Banking in Silence

BANKING IN SILENCE
THIRD EDITION
FOR 1997
Dr WG Hill
CONFIDENTIAL REGISTERED COPY No. _
MAY NOT BE REPRODUCED OR COPIED IN ANY WAY

FOR USE OF ORIGINAL BUYER ONLY
Banking in Silence
Copyright Scope International Ltd 1995, 1996, 1997
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.
Scope International Ltd

Forestside House
Rowlands Castle
Hants P09 6EE
England
UK
3rd Edition 1997

by Scope International Ltd
Edited by DJ Morel
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
ISBN 0 906619 47 5
Typeset by Scope International Ltd.

Printed by Hartnolls, Bodmin, Cornwall, England, UK
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
Chapter 2: Governments on a Collision Course 11

Socialism is a Dirty Word 12
Huge Revenue Demands 12
The Situation Can Only Get Worse 14
Government Spending Can Only Increase 15
The Declining Value of the Dollar 16
Desperate Measures l7
Currency Recall 18
Where Has All the Money Gone? 19
The Coming Two-Tiered Currency 20
The Cashless Society 22
Chapter 3: Governments are After Only One Thing 25

The Death of Privacy 25
The Most Senseless War in History 26
The War on Drugs Can Only Be Lost 27
Governments are Basically Inept 29
Only Succeed in Catching the Innocent 30
Introducing a Very Special Lady 31
The Death of Freedom 32
They're Shooting at You 33
Banking in Silence
Chapter 4: Governments Don't Play Fair 35

Internal Revenue Service or Mafia Kingpin? 36
The World's Most Confusing Legislation 37
Agency Out of Control 37
Corruption and Mismanagement 38
The State within the State 40
Government Paid Informants 41
Your Banker is not Your Friend 42
Seizures are the Game of the Day 43
Even Petty Offenses Lead to Seizures 44
Seizures and Politics 46
Part II: WHAT YOU'RE UP AGAINST

Chapter 5: Big Brother Sets Up Shop 51
The Bank Secrecy Act of 1970 52
Is This Constitutional? 53
The Privacy Act of 1974 54
The Right to Financial Privacy Act of 1978 55
The Tax Equity and Financial Responsibility Act of 1982 56
The Comprehensive Crime Bill of 1984 57
The Deficit Reduction Act of 1984 58
The Money Laundering Control Act of 1986 59
What is Money Laundering? 60
You've Been Drafted 61
What is Structuring? 62
The Anti-Drug Abuse Act of 1988 63
The Annunzio-Wylie Anti-Money Laundering Act of 1992 64
Expanding the Perspective 64
Chapter 6: Big Brother Goes International 67

Difference in Philosophies 67
Foreign Powers Bight Back 69
International Tax Treaties 69
The Mutual Legal Assistance Treaty (MLAT) 70
What Big Brother Wants Big Brother Gets 71
The Caribbean Basin Initiative 72
American Bully Techniques 72
Continued US Bully Tactics 73
They Make the Rules 74
The Writing on the Wall 74
Prepare for the Worst 75
11
Contents
Chapter 7: The Little Brothers 77

England Joins the War 77
The Erosion of Bank Secrecy in Switzerland 79
Switzerland Joins the War 79
The European Perspective 80
The European Union Joins the War 82
The Global Perspective 83
International Cooperation 83
The United Nations Joins the War 84
Welcome to the World of Interfipol 85
The Financial Action Task Force 85
These Laws Need not Affect you 86
Chapter 8: Computers and Your Privacy 87

The Private Data Collectors 87
The Credit Agencies 89
Your Banker's Computer Systems 90
Big Brother's Computer Systems 90
Cross Referencing Information 91
Exchanging Information 92
Beware of FINCEN 93
How to Bust a John 95
Beware of Operation Gateway 96
Beware of the Deposit Tracking System , 97
The System to End All Systems 98
Monitoring Your Movements 99
Part III: OPENING YOUR OFFSHORE ACCOUNT

Chapter 9: The Many Advantages of Offshore Banking 105
Freedom from Government Interference l 05
Greater Profitability l 06
Greater Flexibility 107
Freedom from Taxation l 08
Higher Interest Rates l 08
Circumvent Currency Restrictions 109
Increased Opportunity 110
Explosion in Funds Held Offshore 111
The Downside 112
Don't Listen to Your Government 113
Are Offshore Banks Safe? 114
Yes, Ordinary Mortals Do Bank Offshore 115
iii
Banking in Silence
Chapter 10: Finding Your Offshore Banking Haven 117

Who's in Charge? 117
What's on Offer? 118
What do the Locals Think? 119
What do Others Think? 120
What About Security? 121
What About Convenience? 121
What does this all Mean? 122
Run Like Bambi 123
Chapter 11: Finding Your Offshore Bank 125

Finding Bank Addresses 125
Establishing Contact 126
Reading Between the Lines 127
The Advantages of Larger Banks 128
The Advantages of Smaller Banks 128
Choosing a Private Bank 129
What Services Does the Bank Offer? 130
Are There any Restrictions? 131
Types of Account 131
How to Avoid Being Burned 133
Chapter 12: Opening and Managing Your Account 135

What to Sign, What not to Sign 135
Communicating with Your Bank 136
Receiving Bank Statements 137
Obtaining a Reference 138
Opening a Foreign Account at Home 138
Proper Storage of Sensitive Documents 139
Mail Order Mike 140
Proper Disposal of Documents 141
Part IV: MOVING MONEY ANONYMOUSLY

ACROSS NATIONAL BORDERS
Chapter 13: Moving Money Across National Borders 145
Breaking the Paper Trail 145
Letting Others do the Work 146
Using Electronic Helpers 147
Moving Larger Amounts of Cash 147
Possible Problems 148
Cashier's Checks, Money Orders, Traveler's Checks 149
Keeping it all Anonymous 149
Bearer Shares and Bonds 150
iv
Contents
The ABC of Bearer Bonding 151

Are Bearer Bonds Safe? 152
Are the Days of Bearer Bonds Numbered? 153
Wire Transfers and Transit Accounts 154
Breaking the Paper Trail Completely 155
Chapter 14: What to do About Reporting Requirements 157

Gathering Your Chips 157
Why Reporting Requirements Don't Work 158
File and Forget 159
Creating an Exemption for Yourself 159
Restrictions on Transporting Your Money 160
Moving Your Chips Offshore 161
Gambling Money into Your Offshore Account 162
Making Use of Gold Coins 163
Making Use of Other Collectibles 163
Currency Restrictions are not a Problem 164
Chapter 15: The Long Haul 167

Yet More Reporting Requirements 167
The Silent Approach 168
Avoiding US Reporting Requirements 169
Consider Foreign Securities and Mutual Funds 170
Consider Foreign Annuities 171
The Pros and Cons of Repatriation 172
Bringing it Back 173
Using Offshore Plastic 174
A World of Opportunity 174
PART V: BANKING HAVENS OF THE WORLD

Chapter 16: Banking Havens 179
Andorra: Favorite Mountain Retreat 179
Austria: Secret Accounts Still Available 180
Bahamas: Fully-Fledged Tax Haven 181
Belgium: Little-Known Bank Secrecy 182
Bermuda: Low-Profile Tax Haven 183
British Offshore Banking Havens 184
Channel Islands: Jersey, Guernsey and Sark 185
Gibraltar: Sunspot of the Shady Deal, 186
Isle of Man: Long History of Stability 188
British Virgin Islands: Offshore Corporation Center 189
Cayman Islands: Tough Bank Secrecy on Offer 190
v
Banking in Silence
Cyprus: Home for Offshore Shipping Companies 191

Eastern Europe: No Questions Asked 192
Greece: Establish a Regional Office 193
Hong Kong: Looming Chinese Handover 193
Ireland: The Irish Development Authority 195
Jamaica: Dark Horse of the Caribbean 195
Japan: Little-Known Secret 196
Liberia: Most Lax Corporation Laws in the World 196
Liechtenstein: State Guaranteed Deposits 197
Luxembourg: Growing Offshore Center 198
Malta: Limited Bank Secrecy 200
Monaco: Not for Everyone 201
Seychelles: High-Profile Money Laundering 201
Switzerland: Eroding Bank Secrecy 202
Turks and Caicos: Emerging Tax Haven 204
United Arab Emirates: A Tax Haven within a Tax Haven 205
New Banking Havens 206
PART VI: ADVANCED BANKING STRATEGIES

Chapter 17: Offshore Corporations and Trusts 211
Others are not Cheap to Feed 211
Don't Believe Everything that You Hear 212
Other Alternatives 213
Limited Circumstances 214
The Difference Between Onshore and Offshore 215
Choosing a Jurisdiction 216
Using an Offshore Corporation 217
Making Your Company Judgment Proof 218
The Difference Between a Corporation and a Trust 219
Using an Offshore Trust 219
Problems with Offshore Trusts 220
Putting the Plan into Action 221
Employing a Professional 222
Company Formation Mills 223
Chapter 18: Borrowing Money Privately 225

What is a Private Loan? 225
Using Overdraft Facilities 226
Using Credit Cards 226
Using Collateralized Loans 227
Using Secured Credit Cards 228
Applying for a Secured Credit Card 229
VI
Contents
Providers of Secured Credit Cards 230

A Few Warnings 231
Building a Credit History 232
Chapter 19: More Offshore Strategies 233

The Beauty of Back to Back Loans 233
How Back to Back Loans Work 234
Praetorian Finance Services 235
Going it Alone 236
Treaty Shopping 237
Owning Your Own Bank 238
What to Look for in an Offshore Adviser 239
The Attorney-Client Privilege 240
Choosing an Offshore Adviser 241
Chapter 20: Anonymous Accounts 243

The Austrian Sparbuch 243
What a Sparbuch Can Do 244
How a Sparbuch Works 245
Opening a Sparbuch 246
Is the Austrian Sparbuch an Endangered Species? 247
Anonymous Corporate Credit Cards 247
The PILL Program 248
Is PILL too Good to Be True? 249
What Happens when You Die? 250
Arranging for a Private Will 251
Using a Power of Attorney 252
Forming a Trust 253
PART VII: CREATING YOUR OWN BANK SECRECY

Chapter 21: Establishing Rock Solid Bank Secrecy 257
A Word on Big Government 257
Bank Secrecy Does Not Exist 258
Trust Only Yourself 259
The Name Game 260
Opening a Truly Private Bank Account 261
Obtaining Alternate Identification 262
Other Alternatives 263
A Trusted Inside Contact 264
Using Non-Bank Financial Institutions 265
Opening an Account at Home as a Foreigner 266
Vll
Banking in Silence
Mickey Mouse Resident Permits 268

Keep Your Mouth Shut 270
Chapter 22: Doing the Wash 273
The War on Free-Flowing Money 273
Is it Illegal? 274
A Little History 275
How Politicians Launder Dirty Money 276
The Biggest Laundrymen of All Time 278
The Most Secret Organization in America 279
A Money Laundering Institution 280
The Double Standard 281
The Direct Route 282
Chapter 23: Getting Down to the Basics 285

The Money Laundering Process 285
Transferring it Offshore 286
Bringing it Back Home 288
Beware the Tax Consequences 289
Where to Avoid Doing Business 290
Follow the Professionals 291
Don't Stand Out 292
Government Made Money Launderers 293
Stay Low-Profile 294
Early Warning Signs 295
More Warning Signs 296
Chapter 24: Putting it Together 299

Just Say No! 299
Taking the Necessary Steps 300
Explore the World 301
How the Rich are Dropping Out 302
Finding Freedom in an Unfree World 303
Appendix A: Resource List 305
Appendix B: A Few Banks 315
Appendix C: Some Helpful Forms 325
Other Reports available from Scope International 333
Vl11
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.
YOUR BANKING PROFILE

Few people seem to realize that many of their everyday activities help others invade their
financial privacy on a systematic basis. If your require proof, just review the last few monthly
statements you received for your checking account. Almost anything one would care to find
about you is inscribed in those hallowed pages. Have you made any recent contributions to a
religious or political organization? Perhaps one that is slightly controversial? Your cancelled
check is now a permanent record broadcasting your belief system to any who care to listen.
When was the last time you paid your rent or mortgage? Not only does your checking
account tell all and sundry how much this payment cost you, meaning they can form a rough
picture of your overall net worth, but it also forms a direct path to your front door for any who
may care to pay you an unwanted visit.
Have you visited the doctor lately? Perhaps you suffer from high blood pressure or have a
weak heart? Well, the amount and pattern of your payments again paints a picture that is clear
as day for even the most incompetent of private investigators, a picture of information that
really need only concern you and your doctor.
Consider what else your checking account may reveal about you. There it is in black and
white, almost anything anyone may care to know about you: the type of insurance you carry,
your upcoming travel plans, your favorite restaurants and shops, not to mention the names of
your friends and business associates. Furthermore, any holes that may exist in this source can
be quickly plugged when combined with your credit card records. With this combined
information, one can easily form an overall picture of your character and personality. Almost
any information needed is recorded routinely and permanently on bits of paper and silicon
chips in offices around the world, locations over which you have absolutely no control.
CONSIDER YOUR CORRESPONDENCE

If someone were really interested in finding out more about you than you care to share, your
correspondence would add yet another layer of detailed information. Maybe you think that you
need not worry so much about your financial privacy as you have already taken care of it by
establishing a trusty offshore bank account, say in the Bahamas. Your monthly statements sent
directly to your front door knock a hole the size of Switzerland right into the middle of your
attempt at bank secrecy. Governments routinely monitor international mail, particularly that
coming from known banking centers. All of them reserve the right to open and examine mail
coming from outside of their national borders. For all you know, Big Brother has been opening
the bank statements from your "secret" account, copying them and then resealing and sending
them on, all unknown to you. Your attempt at privacy has in the end accomplished exactly the
opposite of what you set out to do.
Maybe you don't have a secret account, still what mail you receive and from whom you
receive it tells a great deal about you. What mailing lists are you on? What magazines do you
receive? Who do you write to frequently and who writes to you? Would any of this information
2
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.
COMPLETING THE PICTURE

Finally, consider the information that can be amassed about you from your phone records. One
need not even listen in, although such a possibility should never be ruled out, to receive an
abundance of information on you and your daily activities. Who do you call and how long do
you talk for? Do you have any friends or associates overseas or out of state? All such
information has been neatly compiled by your local phone comp~ny and is there for the asking,
or the taking.
Not to mention the fact that your phone number is a direct link to you. Have you ever heard
of a reverse phone number directory? With just the few digits of your home phone number,
anyone can uncover a wealth of information, ranging from your current address to the amount
of your outstanding mortgage. Perhaps you should think a bit more carefully the next time a
casual acquaintance asks for your home phone number.
Similarly, you may want to think more carefully about what you throwaway. Once your
garbage is on the street it's public property, meaning that anyone who wants to sift through it
can compile an intricate picture of your daily lifestyle, everything from your favorite ice cream
to the type and sort of credit cards that you carry. If you are serious about your quest for
financial privacy, think very seriously about what you throw out and who might be able to
intercept it.
WHAT THEY KNOW ABOUT YOU

The amount of data stored on each of us has soared dramatically in recent years. It is estimated
that between government and corporate information centers as many as fifty files are kept on
each and everyone of us. The US government maintains computer tabs on in excess of four
billion files, files which concern citizens, residents and even foreigners. Records are also
maintained by private credit bureaus, state and local governments, the census, the military,
insurance companies, employment agencies, doctors, car dealers, banks and financial
institutions, clubs and organizations, churches, brokerage houses and investment funds, and of
3
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
In short, a host of information concerning you, including detailed financial information, is

stored where you have absolutely no control over it.
Even in the so called private sector, privacy has become virtually nonexistent. A recent
survey showed that almost half of the top 500 companies in the US collect data on their
employees without telling them. Eighty per cent of American workers in the
telecommunications, banking and insurance industries are monitored in some way while they
are working. Even if you don't work for your bank, expect that it is probably compiling
information about you for marketing purposes. Also expect it to frequently make use of such
information to your disadvantage. American Express recently suspended a cardholder's
"privileges" after sneaking a peak into his bank account, without his knowledge or permission.
They discovered that he did not have enough money in his account to cover his next bill, but
did not bother to check if he had other sources of revenue. In other words, they cut off his
credit before they even billed him.
Under modern law, creditors or litigants or private detectives are often given the right to
find out how much money you have in the bank. With little effort, a private investigator can
uncover your entire financial situation and expose you in an embarrassing lawsuit. Overall,
financial transactions are increasingly subjected to careful scrutiny. Every time you cash a
check, apply for credit, purchase an insurance policy, seek employment or attempt to enter a
facility with controlled access, you are asked to provide information regarding your personal
money matters. Furthermore, the courts repeatedly find that once such information is not
actually in your possession, it is not protected legally from outside interference. In effect, you
have little to no legal right over the collection, exchange or control of such information
concerning you.
4
DON'T ALLOW YOURSELF TO BECOME A TARGET

All of this talk about financial privacy may have you wondering at this point what all of the
fuss is about. After all, you are an honest person. You haven't broken any laws or stepped on
any toes and therefore don't have anything to worry about. Even if someone did go to the
trouble of putting together this intricate picture of you and your finances, you have nothing to
worry about. Right? The sad truth is that such a false sense of security has led to the demise
of many an individual. Modern day predators consider anyone to be fair game, but to make
matters worse those who have achieved a degree of success or notoriety are often singled out
for target practice.
Western societies are becoming increasingly violent at an alarming rate. Violent crime is
often seen as an easy way for someone to get their hands on your goodies. If the fact that you
have recently acquired an antique lamp or a state of the art home entertainment system is
known far and wide, expect an uninvited visitor. Furthermore, the modem day thief is
becoming increasingly sophisticated. He need only spend a few short minutes at the console
of his computer to select who to single out as his next victim. There it is for all who care to
see, a detailed analysis of your financial comings and goings. Such information may well work
as an open invitation for any number of unsavory characters.
Unfortunately, this thief prowling the streets is really only the tip of the iceberg of problems
faced today by those of substance. It is the thieves in government who pose the far greater
threat. As governments around the planet rapidly approach bankruptcy yet continue to expand
their annual budgets to astronomical proportions, they will be left with only one option. Milk
the populace. Who are going to be the first victims? Those who are thought to have the largest
amounts of available cash; again it will be the wealthy and successful who are hit hardest. If
you already feel that the amount of your income that Big Brother considers to be his fair share
is somewhat less than reasonable, I have bad news for you. History shows that overall taxes
only move in one direction, meaning things are only going to get worse.
Big business also considers you to be fair game. Who better to hit with the hard sell for
whatever new and improved product they would like to flaunt, than the wealthy and successful
again? Not to mention the fact that every con man on the planet systematically targets those of
substance. Why settle for a few paltry hundred when they can convince the wealthy to part
with thousands, if not millions? Increasingly the schemes on offer carry a layer of
respectability. They often succeed in trapping even the most astute of businessmen. It is only
through enacting a system of financial privacy that you can avoid being fooled by such
schemes. Otherwise, expect to take a fall one of these days.
Finally, if you stand out as a wealthy individual, you will automatically become a target for
lawsuits. In our increasingly litigious societies, many modem day crooks earn their living
legitimately through the eyes of the law and with the grace of the courts. Such lawsuits come
in all shapes and sizes: divorce suits, professional negligence suits, medical malpractice suits,
damage suits and just plain nuisance suits. There are currently over one million such lawsuits
working their way through the courts in the US alone. They are fueled by in excess of one
million lawyers all interested in keeping the machine in working order. After all, if the number
of such suits falls off dramatically many of them will be forced to find other employment. They
may even be forced to do something useful and productive for a change.
5
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.
6
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.
THE OFFSHORE NEST-EGG

By establishing a small nest-egg offshore, you are in effect providing for any possible
eventuality. If your local currency plummets, you need not take comfort in the political rhetoric
that such a move will be good for exports. Such speeches from the politicians may sound nice,
and for a change they may even be true, but why not protect yourself form such political
manipulations by storing your money in a safe and stable currency offshore. Then as the
politicians play, you can sit back secure with the idea that at least part of your fortune is free
from such senseless interference.
In addition, by planting some of your money offshore in a jurisdiction more attuned to the
desires of investors, you can watch it grow free from government extractions. In order for Big
Brother to take any of the proceeds that he feels belongs to him, he will have to first find your
stash and then somehow construct a detailed picture of what your money has been up to. If
your system of financial privacy is constructed properly, such a task will prove to be all but
impossible. There are countless banking centers on the planet that provide access to world
markets while offering an unknown commodity in much of the western world, bank secrecy.
Best of all, these jurisdictions do not have the audacity to think that part of your money
rightfully belongs to them and do not attempt to steal any of it in the form of taxes.
Finally, by establishing an offshore nest-egg you have created a safety net for yourself. We
never know when disaster may strike. It may take the form of some sort of national catastrophe
or unexpected tum in the economy or it could be something more personal, such as a forced
bankruptcy or messy divorce. Whatever form it takes, when the bottom drops out of your life
at home, your secret stash will still be waiting for you. If even the worst of all possible
situations develops, you can take comfort in the fact that you have an escape hatch. In the
meantime, such funds placed discreetly offshore can be used to fund vacations abroad. They
can even be used as a source of revenue for "entertainment" expenses that you would rather
keep private.
THE WAR ON PRIVACY

There is a war going on, a war in the name of everything that we believe is desirable.
Bureaucrats and politicians and other can men and schemers are attacking our personal
privacy. Their excuses nearly always sound convincing. The assault on your privacy is, without
exception, proposed and executed in the name of the common good. New and ever more
complex fiscal regulations are constantly brought into play to enforce their tax codes so that
some pet project can continue to receive its exorbitant budget at public expense.
Day after day we see examples where this blatant abuse and misuse of power is not enough
to satisfy the politicians and their armies of self-serving pen pushers. These bureaucrats then
tum to using threats, violence and similar heavy-handed techniques to achieve some higher
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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
8
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.
THE ALTERNATIVE SOLUTION

Today financial privacy has become far more than a right, sadly it has developed into a
necessity. Those who fail to take notice invariably spend the major part of their lives battling
lawsuits and negativity. I don't. I travel, enjoy good food, agreeable company, pleasant beaches
and all the other great things that this little planet has to offer.
As I explain in PT, I have long since broken free from the restraints put on us by
government and become a Perpetual Traveller and Prior Taxpayer, a PT as I call it. Banking in
Silence forms another link in my developing series of reports which show you how to
accomplish the very same. It deals exclusively with the area of banking and financial privacy,
but is somewhat different from the other reports in the PT series. Banking in Silence is what I
like to think of as a guide to becoming a partway PT. The fully-fledged PT need not be as
concerned with banking in silence as those who are still under the thumb of big government.
The fully-fledged PT operates under a layer of invisibility, constructing his paperwork in such
a way that no government considers him to be its personal property, meaning that completely
silent banking is no longer as necessary.
I have in part constructed this report for those of you who either cannot or for some reason
choose not to become fully-fledged PTs. Perhaps you are tied to one place because of children,
property, a good career or something of the sort. Perhaps you are not ready to break completely
free. This report can form a link to PT status, a stepping stone if you like. It deals with all areas
of financial privacy, even those that may not be of specific value to the PT, such as the use of
offshore corporations and trusts. Even the very idea of opening an offshore bank account is
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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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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.
SOCIALISM IS A DIRTY WORD

Although many reasons are actually given for the various government programs that have been
born under the ever expanding governments of the western world, they can all be traced back
to same old dirty word, socialism. For a case in point, look at the Americans with Disabilities
Act. It shows clearly how socialism in action compels government to come up with ever more
cash, your cash that is. Or look at the huge amount handed out each year by European
governments to those who are for all intents and purposes just too lazy to go out and work for
a living.
To make matters worse, just because some law or government decree is silly or an utter
waste of time and talent does not mean that it will never be enforced. On the contrary, instead
of using logic, government planners employ the old socialist trick of appealing to your
"emotions" and relying on "feelings". Then, like all true socialists, they denigrate and
demonize political opponents. At the heart of the socialist vision is the notion that a
compassionate society can create more humane living conditions for all through government
planning and control of the economy. Anybody who dares to disagree is automatically evil.
Just look at how the Democrats in the US regard their political opponents as somehow less
pure and clean at heart, or look at the name-calling all Social Democrats in western Europe
tum to when they run out of logical arguments to throw at their enemies.
Yet Marxism as an ideal continues to flourish on American college campuses as it does
nowhere else in the world. In Forbes magazine, the scholar and author Thomas Sowell wrote
of how even in hard-line communist countries like China and Cuba, Marxism is simply an
instrument in a system of totalitarian power and control. "With China, especially, it is clear that
Marxism is used instrumentally and is disregarded where the regime thinks it can allow market
activities to generate economic benefits without losing political control. Only in America are
there substantial numbers of adherents to Marxism as a creed for its own sake."
Most of the closet socialists of American campuses turn up in government a few years later.
Don't be fooled by the fact that they now wear a tie and talk rosily of working with the market.
What they're after is power without earning it, money without working for it. Furthermore,
with America leading what will surely soon become a one-world government, this trend is
dangerous. The closet socialists and Marxists who are running the US federal bureaucracy
believe that they have some sort of moral obligation to impose cryptic ways of thinking onto
the rest of the world. Deep down inside they hate capitalists or anybody with money. To them,
money, as long as it is not in the government's coffers, is an inherent evil that must be
eliminated.
HUGE REVENUE DEMANDS

This political and bureaucratic interest in ever expanding government has had a tremendous
effect on the revenue demands made by governments everywhere. In the western world, from
a base of practically zero, governments are now spending close to half of your paycheck each
and every week. For example, the income tax was first introduced in the US in 1913.
12
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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Banking in Silence
THE SITUATION CAN ONLY GET WORSE

All signs seem to indicate that long before things get any better, they will get a lot Worse.
Government expenditures will reach truly astronomical amounts long before they begin to
resemble anything even remotely reasonable. It is simple lunacy to operate at a level that
involves borrowing close to a quarter of a trillion dollars a year. Simply maintaining interest
on the national debt accounts for nearly 15 per cent of the US annual budget. If public
expenditure continues to grow as it has been, expect this figure to reach one hundred per cent
within your lifetime. Have you had a hard time finding financing as of late? Well, perhaps it
is because Uncle Sam is now taking up 80 per cent of all available credit within the US. The
only real mystery is why such a deadbeat is still considered to be a good credit risk, although
apparently international investors are beginning to wonder.
Nonetheless, all western governments have little choice but to continue on this path to
destruction. As public programs continue to grow, they will continue to require ever greater
amounts of financing to stay in operation. Just consider the effects of social security in the US.
This program was first started in 1935. Like the income tax, the public bought into it on the
assumption that it would not eat away too much of their income. Yes, the tax then was an
incredibly low 1 per cent on the first US $3000 of income or a maximum of US $30 per year.
Did this rate stay incredibly low? Of course not, employees now pay 7.65 per cent of their first
US $57,600 of income or a maximum of approximately US $4400 per year. This modern rate
is 147 times higher than the amount that originally sold the plan to the public.
Still, all signs say the worst is yet to come. The mere laws of mathematics show that there
is little other alternative. As the number of people retiring in the US increases, the number of
people entering the workforce is decreasing. It is estimated that by the year 2020 there will be
one retired person collecting from the fund for every two individuals working and contributing
to it. This means only one thing, higher taxes. Even the government admits that this rate could
go as high as 37.5 per cent by the year 2020. That's just social security, meaning that to
calculate your true future tax you will also have to add on whatever federal, state and local
taxes future politicians can dream up!
Other statistics show that the current value of social security's obligations exceeds the
current value of projected tax receipts by more than US $1.25 trillion. Similarly, calculations
by the OECD suggest that even on favorable assumptions the present value of promised public
pensions net of future contributions amounts to 216 per cent of France's GDP and 160 per cent
of Germany's. These figures are three times larger than the existing public debts of these
countries. What do all of these numbers mean? It's simple, just because you have spent your
entire life slaving away to support a welfare state and help others retire with ease does not
mean that there will be anything left in the pot when it comes your tum to collect.
As tomorrow becomes today, the problems of financing a huge and outdated extortion
racket will not go away. On the contrary, all numbers show that these problems will, without
exception, only continue to grow. The problems inherent in recent free lunch programs,
namely future liabilities from unfunded pension schemes, will swell as populations age. When
you couple these liabilities with the fact that public debt runs at about two-thirds of GDP in
most countries, it becomes clear that something will have to change, but yet politicians around
the world realize that it is in their best interest to make sure that nothing does change.
14
GOVERNMENT SPENDING CAN ONLY INCREASE

In spite of such obvious warning signs of disaster, politicians from all developed countries
routinely continue to choose only one option, increased spending. Like the past, the future will
see ever increasing budget deficits and ever greater levels of national debt. The fact of the
matter is that even when politicians realize that they must somehow reduce spending, the
people who put them in office will not let them. In France, when the government started to
tinker with its bloated welfare system, the entire country went on strike for nearly a month.
The government was left with only one option: continue handing out ever larger installments
of cash to the public. Apparently the French either do not realize or simply do not care that
their government cannot afford its now cumbersome and out of date social welfare system.
In the US, such misinformed thinking also persists. Yes, the Republican controlled
Congress has made a great deal of noise about balancing the budget. The individuals involved
may even be sincere, but like all politicians their primary objective is to hold on to their jobs.
They may talk a great deal about cutting spending, but they understand that their constituencies
will oust them from office the minute they cut back funding for even just one local
government-goody program. So instead they focus on goody programs in some far off land, a
program that is equally defended by its local representative.
On a national level, politicians such as Bill Clinton score points by defending programs
such as medicare and medicaid, regardless of whether or not the country can afford such
luxuries. Absolutely no one talks about cutting back defense spending. Even though the cold
war has ended and such massive spending can hardly be justified, the politicians concerned
realize that any adjustment made to this major part of the budget would affect an even more
important element of their constituencies, big business. Without big business to fund his
immensely expensive campaigns, any eager politician would quickly find himself out of a job.
In the world today, our elected representatives dare not tinker with such programs, no matter
how outdated or cumbersome they have become.
If you require any proof of the likely amount of change that will come about under the so-
called "new" Congress just look at their efforts to date. The showdown at the end of 1995
between Clinton and Gingrich again was much more about political clout and job stability than
any of the issues actually involved. If they really did want a balanced budget, then why not
slash spending today? All that came out of the whole fiasco was a promise to balance the
budget, tomorrow. We all know what that means. As usual, in the end all that really happens is
that the government continues to spend money at a rate that would even put a drunken admiral
to shame. Republican or Democrat really makes no difference, remember that it was Ronald
Reagan, a Republican, that got the US into its current predicament in the first place.
Ironically, the one thing that the politicians did manage to demonstrate as a result of the US
government shutdown last year is how unnecessary they really are. Did the world come to a
grinding halt the minute the government closed its doors around the world and sent 800,000
employees home because it could not afford to pay them? Of course not, even the media, at
least outside of the US, seemed to barely take notice of the fact that the world's only remaining
superpower was forced to shut down shop because of financial woes. The few stories that did
appear concerned the poor little schoolchildren who travelled all the way to Washington. We
saw their sad faces in front of the Washington monument, which they could not ascend because
Uncle Sam had run out of cash.
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Banking in Silence
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.
THE DECLINING VALUE OF THE DOLLAR

It is inevitable that such excessive spending accompanied by high levels of national debt will
have a negative effect on the countries concerned. The US in particular, is undoubtedly headed
for rocky waters. As I have already explained, only twenty years ago the US possessed the
largest net foreign assets in the world. Today, it is the world's largest debtor. At one time the
dollar was seen as the international currency of exchange. Increasingly this confidence is a
thing of the past as the currency continues what seems to be an endless downward spiral. Just
look at the statistics. The foreign exchange reserve of the dollar has fallen from 82 per cent to
52 per cent. The number of countries that currently peg their own currency to the US dollar
has been cut in half. Furthermore, the currency has lost 95 per cent of its value against gold in
the last fifty years, and the value of the Swiss franc as compared to the dollar has tripled in the
last twenty years.
Surely, the writing is on the wall. At the very least we can expect further debasement in the
US currency, if for no other reason than to devalue the massive debt carried by the US
government. Even a government inspired devaluation seems increasingly likely. Such major
devaluations of the US dollar have already occurred twice in the past. The first came in 1934
under President Roosevelt. He simply declared that effective immediately the dollar was worth
70 per cent less than it had been previously. At the same time, Congress passed a law that
prohibited Americans from exchanging dollars for gold. The politicians did not stop there,
however, and to save their precious jobs went on to ban Americans from owning gold entirely.
This ban on gold stayed in effect for the next forty years.
Then again in the 1970s the dollar plummeted. Much like today, foreign banks of the time
began to lose faith in the dollar. They asked the US to honor its promise that US $35 was
indeed worth one ounce of gold. In short, they asked the US government to put its gold where
its mouth was. Soon the US had a problem as its gold reserve began to run out at an alarming
rate. President Nixon stepped in, prohibited banks from exchanging dollars for gold and then
upped the price of one ounce of gold to US $42.22. In other words, he devalued the dollar an
additional 20 per cent. The result is that the dollar became a completely unbacked fiat
currency, created out of nothing more than thin air.
Since such actions of the early 1970s, the value of the dollar has continued to decline
steadily and is now worth less than 70 per cent of what it was even then. Although a fiat
currency may be convenient for politicians, it offers little security to investors. Politicians
realize that if they get into a jam they can always run the printing presses a little longer the next
16
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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Banking in Silence
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.
18
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.
WHERE HAS ALL THE MONEY GONE?

