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| Index
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How to Choose an Offshore Haven
By John Pugsley |
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| Since its inception, The Sovereign
Society has guided members through the minefields of international law,
and this has chronicled the accelerating decline of financial privacy in
many jurisdictions once considered secure, private havens for personal
assets. |
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| At the root of this pernicious erosion
are the hyped-up "wars" on drugs, money laundering and terrorism. The war
on drugs gave birth to money laundering laws, and together these legal
weapons are being used to destroy privacy and bank secrecy. Rising terrorism
(inspired by a rising resentment of American intervention in the politics
of foreign nations) engenders the need for random searches, wiretapping
and 24/7 surveillance. |
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| Where two or three decades ago there
were numerous haven nations where privacy was expected and delivered, the
high-tax nations have pushed, cajoled and threatened until the field of
choices has been dramatically reduced. |
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| How do individuals interested
in privacy and security choose the best haven for wealth? |
| To begin with, you should understand
that each "offshore" haven is unique. A country that provides the best
banking regulations won’t necessarily be the best place for incorporating
a business, just as the best jurisdiction for privacy won’t necessarily
be the best for an offshore trust. Yet, there are general guidelines for
choosing an asset haven that apply across the board. The following are
the more important considerations. |
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| Is the haven a completely independent |
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| 1. Is the haven a completely independent
sovereign nation? Or is it a territory, dependency or colony of a larger
country? While the government of a dependency or territory may enact favorable
legislation to attract foreign investment, such legislation will be hostage
to the political and economic environment prevailing in the mother country. |
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| Nothing illustrates this point more
than the recent events in the British Virgin Islands. An overseas territory
of the United Kingdom, beginning in the late 1970s, the BVI, with U.K.
encouragement and funding, developed one of the world’s largest and most
sophisticated offshore financial sectors. Indeed, it became second only
to Hong Kong in the formation of international business companies, registering
nearly 40,000 new corporations annually. With a land area smaller than
Washington, D.C., and a population of 21,000, providing a home for almost
400,000 companies provided substantial revenues both to the government
and the country’s financial sector, along with ending the BVI’s historical
dependence on U.K. foreign aid. |
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| A key provision of the law that
made the BVI so attractive as a corporate domicile was that shares in an
IBC could be issued in "bearer" form. While this provision was not unique
to the BVI, it meant the actual ownership of the corporation could be kept
confidential. However, beginning in the late 1990s, escalating pressure
from the U.K. Home Office and international organizations threatened the
BVI’s ability to offer bearer shares and enforce other aspects of its laws
protecting privacy and wealth. Indeed, the U.K. Home Office threatened
to use an arcane provision of colonial law called an "Order in Council"
to enact binding BVI legislation, over the heads of the local elected representatives,
if the BVI government failed to dismantle its favorable laws on its own. |
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Yes,
learn what it is that the Sovereign Society can do for you. The Sovereign
Society's highly qualified Council of Experts, consist of carefully chosen
professionals located in select tax and asset havens around the world.
Their experts have spent their careers discovering the best global investments,
the safest tax havens and the most secure devices in which to protect your
assets.
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Access
to The Sovereign Society’s Council of Experts is one of the most-cherished
benefits of Sovereign Society members. Their global network of banks, investment
specialists, financial consultants, and legal professionals have proven
themselves, over many years, and to thousands of Sovereign Society members,
as being the best in the business.
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Earning
money requires effort. Protecting
it after
you've earned it requires finding those
who have
the right knowledge & experience
in the
field of asset protection. If you're not
an expert at
it you need someone who is. |
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| Faced with this overwhelming pressure,
the BVI recently re-wrote their laws regarding IBCs. One of the casualties
was the ability of IBCs to issue bearer shares. The BVI is only one of
the U.K.’s overseas territories. The others—Anguilla, Bermuda, the Cayman
Islands and the Turks & Caicos Islands—were subject to similar pressure
from the U.K. Home Office. Closer to the United Kingdom itself are several
jurisdictions with a different constitutional status than overseas territories,
but still subject to substantial interference in their financial affairs
by the U.K. government. These "Crown dependencies"—the Isle of Man, Jersey,
Guernsey and Sark—have also been forced to dismantle many of their favorable
laws designed to attract foreign capital. |
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| Does the haven respect privacy? |
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| 2. Does the haven respect privacy?
And is privacy built into its law? Under what circumstances can creditors
or the government obtain information about your wealth, or even seize it?
