery Lane, London WC2A 1EL, UK for £155 (plus updates)
but can be found in most major business libraries. They also produce another large loose-leaf
book in immigration law in the UK.
Almost every major accounting firm publishes useful booklets for distribution to clients
and potential clients (meaning you) which cover tax laws and business conditions in selected
jurisdictions. You can get these for free, just call the librarian of the firm in any major city for
a list of their publications. Try any major certified public accountant, known as a chartered
accountant in the Commonwealth. For instance: Touche Ross, Price Waterhouse, Peat
Marwick, Pannell Kerr Forster, Arthur Anderson, Arthur Young.
TRAVEL BOOKS
When you visit a new country, the best way to know what to do and see is by purchasing a
good travel book. Many such books are a waste of time and money. I once bought a guide book
where much of the ink was wasted on fancy phrases like, "the dining room is papered in a
nonchalant mauve ..." Who cares? I want a practical guide for good values, good times and an
intelligent discussion of such things as prices, quality of food and service. What are the special
local attractions? Where is a coin-op laundry, a Cook's Tours representative or an American
Express office for cashing checks and receiving mail?
For down-to-earth travel books and guides to good value I highly recommend:
South American Handbook, published annually. In my view this is the best travel book and
the best value for money published today if you are going to visit or live anywhere from
Argentina to Mexico to the Caribbean. This portable, pocket-sized 1500 page book has
everything, all beautifully organized and indexed. It costs about US $40 and is published by
Rand McNally in the US. You can find it at most bookstores. If not, to order by mail in the UK
from: Mendip Press, Parsonage Lane, Bath BA1 lEN, UK.
Arthur Frommer $25-$35 A Day travel guides are very inexpensive paperbacks, priced at
around US $20 each. They cover most countries and major cities in an efficient, budget-
conscious style. Frommer also does another series called the Frommer Dollarwise Guides.
These are less oriented towards starvation, budget-minded travelers, but still discuss the best
places to see, things to do and places to stay with an emphasis on getting good value for
money. Highly recommended. I have been using them personally for thirty years! Both series
are available in all English language bookstores. If you can't find the one you want order by
mail from: 1230 Avenue of the Americas, New York City, NY 10020, USA.
311
Banking in Silence
Let's Go budget travel guides are an easy to follow alternative. They are updated regularly
and usually tell you exactly what to expect. These guides are written by traveling students paid
and forced to live on a small stipend by the publishing company in return for their troubles.
You can count on their honesty. They offer guides to most European countries, Canada, the US,
Mexico, Central America, South East Asia and the Middle East. These guides contain vast
amounts of information good for PTs, such as train schedules, hours of admission at tourist
sites, maps, museum guides, etc. They are available in most bookstores or by mail from: 1
Story Street, Cambridge, MA 02138, USA or in the UK: Macmillan, Houndmills,
Basingstoke, Hampshire RG21 6XS, UK. Tel +44 1256 29242.
Lonely Planet shoestring travel guides tend to focus on the other half of the world, not
Europe and North America. They are published out of Australia and often offer the best budget
travel advice for all of Asia and Africa as well as Australia and New Zealand. They can be
found in most bookstores or order from: 155 Filbert Street, No 251, Oakland, CA 94607,
USA, Tel +1 510 893 8555 for North America or PO Box 617, Hawthorn, Victoria 3122,
Australia for the rest of the world.
Michelin, Baedeker, Fieldings and Birnbaum's travel guides are also recommended.
BOOK CATALOGS
Scope International is the publisher of all of my reports contained in the PT series as well as a
growing variety of books and reports on personal freedom and tax havens. These are not the
usual sort of boring tax manual, but personalized, informative reports which are of real use to
the reader and offer a wealth of practical advice on what to do, how to do it and what to avoid.
Also, ask for the PT Booklist which includes a carefully selected range of titles by other
publishers that are especially suitable for PTs and others interested in protecting their privacy.
For other unusual and hard to find books about personal freedom, individual liberty,
alternate identification, survival and the like, I recommend that you send US $5 or equivalent
in any currency (refundable with first order) to cover postage and handling to anyone or all of
the following:
Loompanics Unlimited, PO Box 1197, Port Townsend, Washington 98368, USA. Tel +1
360 385 2230.