When conducting the original research for this report, I contacted several central bankers to
ask if they could account for their local currencies. The experience was a true epiphany.
Everyone I spoke to knew where their money was. Everyone knew who held which percentage
of it and why. Everyone thought that the question was stupid. The problem was, everyone
consisted of only four people. The rest, claiming state secrets or not even bothering to produce
an excuse at all, refused to be made accountable to the public. This shows clearly that perhaps
all is not as it should be.
Most countries are able to track down about 80 per cent of their national currencies at any
given time. That is most, but Uncle Sam cannot perform quite so well. At present, the US
Treasury can account for only 18 per cent of its currency, at best. Of course, the Treasury
would never tell you this. In fact, the Treasury refuses to speak with anyone directly. Instead,
we are forced to rely on other sources to come to an understanding of the truly massive amount
19
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.
THE COMING TWO-TIERED CURRENCY

As lucrative as a currency recall would be for the US government, it is not likely to bring an
end to all of its financial woes. Even if the entire US $150 billion currently unaccounted were
eventually to become the property of Uncle Sam, he would still be left with well over US $4.5
trillion of debt to contend with, meaning that politicians and bureaucrats have dreamt up even
more sinister plans. One particular approach that has been mentioned around the halls of
government basically rids the government of this unwanted debt by means of the printing
press. It works hand in hand with the issuance of a new currency, but takes things one step
further. Instead of introducing just one new currency, the government would issue two
different types of notes. One would be legal tender inside the country, the other would be legal
tender outside of it.
20
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.
21
Banking in Silence
THE CASHLESS SOCIETY

Introducing a new currency also provides almost unlimited power to your government in its
efforts to track your financial affairs. Governments, for the most part, do not like cash.
Transactions conducted in cash produce no records and leave no paper trail of their existence.
Instead, such transactions can be completely anonymous and afford those involved a level of
privacy that has become increasingly difficult to achieve in our modem electronic age.
However, thanks to currency recalls, even this last source of financial privacy is quickly
evaporating. If your government has its way, in the not too distant future, any and all cash
transactions will become as traceable as those you make with your check book or credit cards.
For a case in point, consider the recent "minor" changes introduced into the US currency.
These changes are not nearly as harmless as they may at first appear. Secretly, Big Brother has
been hard at work transforming the good old greenback into a completely traceable currency.
Do you remember that polyester thread that runs along the left hand side of new bills?
Polyester may sound harmless, but the magnetic threads with which it is interwoven are the
beginning of your worst nightmare. These threads can be encoded with messages, a taxypayer
identification number for example. In other words, it is now entirely possible for your bank to
encode cash with your social security number before handing it over to you. Such a practice
ensures that any transaction carried out with such marked bills would afford you absolutely no
degree of privacy. Wherever your cash may make it to at the end of the day, Big Brother could
easily trace it straight back to you.
Although such practices have not yet come into full swing, it has been reported that at least
some banks in the US are already equipped with machines capable of reading such encoded
bills. Similarly, other countries have developed new currencies that all but eliminate your
ability to achieve financial privacy. The Netherlands has recently introduced a much flaunted
currency. Yes, it must be said that the bills themselves are quite nice looking. The only
problem, these spiffy new notes also carry barcodes, meaning that any attempt at conducting
a private financial transaction can easily be thwarted by the bureaucrats. Incorporating metal
threads and using magnetic inks in new currency also means that large amounts of cash can no
longer travel quite so freely across national borders. Many new currencies have been
specifically designed so that a large number of bills will set off metal detectors at airports.
Still, your government will not rest contentedly even once it has transformed cash into a
completely traceable commodity. Instead, Big Brother is working steadily towards his vision
of Utopia, the truly cashless society. With the advent of the debit card, such a possibility looms
on the horizon as an all too likely possibility. A debit card works much like a credit card, except
that rather than going towards a line of credit, money is automatically removed from an
existing account balance. Just about everyone except the privacy conscious consumer is only
too pleased to usher in these plastic wonders.
Merchants like debit cards because they receive an instant credit for the goods they sell, no
more bounced checks or credit card chargebacks. Banks usually charge a small fee for such
transactions, meaning they can increase revenue while decreasing staff costs. Marketing
companies love debit cards as they create a detailed picture of each consumer which can in
turn lead to far more profitable marketing campaigns. Even the average consumer likes debit
cards. They are seen as an easy way of paying for purchases, one that eliminates the need to
carry around cash that can be lost or stolen. Finally, the bureaucrats absolutely adore debit
22
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
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.
THE DEATH OF PRIVACY

In the US in particular, this drug war is merely the excuse used by government so that it can
legally pry into the privacy of anyone and everyone. Each year more legislation is passed that
allows ever greater amounts of intrusion. At the same time, legislation is also introduced that
severely limits the basic and fundamental rights of every citizen. In the name of the war on
drugs, investigators who have never had the slightest interest in drug use whatsoever, can gain
secret access to your bank accounts, examine your credit card files, review your phone records
and study every check you have ever written.
When government agents claim that they are fighting a Holy War in the name of all that is
good, they can convince even your closest family that you are a bad guy, if not a drug runner
then at least a money launderer. Drug-related crime is used interchangeably with money
laundering, as if the two were the same. Together they become a convenient excuse that can
convince anybody to forget your civil rights. As covered at greater length in the following part
of this report, constitutional rights no longer apply in many cases that appear before US courts
today. Even basic protections once thought to be absolute, such as the First Amendment right
to freedom of expression or the Second Amendment right to bear arms, are often not
recognized by the modern legal system.
Yet in spite of such Draconian measures taken by government, most people accept its pleas
that such action is necessary because of the war on drugs. They not only allow the government
to strip them of even their most basic rights, but welcome such maneuvers. Do you really think
that the politicians and bureaucrats in government care a great deal about the non-voting crack
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.
THE MOST SENSELESS WAR IN HISTORY

Ordinary folk who support the war on drugs do not realize that they are being conned. It is also
doubtful that more than a handful of politicians admit even to themselves that the real intention
behind the many laws recently introduced is purely and simply to allow Big Brother to get his
hands on yet more of your money. Apparently Big Brother will not rest until everyone is
reduced to the status of a serf on his own land. Serfs, that is, to the government and its hordes
of do-good bureaucrats who need every last dollar you earn to pay for a war that they are
clearly losing, if they were ever really fighting it in the first place.
The fact of the matter is that when examined rationally, the war on drugs just doesn't make
sense. Anyone who steps back to look at the larger picture will quickly realize that a war on
drugs could never be won for the pure and simple reason of economics. For example, consider
that sugar cane and heroin are largely comparable crops. They grow in the same sort of
climates and require much the same harvesting, refining, packaging and shipping procedures.
The difference? Sugar sells wholesale for anywhere from one to one and a half dollars per kilo;
26
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.
THE WAR ON DRUGS CAN ONLY BE LOST

Big Brother understands these very simple concepts. He only made a show of actually trying
to rid the country of drugs so that his little ruse would not be found out. Quietly, he introduced
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
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.
GOVERNMENTS ARE BASICALLY INEPT

The real injustice behind the legislation that has come about as a result of the war on drugs is
that it hardly ever succeeds in doing that which the politicians tell us it is meant to do. It
doesn't catch criminals. Of course, that such laws were ever brought about in the first place
underlines the fact that, even by their own admission, governments are basically inept. What
exactly was Big Brother saying when he told us that he must transform a number of related
financial transactions into illegal behavior? He was admitting his own inability to catch
criminals in the act. As Big Brother was not clever enough to actually catch people in the
process of selling drugs or committing fraud or plotting terrorist activity, he had to resort to
trying to stop them after the fact when they tried to wash clean the profits from such activity.
The fact that the public allowed such legislation to go through unhindered rather than tell
Big Brother to go back and do his job properly tells us much about the persuasive rhetoric of
politicians. It also points yet again to the real reasons behind the war on drugs. It is only be
examining the actual effects of all of this newly introduced legislation that we come to
understand who the real victims are. What do all of these new laws do? Who are they meant to
stop? Who needs to be afraid of them? To discover the real answers all you need do is cut away
Big Brother's snake-oil rhetoric and look closely at what effects these laws have produced on
day to day life in all developed countries. To discover the real answers look at who suffers.
Look at whose money is being taken away and at who is forced to tum up in tax court.
Do you see any drug barons there? Of course not. Money launderers only need fear these
new laws if they don't know how to hide. Which is exactly why these laws never affect drug
lords or big time swindlers. These shady underworld characters know how to hide and how to
use fall guys, middle men and ghosts. They know how to keep such a low profile that no one
knows their true identity or where they live. The fact of the matter is that all of this new
legislation fails miserably in its attempt to stop drug traffickers, corrupt kingpens, gangland
bosses or top white collar criminals. Professional crooks are far too clever to get caught in such
bureaucratic traps.
Do you think Pablo Escobar wet his pants when Germany enacted reporting requirements
a few years ago? Do you think that drug barons were sent home quivering in their boots when
Luxembourg asked banks to start reporting "suspicious" transactions? And who do you think
got hurt when France decided that from now on cash deposits would be subjected to extra
scrutiny? No matter how hard bungling governments try to stop crime they will never succeed
29
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.
ONLY SUCCEED IN CATCHING THE INNOCENT

Although the US has introduced the most severe drug-trafficking and money laundering laws
in the world, drug consumption continues to soar and major crime is still on the rise. What
should this tell lawmakers? More importantly, what does this tell any intelligent individual?
One thing is certain, these new laws and regulations do nothing to deter professional, ruthless
criminals. Instead they nail the wrong victims, little people who do nothing wrong and who are
certainly not crooks. This unknown side of the coin reveals that those caught in the net of
reporting requirements, computer database surveillance and other spin-offs of the money
laundering war are common folk. Continually, small independent businesses are victimized
while criminals go free.
Those with reason to fear these new laws are small-time tax evaders and others who simply
fail to notice that the world as they know it has suddenly changed. Belgian dentists who went
to Luxembourg and hid a little gold left over from their fillings became victims of the new
laws. So did Italian workers in Switzerland and Spanish moonlighters on Gibraltar. In short,
the bureaucratic nets have time and time again captured the little guy who likes to hide a bit
of his dough from the all knowing taxman. Many of those who have fallen into the new
bureaucratic traps own a small import-export business or are self employed in some other way.
Under the phony cry of the war on drugs, neighborhood firms, mom-and-pop stores, cottage
industries and private professionals are routinely the ones who suffer. Many have already
learned their lesson the hard way. The rest will soon, unless by reading reports such as this they
learn to change their tactics.
By 1991, five years after the passage of money laundering legislation in the United States,
the government had charged over 290 accountants, 151 CPAs and 225 attorneys. According to
a recently released IRS survey conducted on the subject, most of these indictments eventually
became successful convictions. Add to this list the more than 5000 tax-paying Americans who
were audited and later sent to jail by the IRS and you begin to get a true idea of what the war
on drugs is really about. For every bonafide drug trafficker actually prosecuted, this bogus war
has also nailed between 100 and 150 others, the actual number depending on the country
surveyed. Again, these convictions are all brought about solely as the result of new laws
supposedly introduced to stop drug barons.
The world today has more than two hundred countries. Half of these are either banking or
tax havens. Of the rest, a number can be counted as financial centers. All countries have banks
and banking regulations that differ. With more than two hundred places to choose from, smart
criminals will always manage to get around the system in spite of any and all possible
regulations or restrictions. Like rainwater, their money will always find a way to disappear.
Once you understand this basic principle, you will also understand the real reason for this
explosion in recent legislation. Governments around the world continue to pass these silly laws
because victims are nailed every day. Only unlike the politicians lead us to believe, it is Joe
Taxpayer, Johnny Lunchbucket, Jane Homemaker and all their well-meaning pals who get
caught in the system.
30
INTRODUCING A VERY SPECIAL LADY

A deeper explanation of the reasons behind both the war on drugs and its accompanying
legislation is readily available. The fact of the matter is that governments like the idea that
innocent people suffer at the hands of this new legislation. They know that in our modem
world, anyone who achieves any degree of success also inherently becomes a lawbreaker along
the way. As a result of this arrangement, they can prosecute almost anyone at almost any time.
The fact that the laws broken are silly, if not utterly ridiculous, does not in any way mitigate
the severity of a conviction. Again, it seems that those responsible for shaping the movements
of government have done their homework. Just as George Orwell demonstrated the need to
have a fictitious enemy, Ayn Rand showed the benefits that a government can enjoy by
transforming its entire population into ipso facto criminals.
A Russian expat who fled to the United States from Soviet Russia in the 1920s, Ayn Rand
went on to become one of the leading authors of this century. Her success is based largely on
the public acclaim she received for both her novels and philosophical volumes, but also comes
from her general outlook on life. In her view, life belongs exclusively to the individual who
shall, in tum, be absolutely free to do with it whatever he pleases, as long as the rights of others
are not transgressed. In 1957, Rand published her stunning and immensely significant novel
Atlas Shrugged (out of print in Britain, it is still available from Signet Books, New York). In
her work, Rand explains exactly how things work in the real world and what may happen if
too many people lose sight of the facts. More terrifying still is the realization that much of what
Rand predicted has already begun to happen in almost every western country on the planet.
Set in the United States of America (without mentioning any specific year), the backdrop
for the novel is industry and the people who make it work. The heroes, according to Rand, are
not unionized workers who alternate between whining for shorter hours and demanding more
pay for less work, but rather a few, rare capitalists, without whose constant quest for efficiency
and profit the engine of the world would stop. In Atlas Shrugged, a number of senseless laws
are introduced by government. All are, officially, passed for the common good and public
welfare. Competition is restricted by law, lest old and inefficient companies with bloated
payrolls lose ground to new, ambitious upstarts. Plans are introduced to spread profits around,
lest a few attain "excessive" riches.
An industrialist, Hank Rearden, invents a revolutionary metal, Rearden metal. Suspicious,
at first, over this new product, it soon dawns on the world that the invention holds supreme
advantages over steel and will revolutionize just about every sector of industry. To make sure
that Rearden Steel does not discriminate against those customers who initially refused to buy
his product, laws are passed that require Rearden Steel Mills to put a quota-system into
operation that ensures everyone will enjoy his state-guaranteed right to buy his "fair share" of
the output. Even so, Rearden profits mightily due to his years of research and hard work. Soon
rival mills, unable to compete against him with their old-fashioned steel, are driven to the brink
of bankruptcy. Making no excuses for his success, Rearden is in due course blackmailed by the
government into giving up his patent rights so that all may share in the benefits of his
invention. The following excerpt from the book is a verbal exchange between Rearden and
Ferris, the emissary of Big Brother who visits the mills to announce the government blackmail.
"You honest men are such a headache, but we knew you'd slip up sooner or later - and this
is just what we wanted."
31
Banking in Silence
"You seem to be pleased about it."

"Don't I have good reason to be?"
"But, after all, I did break one of your laws."
"Well, what do you think they're there for?"
Dr Ferris did not notice the sudden look on Rearden's face, the look of a man hit by the first
vision of that which he had sought to see. Dr Ferris was past the stage of seeing; he was intent
upon delivering the last blows to an animal caught in a trap.
"Did you really think that we want those laws to be observed?" said Dr Ferris. "We want
them broken. You'd better get it straight that it's not a bunch of boy scouts you're up against.
We're after power and we mean-it. You fellows were pikers, but we know the real trick, and
you'd better get wise to it. There's no way to rule innocent men. The only power any
government has is the power to crack down on criminals. Well, when there aren't enough
criminals, one makes them. One declares so many things to be a crime that it becomes
impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens?
What's there in that for anyone? But just pass the kind of laws that can neither be observed nor
enforced nor objectively interpreted - and you create a nation of law-breakers - and then you
cash in on guilt. Now that's the system, Mr Rearden, that's the game, and once you understand
it, you'll be much easier to deal with."
Translate this to modern-day politics and you quickly see that the war on drugs is, in fact,
nothing but an elaborate scam to make it legal for the state to invade everyone's privacy. The
multitude of legislation recently introduced creates a situation where prosecutors can select
and convict almost anyone of a drug-related crime. If nothing else, Atlas Shrugged will open
your eyes to what happens in both Europe and the United States once politicians, scheming
intellectuals and over-ambitious bureaucrats are given too much of a say in your life.
THE DEATH OF FREEDOM

The government's ultimate objective is to achieve control over every business and every
individual. Violating your privacy (not just in financial, but in all matters) is a necessary
preliminary step. Big Brother is much closer to achieving his dream of controlling all property
than most people think. Going behind the headlines and the soundbites, most intelligent
followers know by now that the war on drugs should really be renamed the war on citizenry.
Its supporting tenets and its philosophy were around long before the notorious drug baron even
existed. Its implementation started long before the United States came to consider drugs to be
its number one problem.
The fact that the war on drugs is not even remotely about drugs is a point made by Professor
Leonard Peikoff in his study The Ominous Parallels, subtitled "The End of the Freedom in
America". This book shows just how far down the road America has gone to establish what is,
in all important respects, a government that closely resembles a totalitarian dictatorship. The
ominous parallels that Professor Peikoff refers to relate the modern American system to
German Naziism. The deepest roots of German Naziism lie in three philosophic ideas: the
worship of unreason, the demand for self-sacrifice and the elevation of society above the
individual. Read these three ideas again. Does any of this sound familiar? It should. The same
ideas are now influential in America. They are shaping political, economic and cultural trends.
32
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.
THEY'RE SHOOTING AT YOU

The fact that the restrictive legislation introduced in the name of the war on drugs is here to
stay underlines the basic need for reports such as this. In the modem predatory world, privacy
has become a valued commodity that you can never have too much of, even if you have
nothing to hide. Just as you can never be too rich or too good-looking, you can never have too
much privacy.
Once upon a time, two good friends, let's call them Henry and Howard, were relaxing in
the living room, discussing architecture and the passing of the seasons. Occasionally they
would glance out into the big garden to enjoy the colors of the trees in autumn. In the middle
of their conversation while they were taking in the view of the falling leaves, five police cars
shrieked to a halt in front of the house, all with flashing lights and sirens at full blast. Howard
opened the window to see what was going on. Three cops leapt out of each patrol car. They
immediately sought cover, drew their guns and started firing round after round after round
towards the house.
Howard threw himself down on the floor, but Henry kept still in his chair with his legs
crossed and a glass of port in one hand. He was still enjoying the view when Howard yelled,
"Get down, get down NOW!'"
33
Banking in Silence
"Why?" asked Henry, "I didn't do anything wrong!"

This little tale is a fairy tale, of course anyone in dear Henry's situation would seek cover
the minute bullets started flying. The irony is that while most people would be sensible if
presented with such a life threatening encounter, they do not exhibit a similar instinct for self-
preservation when the threat is more subtle, even though the result can often be equally
disastrous. Not all use common sense or demonstrate rational thinking when the issue turns to
personal and financial privacy. Most of those who will seek cover when the police start firing,
do not seek cover when the taxman goes on the war path or when some other trigger-happy
government bureaucrat feels like opening a case.
The fact of the matter is that you may not have anything to hide, but you would be unwise
not to seek some measure of privacy. With a bloated government virtually bankrupt and out for
bloodmoney, even the most honest taxpayer can find himself in the line of fire. Not seeking
some form of cover is dangerous to your financial health. If you manage to annoy the bureau-
rats enough you could find yourself at the receiving end of a phoney criminal case. This has
happened to thousands of US taxpayers who could not prove their innocence when they were
charged with scheming to defraud the IRS. All received jail sentences of at least one year. They
didn't commit a crime, but they had to do the time. All had their property attached even before
the case got to court. Eventually their assets were confiscated and later sold at auction to fill
the taxman's coffers.
Do not think this won't ever happen to you. As I will explain in greater detail in the
following chapter, in criminal tax cases, unlike other criminal cases, the defendant is assumed
guilty unless he can prove otherwise. This flagrant piece of human rights abuse is accepted not
just in the US, but in most European countries. An DEeD special session, as reported in the
Wall Street Journal, even drew up a model treaty on ways the government can take your
property away from you without prior trial. The way the treaty was implemented in at least one
country, means that failure to file just one of some forty-five different forms automatically puts
your entire worldwide assets at risk.
Do not think that privacy is only for those who have something to hide. Do not claim that
low profile is for those whose dealings cannot bear scrutiny of the light of day. It may have
been like that in Utopia many years ago. Today the world is simply not so. Privacy and low
profile have become urgent necessities for all of us. A criminal investigation can hit any of us
from out of the blue. You do not need to be a criminal. Today, it is the criminals who go free.
The easiest victims to nail are hard-working citizens who prefer to be low profile in their daily
dealings and don't like to share their salary with a government or a political system with which
they cannot sympathize. An unfounded out-of-the-blue criminal case can be opened on even
the best of us. Usually the reasons are flimsy. Take steps today to lower your profile. Don't put
it off. No one likes to be under surveillance and no one likes to live with the fear that one day
a vicious law that never should have been there in the first place can wreck his life.
34
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.
35
Banking in Silence
INTERNAL REVENUE SERVICE OR MAFIA KINGPIN?

It is no longer only the mafia that attacks its victims by targeting their friends or family,
apparently the IRS has been taking lessons. In the US today, the IRS will not hesitate to come
after you by going through your children. In Detroit, seven children were detained in a day
care center, meaning in effect they were held hostage, until parents agreed to pay fees owed by
the school. The agency also commonly seizes funds held by children to pay taxes owed by their
parents. Such seizures include the life savings of a nine year old girl to settle part of a tax claim
against her aging grandmother and the US $10.25 account of a 12 year old boy which was
confiscated to offset his parents' back taxes. The agency is also not averse to the idea of going
after your children directly. It has audited several thousand children, each randomly selected.
Of course, it's mom or dad that has to take time off work to sort out the wild goose chase.
Similarly, the IRS does not hesitate to make use of mafia-style violence. In Alaska, a couple
who disputed their tax assessment had their car seized. This seizure alone would be bad
enough, but to make matters worse the couple were actually in the car when the IRS decided
to make its hit. First, the windows were smashed. Then, the couple were dragged bleeding to
the sidewalk where they were promptly abandoned. In another case, a woman objected to the
confiscation of vehicles on her property. Her problem? The armed men, who turned out to be
IRS agents in the company of US marshalls, refused to identify themselves. Instead, one of the
agents involved beat her to the ground with the butt of an automatic weapon. Apparently it
didn't bother the agent in question that this disgruntled taxpayer was seven months pregnant
with twins. One twin was born dead, the other with brain damage. The agent went on to receive
a commendation.
Yet another favorite pressure tactic is to make use of absolutely ludicrous fines. For
example, in 1990 in San Jose, California one woman was billed for US $68,000 in back taxes.
The clincher, however, was the simultaneous penalty of US $647 million, yes that's million.
When she called to complain she was told that she must pay the fine before her case would be
considered. Dealing in smaller amounts, although a similar scale, a businessman in Virginia
was fined US $400 when he failed to pay two cents of his US $22,894 withholding bill. In yet
another case, the police commission of a small town in Pennsylvania was asked to pay a us
$700 fine on a payment that fell merely one cent short of what the IRS deemed to be the
amount owed.
Although such senseless policies may appear comic at first, they are no laughing matter.
Continuous IRS harassment has led many to desperate measures, including suicide. Amongst
these lost souls are the likes of homeless advocate Mitch Snyder who committed suicide in the
face of IRS assessments of US $90,000. Of course, before resorting to such desperate measures
one should realize that even in death the IRS cannot be escaped. In one much publicized case,
the IRS sought to exhume the body of an individual, who died during the course of an audit,
in order to verify his identity. Similarly, veiling oneself in the protective enclosure of a
charitable institution will accomplish little. In EI Paso, Texas, the IRS confiscated several tons
of food in addition to a dozen vehicles from a relief group that owed US $22,000 in back taxes.
The food was intended to help the homeless. After a swarm of bad publicity the IRS released
the food, but held on to the trucks.
36
THE WORLD'S MOST CONFUSING LEGISLATION

Perhaps such totalitarian practices would be acceptable if they were only levied against those
with truly evil intentions. However, as explained in the previous chapter, it is almost always
the innocent who suffer. In the last bastion of capitalism, US bureaucrats have gone to
exorbitant lengths to ensure that almost any individual is a potential victim. The fact of the
matter is that the US tax code is so immensely complicated that, even if one so wishes, it is
simply no longer possible to be the proverbial honest taxpayer.
At present, the US tax code fills several thousand pages and contains sections which number
up to 9602. Of course, all of this is written in the sort of language that no one lacking many
years of legal training can understand. Result, several thousand more pages which "interpret"
the tax code have been published. This interpretation often only succeeds in producing yet more
confusion in the mind of the innocent taxpayer. In 1988, a study conducted by the Akron
University School of Law found that less than 11 per cent of the general public with less than
a high school education can understand the instructions that accompany their tax form.
If you are a member of the somewhat more literate and educated public you may fare
somewhat better, but not without a great deal of time and effort. Those who are really ambitious
and desire a full understanding of the US tax code should consult the IRS Manual, although
before doing so you will have to clear out at least one large bookshelf to make room for it. You
may decide to take the easy road out and employ someone to take care of your tax matters for
you. If so, don't expect any miracles. In 1991, Money magazine asked fifty tax specialists to
prepare a typical family's tax return for the preceding year. The result, not surprisingly they got
fifty different answers, only one of which was correct. Placing blind trust in someone else to
prepare your returns may well turn out to be your one way ticket to the pokey.
Even trusting agents working for the IRS is not such a hot idea. In 1988, a survey conducted
by the Government Accounting Office showed that IRS agents provided the wrong answer to
phoned in questions 39 per cent of the time. By 1992 this figure had improved to 16 per cent,
although little reliance should be placed on even this improved figure as the likelihood of a
question being answered correctly declines sharply as the difficulty of the question increases.
Even today, the IRS provides the correct answer less than half of the time for questions
concerning complex issues such as capital gains. What happens if you happen to be one of these
unlucky souls who places reliance on bogus IRS advice? You will be fined and penalized. The
agency can only be held responsible for advice that it provides in writing. Moral of story, when
dealing with this or any other government agency, always conduct all correspondence on paper.
AGENCY OUT OF CONTROL

In effect, the American tax code is so immensely confusing that no one really understands it
in its entirety, meaning that no one really knows how much any individual American taxpayer
actually owes. The IRS has publicly addressed this issue and has made a great deal of noise
about its efforts to streamline the tax code and simplify filing procedures. Don't believe a word
of it. If you have come to even the most basic understanding of government, you know that the
bureaucrats and politicians running the show are not your friends. They like the idea that they
can nail anyone any day for violating any of a multitude of silly laws. Having not paid your
dues to society is a perennial favorite of governments around the world. Nothing stirs up the
public quite as much as a well-publicized tax case against a wealthy defendant.
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.
CORRUPTION AND MISMANAGEMENT

On the other hand, the agency has been far less energetic when it comes to policing its own
shop. Repeatedly, information showing abuses committed by high-ranking IRS officers has
38
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.
THE STATE WITHIN THE STATE

To achieve this end, the politicians and bureaucrats of governments around the globe have
gone to great lengths to stack the odds in their favor. In many tax cases, traditional ideas of
justice have long since been thrown out the window. If your government thinks that you owe
it money, you are guilty until proven innocent. The burden of proof in such cases rests firmly
on your shoulders. It is your responsibility to prove your every word and back each and every
one of them with solid paper records. Worse still, you often have to disprove what the enemy
claims. You may not like it, but this is the state of affairs in the world today.
In the US, this infringement of basic human rights was brought into being by instituting a
new and separate court system. Congress has authorized the IRS to set up an independent
entity now known as the Tax Court. Not only will you be guilty until proven innocent in this
new court system, but you must also pay the tax assessed by the IRS before you are granted
the privilege of disputing it. Of course, even in the traditional court system, the IRS routinely
ignored decisions that it disliked. Instead it just carried on as usual waiting for the day when
Congress would change legislation to back up its claims.
These special tax courts are also not afraid of using almost barbaric means to pull the
information from you that they are after. Do you think your banking records are safe because
they are tucked away in some distant and terribly secret tax haven? Think again. With little
effort your government can easily arrange it so that you willingly hand over every last one of
them. Yes, your government, carrying on a case against you, will expect you, the suspect, to
incriminate yourself by ordering your own bank, in writing, to tum over all your records to
your enemy. This is how it is done. Your files will be claimed essential to a trial. Until you turn
them over you will be held in custody. Custody before trial is common practice even in non-
violent cases where the crime is a white collar crime such as alleged tax evasion or insider
trading. Few countries have a set time limit on how long you can be held in custody. After a
year or two, chances are you will sign a release instructing your foreign bank to breach bank
secrecy and open the lid.
If you still don't give in, Big Brother has means of messing with your mind. He will put
you in solitary confinement until you suffer a nervous breakdown. In western democracies this
is the most common method of torture. It is ideal, the authorities believe, for breaking the will
of a free spirit. I recently heard of a case in Europe where a harmless family man had spent
more than a year all alone tucked away in solitary confinement while waiting for his trial to
begin. He was accused of a white collar crime, but still locked up in spite of the fact that he
had not been proven guilty of anything. His case had not even officially gone to trial. He did
not have access to television, human contact or letters of any sort. His only permitted
amusement was one book per week, of the Barbara Cartland variety. Like everybody else, his
resistance and will to fight finally broke.
If you are unfortunate enough to come up against Big Brother in a tax case today, you will
undoubtedly find yourself caught between the proverbial rock and a hard place. In the shadow
40
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.
GOVERNMENT PAID INFORMANTS

In the end, if your government fails to extract the information that it is after from you directly,
it can always tum to your friends, neighbors, business associates and family. Recent legislation
in many countries guarantees such informants large cash payouts for any information that will
lead to a conviction or forfeiture. In 1992 in the US alone, 10,966 such individuals participated
in such government tattletale programs and claimed their rewards. Often such bounty hunter
fees come at no small cost to government as rewards of up to US $150,000 or 25 per cent of
the forfeited property are possible. In 1991, 65 informants each raked in over US $100,000
through their dealings with the Drug Enforcement Agency (DEA). Allegedly many of them
worked as small time drug dealers. Owing to the lure of big-time government payouts, they
opted to retire at government expense and turn in their suppliers.
Children are encouraged to spy on their parents. Travel agents, airlines and ticket agents
have all been instructed to be on the lookout for possible criminals. What constitutes a possible
criminal? It could be as simple as someone who pays for his airline tickets in cash or fails to
check any luggage. In the modern world, nowhere public is safe. As you travel, remember that
airports and bus stations and train depots around the world are now filled with spies in the
employ of Big Brother. Some unwillingly play along, but many are on the lookout for
opportunities to increase their cashflow by passing along a tidbit of information.
Business competitors are encouraged to spy on one another. Many are only too eager to
tum in the competition at the first whiff of illegal activity, some prefer the more expedient
method of fabricating stories of wrongdoing. Such unscrupulous businessmen can benefit from
their cooperation with Big Brother in three ways. First, they receive a nice payout from the
government piggy bank. Second, their competition is all but eliminated. Third, they can often
buy the now defunct business of their former competition at a government auction for just a
fraction of what it had once been worth. Such developing patterns should scare you. Big
Brother seems to be a fan of history as the Nazis used the very same tactics to get their hands
on the assets of rich Germans otherwise protected by the law.
The list of potential spies grows constantly longer. Hotels have now been instructed to
monitor their guests. If you receive more than an average number of visitors or make more
than the average number of phone calls, you may well end up the subject of a government
investigation. What happens if the hotel manager fails to cooperate? His business may well be
seized if it comes to pass that illegal activity took place on the premises. Increasingly, such
threats of persecution have been used to transform third parties into willful government
accomplices.
In 1989, the DEA raided hundreds of garden shops in Operation Green Merchant. Their
reason? The shops concerned had sold amongst other things lights that could be used to grow
41
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
42
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.
SEIZURES ARE THE GAME OF THE DAY

Such individuals have every right to be afraid that their governments may one day hold them
responsible for your actions. As governments around the world wake up to the fact that they
have basically run out of money, there really seems to be no end to the tactics that they will
use to bring more money their way. The most recent favorite is to simply reach out and grab,
by making use of government forfeitures and seizures. Such government tyranny is no longer
limited to the domain of totalitarian regimes and military dictatorships. In so-called western
democracies, the state has increasingly granted itself the power simply to take from you
whatever it desires.
In the US, such totalitarian methods have long since come into full swing. In less than ten
years, government seizures have climbed from a starting point of US $30 million in 1985 to
an incredible US $644 million in 1991. This figure again went on to almost double in the
following year as government seizures totalled slightly over US $1 billion for 1992. The trend
is clear. As your government struggles madly to keep its financial head above water, it will
resort to whatever means necessary to keep itself afloat. Governments, like most entities on
this planet, are first and foremost interested in self-preservation.
To achieve this end, outdated concepts such as justice and freedom have long since been
abandoned. Today, in the land of the free and home of the brave, the government can quite
easily and legally sell your home at auction, drain your bank accounts, empty your safety
deposit boxes and make your weekly paycheck payable to none other than itself. Property can
be seized on the grounds of probable cause or on the basis of circumstantial evidence. All of
this can be done before you even appear in court. In many cases, you need never be charged
with any crime. The growing list of violations for which your assets can be seized currently
includes over one hundred crimes, ranging from tax evasion , to money laundering, to drug
offenses, to environmental offenses, to any "predicate offense" of the racketeering statutes.
Your government's objective is pure and simple, money. Consider the following example.
Many years ago, an American friend opened a bank account for his one year old son. The son's
name was different from his own, although the surname was of course the same. As the baby
did not yet have a social security number, the father gave his own number to meet the bank's
requirements. Twenty-eight years later, the son's account had grown to a very substantial sum,
all of which had been earned and saved by the son, not the father.
The father became involved in a civil tax dispute. As a result, the IRS without any notice
or trial seized every penny in the son's account. No court order was delivered to the son. His
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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.
EVEN PETTY OFFENSES LEAD TO SEIZURES