Financial privacy has gotten a bad reputation in recent years. The prevailing
attitude is, "if you’re not committing a crime, why do you need privacy?" |
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| This attitude ignores the very real
need for privacy in a nation such as the United States where there exist
very few legislative protections for it. It is worth noting that a sue-happy
lawyer or identity thief, armed with nothing more sophisticated than a
personal computer, can in a few minutes unearth a great deal of financial
information about whatever U.S. assets you own as a prelude to plunder. |
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| This is the reason why strong privacy
laws are a must in any haven that you might consider. Some countries have
a tradition of secrecy but no legal requirement enforcing it; others have
laws that allow the local government access to information while pretending
that the government is sworn to secrecy. Others have bank-secrecy laws
but frequently ignore them, or have laws filled with exceptions. |
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| Ideally, secrecy should be built
into the legal code and violations should be prosecuted with civil or criminal
sanctions. However, even in jurisdictions with the best privacy laws, it’s
foolish to violate tax or money-laundering laws of your home country. In
their search for tax-evaders, big governments have a history of illegal
espionage, bribery and coercion to get the information they seek. Moreover,
you may wake up one morning to find the haven nation’s laws changed and
your "secret" records in the hands of your home government. Make sure you
comply with the laws in your home country! |
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| From the standpoint of the tradition and legal
basis for banking secrecy, the four countries that stand out are Austria,
Liechtenstein, Luxembourg and Switzerland. |
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| Austria |
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| Austria has strict bank secrecy
laws calling for the prosecution of any bank employee who divulges any
information on a client’s account, and its banking tradition is more than
200 hundred years old. |
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| Liechtenstein |
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| Liechtenstein has some of the strongest
bank secrecy laws in existence. Since Liechtenstein is one of the five
richest countries in the world in per capita income and personal wealth,
it is unlikely to be swayed away from privacy by promises or threats. |
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| Luxembourg |
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| Luxembourg is one of the fastest
growing financial centers in the world and has seen a massive influx of
capital in the last decade due to its liberal banking and tax laws. Although
its secrecy laws only date back to the early 1980s, it has maintained a
long tradition of banking confidentiality. Information will only be released
to foreign governments if the depositor has been charged with a crime that
is related to the account that is also a crime in Luxembourg. |
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| Switzerland |
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| Switzerland has been economically
and politically stable for centuries, enjoys a low rate of inflation and
the Swiss franc is one of the strongest currencies in the world. It remains
the model from which all other financial centers are compared. Although
Switzerland has succumbed to the pressure of the U.S. government to loosen
its strict secrecy laws, for safe banking it still rates as one of the
top havens. |
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| How long a tradition has the
haven had? |
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3. How long a tradition has the haven
had? A country like Switzerland with centuries of traditional respect and
protection of privacy, or like Luxembourg with decades of stability, are
unlikely to change for transient reasons. The longer and stronger the traditions
of law and privacy, and the more stable the economy, the better chance
that those traditions will be continued. |
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| Political stability is a major consideration.
During the last half of the 20th century, Hong Kong was a bastion of financial
stability, growth and privacy. Hong Kong achieved this in spite of being
a dependency of the United Kingdom. But when the U.K.’s lease on the territory
ran out in 1997, control returned to China, casting a deep shadow of doubt
about Hong Kong’s future as an asset haven, a fact underscored by the continued
exodus of wealth from the country. |
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| Do the citizens support the haven’s
offshore status? |
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| 4. Do the citizens support the haven’s
offshore status? In some havens, such as the Bahamas, the local citizens
are not the primary beneficiaries of banking secrecy. Since taxes are low
to non-existent and the local legal eagles have not evolved into predators,
locals have little interest in privacy laws or bank secrecy. This contrasts
with Switzerland, Austria and now Panama, where privacy laws and traditions
affect a significant segment of the citizenry. |
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| Is the haven important to your
government? |
| 5. Is the haven important to your
government? The United Arab Emirates, because it is a "friendly" nation
in an unstable region, enjoys the favor of the U.S. government. Haven income
is important to it and Washington won’t want to lean too hard on it over
a "non-strategic" issue. Another example is Panama, with its strategically
important canal linking the Atlantic and Pacific Oceans. The Cayman Islands,
on the other hand, has little or no strategic value to Washington. |
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| Does the haven wave a "red flag?" |
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| 6. Does the haven wave a "red flag?"
Public dealings with high-profile havens can raise a "red flag" in tax
collector’s offices around the world. The Cayman Islands, Switzerland and
Liechtenstein are examples. Panama, Austria and Luxembourg are another
step below that level. Bermuda is lower still, though it doesn’t offer
the secrecy the others do. |
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| How efficient and convenient
are the services? |
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| 7. How efficient and convenient
are the services? Are competent personnel available to serve your needs?
How well do they speak English? How easy is it to visit the place? Nothing
substitutes for personal contact with the people who are trusted with your
assets. It’s best to visit your money periodically, and so much the better
if it’s in a place that you enjoy visiting. |
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| What taxes are levied on the
haven’s users? |
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| 8. What taxes are levied on the
haven’s users? The first requirement of a haven is to offer capital preservation.
Nonetheless, to include a haven country which scores heavily in capital
preservation but which also has high withholding, corporate, estate or
other taxes, is to ignore an important consideration. |
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| As I’ve written in the book, Forbidden
Knowledge, true financial security must include: the maximum possible tax
avoidance allowed by law; the greatest possible financial privacy; the
highest level of asset protection; and, access to the most profitable investments
available. |
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| Sovereign individuals select haven
nations for placement of our assets according to the relative safety and
privacy such places guaranteed by law. Those who move all or a portion
of their assets offshore simply recognize reality, that governments in
the major nations are engaged in a systematic destruction of their citizens’
right to financial privacy. Sadly, we must look to foreign asset havens
for the sort of economic freedom once guaranteed by our homeland. The number
of safe havens is dwindling, but they still exist. |
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| Index
of Sovereign Society Articles |
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