Paladin Press, PO Box 1307, Boulder, Colorado 80306, USA. Tel +1 303 443 7250.
Eden Press, PO Box 8410, Fountain Valley, California 92728, USA. Tel +1 714 556
2023, Fax +1 714 556 0721. Write or phone for their highly recommended catalog of
underground books.
Laissez Faire Books, 942 Howard Street, San Francisco, CA 94103, USA. Tel +1 415
541 9780. An excellent free catalog. I especially recommend The Amazing Bread Machine
which is about a man who invents a terrific product, markets it, becomes a millionaire and then
goes to jail for violating various technical laws. It is fiction but rings true, reminding me of the
stories that Victor Posner, Leona Helmsley and Michael Milkin have to tell.
312
Resource List
313
APPENDIXB
Banks
APPENDIXB
BANKS
Bankers and bank staff alike, like all people with mouths, are generally indiscreet. All but a
very few countries are generally invasive of privacy rather than protective of it. Most
governments (translate politicians) are ready, willing and able to confiscate your assets without
giving it a second thought. So what is a person to do? The solution, of course, is to bank
offshore where your banker does not know anyone that you know. All banks have certain
desirable characteristics and many fatal flaws. Your favorite may not be my favorite, but
realizing that most readers like specific referrals, here come a few. As I said earlier, the fact that
a bank appears on this list should not be construed as an endorsement. It merely means that I
have not heard anything negative about the bank itself or the services that it offers. Please write
to me if you have any good or bad stories to report about any of the banks listed below. If you
discover a particularly good bank for privacy seekers, please also write to tell us about it.
AUSTRIA
Bank fur Arbeit und Wirtschaft AG, Seitzergasse 2-4, PO Box 171, A-IOIO Vienna
Tel +43 1 534 530, Fax +43 1 534 532
317
Banking in Silence
Royal Trust Bank (Austria), Rathausstrasse 20, PO Box 306, A-I 011 Vienna
Tel +43 1 426 161, Fax +43 1 428 142
debit cards available with US $30,000 deposit
BAHAMAS
Bank America Trust and Banking Corp (Bahamas),
Bank America House, East Bay Street, PO Box N-9100, Nassau
Tel +1 809 393 7411, Fax +1 809 393 3030
Canadian Imperial Bank of Commerce, 308 East Bay Street, PO Box SS-6254, Nassau
Tel + 1 809 393 1966
Coutts & Co (Americas) Ltd, PO Box N-7788, West Bay Street, Nassau
Tel + 1 809 326 0404
Royal Bank of Scotland (Nassau) Ltd, PO Box N, 3045 Shirley Street, Nassau
BERMUDA
The Bank of Bermuda Ltd, PO Box HMI020, Hamilton HM DX
Tel + 1 809 295 4000
CANADA
Bank of Montreal, 129 St James Street, 10th Floor, Montreal, Quebec H2Y 1L6
Tel + 1 514 877 1461
Canadian Imperial Bank of Commerce, Commerce Court, Toronto, Ontario M5L 1A2
Tel +1 416 980 2211
318
Banks
Bank of British Columbia, Division of Hong Kong Bank, 855 West Georgia,
Vancouver, British Columbia V6C 3G 1
Tel + 1 604 685 1000
Royal Bank of Canada, 200 Bay Street, Toronto, Ontario M5J 2J3
Tel +1 416 974 5151
one of the major international banks with branches in most offshore banking havens, asks a lot
of questions
CAYMAN ISLANDS
Barclays Bank PIc, PO Box 68, Grand Cayman, British West Indies
Tel + 1 809 949 7300
another major offshore bank, look for a branch in almost every major banking haven
Fishbury Bank, PO Box 1592, Transnational House, West Bay Road, Grand Cayman,
British West Indies
Tel + 1 809 947 4011
Midland Bank & Trust Corp (Cayman) Ltd, Midland Bank & Trust Building,
PO Box 1109, Georgetwon, Grand Cayman, British West Indies