However, it is not just the high profile or the wealthy who suffer at the hands of government
seizure and forfeiture laws. The list of those who have lost their property goes on to include
many ordinary people leading basically ordinary lives. In fact, relatively small seizures are
44
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.
SEIZURES AND POLITICS

The idea that such seizure powers can be used for political ends has not escaped the attention
of the bureaucrats running the show. Frequently, such awesome powers have been used to
silence unfavorable political views. One Missouri politician was quickly brought into line
when he voiced his opinion against abortion. His campaign funds were frozen, forcing him to
withdraw from the race. Similarly, the voice of a publisher in Connecticut was silenced. After
printing stories that criticized the local police force, he was threatened with possible
prosecution under the RICO acts. Such acts of aggression against those who do not see things
in quite the same light as those in power happen all too often. Democracy has become a
commodity available only to those in agreement with the establishment.
Naturally, politicians themselves are often immune from such unjust treatment. Instead, the
agency responsible simply looks the other way. Whereas most would be subject to a
government seizure if their 18 year old son is accused of selling drugs out of their family home,
apparently those in the employ of Big Brother are not. In 1992, the US District Attorney in
Connecticut failed to begin forfeiture proceedings against Leslie Ohta, Assistant US Attorney,
even in the face of such accusations. Ohta, on the other hand, had been far more diligent in
arranging for over a dozen other properties to be seized from their owners. Apparently it did
not matter that, as in the case of this government employee, many of the owners concerned had
no knowledge of the illegal activity happening on their property. The message is clear.
Big Brother makes the rules, expects us to follow them but requires no such diligence from
those in his own camp. Once you understand that this is a real life game of us against them,
you will be better equipped to plan your strategy. Remember above all else that your
government plays dirty. Once your government has set its sights on you, it will begin by
opening a tax case or something of the sort against you. You will then have to prove your
innocence. Your government is under no obligation to prove your guilt.
Having opened the case, it will proceed with some outrageous claim. This is merely the
opening gambit. Usually you are hit with something too wild to believe. Why? Multi-million
46
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
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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THE BANK SECRECY ACT OF 1970

The official name for this act is the Financial Recordkeeping, Currency and Foreign
Transactions Reporting Act. How exactly it became known widely as the Bank Secrecy Act is
a mystery, although the transition would undoubtedly have put a smile on the face of George
Orwell. It is a prime example of what he meant by "newspeak", where a government says one
thing while doing the exact opposite. This act has absolutely nothing to do with bank secrecy.
In fact, it explicitly set out to provide the US government easy access to all American bank
records. Of course, the fact that it has such a pretty name was undoubtedly responsible for the
lack of resistance Big Brother experienced in passing this bit of legislation. Yes, it appears that
more than a few US bureaucrats are well versed in Orwellian theory.
The Bank Secrecy Act formed the first volley in the war on financial privacy. It called for
the monitoring of financial affairs in three specific areas:
1) The dreaded Currency Transaction Report (CTR) or form 4789 was brought into
existence. This form must be filed with the IRS by all banks and financial institutions for
each deposit, withdrawal or exchange of currency or other monetary instruments in
excess of US $10,000.
2) Customs form 4790 was born. This form must be filled out whenever in excess of US
$5000 (later raised to US $10,000) in cash, negotiable securities or certain monetary
instruments are carried across US borders. This applies both when entering and leaving
the country.
3) Any individual American who either owns or controls a financial account outside of the
US must inform the IRS of the existence of this account. If the total amount of funds
owned or controlled offshore exceeds US $10,000, form 90-22.1, which forces one to
provide explicit detail as to the nature and location of such accounts, must also be filed.
These provisions marked the beginning of the end of banking privacy. As far as the
government is concerned, your relationship with your bank is as much its business as yours. The
effect of the law has been absolutely crippling on US banks. They are now required to maintain
detailed records of almost every transaction. This includes copies of all deposit slips as well as
copies of the front and back of all checks drawn for over US $100. Most banks routinely
microfilm all of the checks that you write. In addition, banks are required to keep permanent
records of all loans issued for over US $5000, with the exception of loans on property.
Your bank is also required to keep your social security number on file. If you fail to provide
this number within 45 days of opening an account, your name, address and account number
will be put on a special list that will in turn be given to the Treasury Department. In short, Big
Brother wants to know exactly how much you have in the bank. This act has assured him easy
access to not only this information, but to detailed figures for virtually all of your banking
activities as each of your accounts is now permanently linked to your taxpayer identification
number.
To make matters worse, the legislation goes on to accomplish a whole lot more than just
turning your friendly bank into a government spy. Almost any institution that you do business
with has been enlisted by the government as an unpaid and, in many cases, unwilling
accomplice. Any and all businesses considered to be "financial institutions" must also comply
with the above reporting requirements. What exactly is a financial institution? As would be
52
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.
THE PRIVACY ACT OF 1974

As a direct result of the legislation enacted in 1970, concerned politicians began to put
together legislation that would protect the privacy of each citizen. Although their efforts are to
be commended, not a great deal has come out of this privacy movement in government even
though two separate pieces of legislation were passed before the decade finished. The first of
these is known as the Privacy Act of 1974, which was brought about as an attempt to institute
at least a few controls over the massive amounts of information that Big Brother had begun to
collect on each and everyone of us. The act sought to control the amount of information that
Big Brother could collect and the manner in which this information, once collected, could be
shared between government departments. It also sought to allow citizens the right to examine
what their own files had to say about them.
The bureaucrats naturally did not warm to the idea of restrictions being put on their
activities, never mind the idea of giving you the right to look over their shoulders. As a result,
large loopholes were inserted into the act before it was allowed to pass. The biggest of these
allows information to be freely exchanged between government departments if it is for
"routine use". Today, it is absolutely amazing the scope of activities considered to be routine
54
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.
THE RIGHT TO FINANCIAL PRIVACY ACT OF 1978

Another attempt to protect your privacy made its way into law as the Right to Financial
Privacy Act of 1978, which sought to ensure that records held on your behalf by banks and
other financial institutions should remain confidential. The original idea behind the act was to
require that the government go to court in order to obtain any of your bank, savings and loan
association or credit card records. In addition, the government would have been forced to
notify you of the request and provide you with the opportunity to challenge the release of such
records. Nonetheless, much like its predecessor, the Privacy Act of 1974, this piece of
legislation was quickly shot full of holes, meaning that in the end it has had little effect on the
overall shift in government circles away from the concept of financial privacy.
The fact of the matter is that the powers that be have such a strong vested interest in getting
their hands on yet more of your money, that such provisions simply proved to be
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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.
THE TAX EQUITY AND FINANCIAL RESPONSIBILITY ACT

OF 1982
Far from discouraged, Big Brother pushed forward in his war against financial privacy in the
early eighties. The IRS began to rapidly expand its activities, recruiting five thousand new
agents. It was at this time that the IRS also started to compare an individual's lifestyle with his
reported income in an attempt to see if his standard of living outweighed his means. What is
the magic number that brings all of this information together for the eager bureaucrats? You
guessed it, your social security number. However, even with these expanded activities, it is the
Tax Equity and Financial Responsibility Act (TEFRA) of 1982 that dealt the strongest blow to
financial privacy during this period. This act was an attempt to significantly expand the
provisions of the original Bank Secrecy Act and to position yet more information at the
disposal of the IRS.
Thanks to TEFRA, banks and brokerage firms must now report most types of investor
income to Big Brother. This includes interest, dividends and gross proceeds from the sale,
redemption or exchange of stocks or bonds. The government also wants detailed records of the
56
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.
THE COMPREHENSIVE CRIME BILL OF 1984

Still not happy, the US government sought to further expand the scope of the Bank Secrecy
Act and after several unsuccessful attempts was able to bring into law several amendments to
the original act. These were incorporated into the Comprehensive Crime Bill of 1984. For
starters, Big Brother decided that he really does mean business. The amount that one can be
fined in a civil penalty was raised from US $1000 to US $10,000. Furthermore, the criminal
penalty was changed from its previous misdemeanor status to that of a felony, meaning that
violation of the requirements of the Bank Secrecy Act could now land you in the pokey for a
whopping five years. If a pattern of illegal activity can be established, the fine further escalates
to the tune of US $500,000, meaning that violation of the act could now make you a half
million dollars poorer and claim five years of your life.
Most of the remaining changes had to do with the requirements concerning customs form
4790. As you recall, this form must be filled out when cash or other monetary instruments are
brought into or out of the country. As Big Brother began to realize that all of his precious forms
had primarily succeeded in burying him in an avalanche of paperwork, he raised this reporting
requirement from US $5000 to US $10,000. However, before you begin to think that this might
represent some type of leniency on the part of the US government, consider the other changes.
To begin with, wire transfers were brought into the scope of the act.
In addition, the legislation goes on much further to yet again infringe upon your basic
human rights. Customs officials can now search individuals both entering and leaving the
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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.
THE DEFICIT REDUCTION'ACT OF 1984

Yet again displaying its fondness for senseless bureaucracy, the government decided to invent
yet another form, this one encoded form 8300. Whereas before only financial institutions were
affected by reporting requirements, in 1984 through the graces of the Deficit Reduction Act,
all businesses were brought into the fold of the growing number of Big Brother accomplices.
Form 8300 is similar to the Currency Transaction Report forced on banks, only this later form
must be filled out by any business that receives in excess of US $10,000 in cash or monetary
instruments. On this form, your name, social security number, passport number as well as the
details of the services received for the payment are all made known to the government.
At first compliance with this regulation was understandably lax, but since 1989 the IRS has
systematically forced compliance from its unwilling adversaries. The IRS first singled out
attorneys, issuing more than 1000 warnings nationwide. The threat of prison terms and large
fines has apparently brought them into willful compliance. The fact that a report filed by an
attorney is more or less a mark against his client apparently does not matter to the federal
government. It has long since abandoned ideas such as the right to a fair trial. The fact that
filing such a form can also be construed as a violation of the attorney-client privilege similarly
is of little concern to Big Brother.
Reporting requirements for form 8300 even take the whole circus a few steps further.
Merchants are asked to report "suspicious transactions" as well as "related transactions" that
exceed the US $10,000 reporting requirement in any twelve month period. In other words,
merchants are asked to form opinions about their customers based on little to no information
and are then required to report such hearsay to the government. Businesses which sell what are
known as "big ticket items", such as planes, cars and boats, have been singled out for
persecution. Precious metal dealers, jewelry dealers and the like will also undoubtedly be
subjected to extra scrutiny. Like those in the banking industries, merchants who fail to comply
risk the forfeiture of their own businesses and other assets, as well as possible prison sentences.
Not surprisingly, the IRS has set up a number of sting operations to force compliance with
these unpopular regulations. The basic game is that agents from the IRS Criminal Investigation
Division visit a merchant undercover and try to convince him to accept in excess of US
$10,000 in cash without reporting it. If he does, it's a one way trip to the pokey with lots of
publicity to scare the rest of the populace into submission. In 1991, the IRS visited more than
5000 retail stores to conduct such "compliance operations". The verdict, compliance is still
lacking even though 66,000 forms were filed in 1991, more than twice the amount that were
filed in the previous year.
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THE MONEY LAUNDERING CONTROL ACT OF 1986

In 1985 and 1986, it came to light that in spite of the government's many and varied efforts, a
large number of banks and financial institutions were simply ignoring the rather restrictive
requirements of the Bank Secrecy Act and its accompanying legislation. Many individuals felt
that the government really had no right to such information and proceeded according to their
own beliefs rather than according to those of the self-serving bureaucratic system.
Understandably, this practice caused a great deal of embarrassment for the federal government
and inevitably led to a crackdown.
Banks were forced into compliance through the use of several highly publicized and rather
hefty fines. The Bank of Boston was the first to fall, fined US $500,000. This was quickly
followed by fines against Seafirst Bank for US $697,000, the Bank of New England for US
$1.2 million, Crocker National Bank for US $2.25 million and the Bank of America for a
staggering US $4.75 million. Banks across the country took notice; no longer was this myriad
of regulations a matter to be taken lightly. The government's precious forms started to roll in
and undoubtedly Big Brother soon found himself yet again buried in an avalanche of
paperwork.
Next came another decisive blow against financial privacy with the Money Laundering
Control Act of 1986. This single act is responsible for the loss of more American liberties than
any other piece of legislation. Again, to keep the public from realizing what was really going
on behind the scenes, the actual provisions of the act were encoded in pretty language and
political rhetoric. The fact of the matter is that the act set about dismantling the basic rights of
Americans in three separate ways:
1) Money laundering was made into a federal crime for the first time anywhere in the world.
2) It became a federal crime to engage in any transaction involving the proceeds of any
"specified unlawful activity".
3) Structuring transactions so as to avoid any federal reporting requirements was made
illegal.
The fines and penalties that violations of this act bring are some of the harshest possible in
all US legislation. Through this act, money laundering, an activity that was perfectly legal ten
years ago, has been put on a par with murder, espionage and racketeering. The fines and jail
terms delivered are often more severe than those received by convicted rapists. Fines can be
levied for up to US $500,000 or twice the value of the transactions involved. Prison terms of
up to twenty years are possible and frequently delivered.
Furthermore, the law provides Big Brother with almost unbelievable powers to seize any
property involved in or even related to an illegal transaction. If convicted of money laundering
conspiracy, fines can reach up to US $25 million and can include forfeiture of all assets, not
just those criminally derived. Often a money laundering conviction is linked with a charge
under the Racketeer Influenced and Corrupt Organizations (RICO) Act which permits the
federal government to seize all monies "laundered" as well as all assets derived through these
funds. In addition, a fine of up to three times the amount laundered is permissible. For
example, in 1988 when Lee Chwan-hong, an investor who went by the name of Fred Lee, was
convicted of insider trading, he was fined a total of US $77.6 million, four times the US $19.4
million he supposedly made from his specified illegal activity.
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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.
WHAT IS MONEY LAUNDERING?

The term "money laundering" is certainly not lacking in connotations. It brings to mind images
of suitcases stuffed with cash carried by men wearing pin-striped suits who speak in raspy
whispers. In the eyes of the public, money laundering is one and the same with drug smuggling
and violent crime. The government fosters this image, brandishing about the few individuals
actually involved in such activities that it manages to catch. Naturally, Big Brother never fails
to mention to all within shouting distance that such unsavory characters have been successfully
convicted of the most heinous crime of all, money laundering. In doing so, he continues to
foster an image of the money launderer that even Hollywood script writers fail to accomplish.
The truth is far less exciting, as realistically speaking, money laundering is one of the most
boring crimes on record.
The actual legal definition of money laundering is found in Section 1956 of the Money
Laundering Control Act. It states that it is illegal to make any transaction with the proceeds of
specified unlawful activity:
A. with the intent to promote that activity; or
B. knowing that the transaction is designed in whole or in part -
(i) to conceal or disguise the nature, the location, the source, the ownership, or the control
of the proceeds of specified unlawful activity; or
(ii) to avoid a transaction reporting requirement under state or federal law.
What falls within the bounds of specified illegal activity? Of course, the old standby of tax
evasion appears at the top of the list. Simply depositing or using money on which taxes have
not been paid is now legally defined as money laundering. In other words, opening a foreign
bank account and establishing a small nest-egg offshore without notifying Big Brother of your
activities can now be classified as money laundering. In spite of popular belief, you need not
be in the employ of some drug cartel in South America to be convicted. For that matter, you
need not even be able to tell the difference between a marijuana leaf and oregano to be labeled
a money launderer by government.
As would be expected, prosecutions in this area are soaring and often lead to confiscations
of all funds concerned. Prison terms of up to twenty years are also frequently issued. Not to
mention the fact that a conviction of money laundering all but ruins the reputation of the
individual involved. Such tactics are clearly primarily intended to succeed in routing yet more
money in the direction of Big Brother. They are akin to a 100 per cent tax on those individuals
smart enough to realize that governments are not to be trusted. The moral of the story? Do not
be surprised if what originally appeared to be a simple a tax investigation by the IRS turns into
a money laundering conviction.
More alarming, the government does not stop there and goes on to define a host of other
specified unlawful activities, at last count more than 150 such activities appear on the growing
list. Have you ever heard of the Emergency Economic Powers Act of 1977 or the Trading With
60
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.
YOU'VE BEEN DRAFTED

Furthermore, you need not even directly participate in any of these activities to take the fall.
Merely doing business with or accepting cash or other monetary instruments from the public
could also set you up for a conviction of money laundering. According to Section 1957 of the
Money Laundering Control Act, it is illegal for a merchant to accept funds that he suspects
have been derived from any of the growing list of specified unlawful activities. If you would
like an indication of the level of commitment expected from you in Big Brother's war, consider
the comments of Florida Congressman Bill McCollum:
"The corner grocer in a community is aware of the reputation of the local drug trafficker. That
person comes to the store and buys five pounds of hamburger. The grocer has to know that he
is coming in to buy groceries with what is indeed the money derived from a particular
designated crime. I don't have any problem whatsoever holding the grocer accountable for
money laundering."
Apparently Congressman McCollum has never heard of the idea of the right to a fair trial or
for that matter of the concept of innocent until proven guilty. Instead, he wants the public to
act as prosecutor, judge and jury. Businessmen and bankers have been instructed to
discriminate against anyone who even appears to be guilty of a crime. If Congressman
McCollum has his way, anyone unfortunate enough to be labeled as a criminal, whether
correctly or not, will basically be sentenced to death without a trial. If no one is willing to do
business with this individual or even sell food to him, he will be left with no alternative but to
become destitute and homeless. This is not such an unlikely scenario as anyone not willing to
participate in Big Brother's campaign risks forfeiture of his assets as well as up to ten years in
prison.
Even more damaging is that the merchant need not even be aware that the activities of
which the person is suspected of committing are criminal. According to Section 1957, the
government need not prove that "the defendant knew that the offense from which the
criminally derived property was derived was a specified unlawful activity". As already
mentioned, this growing list contains many activities that most individuals would never even
imagine could be linked with a money laundering conviction. Should every comer grocer in
the US consult a competent attorney on a weekly basis so that he can find out which customers
he is allowed to sell hamburger to and which ones he must tum away? Apparently, if he wishes
to stay entirely inside the law, this is his only alternative.
Even more damaging, criminal lawyers almost automatically risk entering into a criminal
conspiracy just by agreeing to represent a client. Under common law, one must both have
knowledge of an illegal activity and the intent to encourage it to be convicted of criminal
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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
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.
THE ANTI-DRUG ABUSE ACT OF 1988

A few years after the introduction of the Money Laundering Control Act, the politicians again
set out to reduce the individual liberties of their public further. As it was an election year, a
premium was again put on pretty language and political rhetoric. The ensuing legislation made
use of a tool that helped close off many individual liberties in the US, namely the bogus war
on drugs. It was out of this political hoopla that the Anti-Drug Abuse Act of 1988 was born.
Again, the legislation enacted had almost nothing to do with the name given to it.
Yet again displaying its passion for paperwork, the government expanded the various
reporting requirements that it had instituted. To begin with, the crime of structuring, apparently
as lucrative as ever, was expanded so that it not only includes banks and financial institutions
but also encompasses businesses and the precious form 8300. Furthermore, the government
was given the authority to lower the cash transaction reporting requirements of the Bank
Secrecy Act for certain "target" banking areas. Customers of banks in areas of Florida, Texas
and southern California are now routinely asked to file a CTR "voluntarily" for cash
transactions of as little as US $100. Finally, banks are also now required to keep permanent
records of the cash sale of all monetary instruments for more than US $3000. These include
bank checks, cashier's checks, traveler's checks and money orders.
However, the act went much further than simply altering reporting requirements. Following
a previously established pattern, the government continued to go after those not directly linked
with criminal activity and made it perfectly legal for Big Brother to seize your car, house or
any other asset if he believes that all or part of it came from a relative or associate suspected
of a drug-related crime. Once Big Brother has managed to steal your property, there are very
few circumstances under which it will be returned to you. Your first alternative is to wait and
hope that your friend or associate is found innocent. If not, then you will have to prove that
you had no reasonable way of knowing that the money involved was the proceeds of illegal
activity or that all of the money involved was "clean" money. Proving any of the above is far
from simple, meaning that once Big Brother has his greedy claw around your property, you
might as well kiss it goodbye.
Finally, the Anti-Drug Act delivered a death blow to the Right to Financial Privacy Act.
Under this new law, banks are allowed to disclose any information on any customer's account
if they believe that the customer is violating any of a number of laws, including of course that
old favorite, tax evasion. Provisions in the new act specifically protect banks from prosecution
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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.
EXPANDING THE PERSPECTIVE

Apparently happy with the progress in its war on financial privacy, the US federal government
began to tum its attention to other areas. First, it focused its attention on its own dependents,
the fifty states of the union. Additional legislation in the Anti-Drug Abuse Act of 1988
attempted to pull the states in line by encouraging them to adopt asset forfeiture and money
laundering laws similar to those present at the national level. The biggest stumbling block in
this area for Big Brother turned out to be that many states have laws which require that a
64
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.
65
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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Banking in Silence
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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FOREIGN POWERS BIGHT BACK

At least in the beginning of the international war on financial privacy, foreign powers
demonstrated that they were not willing to simply lay back and allow the US to kick them
around. A tactic frequently employed by US bureaucrats has been to pass laws in the US and
then claim that they apply extra-territorially, meaning anywhere on the planet regardless of
jurisdiction. Understandably, many foreign powers have taken offense at such practices,
particularly as such laws tend to work to the advantage of American business interests while
disadvantaging their foreign competitors. To make matters worse, the US government even has
the gall to express surprise when a foreign country sees such laws as an infringement on their
sovereignty.
In a direct response to recent US legislation, a few foreign jurisdictions have stood up to the
US and enacted their own laws to counter some of the more heinous restrictions designed for
everyone by US bureaucrats. In 1980, France introduced legislation which makes it unlawful
for a French national to disclose any information which might impair France's sovereignty,
security or basic economic interests. The legislation also makes it illegal for anyone, whether
a French national or not, to seek out such information. Criminal sanctions are possible if the
law is violated. This legislation was basically designed to immunize French corporations from
the need to comply with discovery obligations in American courts. It is a direct affront to the
increasing pool of US "extra-territorial" legislation and even mentions what it calls the
inherent "abuse" in American pre-trial discovery proceedings.
The United Kingdom has also reacted by introducing the Protection of Trading Interests
Act. Under this law, the British Secretary of State is given the power to prohibit any person or
corporation in the UK from supplying either commercial information or commercial
documents for use in a foreign country. In other words, the British Secretary of the State can
grant a British national immunity from having to participate in an American pre-trial discovery
proceeding. The law is very broad in its scope as the Secretary of the State can grant such
immunity merely on the basis that information is sought for "pretrial disclosure".
In spite of such setbacks, the US government continued with its campaign to bring the
international banking community into its fold. The reality is that in this instance both France
and the UK were far more interested in protecting their international business interests than the
financial privacy of foreign investors. Proof of this point can be found in the fact that England
readily agreed to exchange of information treaties just a few years after enacting its own
privacy legislation. Hence, merely by changing its tactics slightly the US was able to
accomplish its objective with little interference or resistance. As a result, any protective effect
that such local legislation may have offered foreign investors, particularly American investors,
has been all but nullified.
INTERNATIONAL TAX TREATIES

Perhaps the most civilized approach taken by the US in its international war on privacy makes
use of tax treaties. Currently the US maintains such treaties with over fifty countries across the
world. Of course, governments claim that the intent of such treaties is to stop individuals from
being taxed twice by two different nations. What they invariably fail to mention is the fact that
such treaties also often help facilitate the exchange of information between the countries
involved. This is tum can help them ferret out tax evaders who have stashed assets offshore.
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Banking in Silence
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.
THE MUTUAL LEGAL ASSISTANCE TREATY (MLAT)

Not happy with the limited scope of many tax treaties, the US created the Mutual Legal
Assistance Treaty (MLAT) with the hope that such treaties would ease its access to foreign
records. Again, the political rhetoric behind the MLAT focused on serious crimes, such as
narcotics trafficking, terrorism and large-scale fraud. The US government claimed that as
many such crimes had become internationalized, significant evidence in such cases was often
to be found outside of its jurisdiction. Hence, it argued there was a need for treaties between
various countries which would obligate "each country to provide evidence and other forms of
assistance" in criminal investigations.
Of course, the real reason for the introduction of MLATs undoubtedly had a lot more to do
with public revenue than with Big Brother's concerns about international crime. By
70
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.
WHAT BIG BROTHER WANTS BIG BROTHER GETS

One of the first such expanded treaties went into effect with Venezuela in 1990. Venezuela is
no longer merely required to provide information in cases involving narcotics, but must also
release information for those involving any suspected "violation of currency transaction
reporting and recordkeeping laws and administrative regulations". As detailed in the previous
chapter, it is relatively easy to violate US reporting requirements and therefore fall within the
bounds of this new and improved version of the MLAT.
In order to enforce these rules, Venezuela was forced to enact a great deal of legislation that
strongly resembles that which had been put in place in the US. Why was Venezuela so willing
to tum its own banking industry upside down for the sake of a foreign power? Undoubtedly
the US government made it worth its while. In 1994, the United Kingdom also decided that
cooperation was easier than resistance. Their treaty calls for the release of information,
extradition of suspects and freezing of assets in connection with any US criminal offense.
However, not all governments have been willing to rollover and play along. Some still
realize that their individual sovereignty is a commodity that should not be compromised. In
1991, Panama refused to sign a treaty that would have allowed US officials routine access to
private banking records. It managed to hold its ground in spite of intense pressure brought
forward by the US, including the possibility of a second invasion. The final treaty that went
into effect only allows for the release of information in cases concerning murder, kidnapping
and money laundering strictly related to drug trafficking.
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Banking in Silence
THE CARIBBEAN BASIN INITIATIVE

Yet another effort of the US government to open up foreign bank secrecy was the Caribbean
Basin Initiative, which was the brainchild of Ronald Reagan in 1982. The initiative is rather
simple in design and takes advantage of the fact that many Caribbean nations are all but
dependent on the almighty American tourist dollar.
The US government was willing to cop a deal. In exchange for increased access to banking
records, the IRS would allow businessmen to continue claiming as a deduction all money spent
in the participating countries even after all official business had come to an end. The basic idea
was that the initiative would encourage businessmen to spend increased amounts of money in
the participating jurisdictions as all expenses would be wrapped with the candy coating of a
tax write-off. In exchange, Uncle Sam would crack open secrecy laws and be allowed to audit
the bank accounts of all Americans investing in the jurisdiction.
Not surprisingly, the initiative did not prove to be as popular as the US government
undoubtedly hoped it would be. Barbados, Costa Rica and the Dominican Republic did sign,
but most other countries held back with the exception of the Cayman Islands which flat out
rejected the offer. Nonetheless, this strategy used on the part of the US government underlines
an important point concerning Caribbean tax havens. Most such countries became tax havens
in the first place due to economic hardship. Unemployment rates are extremely high in this part
of the world. Most national economies operate only barely at a level of self-sustenance.
In short, not only do these island nations of the Caribbean depend on US tourism, in many
cases they depend on direct US contributions. Anguilla, Costa Rica, Montserrat, Panama and
Turks and Caicos all receive aid as well as investment concessions from Uncle Sam. They are
completely dependent on US cooperation for continued economic growth. The only reason that
the Caribbean Basin Initiative did not meet with overwhelming success is that Uncle Sam
failed to make the pie sweet enough or, conversely, his threats severe enough. Undoubtedly,
offers of increased funding would have worked wonders. Threats to discontinue all funding to
those nations not willing to cooperate would also have produced miraculous results.
AMERICAN BULLY TECHNIQUES

In recent years, American tactics have not always been quite so civilized. Increasingly, the US
government has merely decided that it has the inalienable right to look over whatever records
it desires, no matter where they may be held. The US has proven to be absolutely relentless in
its struggle to gain access to the bank records of smaller tax havens and has not hesitated to
make use of Draconian pressure tactics. (Undoubtedly it would hesitate before employing such
methods with more established powers.) Again and again laws are passed that fail to realize
that the US possesses absolutely no jurisdiction over foreign lands. Furthermore, the US courts
have repeatedly upheld such legislation, as if there was ever even a remote possibility that they
would do anything but side with their parent government and breadwinner.
One of the more recent tactics employed by Uncle Sam makes use of American subpoena
and contempt laws. The process is relatively simple. Uncle Sam waits for someone related to
the institution holding the records that it wants to enter the US. Then, once the individual is
within his grasp, Uncle Sam rather unceremoniously throws the poor devil in jail until he is
willing to cooperate.
72
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.
CONTINUED US BULLY TACTICS

Apparently not understanding that you get more with honey than with vinegar, the US
continued with such bully tactics. In the case of US vs Bank of Nova Scotia, the US again
displayed its complete disregard for the sovereignty of other countries. In this landmark case,
the US subpoenaed the US branch of a Canadian-owned bank, demanding that it release
records held in the Bahamas. The bank refused to comply, citing the Bahamian bank secrecy
laws. Did this stop the Americans? Of course not. In the end, the court sided with, you guessed
it, the US government and imposed stiff daily fines against the bank to the tune of US $1.8
million. The bank was left with no choice but to give in and turn over the records.
In short, the US government has made it known that it will obtain whatever records it
desires by whatever means necessary. Crime and Secrecy, the government report on
international banking mentioned earlier, comments on this case. It says in part:
The records sought were probably discoverable via letters rogatory but the Justice Department
bypassed the Bahamian court system and thus indicated that Bahamian assistance was not
necessary or would not achieve a positive result. Hence, the message: US pressure could
continually force international banks to comply with subpoenas.
The implications of this case are incredibly far-reaching. When the IRS later asked the
Bahamian branch of Bank Leu, a Swiss bank, to release records that it wanted on Dennis
Levine, who was suspected of insider trading, the bank complied. Yes, it ummed and awed for
a little while, citing Swiss bank secrecy laws, but once it discovered that the US government
had gone to the trouble of freezing all of the assets held by one of its US branches, the bank
quickly complied.
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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.
THEY MAKE THE RULES

Furthermore, as has already been mentioned, the US government feels absolutely no need to
play by its own rules once they have been established. For developed countries, where pressure
tactics are more likely to meet with international outcry than compliance, the US makes use of
more subversive tactics. Almost any existing treaty can be used to obtain just about any
information that the US may be after. In the past, the US has been known to use false pretenses
to gain the information that it seeks. For example, in the case of US vs Sturman, the US
Treasury was able to obtain the Swiss banking records that it was after by claiming that
Sturman was under investigation for racketeering, an offense that falls within the limits of
treaties established with Switzerland. In the end, Sturman was convicted of tax evasion based
on the records that Switzerland released, records that would not have been turned over had the
US been honest about its intentions from the start.
The fact of the matter is that the US routinely lies to many countries. If Switzerland refuses
to lift its bank secrecy laws in a tax case, the US will suddenly and miraculously discover "new
evidence". Officers then return to the Swiss with this new evidence and magically obtain the
records they are after. In short, do not be surprised if a tax evasion case against you suddenly
takes a turn for the nasty. Do not be surprised if the course of events you are accused of a host
of imaginary crimes ranging from child molestation to murder to stock swindling. What they
accuse you of will not matter. All that is important is that in the end their accusations bring the
bureaucrats what they want.
The IRS openly admits that if they did not use "subversive" tactics they would not be able
to achieve the number of convictions that they do. Lying is an accepted practice within the IRS
and may even land the agent responsible a promotion. Furthermore, the Supreme Court
routinely sanctions such practices, meaning that one can only expect continued and increased
instances of covert action and misconduct against citizens. In short, the government is saying
that while you have to play by all of the rules, it does not.
THE WRITING ON THE WALL

The US is far from finished in its international war on financial privacy. In fact, some of the
proposals on the books are more alarming than everything else that Big Brother has put into
practice to date. Many of these ideas crop up again and again. Undoubtedly one day they will
be packaged in such a way that the public will be sold the idea. The proposal will then sail its
way into law. US bureaucrats opposed to the idea of financial privacy are nothing if not
persistent. Some of the proposals that have already been mentioned in Washington include:
74
- 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.
PREPARE FOR THE WORST

The international message being broadcast by the US is clear. No place is safe. Foreign
countries that offer bank secrecy have increasingly come under attack. Banks in the Bahamas,
the Cayman Islands, Luxembourg and Switzerland as well as their counterparts around the
world have been the victims of intense pressure. Where legitimate means fail, the US will not
hesitate to resort to whatever is necessary to achieve the desired result. No country is immune
from pressure. No country can offer one hundred per cent airtight secrecy.
Banks around the world are becoming increasingly aware that if they fight, they will
eventually lose. More and more they cave in to the pressure before a confrontation even
begins. In the face of US powerflexing, most banks choose to give in and betray their clients.
Some have gone even further and accept only small clients. Many no longer accept large cash
deposits from anyone.
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Banking in Silence
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.
BRITAIN JOINS THE WAR

In 1986, the United Kingdom began its own version of the war on financial privacy by
enacting what was to be the first of many pieces of legislation calling for closer monitoring of
financial transactions. The Drug Trafficking Offences Act gave the police the power to
investigate what it suspects to be money derived through drug trafficking. The police were also
given the right to freeze such funds and to confiscate them if their owner is eventually found
guilty. The law additionally made it illegal to either retain or make use of the proceeds of a
drug deal. In other words, it is now illegal in the UK to possess the proceeds of drug
trafficking, as well at to invest such money or assist someone else in doing so.
The following year the UK escalated its stance by instituting the Prevention of Terrorism
Act which extended the same status to money derived through terrorist activity. In 1990, the
Criminal Justice Act made it illegal to "conceal, disguise, convert, transfer or remove property
from the jurisdiction of the courts" if one knows or even just suspects that the money involved
is the proceeds of drug trafficking. Similarly, assisting anyone in such a process is also illegal.
In 1993, the courts were granted the power to prosecute an individual for money laundering in
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Banking in Silence
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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THE EROSION OF BANK SECRECY IN SWITZERLAND

Similarly, as discussed in the last chapter, intense pressure brought forward by Uncle Sam has
succeeded in prying open what had previously been rock solid bank secrecy in Switzerland.
Unfortunately, these new fissures in a tradition that dates back to the French Revolution extend
much deeper than simply a few agreements to release information to the US. Owing to
international pressure, Switzerland has also taken the almost unbelievable step of instituting its
own laws that crack holes in its bank secrecy. In the beginning much of these restrictions were
enacted by bankers themselves. They preferred to clean up their own shop than be forced to do
so by an overpowering government.
Such self-regulation began as far back as 1977, the same year that the Swiss government
first entered into a treaty with the US, when it came to light that in excess of US $500 million
in investments had disappeared with its Italian investors from the Chiasso branch of the
Credit Suisse bank. It was decided that the manager in charge of said bank had been
"somewhat less than diligent" in his responsibility to keep dirty money out of the country.
Seeking to save its international reputation and stave off further government interference,
Swiss bankers gathered together and formed their own code of conduct. The basic idea behind
this code was that it is the responsibility of the bank to know its client and ensure that his
money is from a reputable source.
Unfortunately, such actions were perceived by the government to be too little too late.
Legislation was soon brought into force that all but negated the effect of Swiss bank secrecy
law. One of the first results of this new legislation was the death of the infamous Swiss compte
anonyme. Previously, it had been possible to open a nominee account in which the identity of
the beneficial owner of the account need not be revealed to the bank. This was accomplished
by opening an account through an agent or representative. Although this representative was
required to inform the bank that he knew the identity of the account holder, he was not required
to disclose this identity to the bank. Such special accounts and their two hundred year old
tradition were brought to an end by the new legislation.
Today, the agent must disclose the identity of the beneficial owner of the account to the
bank. The actual name need not appear on the account and need not be common knowledge to
all bank employees, but someone somewhere in the bank must know what name corresponds
with each account number. Furthermore, an agent opening an account on behalf of someone
else must sign a sworn statement that his client is not abusing Swiss banking laws and that the
money involved is not the proceeds of criminal activity. The agent must also disclose whether
or not he is acting as an asset manager for his client.
SWITZERLAND JOINS THE WAR

If the law stopped there, perhaps Switzerland would still today enjoy the reputation of a secret
and reliable banking haven. However, due largely to intense pressure from the US, Swiss bank
secrecy was for all intents and purposes eliminated in future legislation. According to new
legislation, the bank must know the identity of any new customer who desires to open an
account, enter into a fiduciary transaction, rent a safe deposit box or make any type of cash
transaction in excess of SPr 10,000. Furthermore, banks have been instructed to look out for
"suspicious" activity.
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Banking in Silence
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.
THE EUROPEAN PERSPECTIVE

Although changes in banking regulations outside of the US are most notable in the United
Kingdom and Switzerland, many other countries in Europe have taken at least a few similar
steps to curtail banking privacy. Each year it seems a few more countries join the growing
number in the war on financial privacy.
With reunification, large amounts of money started to flood into the former East Germany
and then work its way into the western banking circuit. Owing to international pressure,
80
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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Banking in Silence
UK authorities. Other tax havens, such as the Bahamas and Montserrat, have also instituted
reporting requirements of one form or another.
THE EUROPEAN UNION JOINS THE WAR

The European Union (EU) as a whole also periodically introduces legislation that restricts
banking activity. Although the bureaucrats in Brussels may not be able to agree on much, they
seem to have little problem arriving at mutual terms when dealing with the issue of money
laundering. Again, reporting requirements proved to be a favorite. As the law now stands,
anyone who deposits in excess of Ecu 15,000 in cash or monetary instruments anywhere
within the EU must identify the source of the funds. Banks and financial institutions, including
casinos and bureaux de change, are also required to report any "suspicious" transactions to
their own national authorities as well as any transactions that they believe to be the result of
certain illegal activity. Such illegal activity currently includes, but is not limited to, drug
trafficking, blackmail, terrorism arms dealing and fraud.
Following an alarming US precedent, European authorities decided that they need not
actually prove that an individual is guilty of anything before seizing his assets. All that the
bureaucrats need prove is a "reasonable belief' that the money involved is the proceeds of
illegal activity. Not long after this ED legislation was brought into force, the obvious injustice
of such a law was challenged in the Luxembourg courts. One courageous judge ordered that
US $36 million that had been seized be returned to its rightful owner. She insisted that an
individual must be first convicted of a crime before his assets can be seized.
However, in spite of such sane efforts made by a few in government, the steamroller against
financial privacy had already gained far too much momentum to be stopped. Apparently still
unaware that Luxembourg does not fall within its jurisdiction, the US Drug Enforcement
Agency announced that it was enraged by this decision and vowed to block the release of the
money. Afraid of further reprisal, Luxembourg's Justice Minister decided to play along with
Big Brother and close what was later referred to as this "loophole" in the law. Falling into line
with practices becoming all too common, your assets can now be seized in Luxembourg, and
the rest of Europe for that matter, even if you have not been convicted of or even indicted for
any crime.
About the only saving grace of this new EU legislation is that like much other legislation
in Europe designed to restrict banking practices, it is almost universally disregarded. Five
years after the legislation was first introduced, only Germany, France, Italy and the United
Kingdom have fully met its criteria. At the other end of the scale, Ireland is the furthest away
from implementation, although there is talk of a draft bill it is nowhere near enactment.
Similarly, Portugal, Greece and the Netherlands have done little to institute the new laws. Yet
even if every little brother government in Europe were to eventually get its act together,
European depositors would still have one fallback position. Unlike in the US, requirements for
record keeping and client identification do not apply to attorneys. As most politicians start their
careers as lawyers, they undoubtedly incorporated this loophole into the legislation to protect
their own livelihood. In other words, although the right to representation by an attorney may
be fading in America, it is still alive and well across the ocean.
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THE GLOBAL PERSPECTIVE

Outside of Europe, many other governments have also been quick to implement legislation.
The Japanese government followed the example originally set by the UK, requiring that banks
report all "suspicious" cash transactions. However, they did at least have the decency to set a
few rules in stone, requiring that all Japanese banks report domestic cash deposits in excess of
30 million yen and foreign cash deposits in excess of 5 million yen. In addition, to put a bit of
punch behind its laws, the Japanese government decided that if a money laundering case is
related to drug trafficking, it has the right to force banks and financial institutions to provide
testimony in court.
Not be left out, Canadian banks decided to jump on the bandwagon and voluntarily report
all "suspicious" transactions. No government regulations have come into effect as of yet.
Australia followed the US example, requiring that any cash transaction over A $10,000 or
telegraphic transfer over A $50,000 be reported to the government. However, rather than
bothering with cumbersome forms and the like, the Australian government created a Cash
Transactions Reports Agency, known as AUSTRAC, which is linked by computer to all banks
and financial institutions in the country. (Such high-tech wizardry must most certainly be the
envy of US bureaucrats.) Bankers are also asked to play spy and look out for "suspicious"
transactions. What would be reportable? According to a pamphlet passed out to bank staff in
an attempt to help them in their role as Big Brother accomplices, almost anything, including
the following conversation:
"So, how's your tax problem, Joe?"
"No worries now, Frank, I've found a top accountant who can sort it all out."
The moral of the story is obvious. Pay very careful attention to what you say casually to a
friend while waiting in line at the bank, or anywhere for that matter. Big Brother may not be
watching yet, but his little helpers are listening.
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.
THE UNITED NATIONS JOINS THE WAR

Indeed, it seems that the future holds only the promise of increased legislation in addition to
increased international cooperation. Not only has the war against financial privacy expanded
to different countries around the planet, bureaucrats posted in international agencies have also
started to wage their own battles.
The first step on this path to truly international legislation against money laundering began
in 1988 in Basle, Switzerland. Ten of the world's leading industrial nations, including the
United States, the United Kingdom, France, Germany and Japan, met to discuss the problem of
money laundering and in the end published a set of directives. Of course, the focus yet again
was on the responsibility of banks and their obligations to know their customers, cooperate with
investigations and comply with international law. In other words, governments around the world
agree that the primary role and function of all banks is that of the unwilling agent of Big Brother.
Later that same year, the United Nations issued an extensive treaty supposedly designed to
combat international instances of drug trafficking. Known as the Convention Against Illicit
Traffic in Narcotic Drugs and Psychotropic Substances, the treaty contains 34 articles, each
designed to whittle away yet more of your basic human rights. The treaty has proven to be
immensely popular with members of the UN and has been signed by more than 70 nations and
ratified by more than 20 countries. As with all UN legislation, this treaty must take precedence
over any existing national law in each of the countries involved.
Not surprisingly, the treaty makes use of broad and sweeping generalizations. Money
laundering is defined as "the concealment or disguise of the true nature, source, disposition,
movement or ownership of proceeds and includes the movement or conversion of proceeds by
electronic transmission". In other words, the money involved need not be the proceeds of drug
trafficking or any other illegal activity. According to this treaty adopted by the UN, you are
guilty of money laundering even for hiding your own money on which all taxes have been
dutifully paid.
Still not happy, the United Nations went on to introduce the Draft Convention on Mutual
Administrative Assistance in Tax Matters. Although not yet fully in force, this treaty
encompasses some truly alarming provisions. Of course, provisions for international
cooperation come in at the top of the list. Once this treaty goes into effect, taxpayer
information will be freely exchanged between countries, all without the requirement that
governments notify the individual concerned. Similarly, information on corporations and
84
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.
WELCOME TO THE WORLD OF INTERFIPOL

Of course, none of these Draconian measures are possible unless some sort of international
police agency is constructed to enforce the treaty. Hence, the birth of the International
Financial Police, more commonly referred to as Interfipol. This organization was brought
about due to a provision in the Draft Convention on Mutual Administrative Assistance in Tax
Matters which calls for the establishment of an "international currency control agency".
Interfipol is your worst nightmare, an international police force created not to catch criminals
and swindlers, but to monitor your financial affairs and facilitate the exchange of information
between countries.
Interfipol is Big Brother brought to an international scale, an organization designed and
empowered by a world government created in the image of Uncle Sam. This organization
operates with the explicit consent of all of the major governments of the world, but yet is veiled
in secrecy. Its actions are apparently above questioning, at least according to the Wall Street
Journal. In a recent article titled "An OECD Secret Session" the paper wrote:
"We asked to cover the [OECD] meeting of the working party on tax avoidance. The answer
was no. It's for member states' delegates only; it's not open to the press. The OECD claims the
tax convention is not the subject of the meeting but won't state its exact purpose. It won't even
promise to release a communique at the session's conclusion. This is an agency avoiding
public scrutiny because the public wouldn't stand for what it's up to."
In case your wondering why you have never heard of Interfipol or any of the other various
international restrictions that have come into practice as of late, you now have the answer. Your
government is much happier to keep you ignorant and in the dark.
THE FINANCIAL ACTION TASK FORCE

Still not happy that enough was being done to combat the international problem of money
laundering, the G-7, composing the world's seven top industrial nations, met again to discuss
the situation in 1989. To add more fuel to the anti-money laundering fire, this group decided
that drug trafficking had reached "devastating proportions" and that money laundering is a
"runaway global problem". Their solution? You guessed it, yet another international
regulatory agency. This one was baptized the Financial Action Task Force (FATF).
Membership was quickly opened up to more than just the seven founding nations and now
includes all OECD countries as well as Singapore, Hong Kong, the Gulf Cooperation Council
and the European Union.
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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.
THESE LAWS NEED NOT AFFECT YOU

Bureaucratic bungling aside, the fact of the matter is that countries around the world have
joined in the game of imitating the US and declaring money launderers to be the biggest bad
guys of them all. They are equally eager to cooperate with one another in setting traps and
waiting for the small guy to take the fall, splitting the booty amongst them. As countries
continue to feel growing economic woes, this trend seems only likely to continue. In the end
one can only expect more and more countries to join in the fun. Furthermore, as international
pressure increases, even those countries that remain true to ideas of personal privacy and the
right to a fair trial will soon have little alternative but to fall into line.
International investors around the world should be aware that wherever you bank, cash is
becoming an increasingly rare commodity. The mere fact that you like to use cash all but marks
you as a criminal in the modern world. As the war on cash gains momentum, your ability to
conduct your banking affairs as you see fit, away from the prying eyes of government, is
becoming all but impossible. Your options are simple. You can either bend to the will of the
politicians and submissively cater to their every whim or you can start taking the necessary
steps to safeguard your best interests. As your government claims that its host of new
legislation has been brought about to catch drug barons and big time criminals, then why let it
affect you? Instead, take the necessary steps to protect yourself.
However, before embarking on your on path to silent banking, there remains one area in Big
Brother's arsenal that must be explored. All of the precious forms that have been created by this
multitude of recent legislation would remain ineffective, weighed down by the bulk of the
sheets on which they are printed, if it were not for one recent invention. It is with computers
that Big Brother manages to sort through the mountains of information that he has collected.
Each piece of paper by itself is basically useless. It is only by combining and sorting through
them that Big Brother establishes patterns, patterns that give him the ability to reach out and
grab your hard-earned dough. Without computers, Big Brother would never even be able to find
this golden needle in the midst of his haystack of paperwork, never mind claim it as his own.
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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.
THE PRIVATE DATA COLLECTORS

As detailed in the first chapter of this report, by making use of modem wonders such as your
check book, credit card and debit card, you create a picture of yourself that is then available to
almost anyone. This detailed information stored in computer databases over which you have
no control has become a very valuable commodity. New and emerging companies create a
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Banking in Silence
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.
88
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.
THE CREDIT AGENCIES

However, it seems that unless you want to drop out completely, become a hermit and live in a
tin shack on the side of a mountain, at least some information concerning your affairs will
make its way to private databases. One of the most likely place that files will be created about
you is in the offices of credit agencies. These agencies were originally started at a grass roots
level by local merchants, by pooling information they no longer each had to decide on a case
by case basis the creditworthiness of an applicant. Slowly these local agencies combined to
form national agencies that keep records on just about everyone. Not being listed on one of
their precious computers can also be a problem, as the complete lack of a credit history means
that you will often be denied a credit card or loan simply because, as far as the computers are
concerned, you do not exist. This can cause a few problems for the PT as most credit agencies
still only extend as far as the nearest national border.
One PT friend in the UK was recently denied a simple savings account because, as he was
not British, he did not appear on the country's computer systems. In other words, the bank
refused to take his deposit because they could not identify him. It did not matter that he was
only interested in a saving's account and was not interested in either a check book or credit
card. Still, these problems can be circumvented by making use of the right connections. More
information on how to go about opening a bank account in a foreign land, an essential step in
achieving banking privacy, will be given in the following part of this report. For now,
understand that once an account is opened for you, no matter where, the computers of that
jurisdiction will start happily chirping away with bits of information about you and the way in
which you manage your account.
Furthermore, in spite of what the credit agencies may say do not for a minute think that this
information enjoys even the slightest degree of privacy. In many countries now, credit agencies
have put the wealth of private information that they hold up for sale, in spite of the fact that
for years these companies followed a written policy that prohibited such a course of action.
Again, it is economics that led to this change of policy. The credit agencies were only able to
sit on top of their gold mine for so long before the temptation to start digging became too
strong to be ignored. The information available is truly staggering. Whether you have a bank
account, how much money is in it if you do, whether or not you have a credit card, where you
live, how long you have lived there, what your phone number is, your marital status, number
of children, income and age are only the tip of the iceberg.
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YOUR BANKER'S COMPUTER SYSTEMS

Your bank, in addition to sending information about your activities to local credit agencies,
maintains a host of information about you for its own purposes. Sometimes this information is
used for in-house marketing, but today more often than not your bank will keep records about
your financial transactions simply so that it can stay in business.
As explained earlier in this report, banks are increasingly called on by Big Brother to monitor
the manner in which you handle your money. In effect, Big Brother has passed on the
responsibility of enforcing most of his new laws to these private companies. Banks have been
drafted into the war on financial privacy and are definitely not on your side. There is simply too
much at risk for them to be anything but government cohorts. Any bank that does not cooperate
or for that matter even unknowingly allows money to be laundered through its services, risks
severe penalties. The bank's license can be revoked. Its managers can be sent to prison.
As a result, many banks have gone to the trouble of installing what are known as expert
systems, but can more accurately be envisioned as tattle-tale programs. These systems monitor
all transactions made within the bank, comparing them with all previous transactions with the
hope of uncovering patterns. Attempts to structure transactions so as to avoid reporting
requirements are quickly detected. Similarly, any patterns that resemble those of money
launderers or that are otherwise considered to be suspect would set off an alarm. The bank
manager could then contact the nearest tax office, informing them of his latest conquest in the
war on privacy.
Of course, such systems come at no small cost. One such system, known as Syfact is
supplied by Inter Access Risk Management. The system is billed as an "insurance policy" that
can supplement existing security systems. Like all insurance, it doesn't come cheap at a cost
of nearly half of a million dollars. This sum is, of course, tacked on to bank operating expenses
and then paid for by all that make use of bank facilities. According to one vice president of
Inter Access, his system "is designed to make the whole process more transparent to the
customer." This point underlines yet another aspect of this computer monitoring. Your bank
does not want you to know about it. Your bank does not want you to know that each and every
day it recklessly violates your privacy.
Furthermore, do no think that such computer monitoring is carried out only by banks in the
highly regulated US. As legislation creeps into European countries, so too does computer
monitoring. Inter Access is a Dutch company, based in Hilversum. Its recent customers include
lNG, one of the largest Dutch banks. Inter Access is also presently marketing its system in the
UK and will undoubtedly soon find takers. For the most part, banks would rather be too
cautious, than not cautious enough. They have seen how the Americans made examples of a
few banks that violated money laundering legislation. They have seen the huge fines levied
and entire companies crumble when bank operations are frozen. They would rather not become
the European counterpart of these "examples".
BIG BROTHER'S COMPUTER SYSTEMS

Banks and private companies aside, governments have proven to be avid fans of computer
databases. In fact, even though it has drafted your bank and instructed your banker to enforce
much of its silly legislation, the leader of the pack when it comes to gathering information on
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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.
CROSS REFERENCING INFORMATION

A favorite tactic of governments in their quest to capture every detail of your life in silicon is
to request information for one purpose and then use it for a different matter entirely. Frequently
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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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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.
94
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.
HOW TO BUST A JOHN

There wasn't much to go on. The police salvaged the slip of paper that a small-time East Coast
criminal tried to eat before being arrested but on it they found scribbled only a telephone
number and what appeared to be the name "John". This frustrated the police. They had
anticipated more incriminating information on the man they believed was the supplier not only
to the dealer they had just busted but also to dozens of other street corner crack peddlers. With
two slim leads, the police weren't technically equipped to do much more than antiquated
detective work that probably wouldn't yield evidence they could use to indict John. So they
turned to FINCEN for the digital sleuthing they needed.
Less than 45 minutes after receiving the official police request for help, FINCEN had
retrieved enough evidence of criminal wrongdoing from government databases that the district
attorney prosecuting the case was able to seek indictments against John on charges of money
laundering and conspiracy to traffic narcotics. The local police were impressed. The whiz kids
at FINCEN are good. Very good. That's why state and local police have come to depend on
FINCEN to pull them out of the electronic-sleuthing quicksand. The case of John is a good
example of one of their less complex assignments, and it illustrates the adeptness with which
the government can collate existing financial data.
Seated at a computer terminal inside FINCEN's command post, a FINCEN analyst began
the hunt. He started by querying a database of business phone numbers. He scored a hit with
the number of a local restaurant. Next he entered the Currency and Banking Database (CBDB),
an IRS database accessed through the Currency and Banking Retrieval System. CBDB
contains roughly 50 million Currency Transaction Reports (CTRs), which document all
financial transactions of more than US $10,000. By law these transactions must be filed by
banks, S&Ls, credit unions, securities brokers, casinos and other individuals and businesses
engaged in the exchange of large sums of money.
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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.
BEWARE OF OPERATION GATEWAY

It started in July 1993 on a hot and dusty summer day in Texas. Since then, Operation Gateway
has spread throughout every American state. In the process, lives have been wrecked and
families torn apart. Recently, this menace has moved into other western countries as well.
Gateway is inherently prone to abuse and provides, in the words of one banking professional,
a "disturbing indication of the direction in which the government is moving".
Gateway gives state and local law enforcement officials direct access to the massive federal
Financial Database, a huge mountain of personal financial details known in federal agent speak
as the FDB. All of what the enormous FDB contains can rightly be classified as sensitive
information. It contains, among other things, all of the records that have been filed by financial
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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.
BEWARE OF THE DEPOSIT TRACKING SYSTEM

While the FDB mainly contains records on major money movements (the rich), foreign
transfers (the foreigners) and suspicious transactions (the criminals), the Deposit Tracking
System (DTS) shoots in all directions, not just at the three minorities that federal agents love
to hate most. In the understatement of the century, a computer magazine recently called the
Deposit Tracking System "a potential menace". It went on to say, "If implemented, the
estimated US $12.5 million computer system could be used to penetrate the security of bank
accounts belonging to you, me and 388 million other bank account holders in the US."
The Deposit Tracking System is still at the drawing-board phase. Congress has yet to
approve its enormous price tag. Even once approval is given, it will take another year or two
before the system is operative and running at capacity. In the American media, little has been
heard about DTS. Liberals like it, but professionals in the banking sector raise serious
concerns. According to Diane Casey, executive director of the Independent Bankers
Association of America:
"The Deposit Tracking System would fundamentally change the relationships among banks,
consumers and the government in ways that have implications beyond banking policy. Our
open and democratic society would be changed profoundly if any agency of the government
maintained the scope of information on private citizens described in this proposal. It raises
questions about our democracy that would have to be addressed by the highest policy-making
levels of government."
This is heavy-duty stuff, considering that it is coming from people who usually keep their
voices down and prefer to stay out of the political fray. Other bankers are similarly against
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Banking in Silence
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.
THE SYSTEM TO END ALL SYSTEMS

FINCEN's AIIMPP system should make you seriously question the role of government in
today's society. It will be the mother of all databases. AI stands for artificial intelligence.
FINCEN AI capabilities currently exploit the Financial Database for what is called proactive
targeting of suspicious activity. The system automatically monitors the entire FDB database,
constantly identifying suspicious financial activity in supercomputer-aided, rapid-response
time. In addition to the FDB with its mountains of sensitive data stretching back almost 25
years, FINCEN is applying artificial intelligence to the newly created Criminal Referral Forms
that must be filed with FINCEN whenever banks, examiners and regulators uncover financial
activities they suspect are illegal.
In the near future, all of these government databases will be interfaced by way of AIIMPP
technology. MPP, or massive parallel processing, will then be able to perform real-time
monitoring of the entire US electronic banking landscape. The database of databases will have
been created, FINCEN's AIIMPP system. This system will be tied into private computer vaults
holding all credit card transactions for Visa, MasterCard, American Express, Diners Club and
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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.
MONITORING YOUR MOVEMENTS

If the fact that your government may soon have the ability to monitor your financial
transactions in real-time does not bring to mind the worst imaginable 1984 scenarios, then
perhaps you should consider the power that Big Brother now has to keep track of your actual
physical whereabouts. Although much legislation to date has concentrated on tracking down
your money, your assets, governments are equally interested in tracking down the other half of
the PT formula, your ass. Again, it is by making use of computers and databases that
governments have set out to accomplish this goal. In fact, one of the first places that
governments installed computer systems was at major border points. Today, even some of the
world's poorest countries, such as India, greet you at international borders with a bureaucrat
seated behind a shiny new computer terminal.
Of course, the US has had such a system in place for almost twenty years. It is known as
the Treasury Enforcement Communications System (TECS) and for the most part is used to
monitor the movements of US citizens and their money, although the system also includes
information on a very large number of foreigners. Terminals can be found at every major US
point of entry and exit. Amongst other things, this computer system will tell whether or not
you have been convicted, arrested or are even suspected of a number of crimes, currently
including smuggling, the possession or sale of illegal drugs and, of course, tax evasion. If you
have ever been arrested or are currently sought after by any law enforcement agency, this
information will also appear on the magic computer screen. Those unlucky enough to set off a
computer alarm will be detained for further questioning.
However, the system goes on much further and infringes on the rights of those who are not
even formally suspected of any wrongdoing. An expert system installed in 1987 has
constructed a computer profile based on individuals suspected of money laundering, drug
smuggling, tax evasion and the like. If upon entering or leaving the country, the computer finds
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Banking in Silence
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.
FREEDOM FROM GOVERNMENT INTERFERENCE

The major advantage of offshore banking is that by picking up and moving your chips to a new
location, you can say goodbye to all unwanted government interference. As detailed in the
previous part of this report, banks in developed countries around the world are subjected to a
myriad of restrictive regulations. These regulations have been specifically designed to strip
you of any vestige of banking privacy that you may have once been able to enjoy close to
home. They lay your banking affairs wide open to the scrutiny of government.
The good news is that by making use of one or more offshore bank accounts you need not
just give up. Funnelling some of your assets offshore means that at the very least your
government will have to go through a complicated diplomatic hassle to get its hands on your
banking records. This often means that if you are just the average small investor, you will be
passed over. Bureaucrats around the world would rather spend their time and energy chasing
after the big fish. Catching the multi-millionaire tax evader not only brings in large amounts
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Banking in Silence
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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Banking in Silence
skyrocketed to astronomical rates. By making use of commissions to offset prices, offshore

banks can offer such insurance to clients at a price that is often lower than that of their
domestic competition. Such gambles more often than not payoff with huge profits.
FREEDOM FROM TAXATION

The primary government hassle that offshore banks manage to avoid is that which even Ben
Franklin thought to be inevitable. "In this world, nothing can be said to be certain, except death
and taxes." Dear old Ben may have been right about the death part, but taxes are most definitely
far from certain in this life. As offshore banks are free to set up shop in whatever jurisdiction
they please, they need no longer be concerned with the burden of taxation. The figures speak
for themselves. The industry as a whole pays a negative two per cent in tax. Whereas most
businesses are straddled with tax rates of close to if not more than 50 per cent, the offshore
banking industry has set itself up on the receiving end of government goody programs.
This in tum means that your offshore bank can pass on these tremendous savings to you.
Even if you are legally required to declare interest that you earn on an offshore account and
pay taxes on this income to your home government, you will still reduce your level of overall
taxation by banking offshore. When invested offshore, the money that your money generates
is not taxed twice, first on the profits that the bank earns and then on the interest that you earn.
Of course, with a little imaginative thinking all of your money earned offshore in a tax free
jurisdiction can remain in the possession of the person most entitled to it, little old you.
You can also rest assured that the tax savings enjoyed by offshore banks is not about to
change in this lifetime. By their very nature, offshore banks are free and nimble. They can
quickly move and set up shop wherever the sun happens to be shining the brightest. A few
banking havens have been in the game for a long time, others seem to sprout up continuously
in far flung places. All understand that the minute they change their liberal banking policies,
all of the money that was originally enticed to their shores will flee to safer pastures. This will
soon be followed by the very banks established in the first place to attract such funds. In other
words, banking havens around the world understand that in order to keep the goodies, they
cannot change a thing or start meddling into anyone's affairs.
HIGHER INTEREST RATES

This freedom from restrictions enjoyed by offshore banks all translates into one thing, more
money for you. It can be up to five times more expensive to start an investment fund in a
heavily regulated jurisdiction than offshore. In addition, the sheer number of offshore banks
competing for deposits promises heavy competition, meaning that the interest rates on offer are
pushed up yet again. Offshore banks generally do not have the operating costs of their onshore
competitors. They need not bother with fancy buildings, extensive television advertising or
free giveaway programs to attract new accounts. Instead, they entice customers with the best
incentive of all, higher interest rates.
Again, the figures speak for themselves. In 1991, the average offshore fund offered 12.0 per
cent interest, this is in contrast to an average 3.2 per cent on offer for US domestic investors.
This offshore figure is merely an average, those willing to hunt around and accept some risk
can find rates on offer of up to 20 per cent. Nonetheless, for investors interested in security, a
nice steady return of 10 per cent on capital is far from difficult to come by.
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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.
CIRCUMVENT CURRENCY RESTRICTIONS

Offshore banking opens up many windows of opportunity previously unavailable. For
example, the offshore option means that you are no longer required to tie up all of your money
in one currency, that of your homeland. Many countries prohibit you outright from holding an
account in your home country in any currency other than their own. Many other countries that
are gracious enough to allow foreign currency accounts, tax the profits that such accounts earn
to an extent that all but negates any advantage. Of course, such governments justify their
actions with the excuse that any account held in any currency other than that of the mother
nation is unpatriotic and thus deserves nothing better than to be bled dry.
If you are American and take heed of the warning signs of the plunging dollar, you no
longer need be trapped on the sinking ship. By moving some of your money offshore into
stronger currencies you are able to effectively liberate it from senseless American policies. The
same can be said for the nationals of countries around the planet that suffer at the hands of
misinformed politicians and the currency nose-dives that they seem to be all too well at
engineering. There is no single currency in which it is best to hold all of your assets. As with
all investment advice, diversity is the key. By opening at least one offshore account in a
friendly jurisdiction, you can be certain that you are no longer limited to holding all of your
eggs in one unsteady basket.
In addition, an offshore bank can pave your way to safety if your country has gone so far
as to outright prohibit you from bringing your money out of your homeland. The process is
relatively simple and makes use of what is known as a back to back or parallel loan. This
procedure will be explained in more detail later, but briefly it involves you lending your
currency control money to another company in your home country while affiliate organizations
in a foreign land arrange a loan in the other direction. For example, assume that you have a
certain amount of cruzeiros in Brazil that you would like to liberate from its restrictive
policies. You lend this money to Willy's Widgets of Rio de Jaineiro. In tum, the London branch
of Willy's Widgets lends a company of yours based in the UK a similar amount in pounds
Sterling. Presto, your money is out of the currency control country and free to go and roost
wherever it may desire.
The only problem with such a scenario is that many governments that impose currency
restrictions are aware of such schemes and have imposed legislation prohibiting them. What is
the answer. Making use of an offshore bank. Countries in need of currency restrictions are also
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Banking in Silence
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.
EXPLOSION IN FUNDS HELD OFFSHORE

These many benefits of offshore banking combine to produce what has in all likelihood been
the most rapidly growing area of the international economy over the last two decades. It seems
that money simply cannot move fast enough into the offshore market. From a base of US $24
billion in 1965, the total amount of funds invested in offshore banking facilities grew to a
staggering US $1.5 trillion by 1981, in just sixteen years. This upward trend only continued
throughout the following decade. In short, as the restrictions put forth by government
continued their attempt to strangle off basic rights to freedom, money from such overly
regulated jurisdictions simply changed its flag and made its way to offshore banking havens.
The first to take advantage of the offshore option were large multinational corporations.
They realized that by moving their funds to offshore centers, they could avoid much of the
prohibitory legislation that was successfully eating away large chunks of their hard-earned
profit. Advances in the communication industry, such as the fax machine, also made it a viable
option for them to conduct business in far-flung and even remote locales. Tentatively, a few
corporations stepped into the offshore arena, moving some of their business overseas. Few
could have predicted the explosion in funds that would follow or the tremendous success that
such overseas enterprises currently enjoy.
Today, many such multinational corporations earn the bulk of their profit in offshore
banking havens. In such hassle-free and restriction-free jurisdictions, their money is enabled
to grow and multiply all without the burden of unwanted government scrutiny. Bank of
America, one of the first to move into the offshore market, earned 19 per cent of its profit
offshore in 1970. Ten years later this figure had jumped to a hefty 50 per cent. Citibank
commonly earns 75 per cent of its profit offshore. American Express earns US $30 million a
year from its business located outside of the US. Dow Chemical pulls in over US $60 million
per year through its offshore facility known as Dow Banking. These figures are made all the
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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.
DON'T LISTEN TO YOUR GOVERNMENT

Before investing offshore, you will probably also have to decondition yourself from a host of
government propaganda that has been thrown at you from birth. In spite of what your
government may want you to believe, offshore banking is not evil. It is not even unpatriotic,
as looking after your own financial interests means that you can continue to be a provider in
society rather than a taker on the end of government handout programs. The fact of the matter
is that any politician or bureaucrat of substance has long ago placed at least some of his own
booty outside of his prized jurisdiction. Every businessman and investor knows that one of the
keys to success is to diversify. If diversification is a good idea on a national scale, it is
undoubtedly an even better idea on an international scale.
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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.
ARE OFFSHORE BANKS SAFE?