Swiss Bank & Trust Co Ltd, Swiss Bank Building, Fort Street, PO Box 852,
Georgetown, Grand Cayman, British West Indies
Tel + 1 809 949 7038
HONG KONG
Australia and New Zealand Banking Group Ltd,
27th Floor, One Exchange Square, 8 Connaught Place, Central
The Hong Kong Chinese Bank Ltd, 61-65 Des Voeux Road, Central
Tel +852 5 844 8833, Fax +852 5 845 9221
Mitsui Bank Ltd, 41st Floor, Far East Finance Center, 16 Harcourt Road
major Japanese bank with branches in many offshore banking centers
319
Banking in Silence
LIECHTENSTEIN
Bank in Liechtenstein AG, Herrengasse 12, PO Box 85, SL-9490 Vaduz
Tel +75 5 11 22, Fax +75 5 15 22
MALTA
Bank of Valletta Ltd, 58 Zachary Street, Valletta
Tel +356 243 261/8, Fax +356 230 894
SWITZERLAND
Banca del Gottardo, Viale Francscini 8, Lugano
Tel +41 91 28 11 11
all banking services, beautiful architecture
320
Banks
UNITED KINGDOM
The advantages of banking in one of the British offshore centers include government
insurance, a high degree of stability and the automatic rollover of funds. Checking privileges
can also be arranged. The major disadvantage is illiquidity, usually some period of notice is
required to close an account or to withdraw a large amount of money. Most building societies
do not require a reference before opening an account and will accept deposits in any major
currency. They also tend to pay slightly higher interest than British banks.
321
Banking in Silence
CHANNEL ISLANDS
Barclays Guernsey, PO Box 41, St Peter Port, Guernsey
Tel+441481723176,Fax+441481710439
offers Visa debit card
Cheltenham and Gloucester, C & G Channel Islands Ltd, 2/3 Rue de Pre, St Peter Port,
Guernsey
Fax +44 1481 715 496
Co-Operative Bank PIc, Rectory House, 2 Market Street, St Peter Port, Guernsey
Tel +44 1481 710 527, Fax +44 1481 713 079
offers debit cards, allows standing orders and direct debits
Midland Bank (Jersey) Ltd, 28/34 Hill Street, PO Box 26, Jersey
Tel +44 1534 37788, Fax +44 1534 74966
Skipton Guernsey
Tel +44 1481 727 374
mail order banking, minimum investment of £10,000
Standard Chartered Bank (CI) Ltd, Conway Street, St Helier, Jersey JE4 8PY
Tel +44 1534 74001, Fax +44 1534 24890
322
Banks
GIBRALTAR
Jyske Bank (Gibraltar) Ltd, 76 Main Street, PO Box 143, Gibraltar
Tel +350 72 782, Fax +350 72 732
This Danish bank has a very liberal policy with regard to loans for currency speculation and
offers many unusual services. It is progressive and accommodating, but perhaps not
conservative enough for the mother-lode. Does not require a reference to open an account as
of 1992. Offers multi-currency check writing and fast arrangements for credit cards.
ISLEOFMAN
Alliance & Leicester Isle of Man Ltd, PO Box 226, 10-12 Prospect Hill, Douglas,
Isle of Man IM99 1RY
Tel +44 1624 663 566, Fax +44 1624 663 577
mail order banking, minimum investment of £5000
Isle of Man Bank Ltd (Overseas), 2 Athold Street, Douglas, Isle of Man
Lloyds Bank PIc, Expat Center, 7 Douglas Street, Peel, Isle of Man
Tel +44 1624 844 052, Fax +44 1624 844 057
will try to sell you a plethora of services ranging from insurance to real estate to fund
management
Tyndall Bank International, PO Box 62, Tyndall House, Kensington Road, Douglas,
Isle of Man
Tel +44 1624 629 201, Fax +44 1624 620 200
323
Banking in Silence
offers multi-currency money market account with easy and low switching between ten
different currencies; also, offer American Express gold card in conjunction with high interest
checking account, but like most banks on the Isle of Man is more enquiring than banks located
in the Channel Islands.