Another myth foisted on you by your home government is that offshore banks are not safe.
Horror stories of investment advisers running off with client funds seem to get far more than
their fair share of coverage in the national press. In 1991, the Wall Street Journal ran a front
page article on how one such unsavory character allegedly spent all of the US $8 million he
had collected, blowing every last dollar on his own extravagant lifestyle. Those involved lost
everything. Similarly, the banking atrocities in Mexico of the early eighties received attention
far and wide, particularly in the American media. It is truly bizarre that such foreign stories
arouse such interest whereas the multitude of similar stories of theft by the US government are
hardly ever mentioned.
Your government is quite content for you to persist with the false belief that all offshore
banks are full of swindlers and conmen, but the fact of the matter is that offshore banks are
often safer than those of your home country. Yes, liberal banking regulations do attract some
of less than reputable character, but they also attract many honest businessmen who have
entered the offshore market for the very sound reason of increasing their potential to earn
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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.
YES, ORDINARY MORTALS DO BANK OFFSHORE

Owing to this competition, offshore banks are eager to obtain your business. Every financial
service on the planet regardless of how big it is or where it is located must provide certain
financial services in order to maintain its status as a bank. In other words, offshore banks
cannot survive without your business. The modern international banking community has to a
large extent been established specifically to cater to individuals such as you in search of
international banking privacy.
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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.
WHAT DO THE LOCALS THINK?

You should be wary of investing in a banking haven that does not experience a wide base of
local support. Many tax havens, particularly those in the Caribbean, are very poor countries.
They survive on the basis of tourism and a growing dependence on foreign investment in their
banking communities. If the local population does not realize that the banking community is
supporting it in one way or another, they may come to resent its presence. Before long, this
lack of local support could lead to the election of politicians who will nationalize all of the
funds held on behalf of foreign investors. More than a few unsavory characters have come to
power by means of a foreign-bashing agenda.
In this regard, countries such as Austria and Switzerland score highly as locals not only
understand the importance of their international banking communities, but also frequently make
use of the private banking services available. Other local traditions and customs also underline
the value of these European banking centers. For example, in Switzerland, it is a crime to be an
officer of a bank that fails with losses to customers. As a result, a Swiss-owned major bank in
Switzerland is very unlikely to fail. Why Swiss-owned? Because a foreigner who establishes a
Swiss bank is more likely to live abroad or to take a powder in the event of problems. A Swiss
generally feels that his home country is the only place in the world worth living. Where banking
regulations are substantial and local custom makes absconding or mismanaging customer funds
a serious offense, the customer is surely better protected from fraud.
It is not possible for anyone to go bankrupt in Switzerland. One pays one's bills or goes to
jail. Banks in German speaking countries (Germany, Austria, Switzerland) have a long
government tradition of dealing honestly with depositors. Of course, the Nazis made a big
exception for non-Aryans and confiscated the property (and the lives) of some thirty million
individuals just because they were Protestants, Jews, Slavs, Gypsies or members of a large
number of other minorities. Today, this period is generally regarded as an aberration that won't
happen again. Still, keep an eye open for writing on the wall in any country. When the graffiti
indicates that you may become an enemy of the next batch of politicians to take power, have
your cash already moved.
It is also important that you keep an eye on how the politicians in power treat those who
they represent. If the government shows little regard for issues of human rights and frequently
treats its own populace as nothing more than farm animals to be reared, milked and then
eventually slaughtered, it is unlikely that foreigners will fare much better. Yes, foreign
investment may be lured in with grand promises, but at the end of the day, any government
that shows little regard for its own people will also one day turn around and abuse foreign
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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?
WHAT DO OTHERS THINK?

Certain banking havens, such as the Cayman Islands and Panama, raise eyebrows in tax offices
around the world. Many government bureaucrats assume that anyone who owns an account in
such jurisdictions is guilty of some wrongdoing. Similarly, if the bureaucrats one day discover
that you maintain an account in other well known havens, such as Switzerland, Austria,
Luxembourg, the Bahamas or Bermuda, your quest for increased banking privacy may well lead
to just the opposite. Of course, by opening your account in the manner described in this report,
your government need never be aware of its existence. Nonetheless, as many governments
today require that you disclose the existence of all foreign accounts, you may well choose to
open your offshore account in a banking haven far less likely to draw attention to itself.
You could also choose to bank in a country that is of strategic importance to your home
country. For example, Costa Rica enjoys particular US attention as it is the only country in an
otherwise hostile region that maintains good relations with the US government. As a result, US
bureaucrats for the most part do not try to interfere with the bank secrecy laws of Costa Rica,
even though the country undoubtedly plays host to a large amount of money that is the
property of American tax dodgers. (Nonetheless, I would still not recommend Costa Rica as a
good place to stash any serious money as the Costa Rican government has in the past proven
to be more than eager to confiscate funds deposited by foreign investors.) Similarly, the US
government has done little to interfere with Liechtenstein. Why? This tiny banking haven is
the jurisdiction of choice for the dirty dealings of the CIA.
These few exceptions aside, most banking havens are subjected to intense pressure from
foreign governments. Naturally, your money is safer in those that do not give in to such
manipulations than in those that allow themselves to be quickly reduced to puppet status.
When the US sought to extradite Edwin Wilson, an ex-CIA agent, from the Dominican
Republic, they were not even requested to undergo formal extradition procedures. Instead, CIA
agents were allowed free reign within the country and carried out US instructions as if they
were still firmly planted on US soil. If the country is willing to allow such an outright invasion
of its sovereignty it would undoubtedly do little to protect the banking records of one lone
foreign investor, regardless of what its banking laws may have to say about the matter.
Similarly, other tax havens, including the once solid Switzerland, have also given in to US
demands and today do not truly offer private accounts to many of their international investors.
Of course, the entire issue of sovereignty becomes a moot point when a banking haven
receives economic aid from your home country. Any banking haven on the receiving end of
goody programs that originate at home are best avoided. If push ever came to shove, your new
banking center would quickly turn over your records to your home government. It would be
left with little alternative. Similarly, you should seek out a banking haven that has not entered
into or is even in the process of negotiating any exchange of information treaties or other
arrangements with your home country. Instead, the ideal locale to keep your money should
maintain and value its independence from the growing trends against banking privacy and the
free exchange of information between foreign powers.
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WHAT ABOUT SECURITY?

The international reputation of your banking center is also of the utmost importance. Over the
years, many banking communities have established a solid and dependable image in the eyes
of the international banking community. Others are quickly pushed out of the mainstream by
cowboy bankers who make a quick buck by issuing illegitimate financial documents, letters of
credit, cashier's checks and the like. Your banking center of choice should have an
unblemished history of honest dealings with foreign investors. It should enjoy a solid
international reputation that has been earned over the course of many years. If banks at home
are not willing to conduct business with banks in your chosen banking center or have no
procedures established for such transactions, choose another location.
Again, it is by examining the history of a country that you can discover how it will be likely
to act over the long term. Countries that have been long established as banking havens
obviously have more of an interest in maintaining this status. They realize that much of the
capital invested within their shores will disappear overnight if they start playing with their
privacy laws or tinkering with the deposits that they look after. Hence, a country with several
decades of experience, such as Luxembourg or the Bahamas, is more likely to stay true to its
word than recently self-proclaimed banking havens, such as Vanuatu, Anguilla or Montserrat.
You may also want to consider whether or not your new banking haven is willing to back
its promises with cold hard cash. Many banking jurisdictions offer insurance schemes that
protect deposits up to a certain determined amount, assuming that a government will live up
to its promises in the first place. Remember that governments can always change the rules
midstream. In the US, it was customary for wealthy individuals to place funds with brokers for
allocation to many different banks so that the amount in each account was fully covered by the
national insurance scheme. Then when banks started dying like flies, the regulatory agencies
said that this practice was an abuse and that only one account per individual was insured.
The ultimate result after some wrangling was favorable to depositors, but the important
thing to remember is that government promises and guarantees are one of the last things to be
relied upon in life. Still, they are something to be considered. The Isle of Man, for instance,
has a scheme to insure bank accounts. Other countries offer similar goody programs that merit
consideration. Of course, such government protection also brings with it a certain amount of
government regulation and control, albeit with the aim of keeping banks clean and
conservative.
WHAT ABOUT CONVENIENCE?

If you have not yet broken completely free and become a PT, you may want to choose an
offshore banking center that is relatively close to home. Obstacles, such as long flights or large
time differences, may make it difficult for you to manage your money effectively. If you first
have to drag yourself out of bed at four in the morning before calling your banker, you will not
be in the best mindset to make the decisions required. Similarly, if you must first stand in line
at a consulate to obtain a travel visa before you can visit your money, you will not only create
an abundance of bureaucratic hassle for yourself but also produce documented records of your
movements. Your home government may well become curious one day about why you make
so many trips to a well-known banking center.
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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.
WHAT DOES THIS ALL MEAN?

There is no one country that meets all of the above criteria. Like the ideal lover, the ideal
banking haven exists as no more than a figment of the imagination. When it actually comes to
choosing which location is best for you, you will have to first decide which of the above
requirements are most near and dear to you. The task will then be to find a location that meets
these requirements above all else. Part V of this report provides a detailed analysis of the
world's major banking havens. It also examines a few other countries that may be of value to
the international investor. By reading what each country has to offer, you should be able to
narrow down the number of locations that are likely to meet your needs to no more than half
a dozen.
However, if you are primarily interested in finding a location in which to hold a secure nest-
egg, the task need not even be this difficult. The number of truly secure banking havens that
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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.
RUN LIKE BAMBI

Does this mean I'd never have any accounts or do any business in any of these other potentially
dangerous areas? No! It is only when it comes to protecting the bulk of my assets, my nest-
egg, that I stick to the secure path, otherwise the lure of profit may cause me to venture further
afield. Similarly, for the sake of convenience or diversification I might have small or
temporary transit accounts in many countries that I would otherwise avoid. The Hong Kong
bank is in fact one of my favorites. It is British owned, competently run and will surely survive
into the next couple of centuries.
Still, as I have stressed throughout this chapter, no matter where you invest make a point to
keep an eye out for any writing on the wall or bad odors emanating from politicians before an
election. Stay on top of things by subscribing to one or more newsletters which keep a sharp
eye on such matters. Move your money at the first whiff of trouble. Remember that any
banking center that you choose is just a location to store your money over the short term. Your
relationship with your new bank and its host jurisdiction is not until death do you part. At the
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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.
FINDING BANK ADDRESSES

Once you have located two or three banking havens that meet your criteria, you can begin to
contact banks located within these jurisdictions. You may want to consider writing to several
banks located in two or three different jurisdictions. Send each a standard letter asking for
details about the bank itself as well as the manner in which you can open an account. Try to
choose a variety of banks, ranging from large multinational firms to smaller local operations.
You will then be able to compare first-hand the services offered by each.
As offshore banks are generally prohibited from advertising their services onshore, you will
have to do a little homework to come up with a list of desirable banks. This need not be
difficult, as you can begin by consulting the list of banks supplied in the back of this report.
The fact that a bank appears on this list, however, 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 care of Scope International if you have any good or bad stories
to report about any of the banks mentioned in this report. If you discover a particularly good
bank for PTs and other privacy seekers, please also write to tell us about it.
However, if this list is not extensive enough for your purposes, an exhaustive source for
offshore banks is the Polk World Bank Directory, International Edition. In these hallowed
pages, you will certainly be able to find a bank that will meet your needs as this directory lists
just about every bank in the world. It also supplies other helpful bits of information, such as
the current balance sheets and performance ratios for the three most recent fiscal years of each
bank listed. A copy of this guide is probably sitting on the shelf at your local library at this very
moment, but if you would like one of your very own, it is available through: Polk Bank
Services, PO Box 305100, Nashville, TN 37230-5100, USA. Fax: +1-615-885-3081. The
cost for the directory, which is updated annually, is US $330. A five year subscription will
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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.
READING BETWEEN THE LINES

Having written to a number of banks, you will undoubtedly soon discover that you have made
some new penpals as packets of advertising material make their way to you via your maildrop.
A few banks may not respond at all, as they only open accounts for new clients who have been
introduced by an old and trusted client, but most will send out a standard advertising package
designed to attract new account holders. This will be supplemented by yet more advertising in
a few weeks time if you fail to respond. Some banks, particularly if your letter of inquiry
mentions that you are interested in investing a sizable amount, will go to the trouble of issuing
a personal response. Don't let the full color advertising with its glossy pictures fool you. You
are interested first and foremost in the figures contained within.
To begin with, do not fall into the trap of believing the myth that you should only deal with
an old established bank. This advice has lead many people down the garden path. Often an old
established bank is acquired by a young hotshot or downright crook. In other cases, the
government takes over and ruins a spotless bank as was the case with the near legendary
Rothschild Bank in France. Too often an old established bank is taken over by a gang of
thieves. It expands, brings in new depositors and then suddenly the whole operation, including
your money, goes down the pan. Accordingly, there is much more to consider than the mere
age of a bank.
As a general rule, invest only in banks that can demonstrate a steady growth in capital over
the long term. Before investing a significant amount in any bank, whether it be onshore or
offshore, request to see a copy of its annual report. This report should be audited and should
also provide the names of the principals with whom you will be doing business. If the bank is
privately owned, you should also request its latest financial statements, again preferably
audited, as well as the names and addresses of the bank's principals and promoters. If your new
bank is not willing to share such information, find another bank.
There are a few key factors that determine the overall strength of any bank. In particular,
you should pay close attention to the bank's equity to assets ratio, liquidity ratio and the
percentage of its overall capital that has been lent out. If these figures are not presented in the
annual report, request that they be made available to you. The first, the equity to assets ratio,
shows you how easily the bank will be able to cover losses that it incurs as a result of bad loans
or investment. The higher the number, the better. The international standard for a solid equity
to assets ratio is 8 per cent, but to be on the safe side you may want to only invest in banks that
safely maintain a ratio of more than twice this amount. Similarly, you will want to seek out
banks that have high liquidity. Some offshore banks are actually more than 100 per cent liquid,
but as a general rule I would not invest heavily in a bank that falls much below a liquidity ratio
of 50 per cent. Finally, I would avoid investing in a bank that has lent out most of its overall
capital or that maintains high risk loan portfolios, such as one that is highly leveraged towards
third world government debt. The strongest banks only loan money against assets on deposit.
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THE ADVANTAGES OF LARGER BANKS

The size of your bank will tell you a great deal about the type of services that you can expect.
If you need to be in constant touch with your bank and wish to maintain investments in distant
markets allover the world, particularly those in emerging third world economies, you should
seek out the services of a large bank. On the other hand, if your primary objective is to stash
some money away from the glare of the taxman, a smaller bank may be more than sufficient.
In each case there is a trade-off of one type or another.
In general, larger banks offer increased security for your investments. A small peanut is far
more likely to fail than a multi-million dollar bank. In many cases your funds will still be
secure even if a big bank's entire trust department is taken over by a crook and funds do get
diverted, as happened with the Chiasso office of a well known Swiss Bank in the 1970s. In
many such cases, the bank's home office will make good any losses in order to protect its
reputation. It is unheard of for a major bank, established in a civilized, conservative country
that recognizes and protects private property, set up and run by career bankers of good
reputation, to be entirely corrupt, but of course anything can happen!
Once in a while big banks like the late, lamented Bank of Credit & Commerce International
(BCCI) do go under, but in the case of this particular bank, it would never have met my other
tests. BCCI was established by nationals of a Muslim country, namely Pakistan, that lacks
serious banking traditions. It was backed financially by some newly rich Arab sultans who
knew nothing about banking. It was incorporated in Luxembourg, a country with lax controls
over bank holding companies. Further, long before the failure of BCCI, there were substantial
warnings in the form of criminal indictments and so on. BCCI was known in the trade as the
Bank of Criminals and Conmen. The writing was on the wall long before the ultimate failure
occurred. Any sensible PT would have bailed out before he lost his money.
THE ADVANTAGES OF SMALLER BANKS

Of course, the security and services offered by big banks do come with a price tag in the form
of higher bank fees and lower interest rates. Many smaller banks are able to compete
effectively in the offshore market and offer interest rates that exceed those of their big player
competitors. Some smaller banks are referred to as "brass plate" or "letter box" banks because
they exist as nothing more than a brass plate fixed on the wall of a building in some sunny
locale. These banks are generally established specifically for the offshore investor in search of
privacy and operate routinely by means of mail, telephone or fax. In short, they may prove to
be an ideal match if you are not interested in moving your money about too much and merely
like the idea of receiving hefty interest payments and at the very least you may want to
consider keeping at least part of your overall portfolio in smaller banks.
Extra scrutiny should be used when researching this type of offshore bank. Some enjoy
solid reputations that have been earned over the course of many years. Others are the latest
project of con artists eager to separate you from your money. In A Banker's Trade, a well
researched underground text that made the rounds in the early 1980s, spooks and looters
learned how to set up banks abroad. As a result the mid-1980s saw quite a few banks that only
existed in name and on paper, usually licensed to do business in Anguilla or Montserrat. Some,
sold by Beverly Hills based WFI Corporation, brazenly bastardized real world banks. Using
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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.
CHOOSING A PRIVATE BANK

As a general rule, deal only with established foreigners. Outside of Europe, it is probably best
to deal only with a branch of a major bank whose home base is neither in, nor related to, your
home country. Thus if an Englishman was going to have an account in the Caribbean, first
choice might well be a Swiss, Danish or Dutch bank, but never a British bank. Similarly, the
account for a Brit should be in the Antilles, a former Dutch colony, not in the Cayman Islands,
a British colony. Your offshore bank should also preferably not have any branches in your
home country. As illustrated in the previous part of this report, tax hungry governments are not
above putting pressure on one branch of a bank, one within its jurisdiction, to force another
branch, one outside of its jurisdiction, to reveal details about your account or worse, freeze
your assets altogether.
Along the same lines you should also make certain that your bank does not carry out its
computer processing in your home country and that its records are kept in-house and offshore.
For example, if you are a UK resident and make use of banking facilities in Gibraltar, the
English government could cause all sorts of problems if the bank's computer system or even
just its back-up files are located in the UK. The same could be said for an American banking
in the Caribbean with a bank that does its processing on the mainland. Of course, finding a
bank that offers all of the services and security that you require but yet does not maintain any
ties with your home country can be difficult. In many cases, this will limit you to smaller
banks, meaning that if you desire the services of a large bank you may have to sacrifice this
extra layer of security.
Finally, be aware that if you maintain your offshore account in your home currency, your
actual funds on deposit will in all likelihood be stored by the bank in a correspondent account
in your native country. If you keep your money in pounds, the funds are going to be on deposit
in a British bank, even if your actual account is with a non-British fiduciary. Likewise, you
could have a dollar account with most international banks of the world, but remember that in
the unlikely event that all the major banks of America fail, you will lose your money even
though it has been moved outside of the US. As your are investing offshore in the first place,
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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.
WHAT SERVICES DOES THE BANK OFFER?

Once you have found several banks that are secure and offer truly private banking, you can
then begin to analyze each at a more basic level according to the services that it offers. At the
top of this list is undoubtedly the interest payments that each bank is willing to pay for the
privilege of looking after your money. Why not store your money where it will do the most
good? Of course, beware of any bank that is offering interest rates that far exceed those offered
by its competitors. Such extravagance could well be a sign that the bank is struggling and
desperate to draw in new capital.
Furthermore, many banks that offer high interest payments make it difficult for you to get
at your money. They claim that you are allowed instant access to your funds, but require that
you contact them in writing in order to withdraw your money. The bank will then, more or less
at its leisure, draw up a draft and send it to you. You will then have to deposit this draft and
wait for it to clear, meaning that the entire process from when you want your money to when
you actually get your hot little hands on it can take up to a month. In the beginning, for your
own peace of mind if nothing else, avoid this type of bank. Instead, open up offshore accounts
that work much like those that you use at home. By means of debit cards, credit cards and the
like you can enjoy instant access to your money held offshore. Many of these bits of plastic
are now linked with international networks and will allow you to withdraw your money from
almost anywhere on the planet.
In the event of an emergency, your offshore stash would then be ideally placed to step in
and finance your day to day existence. You would then only need to move yourself physically
to safer pastures. Naturally, except for in the case of an emergency, you would want to avoid
publicly bringing money from your offshore account into your home country. To do so would
expose your account to your home government and eliminate the hard-earned layer of banking
privacy that you created by moving offshore. Never use a credit card linked to your offshore
account in a place where you are known. Similarly, avoid withdrawing money from instant
teller machines in your home country that are equipped with cameras.
Finally, in addition to being able to gain access to your funds by means of plastic, you may
also want the convenience of a check book. In this case, you could move money out of your
offshore account even when stranded in a location where your plastic is not yet of any use.
Similarly, facilities such as direct debits and standing orders may be desirable, particularly for
a low maintenance offshore account. You could then simply instruct your bank to make certain
payments every month and no longer have to worry about whether or not they are sent out on
time. Your bank should also allow for SWIFf transfers and ideally not be afraid of large cash
deposits so that you can easily and anonymously move your money offshore. In the modern
world, most banks fear cash more than anything, meaning that you may have to get creative
when it comes to moving money into your account. A great deal more will be said about how
to move money into your account in the following part of this report. For now, just be aware
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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.
ARE THERE ANY RESTRICTIONS?

Another factor to consider when choosing your bank, are the restrictions that the bank has on
how you may use your account. One of the first things that you should consider is the
minimum opening account balance required. Some offshore banks, including many privately
owned banks in Switzerland, require rather hefty opening balances of US $200,000 or more.
However, most offshore banks will make do with sums that fall in the area of US $10,000,
although many place no restrictions at all on the amount required to open an account. If you
are .only interested in moving a couple of thousand offshore, your search should come up with
many secure banks that are more than willing to do business with you. Nonetheless, as with
onshore banks, the amount that you deposit will have a direct effect on how friendly your new
banker becomes.
You should also consider the fees that the bank charges for its various services. Ideally, you
should look for a bank that charges a reasonable fee for each service offered. Many banks
make a great deal of noise about the fact that they have no bank fees whatsoever, but when
considered rationally such boasts really do not make a great deal of sense. The bank will have
to pay something to manage your account one way or another, meaning that if it does not
charge any management fees, you will suffer some other penalty. This usually takes the form
of reduced interest rates or an enormous fine the one time that you violate one of the bank's
precious rules. As your account will be offshore, you will in all likelihood not be writing a
great deal of checks or conducting many transactions with your account. The lost interest on
even a few thousand deposited will add up to a significant amount over the years.
Finally, although reasonable fees for services rendered are acceptable, senseless fines and
penalties are not. At the top of the list of senseless fines is a no activity fee. All a bank need
do is program its computer to not generate a statement if you have not used your account for
the previous month. If the bank does nothing but hold on to and profit from your money, it has
no right to charge you for such a privilege. Similarly, try to avoid banks that restrict the size
or amount of checks that you can write. If your are limited to writing only two checks a month
for at least US $100 each, you will eventually need to open another account just to manage
your affairs. Avoid such a need for senseless duplication right from the start.
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.
HOW TO AVOID BEING BURNED

Investing in an offshore bank need not be any more risky than choosing a bank at home.
Although it is true that you may have less recourse in a foreign land if things go wrong one
day, this does not mean that opening an account offshore is plagued with danger. By doing
your homework diligently before investing in any bank, you can rest assured that your money
is safe, or at least as safe as it can be in our uncertain world. As a final word of warning, I
sug~est that if you are investing a large amount you not only get to know your bank, but also
the people behind it before handing over your money. Try to develop one contact in a bank
who will then handle all matters concerning your account. This will not only prevent you from
being shunted from one department to another during your expensive long distance call, but
also means that if one day a problem does arise with your account, you can then turn to a
trusted contact within the bank itself.
For smaller banks in particular, you should make certain that the reputation and character of
your banker are impeccable. Ask for references and then verify everything that they say about
both the bank and its owner. If the banker is not willing to provide references, find another
bank. You may even want to consider venturing into the den of the lion, a government consulate
or embassy in your banking country, and ask if they have heard any complaints about a bank
you are considering. Be aware, however, that many governments keep a small staff of taxmen
in the embassies of all known banking centers. As a result, you may be better off contacting the
embassy of another foreign country in your new banking jurisdiction and using a false name if
necessary. English consulates in particular are very helpful, although if you carry a British
passport you would be better off with a Canadian, Australian or even American bureaucrat.
Finally, remember the golden rule of all investment advice. If it sounds too good to be true,
it probably is. Although banking offshore is a way for you to earn better returns on your
investment tax free, it will not grant you the power to turn straw into gold. When investing in
loosely controlled banking communities, pay careful attention to your instinct. If something
about an investment on offer does not feel right for any reason at all, pass it over. There are
plenty of other opportunities out there that will provide you with both the security that you
need as well as a good return on your investment.
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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.
WHAT TO SIGN, WHAT NOT TO SIGN

One of the first things that you will receive from any bank, whether you contact it through
the mail or simply walk in off the street, is an application form for opening an account. This
form alone will tell you a great deal about the bank and its true stance on privacy. Many banks
claim to offer rock solid bank secrecy, but then want to know everything about prospective
clients right down to the name of the family pet. If the bank has no intention to use such
information, then why collect it in the first place? As a general rule, I would say that any
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Banking in Silence
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.
COMMUNICATING WITH YOUR BANK

Once your account has been opened, your need for privacy is even more paramount than it was
while researching and opening your account. From the very beginning, you should make
certain that each of your banks does not know your home address and does not keep a picture
of you on file. Furthermore, if at all possible never try to call your bank on the telephone. In
this way, neither your government nor your bank itself will be able to make a recording of your
voice or of financial details, codes, account numbers, transfers and so on. You should strive to
keep your communications with your bank to a bare minimum, ideally this means that your
bank will never contact you at all. Instead, it will simply mind your money and wait to hear
from you.
If for one reason or another, you need to get in touch with your bank quickly, the best way
to contact it is by fax. In the age of techno-gadgets, you can not only correspond with your
136
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.
RECEIVING BANK STATEMENTS

You will also have to give some thought as to how you want to receive bank statements, if at
all. The best of all banks never send any out. If, however, your bank insists on sending out
correspondence in one form or another, make certain that you receive it in the same manner
that you received initial correspondence. Alternatively, you may be able to make use of a
nearby lawyer, one in the same country or perhaps even the same town as your new bank. Here
is how it works. Introduce yourself and explain that you are perpetually travelling and thus do
not have a fixed address. Also explain that you are about to open an account with Bank So-
and-So down the street and that the bank will expect you to give some sort of an address.
Would it be possible, for a fee, to receive mail care of his law firm?
This has been my method of choice for years. In the course of several decades and a large
number of bank accounts, I have only had two lawyers turn down my polite request. One was
on the verge of retirement and would be closing his office by the end of the year. The other
only dealt with established clients, he claimed, and didn't service newcomers. I left and went
to one of his colleagues on the same Luxembourg street where I found a lawyer who has been
receiving and holding mail for more than five years now. Of course, he also never forgets to
bill me one hour of work per year for his service.
If I ever get the urge to see some of my bank statements, I visit the lawyer in person to
collect the mail, which is always a good idea if you are in the country anyway. Visit him prior
to visiting your bank or call anonymously, not from home, to have him forward the mail to
where you happen to be staying. Never try to have mail forwarded to your home address, not
even from a lawyer using non-bank envelopes. Instead, receive the mail while you are on
vacation somewhere outside of your home country.
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Banking in Silence
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.
OPENING A FOREIGN ACCOUNT AT HOME

It is generally a bad idea to open a foreign currency account with a bank in your home country.
Such accounts are available in some countries, although they hardly compete with their
offshore equivalents. Even based on pure and simple economic terms, foreign currency
accounts are a waste of time. Starting balances are high, interest payments are low and the
services offered by the banks involved are limited. Furthermore, such accounts provide almost
no additional safety, not to mention privacy, as they are subjected to the same whims,
restrictions and regulations as any other account located in your home country. If your home
government one day decides to restrict your ability to get at your money, the fact that your
account is denominated in a foreign currency will not matter even slightly. You will still be
barred from getting at your cash.
It is also possible, although still not recommended, to open a genuine foreign account with
an offshore bank located in a bona fide banking haven without venturing any further than the
nearest major city in your own country, no need to travel, no need to establish a foreign
maildrop. You can accomplish this by making use of the branch of an offshore bank located in
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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.
PROPER STORAGE OF SENSITIVE DOCUMENTS

Ferdinand Marcos could have saved himself and his family a great deal of hardship if he had
only given a little thought to how he should store important and sensitive information. What
happened to Ferdinand Marcos, ex-dictator of the Philippines? The US government invited
him to take sanctuary in the country and retire in Hawaii. When he arrived, US customs seized
his ·typed out lists of foreign investments and bank accounts, many of which were held in
Switzerland. Then, at the request of the Philippine government, Switzerland froze his
accounts, some of which were immediately transferred to the personal accounts of lawyers for
the corrupt New Philippines Good Government Association. All recoveries by this
organization have already disappeared into private pockets!
Marcos then died. Mrs Marcos sought to protect her remaining Swiss funds (held in the
names of foundations) with a court action. She got Swiss courts to rule that her accounts could
notbe taken from her without a criminal conviction in her own country for having stolen the
money. The criminal cases are pending. Had Marcos not had a typed, uncoded list of his
accounts on his person when he crossed a border, his money held in other names and
foundations would be safe for his family today. He made the mistake of trusting the US
government to honor its promises to him. You should know better. Never trust any government!
Furthermore, be aware that no matter how you actually go about opening your account, the
manner in which you store any and all information related to it is also of the utmost
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Banking in Silence
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.
MAIL ORDER MIKE

Of course, when it comes to storing sensitive information, you should strive to implement such
privacy techniques in all areas of your life and business, not just in those concerned with your
offshore portfolio. Otherwise sensible people often seem to throw caution to the wind when it
comes to dealing with important or sensitive documents. One of my clients actually went to
jail mainly because he kept customer lists at his office. Here's what happened.
Our hero was in the mail order business. He operated from the same address for over a
dozen years. During that period he was the subject of exactly one complaint to a federal
agency. He had over 100,000 clients per year for various small catalog items, mainly cutlery,
and he offered a money back guarantee. About one per cent of his customers took him up on
the warranties. He felt he was an honest businessman as 99 per cent of his customers were
satisfied with his products. The one per cent that were unhappy always got their money back,
no questions asked. Nonetheless, one day, as the result of a single, totally unwarranted
complaint from a non-customer who had somehow received an unsolicited catalog, a
bureaucrat decided that his ads were fraudulent. One product, a knife with a blade that would
"last forever" was the bureau-rat's particular target.
Without any warning, government agents swooped in on Mail Order Mike's office and
confiscated ten years of customer records that contained over a million names and addresses,
each neatly inscribed. First, there was a tax investigation to see that Mike had paid the proper
income taxes and state sales taxes. He passed with flying colors! Local newspapers then ran
favorable articles about Mike's persecution and the unfair treatment he had received, but this
only made the bureau-rats more determined to get him. The government agency then sent out
a form letter (at taxpayer expense) to all past customers asking if they were still happy and
satisfied with products they bought from Mail Order Mike. They were informed that if not
140
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.
PROPER DISPOSAL OF DOCUMENTS

One cannot stress how important it is to dispose of personal or sensitive documents in such a
way so that they do not come back to haunt you. Most people keep receipts, cancelled checks
and personal letters in a shoe box or other insecure place at home or at the office. When the
time comes to dispose of them, they simply dump the documents in any wastebasket. A
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Banking in Silence
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.
BREAKING THE PAPER TRAIL

Moving money into your offshore account is unfortunately not as simple as writing a check
from your home account and then sending it off to your new bank. Such an approach would
instantly erase any and all remnants of banking privacy that you so laboriously established
when opening the account. When funding your offshore account, you must not directly transfer
money to it from any bank or source in your home country that is traceable to you. Never move
funds between your home country and your foreign bank account. Similarly, never deposit
checks from one bank in the account of the other. In other words, if you want to keep your new
account secret, don't leave a paper trail.
The best way to eliminate the paper trail all together is to open your new account with good
old untraceable cash. There are many ways to move cash from your base of operation into your
new account, although the best of all these approaches is the personal way. Withdraw cash at
home, go abroad with the notes, go into your foreign bank, count the money, deposit it. This
approach remains more or less straightforward if you are dealing with relatively small
amounts, which in the modern over-regulated world usually means less than US $10,000.
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Banking in Silence
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.
LETTING OTHERS DO THE WORK