324
APPENDIX C
Banking in Silence
APPENDIX C
SOME USEFUL FORMS
All Powers of Attorney should conform to local rules in whatever country they are to use. It
may be that they cannot be written in English. Sometimes, they will have to be very specific,
but more often than not a wide ranging General POA is accepted. Usually, it must be notarized.
Where you are a foreigner in a strange land, your signature can only be notarized by your
consulate there. Check first. If your heirs have trouble getting at your money later simply
because a power of attorney does not conform to local norms, it will be too late for you to
remedy this problem.
Apart from powers of attorney, two forms that you can use in all of your own dealings are
the "Survivorship" and the "Joint Rights" forms, as reproduced here. They are copyright free.
327
Banking in Silence
JOINT RIGHTS
The below listed individual(s) are to have equal rights, control and authority on any and all
certificates of deposits, cash, or assets listed in my name. These individuals may sign, cash,
renew or perform any other act deemed necessary in the maintenance of assets listed in my
name.
Name:
-----------------------
Relationship:
Address:
---------------------
- -
City and state:
---------------------
Country:
---------------------
-
Telephone no:
- --------------------
Signature:
---------------------
- - --------------------
The signature on this line is a true likeness of the signature of the party whose name and
address is listed above.
Name:
-----------------------
Relationship: _
Address:
----------------------
City and state:
Country:
--------------------
- - - - - - - - - - - - - - - - - - - - - -_
Telephone no:
Signature: _
The signature on this line is a true likeness of the signature of the party whose name and
address is listed above.
Statement of depositor / owner:
I, (full name), submit this form and request that it be accepted and followed accordingly.
Date: / / _
Name:
Address:
-----------------------
- - - - - - - - - - - - - - - - - - - - - -_-
City and state:
Country_: _
Telephone no: _
Signatur_e_: _
Signatures confirmed by -
Notary public: _
(name and address)
Signature: _
Date of expiry of commission: / /
Date certified: / / _
(Seal)
328
Banking in Silence
SURVIVORSHIP
The below listed Individuals are to have Only Survivorship Rights in case of my Death. In
such case, a True Copy of my Death Certificate, verified by a Notary Public, will be provided.
Further, the full and complete name and address of the Doctor who issued the Death Certificate
shall be provided along with the full and complete name and address of the Notary Public who
certified said Death Certificate as being True and Authentic.
Date: / / Signature: _
Beneficiaries-
Name:
-----------------------
Relationship:
---------------------
Percentage: ( ) %
Address:
City and - - - - - - - - - - - - - - - - - - - - - -_
state:
Country: _
Telephone no. _
Signature: _
The signature is the true signature of the above named beneficiary.
Name:
-----------------------
Relationship: _
Percentage: ( ) %
Address:
City and - - - - - - - - - - - - - - - - - - - - - -_
state:
Country: _
Telephone no: _
Signature: _
The signature is the true signature of the above named beneficiary.
Name:
- - - - - - - - - - - - - - - - - - - - - -_-
Relationship:
Percentage: ( ) %
Address:
City and - - - - - - - - - - - - - - - - - - - - -_-
state:
Country: _
Telephone no: _
Signature:
The signature is the true signature of the above named beneficiary.
329
Other Special Reports
Available From
Scope International...
Other Special Reports Available from Scope International
l~
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Federal, state and local. Are you aware that overall tax rates of
"Becoming a PT is not a static thing that you can do once, and
50 per cent or more are common now in most major industrial
then, like obtaining a diploma, just hang it on the wall. PT is a
nations? This is because of crafty schemes ingeniously called
way of thinking, something far more than a mere occupation or
'tax reform' employed by the US government and adopted by
even a lifestyle. It is a state of being... The variations and
many other high-tax countries. They have cleverly lowered tax
possibilities are infinite -
rates, while at the same time they have increased the amount of
PT's have real freedom in an unfree world."
taxes that they collect from you.