If, however, the time or expense of making such a trip is far too exorbitant for your particular
circumstances, there are other ways of delivering cold hard cash to the doorstep of your
offshore bank. The most obvious of these is to send it through the mail. Although this method
is relatively reliable, there is of course no recourse if your tidy little package gets lost on its
way to your bank. It is also a good idea to make use of a remailing service so as to not attract
attention from your home government. If Big Brother is monitoring your mail, an envelope
containing even only a few hundred in cash that is addressed to the Terribly Secret Bank of
a well known banking center could well be all that is needed to bring the authorities crashing
through your front door. To avoid such possible disasters, mail your cash to a mail
forwarding service or trusted friend outside of your home country and instruct them to mail
it on to your bank.
Alternatively, you could make use of a courier service to transport your cash to your
offshore bank. This method is more low-profile than it at first appears, as it is nothing out of
the ordinary for a courier to make an appearance at an international border carrying a large
amount of cash. Of course, before sending any cash at all to your bank, you should make
certain that it is prepared to accept it. Many banks no longer allow substantial cash deposits,
particularly from new account holders. Even if your bank is willing to accept your deposit, it
is still advisable to notify them that your money is on its way. You can then give them precise
instructions on how to handle the deposit once it is received.
Another way to move money into your offshore account through other people is to make
use of friends and associates that live outside of your home country. If you have close friends
that live abroad or frequently travel outside of your home country, you can easily arrange for
private international transfers. For example, the next time friends from abroad come and visit,
be very generous and pick up all of their local expenses. Then, once your trusted friends return
home they can deposit an equivalent amount in your offshore account. In this way, money
makes its way to your account without ever having to make its way out of your home country.
You could also move larger amounts of money in this manner. If a trusted foreign friend is in
need of a certain amount of money in your home country, perhaps for a local investment, you
can simply trade assets. Rather than actually transporting your money out of your home
country and his money into it, just swap funds. He'll take your money in your country. You'll
receive an equivalent amount in his.
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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.
USING ELECTRONIC HELPERS

Alternatively, if you would rather go it alone, there are ways in which you can both gather your
money and deposit it without telling a soul. If you bank in Luxembourg or Liechtenstein, you
can make your deposits by means of money-eating ATMs, automatic tellers that actually accept
cash instead of dispensing it. Such machines are ideal for around the clock deposits, no fuss,
no hassle. You even get a receipt on the spot. If your bank does not have one of these magic
helpers, ask about using the standard night deposit box as long as you can do so in a way that
will not raise any eyebrows. Ask when you open the account, then formalize everything at
once. Of course, you will also want to make certain when using such devices that you do not
inadvertently violate any of the local reporting requirements.
ATMs can also be used both at home and abroad to withdraw cash from your onshore
account in a low-profile manner. At home, get into the habit of frequently withdrawing large
amounts of cash, but rather than spending this money, store it away until you have amassed a
tidy little sum that is just under reporting requirements. You can then make your way to your
offshore account and deposit the entire amount. As far as all records in your home country are
concerned, your money disappeared long ago. You can even add more to your offshore
account, by making additional withdrawals once abroad and adding them to your account. The
whole trip can be explained away as a simple vacation to a beautiful sunny island, meaning
that you can withdraw even more than you would at home while abroad. It is only natural for
you to spend more while on vacation than at home.
MOVING LARGER AMOUNTS OF CASH

Even when dealing with large amounts of money, cash or other untraceable commodities such
as gold, are still the instruments of choice for those concerned with banking privacy. However,
in most parts of the western world today, you will raise far too much attention than desirable
by walking into your otherwise friendly onshore bank and demanding that your million dollar
account be closed down and turned over to you in hundred dollar bills. Still, if you are one of
the privileged few that can gather your chips as you see fit or are about to embark on the free
life of a PT and no longer care what your former taxman may think, there are a number of ways
that you can go about moving your nest-egg into secret offshore accounts without sacrificing
your hard-won banking privacy.
Many banks around the world are required by their governments to restrict or report the
amount of cash they accept from new accounts, meaning that they will in all likelihood be even
more reluctant to accept large cash sums than they are to hand them over. If you walk in
bearing large sacks of cash, your new banker may outright reject your business. Accordingly,
it is best to make an appointment well in advance to merely discuss the possibility of opening
a substantial account. Then shut up and let the banker sell you! Perhaps you can make the first
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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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CASHIER'S CHECKS, MONEY ORDERS,

TRAVELER'S CHECKS
If you do not like the idea of travelling abroad while carrying large amounts of cash, there is
another private solution that will cut the paper trail. Buy a cashier's check or money order with
cash, either in a bank at home at which you are not known or in a neighboring country that
does not have a patrolled border with your home country. Americans may want to make a
special trip to Canada. Europeans can freely meander with their cash to any neighboring
member of the European Union.
Money orders can also be purchased at a convenience store, mail forwarding service,
bureau de change or similar type of business. Such small businesses are often not entirely
diligent in following Big Brother's laws to the letter. They have not as of yet come under the
immense pressure from government bureaucrats that the banking industry has. The bad news
is that in a growing number of countries, many banks will make it very difficult for your to
buy a money order anonymously. They often require that you identify both yourself and the
payee. They also more often than not like to create a rock solid record that contains goodies
such as taxpayer identification and bank account numbers. Finally, to make matters even
worse, they charge much higher rates for such infringements into your privacy than most
convenience stores do to leave you alone. After all, somebody has to pay for all of that
increased paperwork.
Another alternative for turning cash into a more secure medium for transport is to buy
traveler's checks, again with cash at a place at which you are not known and do not maintain
an account. Generally traveler's checks are handed over with very few questions. You are even
free to sign the first signature on your own, meaning that there is no reason for you to use your
own name. Remember, as long as you can reproduce the signature again, you can easily cash
the traveler's checks. A few places, particularly currency exchange businesses, are still willing
to cash traveler's checks without demanding that you show identification. However, even if
you do sign your own name on traveler's checks, it is highly unlikely that they will ever be
linked to you if you pay for them with cash. A computer base that can search through all
encashed traveler's checks for a specific name has not yet been created. With a little luck, one
never will be.
KEEPING IT ALL ANONYMOUS

Whatever method you choose, just remember that you want to purchase your checks or money
order anonymously. In some countries, when buying a cashier's check or money order at a
bank, you may have to place your order before ten in the morning and then pick up the check
after lunch. Don't panic. Different strokes for different folks, each country is different. Pay
cash and then mail the check to your offshore bank with instructions to clear the check, convert
it into the currency of your account and then deposit it.
High street banks in most countries will still routinely sell cashier's checks to non-
customers walking in from the street. You may have to give a name but in all of the European
countries that I have worked with I have never been asked to show identification. As a general
rule, if you are not asked for identification at the beginning of the transaction you will be all
right. Of course, if the teller suddenly asks for your passport, you can always say that you
forgot it at home and then take your business to the next bank down the street.
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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.
BEARER SHARES AND BONDS

Another alternative for transporting large amounts of money anonymously is by means of
bearer securities. These are simply shares of companies or bonds that are issued to the
"bearer". The issuing company maintains no record of the sale. By definition, these shares or
bonds may be freely bought, sold, traded or given away without creating a paper trail. As far
as banks or other financial institutions are concerned, such shares or bonds are legally owned
by whoever actually has them in his or her physical possession. No central registration exists,
meaning that for all intents and purposes, they are as untraceable as good old cash.
Bearer shares are issued by most offshore corporations. They are also used by banks,
insurance companies and even countries, states and municipalities, which issue them to raise
revenue. They can be purchased just about anywhere on the planet, with, of course, the
exception of the US. Bearer shares and bonds were one of the first victims of the so-called war
on drugs and are now illegal in this Big Brother stronghold. American corporations, even those
based offshore, are now prohibited from issuing bearer bonds or shares. Even the US
government swallowed its own bitter pill and recently stopped issuing bearer T-Bills.
Nonetheless, in spite of such ongoing efforts by Big Brother, such wonders of anonymity
remain freely available in most of the rest of the world, at least for the moment.
Bearer bonds are considered by many privacy conscious investors to be the best invention
since sliced bread. As a conduit for converting your cash and transporting it in the least
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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.
THE ABC OF BEARER BONDING

Bearer bonds come in two versions: coupon and non-coupon. The former is a bond with a
number of coupons attached to it. At specified intervals, these coupons may be cut out and
redeemed for cash, either at a bank or by mailing them directly to whoever issued the bond in
the first place. Rules vary, but will be stated on the back of the bond. This payment is usually
interest, as the bond itself is redeemable at face value upon maturity. On the other hand, a non-
coupon bond, as the name implies, does not have any coupons. This means that interest is not
paid out as long as you hold the bond but is instead added to the overall value of the bond until
it reaches maturity.
Let us say, for instance, that a bond is issued in the amount of US $100,000. The interest
rate is set at 10 per cent per annum and the date of maturity (the date when the bond may be
redeemed at full face value of US $100,000) is seven years from the date of issue. Obviously,
no one would pay US $100,000 for a bond just for the pleasure of owning it for seven years
and then at the end of it all get the same amount back. In effect, that would mean receiving no
interest payments on your funds. So, the bond is issued at a discount to face value. For the
°
purpose of this example, I have set an interest rate of 1 per cent per annum and a running time
of seven years because an amount will double in seven years (plus a few weeks, anyway) if 10
per cent annual interest is left to be compounded upon - the good old interest on interest.
This means that when a bond is issued with a face value of US $100,000 it will be sold for
US $50,000 - a 50 per cent discount on face value. No one in his right mind would pay the US
$100,000 face value before maturation date, seven years hence. Remember, there are no
coupons on such a bond. In fact, interest for the entire seven year period will be paid as part
of a lump sum of US $100,000 at the end of it all- that's US $50,000 in interest as well as the
original US $50,000 paid for the bond. Strictly speaking, one does not buy a bond but rather
lends money and receives the bond as collateral for the loan.
So what happens if you need or want your money back before maturation date? No
problem. You just find someone who wants to buy it. That is exactly the sort of thing that banks
and brokerage houses do for a living. They make surprisingly small charges for their services.
(Of course, if a low-quality junk bond is involved, there may be no buyers.) After one year,
you will be able to sell the bond of the above example for US $55,000 - the original outlay
°
plus 1 per cent interest. If your bearer bonds are not counterfeit or damaged, you will have
no problem selling them. Just walk into any bank or stockbroker's office with your bond and
they will happily buy it from you at the prevailing price.
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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.
ARE BEARER BONDS SAFE?

The major drawback to bearer bonds is the same as with cash - if you lose it, kiss your money
goodbye. Yes, there is a way to get a duplicate bond to replace one that has been lost, stolen
or destroyed, but this means that you must also purchase a "lost instrument surety bond" from
an insurance company. This will cost about 12 per cent of the value of your bearer bond. You
will also have to wait about six months to get your money back after proving that the paper
was lost or destroyed. If you dread the risk, ask an insurance company for more information
or seek out one of the very few bearer bonds that comes pre-insured. Alternatively, guard your
bearer bonds closely, preferably keep them on your person or in a safety deposit box until you
can get them to your bank and add them to the growing mother lode held securely offshore.
Another caveat about bearer bonds and shares is that, as there is no central registration of
bonds, you could accidentally buy stolen shares. As stolen bearer bonds are almost always
cancelled bonds that have already been redeemed, again you can then kiss your money
goodbye. The easiest way to avoid this is to buy bearer securities only from a major bank or
broker. They supply you with a receipt and a guarantee that the paper is bonafide.
Can artists love everything that has a tad of mystique about it, whether this mystique is
warranted or not. Every year, both banks and private investors are duped into either forking
over money for worthless cancelled bearer bonds or into extending large loans and taking
physical possession of bogus bonds as collateral. Usually, the way it works is that a crook
somehow obtains, more often than not by theft, a number of bonds that have been redeemed
but have not yet made their way to the incinerator. Sometimes the ruse is obvious to those who
know what to look for, such as one or more tiny holes or perforations in a comer of the bond.
(Those little holes, if undetected, may mean that the piece of paper you just paid £10,000 for
is about as valuable as a piece of toilet tissue.) On other occasions, even bonds that have
already been redeemed but for some reason were not perforated are peddled by more
enterprising con artists. Be careful!
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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.
ARE THE DAYS OF BEARER BONDS NUMBERED?

On another note, although you can take steps to protect yourself from con artists when
purchasing bearer bonds, there is little you can do to protect yourself from legislators. For
example, in 1992, the State Bank of Pakistan carried a number of full page ads in The
International Herald Tribune, The Wall Street Journal and a number of other papers. These ads
touted a new series of bearer certificates and proclaimed proudly that no questions would be
asked as to the origin of funds used to buy the bonds. Of course, Big Brother saw this as nothing
less than a direct assault against his ongoing war against banking privacy. He acted swiftly.
The US government, acting as self-elected world cop, threatened to summarily arrest and
prosecute all Pakistani bankers living or working in the United States for "aiding and abetting"
drug dealers and money launderers, current and prospective. Talk about Nazi methods! But, it
worked. A short, three weeks later, the State Bank of Pakistan ran a new series of ads to the
effect that the bearer bonds on offer had been withdrawn. Big Brother had struck another blow
against freedom. Pakistan then went on to sell its bearer bonds more discreetly as almost all
nations and corporations do.
The US government, for its part, went on to request that Pakistani officials tum over the
names of all Americans who responded to the ads. This demand has not, as of yet, been
honored. However, there is a great deal that one can learn from this story, particularly if you
are an American interested in purchasing bearer securities. When requesting information about
such commodities, make absolutely certain that you use an address located outside of the us.
If your government one day finds out that you frequently buy and sell bearer securities you
may well find yourself at the center of a very unfriendly investigation. Don't allow this to
happen. Stay absolutely low-profile from the very outset.
Furthermore, this story also shows that you really do need to start thinking about how you
intend to move large sums at some future date. This rule applies not only to Americans but to
everyone, unless you have your mind set on spending the rest of your days in your present
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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.
WIRE TRANSFERS AND TRANSIT ACCOUNTS

Another method to move money into your offshore account is by good old fashioned wire
transfer. Moving money between countries in this manner is immensely useful, especially if
the amount in question is larger than what you would feel comfortable carrying around on
your person.
The major problem with wire transfers is that as with checks and credit cards, they leave a
number of traces behind. Not only does the bank from which the transfer is initiated retain
records of the transaction, but the bank on the receiving end will be able to dig up at short
notice details about who ordered the transfer and from where, right down - in some cases - to
the account number from whence the funds originated. Such tidbits will be stored in silicon for
ten or perhaps even twenty years after the transfer took place, even in countries that boast
banking secrecy. There is no guarantee that at some point in the future the laws of such
jurisdictions will not change. What will happen if Switzerland one day joins the European
Union? The last remnant of already tattered Swiss bank secrecy may well disappear.
Hence, when using wire transfers you must approach the whole process creatively. Yes, you
can move your money around the globe anonymously by wire transfer, you just have to make
use of what is commonly known as a transit account, although I prefer the term PT or
"passthrough" account. Briefly, a passthrough account is simply an account in a different name
(perhaps that of a corporation) that is located in a country with bank secrecy. Funds are routed
through two or three such accounts in different banking havens. Another alternative is to have
either the manager of the branch or an employee act as recipient of the funds, legally signing
his name to the account, at one or more points along the way. Swiss banks routinely sign all
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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.
BREAKING THE PAPER TRAIL COMPLETELY

You can also make use of wire transfers to move your money to more friendly jurisdictions at
which point it can be withdrawn as cash to break the paper trail completely. Here is how it
works. Once the money has been wired from your home bank account to your passthrough
account, visit the receiving bank - or have a friend do the honors - and withdraw the funds, in
cash. Whereupon you quite simply take the money - in cash - to another bank in the area, from
which you can then wire the funds to their ultimate destination. Another alternative with this
method is to start the whole ball rolling with a personal check rather than a wire transfer,
deposit funds in your first passthrough account by simply writing a check, albeit a large one,
from your home account. Although the check will take some time to clear, this method is a
perfectly legal way to move money outside of highly regulated jurisdictions.
These methods work fairly easily in countries with liberal banking regulations, meaning
that you must choose carefully the jurisdiction in which your money will be converted into
cash and then redeposited. Of course, you will need to show some valid identification and
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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.
GATHERING YOUR CHIPS

Big Brother is very much aware that once your money is handed over to you in the form of cold
hard cash it becomes very difficult for him to monitor its movements. Hence, the first reporting
requirements were introduced to try and stop your ability from making use of cash as a way of
establishing banking privacy. As described in greater detail earlier in this report, banks today
not only monitor all transactions in search of cash deposits or withdrawals in excess of
reporting requirements, but in many jurisdictions have been instructed to be on the lookout for
what has come to be known as "suspicious" behavior. What constitutes suspicious behavior?
Banks have been instructed in particular to look out for individuals who frequently make
use of cash. Changing a large number of small bills into larger bills will today mark your as a
criminal. Similarly, coming into a bank with a friend and then each making a large cash deposit
just below reporting requirements will also merit undue attention from your banker. Even
trivial things, such as not counting cash before depositing it or using a number of large
denominated bills, could also lead to increased monitoring of your affairs. In short, just about
any transaction that involves cash at some stage could well fall into the expanding net.
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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.
WHY REPORTING REQUIREMENTS DON'T WORK

As Big Brother not only threatens but often issues severe penalties against banks that do not
comply with his precious reporting requirements, many banks have adopted the practice of
filing "defensive" reports. Bank managers tell their employees that any activity that could even
remotely be construed as suspicious should be written up. In this way, if at one point in the
future a customer does come to be one of Big Brother's targets, the bank need not fear any
possible reprisals. It also need not worry about being tied up in months of bureaucratic hassle
when it comes time to justify why it did not file a report in a certain situation. Today, many
banks file a report for any and all large cash transactions, even for transactions that they know
are entirely innocent.
As frightening as this prospect may sound, the upshot is that this whole process succeeds
primarily in producing a vast number of meaningless reports which then dramatically water
down the overall effectiveness of reporting requirements. While the number of reports on file
increases, their overall quality decreases and the time and cost required to sort through this
abundance of newly created paperwork grows to an almost overwhelming degree. In short, Big
Brother often finds himself completely immobile, wrapped up tightly in the very red tape he
intended for other less nubile victims. According to an article which appeared recently in the
Boston Globe such a surge in the quantity of reports filed "does little to boost the number of
individuals prosecuted for money-laundering offenses." In the US, it is not uncommon for it
to take up to four years for the Treasury Department's Office of Financial Enforcement (OFE)
to get around to examining the abundance of reports (approximately 8 million per year) that it
has demanded be filed by all and sundry.
One individual in New York filed nearly 1700 such reports before Big Brother took any
notice of him. Apparently, it wasn't until a random search revealed that a large number of
reports were being filed within a single zip code that Big Brother became interested. Further
analysis showed that this enormous number of reports had almost entirely been filed by one
individual in one lonely bank. This example demonstrates clearly that, for the most part,
properly filed reports are generally ignored. This has led many professional money launderers
to adopt what is known as the file and forget approach.
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FILE AND FORGET

Once Big Brother does get around to looking over his precious bits of paper, he tends to focus
his energy on patterns of behavior rather than single incidents. In other words, if your goal is
to move a large amount of money offshore and you would like to withdraw the funds in cash,
just withdraw it in one lump sum and file the appropriate report. Say that you would be more
than happy to do all that you can to help out in the war against drugs. After all, no sacrifice is
too great for the welfare of our children.
The worst thing that you could possibly do is refuse to fill out a report or appear to be in a
state of shock when the very idea is mentioned. Such behavior would immediately set off
alarm bells far and wide and your banker would in all likelihood assume that you are a child
pornographer, drug trafficker or other equally unsavory character. Apparently the idea that you
would just like to move some of your own legally earned money into a safe offshore account
seems ludicrous to all involved in government. Such an idea is not even entertained. Still, once
you have given them their precious bit of paper telling them that you have taken your chips
out of your account, the money is then yours to play with as you please. You have your cash,
you now only have to move it safely into your offshore account.
The second to worst thing that you could do when withdrawing your money is to try to
avoid reporting requirements by structuring your transactions, making several withdrawals just
under reporting requirements. (This is, of course, assuming that your home country has made
such maneuvers illegal.) Many banks have installed state of the art snooping computers that
will pick up any such effort to avoid reporting requirements before you have even completed
your last transaction. Furthermore, as such activity constitutes a pattern of behavior it falls
within the territory that Big Brother can easily monitor. Remember, your home country more
often than not need not prove any underlying illegal activity to seize your money and add it to
the government piggy bank. Structuring in and of itself is illegal and usually calls for the
forfeiture of all funds involved. Furthermore, enormous fines to the tune of a quarter of a
million dollars and even a stint in the pokey may also be brought into play if you are
successfully convicted.
It is much better to file a report, particularly if you are transporting both your ass and your
assets out of your home country for good. Big Brother will file your little form away and
perhaps look at it in three or four years time. By then, you will have had more than enough
opportunity not only to move your money, but also yourself to safer pastures. With a new
passport in hand, you can freely wander the globe and enjoy the finer things in life while your
former taxman wrings his hands over his now useless bits of paper.
CREATING AN EXEMPTION FOR YOURSELF

If, however, you are one of the large number of people on this planet who insist on staying in
their home country, there may be a way for you to create a route around reporting requirements
in certain situations. Again, this path to secrecy has been made entirely impossible by the
avalanche of paperwork under which most of Big Brother's bureaucrats currently find
themselves buried. From the very beginning, Big Brother understood that too many reports
would be as useless as no reports at all and thus in most countries granted certain types of
businesses exemptions from reporting requirements.
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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.
RESTRICTIONS ON TRANSPORTING YOUR MONEY

There are no restrictions on the free flow of capital in and out of most countries at the present
time. This freedom to transfer assets abroad exists in almost every western democracy,
including the US, Australia, Japan and most of Europe. Reporting requirements are, however,
a different matter entirely. For example, the US Currency and Foreign Transactions Reporting
Act requires:
Everyone who transports or causes to be transported into or out of the United States currency
or certain monetary instruments in an amount exceeding US $5000 (note: this amount has
since been raised to US $10,000) is required to file a report (IRS Form 4790) with Customs at
the time of entry or departure, or on or before the date of entry or departure if the currency or
monetary instrument is mailed or shipped.
In other words, Big Brother not only wants to know when you take money out of your
onshore account, but also wants to be informed the minute you decide to move said money to
safer pastures away from his ever-extending grasp. The US has one of the most severe
reporting requirements concerning the transport of funds as not only cash but many other
monetary instruments must be reported.
Such monetary instruments include almost anything in bearer form, meaning anything for
which title passes upon physical delivery. This includes any and all forms of bearer bonds,
securities and investments. Similarly, cashier's checks, money orders or traveler's checks on
which the name of the payee has been omitted or which have been endorsed must also be
reported if they exceed the US $10,000 limit. Again, the laws vary from country to country.
Many countries are only concerned with the movement of large quantities of cash and could
not care less about other monetary instruments. Check out what the situation is in both your
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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.
MOVING YOUR CHIPS OFFSHORE

In general, the easiest way to not have to inform Big Brother when you decide to move your
money into your offshore account is to make use of either cashier's checks, money orders or
traveler's checks. Although you would be required to report such monetary instruments when
they are either brought or sent out of your home country if they are not made payable to
anyone, all such requirements are instantly nullified once a name is written into the payee line.
You can make such monetary instruments payable to your bank and then send them off with
instructions that the check be cashed and then deposited in your account. As described in the
previous chapter, such instruments also allow you to break the paper trail if they are purchased
anonymously with cash. In one quick and simple step you not only break the paper trail, but
also quickly and legally move your money anonymously into your offshore account.
Another method favored by some is to make use of personal or business checks that you
have received from third parties. By endorsing such checks over to your bank and then sending
them off to be deposited in your offshore account, you can also legally avoid having to report
the movement of funds. Make sure that you do not simply endorse the check as this would then
make it into a bearer instrument and liable for reporting requirements. You must make the
check payable to someone. By using your bank for this purpose, your actual offshore account
stays out of the picture. Remember, however, that the name and location of your offshore bank
does not. Whoever wrote the check originally will become privy to certain information that is
best known only to you. If this check is from anyone who can be construed as a potential
enemy (which basically means almost anyone) avoid this approach. Still, if it is a matter of
either informing Big Brother or an unconcerned third party of what you are up to, this third
party may prove to be the lesser of two evils.
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GAMBLING MONEY INTO YOUR OFFSHORE ACCOUNT

Of course, you could always choose to inform neither Big Brother nor anyone else of your
movements and carry your cash offshore in amounts that need not be reported, making several
trips if necessary. Again, the problem with this approach is that many countries have instituted
restrictions against structuring the movement of funds to avoid having to inform Big Brother
of what you are up to. In other words, if Big Brother one day finds out that you have been
diligently moving money into your offshore account by making many trips to your offshore
bank with amounts just below reporting limits, say US $9000 per trip, you could find yourself
in a heap of trouble. Of course, how Big Brother is going to find out in the first place if you
do not generate any reports or other documentation of your movements remains a mystery to
all but government bureaucrats.
If one day, however, it does come to light that over the past several years you have been
traveling abroad to a well known banking haven with large sums of cash, you may well find
yourself at odds with government henchmen, unless, of course, you can provide a justifying
story. For example, if each time you leave your home country, you do so on a large cruise ship
which makes a tour of beautiful little tropical islands that also just happen to be terribly secret
banking havens, you can easily explain your money away until it all but disappears. For a start,
break one of the most sacred of all PT concepts, that which says it is always best to maintain
a low profile. Tell anyone who cares to listen that you are an avid gambler and love nothing
more than to set off on a cruise to all of your favorite casinos located conveniently in sunny
tropical islands.
Once the ship docks in each banking haven, set off with a large camera hung around your
neck and a goofy hat perched on your head. Unbeknownst to anyone, tuck the majority of
your cash into your camera bag before leaving and then head straight for your local offshore
bank. If arranged creatively, you can fund several accounts in several secure banking havens
in this manner. You will, of course, also want to take advantage of the expedition to put in an
appearance at each of the casinos of which you are supposed to be so terribly fond. Make a
big show of the fact that you are losing a bundle. Even if you only gamble away a few
hundred, if done with the proper finesse, most people will automatically assume that you have
parted with thousands.
If one day your local taxman does find out about your little hobby, he will in all likelihood
assume that you are far too stupid to merit any further interest, which is just the way you want
it. In fact, you could probably even use the above method with larger amounts of cash by again
employing the file and forget method. Diligently fill out the required form at the border before
boarding your ship. Make sure you don't forget to mention to the customs official your
fondness for gambling. For that matter, it is probably also a good idea to don your camera and
hat while working your way around this little bit of government red tape.
Again, if you are setting off for the free life of a PT, such smoke and mirror tactics are far
from necessary. Just take your money with you. In most parts of the world you are perfectly
entitled to carry cash or checks abroad in any form. As long as the money is legally earned,
you can take US $100 billion with you provided that you report it (or attempt to report it) at
the time you cross the border. Yes, filling out this report will tell your government that your
money has left its sacred shores. It will not, however, reveal where exactly it has gone to roost.
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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.
MAKING USE OF GOLD COINS

Another possibility for transporting money out of your home country is to purchase small
collectibles at home that you know can be brought or shipped abroad and sold. Rare coins,
particularly those made of silver or gold, are probably the most liquid of all such investments.
In the case of gold coins, it is not uncommon for a significant portion of the overall value of
the coin to be the gold from which it is made. While invested in such coins, your money, or
at least a significant part of it, enjoys the same security that it would if invested directly in
gold bullion.
Furthermore, rare coins are generally valued at their face value rather than their higher
numismatic or collector's value for reporting requirements. In other words, by changing your
money into a coin collection that is the envy of even the most avid collector before setting off
for your offshore banking haven, you can legally work your way around all reporting
requirements. Even US legislation specifically states that gold coins and other coins used for
"non-monetary purposes" are exempt from currency reporting requirements.
As with any investment, when putting your money into rare coins make sure that you know
what you are getting into before investing. Shop around and compare prices, research the
market. If you do not know a great deal about this area of investment, deal exclusively with
reputable firms. Make certain that the seller is at the very least willing to buy his coins back
from you at fair market value and is willing to put such a promise in writing. When it comes
time to cash in your coins, he may well claim that the value of your coins has not increased or
may charge you a small fee for such a service, but at least you can rest assured that if your
money fails to make it to your offshore bank it can be redeemed at home.
Purchasing rare coins anonymously, meaning with cash, in highly regulated jurisdictions
will prove to be difficult if not impossible. Many dealers no longer accept cash at all, others
do but will then file one of Big Brother's reports and announce your activities to any who cares
to hear. Instead of going this route, it is probably best to purchase your coins in your own name
at home and then liquidate them into cash, thus breaking the paper trail, once you have taken
them abroad to a more freedom-oriented jurisdiction.
MAKING USE OF OTHER COLLECTIBLES

The other problem with transporting your funds by first investing them in rare coins is that
Big Brother is very much aware of this approach. Although reporting requirements have yet
to be tightened, the bureaucrats are on the lookout for individuals who suddenly take an
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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.
CURRENCY RESTRICTIONS ARE NOT A PROBLEM

Happily, full-fledged currency restrictions, in which you are simply prohibited all together
from bringing your money with you when leaving home, are now largely a thing of the past.
If, however, you do business in many third world countries, your company may still be
hampered by them, at least in the beginning. Such all out restrictions on the movement of
,capital are generally the brainchild of stupid politicians who foolishly think that they can plan,
centrally, such a vibrant thing as an economy. Nonetheless, as with all reporting requirements,
even currency restrictions are easy to circumvent in a totally legal manner. Currency
restrictions, like all of the legislation discussed in this chapter are soon reduced to the utterly
senseless pipe dreams that they are.
The exact way to work around currency restrictions naturally varies from country to country
depending upon the nature of the legislation introduced. If you find yourself faced with
currency restrictions, your first step is easy. Ask for directions. The best people to talk to are
resident foreigners in business. They will know the easiest way to get money in and out of the
country. Most large cities have an American club which caters not only to Americans, but to
expatriates of all colors. Go there for lunch to meet new faces. Wealthy residents are also
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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.
YET MORE REPORTING REQUIREMENTS

That good old land of the free and home of the brave is again the leader of the pack when it
comes to invading your privacy. The US, unlike most other countries, not only demands that
you pay tax on any interest earned offshore, but also demands that you inform it of the very
existence of your account. Yet more reporting requirements have been enacted that require
you to inform Big Brother of your activities. If you hold more than US $10,000 in total in
offshore financial accounts, you are required to mention this fact on Schedule B of your tax
return and then separately file Form TD F 90-22.1 known more commonly as a Foreign Bank
Account Reporting Form (FBAR). You are also required to file this report if you own more
than 50 per cent of a corporation that maintains foreign financial accounts which in total
exceed US $10,000. In either situation, this form is filed directly with the Treasury
Department, which then of course uses the information you have provided to take an extra
careful look into your affairs.
As with all other forms of American reporting requirements, those which demand that you
disclose the very existence of an offshore account will in all likelihood soon be adopted by
most other western countries. If such an infringement of your privacy has not already been
brought into play in your home country, it undoubtedly will be soon. Germany was one of the
first to hop on the American bandwagon. It is now illegal to not disclose the existence of a
foreign account in dear old Deutschland. In 1993, the German tax authorities installed a 30 per
cent withholding tax on all interest earned in the country. Of course, this new tax succeeded
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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.
THE SILENT APPROACH

Once you have gone to the trouble of opening an account in a completely anonymous manner,
it makes little sense to then tum around and tell Big Brother the exact nature and location of
your account. If done properly, you may well think that as there is no possible way for your
government to find out about your account, you may as well keep the local bureaucrats happily
unaware of the fact that some of your money is now stashed offshore. What your government
does not know, cannot hurt you. You could then watch your expatriated money grow silently
and completely free from all burdens of taxation. Although I admit that this method may be of
value to PTs who need not answer to anyone government, it could well prove to be disastrous
for those still firmly planted in one country under the thumb of an oppressive regime.
Remember that you never know what the future may bring. As has been demonstrated
throughout this report, governments do not hesitate to gather whatever information they want
about you in whatever manner possible. Questions of legality are of little if any concern. You
also have no idea what the future may bring in your chosen banking haven. Perhaps one day
in the not too distant future it will form an alliance with your home country and as a show of
good faith tum over all records concerning all foreign account holders. Perhaps one day, in its
continued quest to gain access to foreign banking records, your home country will just outright
invade the country in which you have stashed your money. There really is no telling what may
happen tomorrow.
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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.
AVOIDING US REPORTING REQUIREMENTS