WG Hill
More than just a book on tax havens Unlimited, untaxed wealth and the power to dispose of it as you
The Tax Exile Report is not your average tax manual. Unlike please is one of the major benefits of becoming a PT. PT the
most other books on the subject Langer sets out legally and book, will raise your consciousness as to the nature of freedom
thoroughly the entire process of becoming a tax exile. He takes a and ways to rid yourself of limitations.
look at the special problems involved in leaving certain high-tax Can you afford to have only one flag? Not if your net worth is,
countries, including Britain, the US and many European or may soon be, over $250,OOO! PT the book, explains the Five
countries. He also explains how to plan around US anti- Flag Theory on how to defend your wealth.
expatriation rules and departure taxes imposed by other
countries. And, exclusive to Scope International, he reveals The Flag 1: Passport & Citizenship. Finding a country unconcerned
Tax Octopus - the eight different criteria the US government and about offshore citizens or what they do outside its
other high-tax countries use to tax you on your income and your borders.
capital. Flag 2: Business Base. Places where you make your money.
Marshall Langer's book covers the whole process from leaving Flag 3: Domicile. A tax haven with good communications.
your old country to arriving at your new home. He gives you the Flag 4: Asset Repository. An anonymous base for your assets.
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Other Special Reports Available from Scope International
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Other Special Reports Available from Scope International
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Other Special Reports Available from Scope International
(~
This Report answers the questions:
• Is Switzerland more free than the US or the UK? The Tax-Free Car Report
• Should you move there at all? by DrWG Hill
• How do you avoid or reduce Swiss taxes?
• How can you use Swiss bank accounts and the Swiss Discover how to own a luxury car tax free, use it for a year
secrecy laws to your advantage?
or so and then sell it for a profit. And not just once but
If you want to be anonymous with your assets, Switzerland is the again and again! This is your chance to own the car of your
place to go! dreams tax free. People are doing it everyday. However, these
amazing deals are not publicized.
You will discover:
• where to obtain the lowest factory-list prices in the world.
• the longest lasting tax-free license plates.
• the nine golden rules of international car ownership.
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Other Special Reports Available from Scope International
• little-known secrets about tax-free plates. The Maltese government's desire to attract foreign business
• the premier source for right-hand drive vehicles. provides many opportunities for the potential investor. There
• everything you need to know about permanent are no restrictions on 1()() per cent foreign ownership and
registration. control of companies. You are also guaranteed repatriation of
The potential buyer has the global market at his feet. The capital and profits.
United States in particular offers amazing deals on quality In this new Report just published you will learn about the many
luxury cars. There are also excellent deals to be made in the perks and incentives used to encourage people to take up
Middle East and the South Pacific. The author, Dr Hill, residency in Malta:
discusses 14 countries in detail. • no VAT or Customs Duty on the import of your personal
Over 110 dealers names, addresses and telephone numbers effects
are listed to help you on your way. Dr Hill discusses the entire • no death duty, gift duty or wealth tax on real estate
process of buying tax free. transfers.
During the past twenty years the author, Dr WG Hill, has Take advantage of Malta as an offshore banking centre.
personally owned a Rolls, Ferrari, and several Mercedes all tax- A qualified account, the author reveals:
free. Let him show you how to save up to 50 per cent off the • that there are no restrictions on transfer (in or out) of large
retail price. Learn everything you need to know to enjoy sums of foreign currency
trouble-free, permanently tax-free international motoring. Those
• how non-residents can receive gross interest on your
who take Dr Hill's advice are guaranteed to succeed.
savings
• how you can acquire major credit cards, including Visa
The Malta Report and Eurocard, with no security pledge.
by Ross Shaw Discover the advantages of living and investing in this beautiful
island.
Explore the emerging Investors' Paradise.
For full details and prices on all these Special
Recent developments have seen Malta develop into a promising
financial centre and tax haven. Get your foot in the door early. Reports contact Richard or Stewart at Scope
The Malta Report gives you the necessary head start.
International on:
The areas covered in depth include: Tel: (01705) 631751. Fax: (01705) 631322
• Residency incentives (Overseas: +44 1705)
• Real Estate opportunities
• Offshore companies & Trusts
• Expatriate Perks
• Relocation tips.
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