There are a number of ways that you can work your way around reporting requirements while
still investing a significant part of your overall portfolio offshore. Although foreign financial
accounts must be reported, other forms of investment such as foreign property, annuities,
precious metals and securities have not yet fallen prey to such restrictions. You are also still
allowed to store such commodities in an offshore safety deposit box without having to inform
the bureaucrats of either the investments or even of the existence of the safety deposit box
itself. It seems that for the most part Big Brother is interested in cash holdings, investment
accounts and the like. When placing your money in other areas of investment, you are still
allowed to operate with a relatively free hand.
Furthermore, both individuals and corporations enjoy separate exemptions. In other words,
if you own an offshore corporation which in tum owns an offshore account, you could legally
deposit up to US $20,000 without having to report it. Half of this amount would be in your
corporate account and the other half would be held in a personal account. No report need be
filed. (For more information on the use of offshore corporations, see Part VI of this report.) If
you diversify yet further, such as into gold or other precious metals you could again extend the
total amount held offshore without having to report it. You must, however, personally take
possession of the gold at some point. You cannot have your offshore bank buy it on your behalf
and then hold it in a brokerage account. The same rule applies when investing in foreign
securities: you, not your bank, must hold on to the bits of paper, clip and redeem coupons and
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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.
CONSIDER FOREIGN SECURITIES AND MUTUAL FUNDS

Although it is perfectly legal for you to invest as much as you desire in foreign securities
without informing your home government, you will be required to report any income that such
investments derive and pay tax on it. One way around this infringement of your privacy is to
invest exclusively in foreign securities that do not payout dividends but instead roll-up or
reinvest any profits generated. You can thus defer tax on your investment until the day that you
sell it. In some countries, you will be penalized when you do eventually cash in your
investment by being charged interest on the deferred tax. Still, if you are planning to soon
move yourself as well as your money away from your home government's base of operation,
this strategy is an excellent way to salt away your nest-egg in a completely private manner.
Another alternative is to invest in an offshore mutual fund. Unlike the international banking
industry, mutual funds enjoy a certain amount of freedom when it comes to official attention
and reporting requirements in many countries. Often fund managers do not even ask where your
money has come from. Funds that cater exclusively to expatriates manage to steer clear of
almost all reporting requirements. The only catch is that when purchasing a mutual fund you
must do so in a manner that does not enact reporting requirements back home. Do not set up an
actual account with the sponsor of the mutual fund. Instead, visit their offices in person and pick
up shares in bearer form. You can then store these shares offshore in a foreign safety deposit
box, preferably in the very country that they were purchased. As you are not maintaining a
foreign financial account, no report need be filed. Similarly, as your investment in bearer form
is not coming across any borders with you, no reporting requirements concerning the transport
of funds need concern you. Of course, you will have to visit the country again and actually hand
over the bearer certificate when it comes time to cash in your investment. Finally, as a few funds
do not sell directly to Americans, if you are straddled with this unfriendly passport you may
have to buy through an intermediary, such as an offshore bank.
Like other foreign securities, many offshore mutual funds do not payout dividends but
instead continually reinvest all profits generated. This means that no reporting requirements
whatsoever need be feared once your money is invested in this type of commodity. Your
problem will then be gathering information on the various types of offshore mutual fund
available. As with offshore banks, many countries prohibit offshore mutual funds from
advertising. It is up to you too seek them out, but once you have dug up their addresses and
written to them all by yourself, they are allowed to take your money. Neither you nor the
mutual fund is breaking the law, but still remember to use the same privacy tactics when
contacting offshore mutual funds as you would when contacting offshore banks.
There is certainly no shortage in choice when it comes to offshore mutual funds as there are
literally thousands of them. Don't think that such funds are small either. Some are operated by
the offshore divisions of the largest US fund management groups. Fidelity, for one, is making
buckets of money offshore. Such funds are based in Luxembourg, Gibraltar or in the
Caribbean, but are often sold from London. A good place to begin gathering information is The
International, a magazine published by the Financial Times for investors based outside of the
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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.
CONSIDER FOREIGN ANNUITIES

If your home country were one day to institute full-fledged exchange controls, it would in all
likelihood require that almost all funds invested offshore (at least those that it knows about) be
returned to its trusty shores. Most governments have resorted to such measures when push
comes to shove and exchange controls are brought into play. Insurance policies, however, are
likely to escape any forced repatriation under future restrictions because they are seen as a
pending contract between the investor and insurance company, rather than as a financial
investment. Even when England instituted harsh exchange controls in the 1960s, foreign
insurance policies were specifically exempted from any and all restrictions. To the bureaucrats
writing such regulations, an insurance policy is a commodity already bought, not an investment.
Even today, in most countries, foreign annuities or insurance policies need not be reported no
matter how much is invested as such policies are not considered to be financial accounts.
Foreign insurance policies come in many shapes and sizes. Some act remarkably like a bank
account, paying out monthly or yearly installments and allowing you to increase the overall
amount invested by adding small amounts over long periods of time. As with foreign
securities, any income derived from a foreign annuity must be declared on your tax return. If,
however, your money is invested in a deferred annuity, no regular income will be generated
and thus nothing need be reported. Instead, the actual value of your policy will grow until the
day comes for you to cash in. (At this time, if you are still on the tax rolls of your home
country, taxes on the entire amount earned would become due.) The only catch for Americans
is that you must pay a one per cent excise tax on foreign insurance policies unless you purchase
them within a retirement plan. However, in order to purchase a foreign policy within a
retirement plan, you must make use of a US trustee, such as a bank or other institution, and the
policy itself must be held by this trustee in the US. For this reason many Americans choose
to pay the tax and hold on to the annuity, in a secure offshore deposit box, themselves.
Although annuities are available in many countries, those on offer in Switzerland are
generally the favorite of investment advisers far and wide. Unlike the Swiss banking industry,
the Swiss insurance industry has not yet come under intense pressure from foreign powers to
share their customer records with any and all who may care to see them. This situation is likely
to continue as long as annuities enjoy the freedom that they currently do from reporting
requirements. Furthermore, the Swiss insurance industry is undoubtedly the strongest in the
world. During the course of its history which spans more than 130 years, not one single
institution has failed. Policies are available in a variety of currencies, including the Swiss
franc, German mark, European Currency Unit (ECU) and US dollar. They are also exempt
from the notorious 35 per cent Swiss withholding tax.
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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.
THE PROS AND CONS OF REPATRIATION

You now understand the various strategies available for investing your money offshore in a
completely anonymous manner. By following the advice given in the previous pages, you need
not worry about your government one day finding out about your secret stash. The only
remaining area in which problems could arise is if and when you decide to bring some of your
money, so painstakingly moved offshore, back to your home country. The first rule for
repatriating funds is that above all else remember that the entire purpose of having a judgment
proof nest-egg abroad is not to bring it home and spend it, but to keep it abroad for the day that
you become a PT or to survive a rainy day if the unexpected comes and wreaks havoc in your
life. If you get older and decide you may never use up your money before this rainy day comes,
it is best (safest) to be a big spender only on vacations abroad. If you spend too much at home,
this will attract the attention of local tax collectors who will then do an analysis of your income
and expenses and quickly discover something fishy.
The game plan that I recommend for most is to earn enough in your home country to build
up offshore assets and then relocate comfortably abroad. Relocation can mean just moving
abroad at a young age to get involved in a different line of work or activity. It can also be used
as a means to wave bye-bye to ex-wives, tax collectors and bureaucrats. Or to retire and go
fishing every day. Or to discover sex havens. Life can be great when you can go anywhere and
do anything all on a large income free from any and all record keeping requirements. First you
ship your assets abroad in advance of your departure and then you move your ass abroad to
join them. Don't bring the mother lode home unless you want to create the very strong
possibility that you will be forced to pay taxes on the whole shebang as ordinary income.
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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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USING OFFSHORE PLASTIC

The best low-profile way to withdraw money from your offshore account is by means of
plastic. Many offshore accounts come equipped with either a cash, debit or credit card that
allows you to gain access to your funds from just about anywhere in the world. The best way
to make use of offshore plastic is to receive out-of-the-wall cash from an Automatic Teller
Machine (ATM). This method offers almost complete privacy as well as freedom from any and
all reporting requirements. When withdrawing money from an ATM machine, only your card
number, not your name, is recorded. This card number includes a number that identifies the
card issuer, your offshore bank. All transactions concerning your bank are then grouped
together through large clearing houses and debited in one large sum. It is then up to your bank,
in turn, to debit the proper amount from your account. Your name stays out of the picture as
the money involved actually makes its way across national borders. All records of your
individual movements are thus conveniently placed offshore and are subject to whatever
banking privacy regulations your banking haven enjoys.
Some offshore plastic can be used to directly purchase goods or services, just like onshore
debit or credit cards. Of course, this method does not offer quite the same degree of privacy as
simple cash withdrawals. Your name may at some point come into the transaction if an
impression of your card is taken, but still the eventual record of all of your purchases will come
to rest offshore, not onshore in one tidy pile just waiting to be mined by tax snoops or a private
investigator. Still, be very careful when using your offshore plastic at home. Your card itself
could raise more attention than desirable if it is printed in a foreign language, meaning that
from the start you should ask your bank to issue all of your cards in the native language of the
country in which you will be using them most often. It is also a good to keep your onshore
purchases as conservative as possible. Only flash your offshore plastic in shops in which your
are not known and are not likely to be remembered.
For that matter, even when withdrawing cash from ATM machines, travel a little out of your
way. Frequent locales at which you are not likely to be recognized and if possible only use
machines that have not yet had one of Big Brother's cameras installed. Remember also that
just being caught in your home country with a card on your person that links you to an offshore
account can land you in a very sticky situation. In my opinion, when at home it is best to keep
all offshore plastic safely hidden somewhere, only to be used in case of an emergency. If at all
possible leave all cards and other material related to your accounts outside of your home
country. You can then pick up your trusty cards before setting off on a vacation or trip abroad
and then spend to your heart's content.
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.
ANDORRA: FAVORITE MOUNTAIN RETREAT

Nestled in a hidden valley in the Pyrenees, tiny Andorra offers bank secrecy and efficiency that
far surpasses what is on offer in modem day Switzerland. This little country has no taxes and
the lowest prices in Europe on almost everything. Native Andorrans all have one other thing
in their favor. They know and recognize that nobody owes them a living. No Andorran expects
a subsidy or a free ride. These mountain people work hard, study hard and to try to get ahead.
As a result, without any big fuss or fanfare, they now have a privately owned, thriving local
service economy. Their unregulated banking system is safe, sound, prosperous, computerized,
streamlined, discreet and very customer oriented.
American style reporting requirements and restrictions are simply unheard of in Andorra
where banking is not subject to endless rules, regulations or red tape. There are no restrictions
whatsoever on cash or other money movements in and out of Andorra. However, getting large
amounts of cash through French or Spanish customs requires knowledge of the rules and a bit
of finesse. Banks in Andorra offer a personal and personable service that is friendly but
respectful. Bankers are generally competent and positive thinking. Many speak English. The
local lingo is Catalan, but French and Spanish are commonly understood.
In Andorra, unlike Switzerland, you can have a current account that pays interest on
checking accounts instead of charging fees for the privilege of holding on to your money.
Opening a new account in Andorra is very straightforward. You walk in the door, show any ID
and letter of reference from a local customer or your present banker and are then given an
account number. Your account can be held in just about any currency. You can place current or
long-term deposit balances in all freely convertible currencies with no further ado. No sub-
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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.
AUSTRIA: SECRET ACCOUNTS STILL AVAILABLE

As international pressure caused Switzerland to slowly loosen its legendary bank secrecy laws,
Austria was quick to pick up the ball and run with it. In 1979, this country instituted its first
bank secrecy laws. These laws call for stiff penalties and fines including up to one year in the
pokey for anyone who knowingly reveals details about local bank accounts. Disclosure of
information is only permitted in limited circumstances, although again international pressure
results in the constant expansion of these qualifying circumstances. At present, account
information is no longer protected only if criminal proceedings, probate proceedings or penal
proceedings are instituted because of "deliberate offenses against tax laws". Money
laundering, insider trading and tax fraud (although not tax evasion) have also been made illegal
in Austria. Money laundering is considered to be any attempt to hide illegally earned funds in
the Austrian banking system.
Austria recently joined the European Union which resulted in the loosening of its bank
secrecy laws. All cash transactions in excess of AS 200,000 (a little less than US $19,000) must
now be reported. This reporting requirement had previously been set at a more moderate US
$50,000. ED membership also brought about the demise of one of the most touted private
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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.
BAHAMAS: FULLY-FLEDGED TAX HAVEN

The Bahamas is geographically one of the closest tax havens to the US. Nassau, the capital of
the islands, is only a thirty minute plane ride from Miami. Many cruise ships also visit the
country, making it a convenient banking haven for Americans. This chain of more than 700
islands enjoys a long and stable history. It was a colony of the United Kingdom until 1973, at
which time the country achieved full independence. The Bahamas, however, remains closely
linked to the UK and is part of the Commonwealth, with Queen Elizabeth II serving as head
of state.
The Bahamas is a full-fledged tax haven in the traditional sense of the term. There is no tax
on income, interest, dividends or capital gains earned in the country. There are also no
withholding, inheritance, wealth, sales or gift taxes present on the islands. Both numbered and
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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.
BELGIUM: LITTLE-KNOWN BANK SECRECY

Belgium is not commonly grouped in with other European banking havens even though the
country has some of the strongest bank secrecy laws in Europe. It also offers a modem and
sophisticated banking community that allows the investor to gain access to all major markets.
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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.
BERMUDA: LOW-PROFILE TAX HAVEN

Bermuda is composed of more than 200 islands located in a rather remote area of the western
Atlantic, about 600 miles off the East Coast of the US. From New York, it takes about two
hours by air to reach Hamilton, the capital of the islands and their financial center. Bermuda is
a British colony which has been governed by a generally elected House of Assembly for
centuries. It is home to the longest running parliamentary system in the western hemisphere.
Bermuda achieved a yet higher degree of self-determination in 1968 when its new constitution
went into effect. This constitution was later amended in 1973.
Bermuda is also one of the world's most firmly established tax havens. For non-resident
bank accounts and corporations, there are no taxes on income, profits or capital gains. There
are also no withholding, corporation, estate or death taxes. There is, however, a small probate
tax levied against real or personal property that is physically located on the islands. As for bank
secrecy, Bermuda has not instituted official bank secrecy legislation, but does enjoy a long
history of confidentiality based on common law and statutes governing the manner in which
companies are formed. Bermuda has also entered into what is known as a Tax Information
Exchange Agreement with the US. This tax treaty requires that the US beneficial owners of
Bermuda exempt companies be identified. Bermuda has not entered into a tax treaty with any
other country.
As strange as it may sound, the fact that Bermuda does not have official bank secrecy has
worked out to be an odd advantage for the jurisdiction. US officials have spent far more of
their energy concentrating on other banking centers, hoping that their efforts will force a crack
into what would otherwise have been impenetrable bank secrecy. Left to their own devices,
banks in Bermuda quickly learned to police their own shop before foreign bureaucrats showed
up to take care of such matters for them. When opening a bank account in Bermuda, you will
probably be asked to provide one or more verifiable references. Bankers in Bermuda go to
great pains to assure themselves that the money you wish to deposit is not the proceeds of
criminal activity.
This diligence taken on the part of bankers has worked to further assure US authorities that
Bermuda can be left alone to take care of itself. In short, this means that compared to most
other banking havens located in the western hemisphere, Bermuda enjoys a relatively low-
profile. If you do not mind answering a multitude of questions and proving the legitimate
source of your money when opening an account, Bermuda may well be the banking haven for
you. For the most part, bankers in Bermuda are not concerned with foreign tax matters. As
Bermuda imposes almost no taxes, it has no laws which make tax evasion a crime, meaning
that any dispute that may arise at home would not be viewed as a criminal offense in Bermuda.
Bankers in Bermuda also understand that revealing information about just one errant taxpayer
could well lead to the evaporation of much of the funds entrusted to their safekeeping.
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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.
BRITISH OFFSHORE BANKING HAVENS

The British offshore banking havens comprise Jersey, Guernsey and Sark in the English
Channel, the Isle of Man in the Irish Sea and Gibraltar on the southernmost tip of Spain. Local
legislation is modelled on that of the United Kingdom with one major difference. In the
locations mentioned, there is only minimal taxation. Also, there is bank secrecy, sort of.
Banks located in these centers are mostly British. Personally, I do not hold British banks in
very high esteem. I have found that, especially outside of London, they tend to be relatively
clumsy and restrictive. In general, British offshore banks do not come anywhere close to their
Swiss competition in terms of efficiency, confidentiality and the range of services offered.
Then again, they are cheaper. If you are not into active trading, they are perfectly okay for
long-term deposits. If you can live with silly rules (imposed by the banks themselves)
concerning minimum deposits, the number of checks allowed per month, special surcharges if
more than 80 withdrawals are made in a year, funny ways of calculating interest and the like,
then you can live with British banks.
They usually offer great interest on Sterling. For years it's been between 12 and 15 per cent
per annum - naturally with no tax deducted at source. In 1993, the rates dropped to just below
7 per cent, but compared to the 4 per cent on dollars that US banks are offering, even a paltry
7 per cent looks good. Furthermore, although interest rates are currently low, history shows
they will rise again shortly. The major British building societies (Savings and Loans) all pay 2
to 3 per cent per year more than the banks. The difference between a bank and a building
society is simply that the main business of a bank is supposed to be commercial loans. The
main business of a building society is supposed to be lending on long term mortgages. As a
result, the building societies pay the highest interest on funds that are tied up for a year or
more. In short, they offer less liquidity.
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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.
CHANNEL ISLANDS: JERSEY, GUERNSEY AND SARK

The Channel Islands, composed of Jersey, Guernsey and Sark as well as six smaller islands,
are all situated in the Bay of Milo which is actually closer to France than to England. Still,
these offshore centers can be reached from London in less than an hour. St Helier, the capital
of Guernsey is (surprisingly) home to the busiest airport in all of the British isles. As offshore
banking centers, the Channel Islands enjoy a long and stable history. They first became part of
the British empire during the Norman conquest in 1066 and have repeatedly earned special
privileges from the crown, including freedom from taxation. At present, with the exception of
foreign policy and defense, the islands are completely autonomous.
Residents are taxed at a flat rate of 20 per cent on income. For nonresidents there is no
withholding tax at all on dividend, interest payments and the like. Many of the smaller islands
have no taxes at all. Furthermore, although the islands have no specific legislation concerning
bank secrecy, they do have a long tradition of confidentiality. Many banks require that their
employees sign contracts which for all intents and purposes commit them to bank secrecy.
Numbered accounts are also available for further anonymity. Accounts can be held in any of a
wide range of currencies, although interest payments are usually higher when funds are
maintained in pounds Sterling. The Channel Islands also play host to a booming offshore fund
market. More than 300 international funds are based in Jersey alone.
The islands are also commonly used as a jurisdiction for establishing offshore corporations
and trusts. Corporations that are established in Jersey and Guernsey pay an annual tax and
filing fee of only £500. If the company is owned by nonresidents, the company is exempt from
the standard flat tax of 20 per cent on worldwide profits. Local corporations can be registered
through nominees. The actual beneficial owners need not be disclosed. Many major
international banks and corporations have come here to set up shop, including Chase
Manhattan, Credit Suisse, Hong Kong & Shanghai Banking Corporation and the Rothschild
Bank. Branches for most of the major accounting firms also call the islands home and are able
to assist in arranging your affairs in accordance with local laws. If you plan to visit, Jersey is
a more charming, lively and interesting place than Guernsey, but the islands are close enough
together that you can see both of them by hovercraft from St Milo, France, in the same day.
Jersey has a bit more class and a few more banks than Guernsey.
Sark also offers many opportunities not available elsewhere, if for no other reason than the
fact that most people are only vaguely aware of its existence in the first place. Mention Sark
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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.
GIBRALTAR: SUNSPOT OF THE SHADY DEAL

Gibraltar is located on the northern shore of the Strait of Gibraltar between Spain and the
African continent. Although many people think that Gibraltar is an island, it is actually a small
peninsula connected to the larger Iberian peninsula by a wide and sandy stretch of land. The
city state of Gibraltar (often called "the rock") is located on the rocky part of the peninsula.
The wide flat sandy bit is home to the airport, which was built during World War II and was
Gibraltar's only lifeline during the years of Spanish blockade that ended in 1985. Before Spain
joined the European Union, it laid claim to Gibraltar. The Gibraltarians begged to differ, held
a referendum and decided that they would rather remain with the British. This led to a 20 year
blockade that prohibited all people and goods from entering Gibraltar by land.
Today, Gibraltar - unlike the other British offshore havens covered in this section - is a
member of the EU under an opt-in with the United Kingdom. As a dependent territory,
Gibraltar is required to follow all ED regulations except the common customs tariff, the
common agricultural policy and (most importantly) the value-added tax agreement. This
means that Gibraltar is in the rather unique position of enjoying EU benefits as a full and
independent member country while not having to follow all of its silly rules and regulations.
As Gibraltar does not have a great deal of industry to call its own, these benefits are primarily
enjoyed by Gibraltar-based importers. Taking advantage of Gibraltar's VAT-free and customs-
free status, they import goods to the territory and then export them to European markets,
making a bundle in the process. As would be expected, shipping companies are thick on the
ground. It seems that any creative importer and exporter can almost make money while he
sleeps. Best of all, if profits are maintained offshore, they can be accumulated tax free.
All of this is not just legal, it is actively encouraged by top government ministers. Gibraltar
is very actively promoting itself as an offshore center. The territory sees itself as the emerging
Hong Kong of Europe, if not all of the world. If, after the communist takeover in 1997, Hong
Kong ceases to be the place that we know today, Gibraltar has already announced that it is
more than happy to step in and fill the void. At least this is what Prime Minister Joseph
Bossano and his government of nine people have decided. They see the sleepy colonial houses
that currently fill the narrow streets replaced by skyscrapers and finance towers which will
then proudly overlook the African and European continents.
Gibraltar has actually seen a building boom in recent years, most of it on reclaimed seabed
which expanded the tiny six square kilometers on which the territory is situated. So far, most
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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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ISLE OF MAN: LONG HISTORY OF STABILITY

The Isle of Man is located in the Irish Sea between Great Britain and Ireland, only sixteen
miles from Scotland. Its old eroded mountains, deep glens, sandy beaches and cliffs make the
perfect setting for a tax haven. The island is serviced by Ronaldsway Airport which offers
regular flights to almost all major cities in the UK. The trip from London takes only a little
over one hour. The local currency is the British pound. Notes printed in England, Scotland and
on the island itself are all in common circulation.
The Isle of Man also enjoys a long and very stable history. Its current government can be
traced back to the days of the Vikings. The ruling one thousand year old parliament is the
oldest in the world. Furthermore, although this government has long maintained ties with the
British crown, it has never been part of either the United Kingdom or any of its colonies.
Instead, the Isle of Man enjoys the status of what is known as a dependency of the crown. For
the most part this means that while the British provide defense for the island and handle
international affairs on its behalf, the local government is left to its own devices in all matters
concerning local legislation. Over its long history, the government of the Isle of Man appears
to have learned a thing or two about how to encourage economic growth. There are no capital
gains taxes, inheritance taxes, wealth taxes, gift taxes, capital transfer taxes or foreign
exchange controls on the island. More than 50 licensed banks, including some of the major
players, call the Isle of Man home. Services on offer are said to compare favorably with those
available in other established banking havens of Europe, including Switzerland. Best of all, the
Isle of Man is noted for generally offering higher interest rates than their competition.
Many insurance companies located on the island also offer policies that may be of interest
to Americans. (Offshore annuities need not be reported to the IRS as a financial account.)
Many single premium policies are available that allow one to invest funds in almost any way
desired while still falling within the protective enclosure of an annuity. Of course, such
convenience comes with a price tag which in this case takes the form of high minimum
investments - often more than US $50,000 - and steep front-end loads of often up to 6 per cent.
Many people also use the Isle of Man as a convenient place for establishing offshore
corporations. It is fairly easy to incorporate within the jurisdiction and as long as all profits are
generated outside of the island, all taxes can easily be avoided. Private companies are not
required to file their annual audited accounts at the public registry with their annual return.
There are no restrictions on the number of members or the transferability of shares. Other
services, such as legal and accounting advice, are also readily available on the island.
As with the Channel Islands, no official privacy legislation has been enacted on the Isle of
Man. Banks on the island can, however, reassure depositors by pointing to their long history
of respect for financial privacy. The government has not entered into any double taxation
agreements with any countries with the sole exception of the United Kingdom. Local
authorities are known for not cooperating with tax authorities, including those sent from
England. Nonetheless, a few rumors have circulated recently that island officials have begun
to pass information on to London with the hope of not being labelled as a money laundering
center. Still, those who bank in the Isle of Man with anything other than a British passport can
rest relatively assured that their affairs will be kept private. Local officials have a reputation
for making life tough for foreign tax collectors as well as foreign creditors who seek to use
local courts to collect anything from investors or depositors.
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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.
BRITISH VIRGIN ISLANDS:

OFFSHORE CORPORATION CENTER
The British Virgin Islands were originally discovered by Christopher Columbus. He was so
impressed by the number of islands that he found - there are 60 in all - that he named them
in honor of St Ursula and her legendary 11,000 virgins-in-waiting. Today, the islands are a
British colony that is governed by a ministerial system which operates under a constitution
that came into effect in 1967. The governor, who is appointed by the crown, maintains
responsibility for defense, internal security, external affairs, the civil service and the operation
of the courts and finance.
English is the official spoken language on the islands while the US dollar is the official unit
of currency. The British Virgin Islands are well connected to the US with a daily airline service
that shuttles tourists as well as the odd privacy seeker back and forth between the two. The
islands are also frequently visited by many cruise ships, providing an excellent way to combine
a vacation with a little private banking. The telecommunications system is excellent,
connecting the islands by satellite to most other parts of the world. Like most other havens in
the Caribbean, the British Virgin Islands have set out to attract foreign investment by imposing
almost no taxation on foreign bank accounts and corporations. There are no taxes on income,
profits or capital gains. Similarly there are no value added, withholding or sales taxes imposed.
Dividends arising in the jurisdiction may, however, be subject to a 15 per cent tax.
Traditionally, the British Virgin Islands have served more as an offshore incorporation
center than as a straightforward banking haven. It is estimated that there is one offshore
corporation present on the islands for every two of their 12,000 inhabitants. An International
Business Company (IBC) is quite flexible in its design. One must, however, maintain a
registered office on the islands as well as a registered agent. Nonresident companies are
restricted from doing business or owning property on the islands. In lieu of taxes, a flat license
fee of US $250 is charged as well as an annual US $50 return filing fee. No audited accounts
need be filed, but the company must have at least two shareholders as well as at least two
directors and one company secretary.
The British Virgin Islands is also a popular jurisdiction for the formation of offshore trusts.
A managing trustee, one who is responsible for various decisions regarding the trust, can be
arranged in the territory. Another major benefit of trusts here is that the proper law can be
changed so that, if necessary, the trust can be transferred to another jurisdiction. One is not
liable for tax on property held in the islands provided that one is neither resident nor domiciled
in the territory. If the property is held by a company, there will be no liability for transfer or
capital gains taxes upon the transference of shares.
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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.
CAYMAN ISLANDS: TOUGH BANK SECRECY ON OFFER

The Cayman Islands are located 450 miles from Miami, just south of Cuba. They are
composed of three small islands, the largest one of which is known as Grand Cayman and is
home to Georgetown, the financial center of the islands. The Cayman Islands were originally
a dependency of Jamaica, but opted to become a British crown colony when Jamaica declared
its independence from Britain in 1962. Unlike some of the other British tax havens detailed
in this section, the Cayman Islands technically remain subject to British rule. The governor of
the islands is appointed by the crown, but the bulk of his activities seem to involve ribbon-
cutting ceremonies. The Bank of England does not have any say nor does it possess any control
over banks in the Caymans.
Once used by pirates to hide their loot, today the Cayman Islands still serve as a repository
for foreign money. The Caymans have more funds on deposit - in excess of US $400 billion -
than any other banking haven in the world. Similarly, although the colony is home to only
30,000 local residents, there are more than 500 banks and over 300 insurance companies
present on the islands. There are more banks in Georgetown per capita than in any other city on
the planet. This prosperity is undoubtedly due to some of the toughest bank secrecy legislation
in existence and the fact that the Cayman Islands have enjoyed tax haven status for centuries.
Legend has it that the islands were first transformed into a tax haven when locals heroically
saved ten shipwrecked vessels in 1778. Amongst those rescued was a British royal prince. To
show his gratitude, King George III granted the colony an eternal tax holiday. This tax
exemption is still in effect today. No form of direct taxation is levied against both residents and
corporations. There are no income, capital gains, withholding, inheritance, estate, gift or sales
taxes present on the islands. The Caymans also do not impose death duties nor do they require
probate fees. Instead, revenue is raised through import duties, property transfer duties, stamps
on mortgages and loans as well as departure and accommodation taxes on tourists.
Bank secrecy was originally made into law in the Cayman Islands in the Banking and Trust
Law of 1966. This legislation was later tightened as a direct result of the outcome of US vs
Field. As you will recall, this case forced a Caymanian banker to testify against one of his
clients. It did not matter even slightly to US courts that this testimony was a direct violation of
Caymanian bank secrecy law. Cayman officials were so enraged by this decision that they
passed the Confidential Relationships Preservation Law of 1976, thereby transforming what
had been bank secrecy into sweeping business secrecy legislation. This legislation is amongst
the strictest bank secrecy legislation in existence. It even prohibits a bank employee from
enquiring within the bank about the activities of an account holder without the proper
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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.
CYPRUS: HOME FOR OFFSHORE SHIPPING COMPANIES

Cyprus is located in the Mediterranean Sea, just south of Turkey and southeast of Athens. It is
an independent country but was a British colony until 1960. The island is currently divided as
part of it is occupied by the Turkish army. Surprisingly, such political instability does little to
keep the independent southern part of the island from being a popular tourist destination. Most
Cypriots in this part of the island are of Greek descent, meaning that Greek is the official
language. Turkish is spoken in the north, but overall, especially in commercial sectors, English
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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.
EASTERN EUROPE: NO QUESTIONS ASKED

As the nations of Eastern Europe try to repair their national economies after having finally
given up on the communist "experiment", they are desperate for hard currency. Dollars, marks
and yen are seen as the answer to all of their current economic woes. Hard currency is not
only needed to repair the much neglected infrastructures of these countries, but is also the key
that allows individuals to play in local black markets and gain access to the international
commodity markets. To entice this much needed investment to their shores, many countries
of Eastern Europe are offering both bank secrecy and phenomenally high interest rates on
hard currency.
Hungary was one of the first countries to take advantage of its newfound freedom and open
borders. The country has attracted hundreds of millions of dollars in investment by
guaranteeing a state secured 20 per cent interest rate on hard currency. Bank secrecy is also on
offer and is said to be iron-clad. There is no way for anyone to gain access to the records of an
account holder for any reason whatsoever. Mostly deposits are said to have come from
bureaucrats in Russia and other countries in Eastern Europe. Other customers are those who
have simply grown weary of the decline in bank secrecy found in Switzerland and other
western countries. Bankers in Hungary ask almost no questions when opening an account. In
many banks, you need not even show any identification. English and German is spoken in most
banks that cater to foreigners.
Poland is another country where cash is said to be welcomed by bankers with no questions
asked. Reports say that this is a country where businessmen carrying suitcases stuffed with cash
is a common sight. It is definitely true that the use of credit cards and checks remains extremely
rare not only in Poland, but in almost all former communist countries. In 1992, under Lech
Walesa, Poland did introduce reporting requirements in an attempt to shake of its image as a
growing money laundering center. Today in Poland, one is technically required to report all
cash transactions of more than US $12,500. This bit of legislation prompted one Warsaw banker
to observe, "They might as well have asked the entire population to whistle Paderewski."
Another budding haven is the Baltic Republic of Estonia. This country has a nice
convertible currency and allows banks to do as they please. All sorts of currencies are welcome
and no questions are asked. Banks in this country are new and just want a chance to compete.
The country itself is also young, meaning that it has not yet had time to introduce a whole lot
of contradictory banking rules and regulations. Nordic neighbors are, however, doing their best
to mess things up. The Swedes in particular are actively sending delegation after delegation of
bureaucrats to provide advice on how to limit the personal freedom of every account holder.
Not to be left out, the Czech Republic also entered the game of international banking. In
1990, the country issued charters for more than 150 new banks. Of course, many of these
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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.
GREECE: ESTABLISH A REGIONAL OFFICE

Greece is definitely one of the more impoverished members of the European Union. While
driving your rental car along the sunny streets of one of its remote regions, you are still likely
to see farmers moving their produce to market by means of a tired donkey and rickety cart.
Recent sensible legislation introduced by the Greek government, however, may be about to
change all of this. This new legislation makes the country quite an attractive place for foreign
companies to establish a regional office. Incentives on offer include freedom from all taxation.
Foreign personnel also enjoy many government goodies, including a two year work permit and
freedom from income tax as well as import duties on household items. Lots of other incentives
are also on offer for the parent company. To form a regional office in Greece a permanent
Greek resident must be appointed as the company's local representative and granted power of
attorney. For more information about exactly what is on offer in this program, contact the
nearest Greek consulate or embassy.
HONG KONG: LOOMING CHINESE HANDOVER

Hong Kong is located on the south-east tip of China and consists of a large number of islands
as well as part of the Chinese mainland. With a population of more than six million, Hong
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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.
IRELAND: THE IRISH DEVELOPMENT AUTHORITY

As Ireland is a full member of the European Union, it is not a tax haven in the official sense
of the word. However, like many other countries featured in this chapter, Ireland is very eager
to attract new business to its shores with the hope of relieving some of its unemployment
problems. Goodies on offer include government grants and a tax ceiling of only 10 per cent
that is guaranteed until the year 2010. The Irish government has even established what is
known as the Irish Development Authority (IDA) to provide assistance to foreign
entrepreneurs interested in establishing a business in the country. This plan targets companies
in either the manufacturing or international service businesses. Financial companies must
employ at least 10 people to qualify. If you are interested in starting a new business in an
English speaking country, such goodies, combined with local wages that are often less than
half of those found in other western countries, may be all the incentive that you need.
JAMAICA: DARK HORSE OF THE CARIBBEAN

South of Cuba you will find Jamaica, well known for rum, reggae and rastafari. Although few
people are aware of it, Jamaica is a corporate tax haven. In 1971, the country enacted
legislation that made it possible for foreigners to establish International Finance Companies
(IFCs). The tax burden for such entities is a lenient 2.5 per cent on net profits, as long as two
requirements are fulfilled. No more than five per cent of the shares can be owned by a
Jamaican and all trade must either take place outside of the country or be conducted strictly
with tourists and foreigners in Jamaica. If trading with locals, full corporate tax must be paid.
Even though the conditions for attracting foreign investors to Jamaica seem to have been
fulfilled, success for Jamaica as a tax haven has long been awaited. There are several reasons
for this failure. First, the telecommunication system is rotten. Telephones do not work and mail
goes missing all the time. The real Jamaica is a complete contrast to the happy rum
commercials used to promote the country. Jamaica is a poor and overpopulated island, where
daily life consists of crime and slum. Beaches with palm trees do exist, but many of them are
polluted. The few nice and clean beaches belong to a handful of rich foreigners and are
protected by surveillance cameras and armed guards.
Furthermore, bank secrecy does not exist in Jamaica and, even though there are no currency
restrictions, corrupt local bureaucrats frequently invent red tape on the spot. They make it very
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Banking in Silence
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.
JAPAN: LITTLE-KNOWN SECRET

A little known secret is that in Japan, of all countries, you can use some offshore banks located
onshore to sidestep the normally closed regulatory system. In a brave quest to win some of
Japan's deposits back from Asian banking havens, most notably Hong Kong, the Japanese
passed a series of new laws in the 1980s and eased others. This change in legislation has
resulted in offshore banks located in downtown Tokyo. These banks cannot serve Japanese but
are open for business for foreigners and foreign subsidiaries of Japanese firms. As they are
outside the jurisdiction of the main Japanese banking system they are, for all practical
purposes, exempt from almost all banking regulations. Yet no offshore authority exists either,
meaning there is no legislation that takes the place of that from which these offshore banks
have been specifically made exempt. In other words, this has created a complete and utter void,
a lawless world of banking right in the middle of buttoned-up Tokyo.
LIBERIA: MOST LAX CORPORATION LAWS IN THE WORLD

What will happen when Liberia, which has been independent since 1847, finally digs itself out
of the rubble? Once Africa's freest country and its premier tax haven, Liberia has suffered from
a long and bloody civil war. Although the situation has recently calmed down somewhat,
Liberia's Registrar of Companies along with its Ship Registry still operate out of correspondent
offices in New York and Zurich. If you want to register a company in Liberia, there is no point
in going to Monrovia. All offices are closed. Go to Switzerland. This is where the files are kept
and where the Liberian government will be happy to take your money and then register your
Liberian company or a ship under the Liberian flag. Founding a company takes two days.
English is the official language of the country. With no central bank to call its own, Liberia uses
US dollars. There are no currency controls or restrictions of any kind whatsoever.
Liberia has what must be the most lax corporation laws in the world. In short, you are free
to do anything you wish, as long as you state a willingness not to break the laws of Liberia.
The laws of Liberia, like the corporate laws, are next to nonexistent. As long as more than 75
per cent of all shares are owned by foreigners, a Liberian company does not pay tax, nor does
it need file any returns. There is no requirement that annual meetings be held. There are also
no restrictions concerning the required number of directors or shareholders. Beneficial owners
of the company need never be revealed. As for your company name, you can call it whatever
you like. If you want it to end with "Ltd", no problem. The Liberian registry simply could not
care less about petty details, a welcome change from some other havens. If Liberia is able to
repair its act and beef up infrastructure, this African pearl could easily become a hot tax haven
in the coming years.
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LIECHTENSTEIN: STATE GUARANTEED DEPOSITS

Liechtenstein is tucked into a stunning mountain valley along the border between Austria and
Switzerland. It is one of the smallest countries in the world, covering only 61 square miles
(roughly the size of Washington DC) and has a population of only 28,000 people. Its
government is an hereditary constitutional monarchy. Prince Joseph II has filled the role of
chief of state since 1938. In short, Liechtenstein is the stuff that fairy tales are made of. This
tiny little country has all that one needs for the perfect holiday: rivers, dark forests, hillside
castles, perfect ski slopes, fine wines, one excellent hotel and almost unshakable bank secrecy.
Liechtenstein is one of the oldest tax havens in the world. There is no withholding tax on
interest. Companies domiciled in the country are not taxed on profits earned outside of
Liechtenstein's borders. The country enjoys a high degree of both political and economic
stability. Over the years, it has benefited tremendously from its proximity to Switzerland. Its
national currency is the Swiss franc, one of the strongest currencies in the world. Liechtenstein
has also enacted strict bank secrecy legislation which prohibits banks from revealing
information about account holders except under very limited circumstances. In a nutshell, this
means that for your home government to be able to sneak a peak at your foreign bank records,
you must first be charged with an offense that is a crime in your home country as well as in
Liechtenstein. As tax evasion is not a crime in Liechtenstein, no account information can ever
legally be revealed in such cases. Liechtenstein maintains only one international tax treaty,
with Austria, its other neighbor renowned for private banking.
Another advantage of banking in Liechtenstein is that it has not come directly under the
thumb of Big Brother. For the most part, foreign bureaucrats have focused their energy on the
larger Swiss banking community and left Liechtenstein to its own devices. Secrecy in
Liechtenstein is thus better respected than in Switzerland. Also, Liechtenstein has only three
banks. This is actually a tremendous advantage as foreign governments would find it
practically impossible to plant undercover agents in any of these banks. If such moles were
ever strategically placed, they would be guilty of several criminal offenses under Liechtenstein
law. The same is true in Switzerland, of course, but Swiss banks are inherently more simple
for Big Brother to infiltrate. Swiss banks are much larger and employ far more foreigners as
officers. Swiss banks also have offices in most countries abroad. The major bank in
Liechtenstein does, unfortunately, have small offices in New York and London, but the other
two banks are strictly local.
For those interested in instituting yet more safeguards between their money and possible
future problems, private numbered accounts are available. These accounts are not completely
anonymous, but the actual beneficial owner of the account is made known to only a few
employees within the bank. For even greater discretion, all transactions with the bank can be
carried out by means of a pre-agreed code word. Banks require a significant investment, in the
region of US $400,000, to provide such a service. Portfolio management is available for
accounts with balances of at least US $250,000. In general, banks in Liechtenstein are also
willing to hold all mail for account holders.
One major advantage of banking in Liechtenstein is that all deposits (no limit) are
guaranteed by the state itself. Of course, such guarantees are only as good as the country that
makes them and Liechtenstein is one of the smallest countries on Earth. Still, it is also one of
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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.
LUXEMBOURG: GROWING OFFSHORE CENTER

The Grand Duchy of Luxembourg is both a city and a country. It is located in central Europe
and borders France, Germany and Belgium. Although much larger than Liechtenstein, this
country still only covers approximately 1000 square miles. It is a constitutional monarchy with
the Grand Duke filling the role of chief of state. He shares control of the government with both
the cabinet and the elected legislature. Luxembourg enjoys a strong economy with an almost
100 per cent employment rate and one of the highest per capita incomes in Europe.
Luxembourg is also one of the fastest growing financial centers in the world. The country
saw a massive influx of capital in the last decade, due largely to its liberal banking and tax
laws. Interest, dividends and capital gains are not taxed in the jurisdiction. Bank accounts are
also insured by the government for amounts up to Luxembourg francs 500,000 (approximately
US $15,000). As a result of such policies, an estimated US $160 billion in deposits now sit in
Luxembourg banks. Luxembourg is said to be replacing Switzerland as the favorite banking
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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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One major drawback to banking in Luxembourg is that as a founding member of the

European Union, it is somewhat limited in the banking practices that it can offer. International
pressure, which arose largely as a result of the BCCI scandal, led to the institution of money
laundering laws. Today, any banker who knowingly or, as the result of failing to properly check
on his customer, handles criminal-source money faces five years in the pokey. The practical
effect of this is that most bankers are paranoid about new accounts that materialize off the
street. They want new customers to come to them with letters of reference from lawyers,
accountants, bankers or other customers.
Luxembourg also maintains international tax treaties with a slew of countries, including
Austria, Belgium, Brazil, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Korea,
Morocco, the Netherlands, Norway, Spain, Sweden, the United Kingdom and the United
States. Although Big Brother has to date concentrated the bulk of his energy on larger banking
havens (most notably Switzerland) it is undoubtedly only a matter of time before he turns his
attention to Luxembourg. The country itself may be small, but the tremendous growth of its
banking industry will undoubtedly one day merit far more attention than any involved would
ever desire. Again, as with all banking havens, keep your eyes open for the writing on the wall
and move out at the first whiff of trouble.
MALTA: LIMITED BANK SECRECY

Malta consists of five islands that are located between Gibraltar and Suez. The country is a
sovereign European state that is governed by a democratic parliamentary system based on the
British model. It is a member of the Commonwealth. Malta enjoys a modem and excellent
communications system, with a satellite direct dialing system that connects the country to most
other parts of the world. Like many other small island nations, Malta is interested in attracting
foreign investment to its shores. The government is actively promoting the country as a safe and
reputable international banking haven and is specifically targeting high net worth individuals.
On offer is a limited form of bank secrecy. In 1994, the government enacted legislation to
refine bank secrecy along the EU model. In essence, this means that the confidentiality of
customer affairs is paramount unless bank staff have cause for suspicion. Suspicious
circumstances currently include the usual fanfare of drug trafficking, major crime and
associated money laundering. Foreign tax evasion does not appear on the list of offenses.
Maltese banks are under no legal obligation to cooperate with foreign tax authorities. The local
courts will similarly not become involved in foreign tax disputes. Malta imposes no exchange
controls or restrictions on the import or export of currency, but does require that a large
quantity of cash be declared before it is brought into the country. Very large cash deposits in
Malta would result in a string of questions as well as a two to three per cent handling charge.
You would also be asked to produce the Malta customs declaration form and evidence that the
source of the funds is legitimate.
There are only three principal banks in Malta, each of which offers accounts in a large
number of currencies. Interest rates on offer are reasonable and in line with those of prime
London banks. While a withholding tax is imposed on locals, no such similar restrictions apply
to foreign account holders. Better still, all paid checks are mailed back to the customer in his
bank statements and, unlike in other more restricted jurisdictions, no copies of the checks are
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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.
MONACO: NOT FOR EVERYONE

Although Monaco is a fine place to spend some time and perhaps even establish residence in
true PT fashion, it falls somewhat short of expectations as a banking haven. In cooperation
with French authorities, all financial institutions in Monaco are required to pass on information
about suspicious transactions to Tracfin, the French agency which deals with money
movements. Monaco also has very strict laws concerning money laundering. Anyone found
guilty could face jail sentences of up to ten years as well as confiscation of all funds involved.
There have also been recent developments that facilitate the exchange of information between
Monaco and France. Furthermore, money laundering has been extended in the penal code to
cover profits from criminal activities other than drug trafficking.
That all said, it is also true that the banking sector in Monaco has greatly expanded over the
last twenty years. More than 55 banks and financial institutions have set up shop in Monaco.
Since the beginning of the 1980s, deposits have grown steadily and are now estimated to be
around US $16 billion. The principality has not entered into any agreements for the exchange
of information with any country other than France, and local customs officials can access bank
archives only if it will help them further a criminal investigation. Monaco is part of the French
monetary system and has, in line with France and the EU, abolished exchange controls. In
short, this all means that if you open an account with anything other than a French passport,
Monaco can deliver at least a limited form of banking privacy. Large cash deposits, however,
are best brought elsewhere. For more information on what this well known tax haven has to
offer, consult The Monaco Report, published by Scope International.
SEYCHELLES: HIGH-PROFILE MONEY LAUNDERING

For a very brief period, the Seychelles offered what can only be thought of as a money
launderers dream come true. Through its Economic Development Act (EDA), an investment
of more than US $10 million guaranteed immediate citizenship, immunity from prosecution
and freedom from investigation as to the source of funds. Of course, such a flagrant attempt to
swim the other way in the growing trend against financial privacy quickly brought about far
more international attention than the Seychelles would have liked. The Sunday Times of
London sent an undercover journalist to the islands to pose as a lawyer for a Russian business
consortium. The journalist claimed to have an interest in "agricultural commodities" in South
America. This somewhat indiscreet explanation prompted no further questions from the
authorities who proceeded to offer him the above facilities in addition to the exclusive use of
one of the islands as well as a luxury hotel.
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Banking in Silence
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.
SWITZERLAND: ERODING BANK SECRECY

Switzerland is commonly known as the place that one goes when in need of a little investment
advice or a private bank account. Everyone has heard of the infamous Swiss numbered
account, so often employed by the likes of James Bond and his fictional friends. In fact, most
people are of the opinion that Switzerland and the entire concept of bank secrecy are one and
the same. What few people realize is that while Switzerland is certainly one of the prominent
financial centers on the planet, Swiss bank secrecy, which was laboriously established over the
course of centuries, has recently been eroded to the point where it is now as full of holes as
Swiss cheese.
Bank secrecy was first made into law in Switzerland in 1934. Before this time the country
enjoyed a long history of bank secrecy practices, but the Nazi imperialism called for these
practices to be turned into tough legislation. At the time, Germany had made it illegal for any
German national to maintain a foreign bank account. The Swiss sought to protect their German
depositors from disastrous consequences. The legislation that they brought into force was
strong to say the least. Technically, this same legislation still exists in the Switzerland of today.
It covers everyone - bank employees, auditors, regulators - who may come in contact with
information pertaining to an account holder. Even the very fact that a certain individual holds
an account with a certain financial institution is considered to be privileged information and
therefore cannot be revealed. Each unauthorized breach of bank secrecy can be punished by a
fine of more than SFr 50,000 as well as a six month stint in the pokey.
While bank secrecy in Switzerland survived the Nazis, it has not fared nearly as well against
US authorities. The fact that Switzerland was widely known as a banking haven made it the
primary target in Big Brother's campaign against financial privacy. Over the last twenty years,
Switzerland has entered into a number of international tax treaties which basically nullify its
bank secrecy legislation. Such agreements in theory only allow information to be released in
cases which involve a crime committed in another country that is also a crime under Swiss law.
As tax evasion is a civil, not a criminal, offense in Switzerland, foreign tax evaders are still
technically protected by Swiss bank secrecy. In practice, however, government officials often
miraculously discover evidence of other forms of criminal behavior which then allows them to
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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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Banking in Silence
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.
TURKS AND CAICOS: EMERGING TAX HAVEN

The Turks and Caicos are comprised of 40 islands in all, only seven of which are inhabited.
They are located at the southern end of the Bahamas chain, approximately 90 miles north of
Haiti and 600 miles from Miami. Like most other tax havens in the Caribbean, the Turks and
Caicos are a self-governing British crown colony. Having only recently entered the world of
international finance, however, the islands are still largely dependent on mother Britain for
subsidies. This dependence has led the British to encourage the territory to establish itself as
both an international financial center and a tourist destination. It is US $8 million worth of
British funds that allowed the international airport on the islands to be built.
In 1979, the Turks and Caicos enacted the Confidential Relationships Ordinance with the
hope that it would attract large amounts of foreign capital. This bank secrecy legislation is
perhaps the strongest in existence. Anyone found guilty of disclosing information about an
account holder without proper authorization faces a fine of up to US $50,000 as well as a
possible three year stint in the pokey. The Turks and Caicos are also a tax haven in the
traditional sense. There are no income, capital gains, corporate, sales, property, withholding,
inheritance, gift or estate taxes present on the islands. The fact that the local currency is the US
dollar has also attracted foreign investors to the islands.
The Turks and Caicos, however, have proven to be far more desirable as an offshore
corporation center than as simply a place to hide a little private money. Offshore corporations
can be formed in the jurisdiction both inexpensively and quickly. No business license is
required. There is no need that the identity of officers, directors or other members of the
company be revealed. Similarly, the actual identity of the beneficial owners of the company
204
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.
UNITED ARAB EMIRATES:

A TAX HAVEN WITHIN A TAX HAVEN
Although the United Arab Emirates (UAE) has long been a low tax area for businesses and a
no tax place for residents, the country has only recently started to attract a great deal of foreign
investment. One reason for this original reluctance on the part of international investors was
local politics, which in this region of the world is a combination of religion and ruling families
rolled into one. A larger problem was the fact that there are simply too many laws on the books.
During the last couple of years, however, this gulf state has quietly been placing itself on the
map of offshore advisers and tax planners worldwide.
As part of a government strategy to shift away from sole reliance on oil proceeds, the Jebel
Ali Free Zone has been created. Here, anything goes. Even whisky and women - the worst of
all things western - have been let in. I can best describe Jebel Ali as a tax haven within a tax
haven. In this region, government planners set out to create a UAE-style tax haven, but with
fewer laws. In the Jebel Ali, foreigners can do what they want as long as they stick to what they
do, meaning that foreign companies and residents cannot change horses midstream and move
into areas of business other than those for which each individual entry was originally approved.
The absence of laws, government control, tax and currency restrictions all adds up to a good
thing. Even better, at least for the time being, is the fact that Jebel Ali is a well-kept secret.
Doing business with this super liberal tax haven will not get you noticed overseas in the way
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Banking in Silence
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!"
NEW BANKING HAVENS

Although everyone from pundit to professional hypes the global village, new world order and
coming one-world government, the truth is that each year more and more new countries are
206
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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Banking in Silence
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.
OTHERS ARE NOT CHEAP TO FEED

The major problem with trusts, foundations, corporations and so on is that they involve other
people. These other people are provided with detailed information concerning your sensitive
and personal financial affairs. If they are local people subject to the jurisdiction of a court
where you are being sued, you can forget about secrecy. Asset protection plans set up in your
home country are almost entirely useless. As for offshore centers, many of them are rich in
crooked "corporation mills" that churn out steep bills, but still could not care less about your
business. Stop and think twice before going to the company factories that advertise their craft
a little too much in the international press. Alternatives to such expensive offshore legal
entities often lead to better results at only a fraction of the price. Many lawyers and corporate
formation agents have an interest in setting up a long string of companies for each and every
client. In reality, however, there is simply no need for this string. You can cut huge chunks out
of it and make the whole exercise quite a bit cheaper.
Furthermore, remember that these other people brought in to help you sort out your
financial affairs may not necessarily be discreet or honest and are definitely not cheap to feed.
Your advisers may say that they need to be able to sign checks and control funds. This is to
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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.
DON'T BELIEVE EVERYTHING THAT YOU HEAR

The other major problem with establishing offshore legal entities is that they often fail to
achieve what advisers say they can. Many advisers insist that you can legally avoid taxes or
protect your assets from creditors by means of an expensive network of offshore corporations
and trusts. This may have been true at one time, but in many western countries today, this is
simply no longer the case. New laws in the US, for example, have made the diversion of earned
income to tax haven holding companies something that must be reported.
Let us say, for instance, that you live in a high-tax country with very strict tax laws. Every
year, you have to file an income tax return, such as the US 1040. On this hideous piece of
paper, you are obliged to make a full disclosure of all bank accounts, shares and other assets
that you own - under the threat of severe penalties, including jail, for non-disclosure. Most
high tax countries tax their citizens on their global income and, accordingly, require that all
assets (even those that are not taxable) be disclosed, regardless of where they happen to be.
Even if you own, say, a loss-making company in another country or a non-interest bearing
bank account (well, they do exist) somewhere you will be legally obliged to disclose this fact
on your income tax return. Some countries, including the US, even demand that citizens
disclose the beneficial ownership of assets, preventing one from legally hiding assets by
registering them in the name of a third party, such as an attorney.
In other words, if you come from one of these modern "democracies" and establish a
corporation in the Channel Islands, your government wants to know about it. If you then open
a secret bank account in the Bahamas in the name of this company, your government wants
you to share this tidbit of information also. Yes, you have managed to legally open an account
in a name other than your own, but you have not achieved banking secrecy. In most western
countries, you will be required to report the fact that you own a controlling interest in a foreign
company and, of course, pay tax on any income that you receive from said company. Your
government will still demand that you tell it where your money has gone. Furthermore, going
to the trouble of establishing such an elaborate setup in the first place will also raise red flags
left and right and give the bureaucrats more than enough reason to take a closer look at your
affairs.
In most countries, the only thing that such an arrangement accomplishes is that as long as
your company maintains and reinvests all of the profits generated with your funds, you need
not pay tax on such income as long as it stays offshore. You will, however, be taxed and forced
to pay severe penalties on such income when and if you finally do lay claim to it. Even this
slight benefit, however, has gone the way of the dodo bird in some countries. In more
212
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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contacts in the classified section of The Mouse Monitor, the privacy newsletter published by
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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THE DIFFERENCE BETWEEN ONSHORE AND OFFSHORE

The difference between onshore and offshore trusts and corporations is, roughly speaking, that
onshore means subject to the whims of a high tax jurisdiction. Onshore corporations and trusts
are generally obliged to file a host of disclosure forms with the local company register, which
also handles trusts. This information will then essentially be public, freely given out to anyone
who cares to ask. In addition, annual statements must be made and tax must be paid on any
profits generated. In countries with wealth taxes, the trust or corporation may be obliged to
give a percentage of its capital to the government each year. For these reasons, asset protection
plans established in your home country are generally not worth the effort. Only under the most
far-fetched of circumstances will they be any good at protecting you from those out to separate
you from your money.
On the other hand, most offshore jurisdictions have very lax (or non-existent) laws about
what sort of information, if any, a corporation or trust is required to file with the company
register. In many offshore jurisdictions, companies and trusts need not file annual statements
or even declare the identity of managers, shareholders, protectors and trustees. In an offshore
location, it is usually much harder for external third parties (such as foreign tax authorities) to
obtain any information about the activities of a specific company or trust. An offshore
corporation or trust is also usually tax exempt. For a small, yearly fee payable in lieu of taxes,
such companies may conduct just about any business, anywhere, without any legal
requirement to inform the local tax authorities about what they are up to. This is the basic
distinction between a legal entity that is registered offshore as opposed to onshore.
Is there anything immoral or illegal about incorporating a company or trust in an offshore
location? In and of itself - no. Most if not all countries recognize the authority of other countries
to make their own laws as far as company registers and taxation is concerned. Just as it is quite
legal to move to another country in order to save taxes (even though your home country may
not quite like the idea) so it is also quite legal to register a company or form a trust in a
jurisdiction that extorts little or no tax. Many Americans do not realize that there is nothing
illegal about transferring all of their shares of stock, cash or other assets to a custodian bank
based abroad. Even real estate may be transferred to a foreign-based corporation.
British-based corporations cost only a nominal sum to establish and run. It used to be the
rule that if they did no business in the UK, they were tax exempt in Britain. The US and other
OEeD countries pressured the UK into lifting this rule in 1988. Now, all UK companies have
to file and pay British taxes regardless of where their source of income may be. Neighboring
Ireland, however, was swift to take advantage of the new British rules. When the UK closed
down tax-exempt companies, the Republic of Ireland passed legislation allowing for tax-free
Irish nonresident companies. If no directors live in Ireland and all source of income is outside
Ireland, then the Irish company does not pay any tax at all!
It is perfectly legal to own any number of tax-free corporations in any number of different
countries. The questionable part is the legal requirements that one may be subjected to back
home. Today, many high-tax countries require full disclosure of all foreign assets owned or
even controlled. Remember, most governments are under the impression that they own their
citizens and may confiscate their assets (or send them off to get killed in a silly war) at will.
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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.
USING AN OFFSHORE CORPORATION

Many people use offshore corporations as a way to screen their identities. With an anonymous
sounding company name, there is no reason to use your own name when doing business. Bring
the documents with you the next time you visit your favorite tax haven, then open an account
in the name of your foreign corporation. As signatories for accounts change from time to time,
most banks do not capture authorized signatures on their computers. In short, this means that
all information related to your new account will then be stored under your innocuous new
company name, not your own name. This will in tum leave the taxman or a hungry creditor
with little if anything to go on, even if they were to one day discover the name and location of
your offshore bank.
Alternatively, you can use your foreign corporation to rent a safety deposit box. This will
not only allow for anonymity, but will also prevent unnecessary hassle if something should
happen to you. In many jurisdictions, if the holder of a safety deposit box dies, banks are
prohibited from providing anyone with access to it until the taxman gives his permission. When
the box is opened, all that it contains is assumed to be the property of the deceased and will be
used to settle any outstanding tax obligations or debts first and foremost. Whatever is left will
then be subjected to estate tax and only then turned over to heirs. Furthermore, if the box is held
in one name only, it may prove to be difficult to gain access to it in a time of crisis, such as if
you land in hospital while visiting a foreign country. Many banks will only allow a third party
access to a safety deposit box if a power of attorney is signed on the actual bank premises.
For this reason, it may be desirable to form a corporation and then rent a safety deposit box
in its name. New individuals could then be allowed access to the box by simply supplying the
bank with a new resolution form. The box will also not be frozen, even if the only person who
has access to the box dies. Both creditors and the taxman will also find it much more difficult
to open the box as the result of a lawsuit or claim against you personally. Best of all, your
corporation need not even be qualified to do business in the jurisdiction in which the box is
held, as simply owning a safety deposit box is not considered to be conducting business by all
major countries on the planet. This means that no records related to the company will then need
to be on file in the jurisdiction in which the box is actually held.
Many advisers recommend that you form a corporation for the sole purpose of renting a
safety deposit box. This provides maximum privacy, as then there is no need to worry that the
contents of the box may become subject for seizure as the result of other activities conducted
by the company. It is also important that the company is not closed down after the box is
opened, but instead remains in good standing. If the bank were to one day find out that your
company no longer exists, they may deny anyone and everyone access to the valuables that
you have left in its safekeeping.
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MAKING YOUR COMPANY JUDGMENT PROOF

Do not pretend that your offshore company is a multi-million dollar outfit with scores of
employees, if in reality it is merely a shelf company stashed away in the file drawer of some
resident agent. Claiming that your offshore company is something that it is not could well get
you into trouble. Do not, however, think that your company is somehow less legal because it
does not have its own offices or its own staff. Even though most offshore companies are
mailbox companies, they are accepted as separate entities by most countries and their tax
courts. In most western nations, quite a number of companies operate from a shelf in some
lawyer's office or trade out of a drawer in an accountant's desk. To deem a company invalid
because it shares offices with a number of other companies is pure undiluted nonsense.
Corporate shells can be purchased in many countries for a few hundred dollars and
upwards. For added secrecy, buy outside any countries where you live or make your money.
As long as you just need the name, you do not necessarily have to buy corporations in tax
havens. If your corporation will not be producing an income and will only be used to shield
your identity, you can safely incorporate anywhere, even in high tax countries. Just choose a
country in which you do not do business or have any other ties. The United States, the United
Kingdom and Ireland are all players where lawyers and corporation mills sell ready-made shelf
companies for just a few hundred dollars, already formed.
For more advanced offshore business activities, you may have to make use of more than
one offshore entity. Most revenue offices are probably going to smell a rat if you start dealing
extensively with shell corporations based in tax havens. You have to show them that there is
no rat and that whatever goes on offshore is completely legitimate. One way of doing this is
to build a two-tiered layer of offshore corporations, one company in a tax haven and another
in a high tax jurisdiction. For example, imagine that you want to move goods from an offshore
market into the UK. First, establish one company in a high-tax EU country, such as France.
This company could well be a full-scale legitimate trading operation dealing in imports and
exports on a broad measure. Then establish a second company based in a local tax haven, such
as Gibraltar. Your wares will then enter the EU through Gibraltar and move through France
before finally making their way to England.
The Gibraltar company sells the goods to the French company at a big markup, thus
keeping all profits in tax-free Gibraltar. The French company will then sell the goods to you
at little or no markup, meaning that it will have no tax liability as it does not make a profit.
Back in the UK, you will not get any heat from the taxman because you do not deal with any
shady letter box companies located in tax havens. The only company you deal with is a trading
company in an EU country. If checked out, this company is the real McCoy, no scam, no fly-
by-night setup. Naturally, for a fee, the directors would all be willing to come and testify in
the UK on their dealings with you, but this will not happen, simply because the bureaucrats
will not smell a rat.
Try to avoid dealing extensively with paper companies. Use real companies and real people
wherever possible. No nominees will ever bail you out should you run afoul with the taxman
or enter the line of fire during an audit. Also, if checked out, they will appear to be just that,
nominees. You do not want cardboard solutions. A real company with real people and real
business, not just a company factory, will convince any revenue agent that your business is
legitimate, not just a scam designed to cheat the system out of its fair share of your earnings.
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THE DIFFERENCE BETWEEN A CORPORATION AND TRUST

A corporation or trust is what lawyers call a legal entity; whereas a company does not eat, sleep
or go to the movies, it may own just about anything you care to mention: bank accounts,
stocks, bonds, investments, cars, boats and even airplanes. So maya trust or foundation. The
distinction between a corporation and a mere company is that the former is, by its very
definition, a separate, legal entity as opposed to an unincorporated, personally-owned
company. A corporation may go bankrupt and leave creditors, including the taxman, holding
the short end of the stick. An unincorporated company will be inextricably linked to its owner
(or owners). If an unincorporated company defaults on a debt or a payment, creditors may
immediately tum to the owner and demand payment from him.
This is the major reason why you should never operate any business except from behind the
protection of a corporation. That way, you are only liable for a loss up to whatever capital you
have invested in the business, but no claim can be made against you personally in the event
that the corporation folds or closes with a negative net worth, unless fraudulent conduct by the
owner or manager can be proven. Only rarely are owners or managers held personally liable
for losses stemming from fraud or gross misconduct, which you should take to read as - only
in cases where criminal misconduct or outright fraud can be proven. Proving such claims may
take years. This is the major reason why dejected creditors usually take their licks and abstain
from pursuing the matter further.
Shares in a corporation have to be owned by someone - or something. Usually, shares are
held either by ordinary shareholders or by one or more other companies, institutions or trusts.
A corporation cannot own itself. Someone has to own the shares, which also means that
someone may be taxed on the wealth represented by the value of the shares, on the dividends
or even on the capital gains realized when the shares are ultimately sold or the corporation is
successfully liquidated. Enter trusts - or foundations as they are sometimes called. As opposed
to a company or corporation, no one can own a trust. By definition, a trust is not only a
separate, legal entity, but also owns itself. No physical or legal person may own even the
tiniest, little share of a trust, which is exactly why trusts have so many potential uses for those
resident in high-tax Big Brother jurisdictions.
USING AN OFFSHORE TRUST

Trusts create a legal relationship between three or more parties, usually referred to as the
grantor, beneficiary and trustee. The grantor establishes the trust and then funds it. He also
stipulates the guidelines by which the trust will operate in the trust's charter. The trustee
handles the day to day operations of the trust and makes all decisions concerning the
investment and disbursement of funds owned by the trust. If the trust wishes to open a bank
account or buy a yacht (in keeping with the trust's charter) then it is the trustee who must arrive
at this decision and sign the relevant papers. The beneficiary or beneficiaries, in turn, receive
any payments or disbursements distributed by the trust. Most offshore trusts also appoint a
protector who oversees the trust and has the power to remove and replace the trustee, if for
some reason he fails to follow the guidelines set out in the trust's charter.
The same individual can fill more than one role. In many high-tax countries, it has become
popular to form a living trust and then to appoint oneself as both trustee and beneficiary. The
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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.
PROBLEMS WITH OFFSHORE TRUSTS

For the most part, offshore trust arrangements are only useful in very limited circumstances.
Despite what many advisers may claim, offshore trusts offer little advantage to the individual
who establishes them. They may provide a certain degree of asset protection, but will only
provide marginal benefits in the more sensitive areas of financial privacy and tax avoidance.
In fact, creating an offshore trust could well raise red flags far and wide, causing the taxman
to take more than a passing interest in your financial affairs.
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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.
PUTTING THE PLAN INTO ACTION

Once you have decided that your personal circumstances can benefit through the formation of
one or more offshore corporations or trusts, the next question becomes when to put the whole
plan into action. Many wonder if they can leave the formation of such structures until they
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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.
COMPANY FORMATION MILLS

If, on the other hand, all you want to do is establish an offshore corporation and use it to screen
your identity, then one of the company mills that advertise in the international press should be
more than sufficient. Look for their ads in the classified section of The International Herald
Tribune or in the pages of The Mouse Monitor. As with all things in life, shop around and get
prices from several sources. There are a number of companies, mostly located in Europe,
which provide these services. You may phone up (first mistake), give your real name (second
mistake), give the name you desire for your corporation or trust over the phone (third mistake),
pay for the whole thing by your credit card (fourth mistake), and then arrange to have the
incorporation documents mailed to your home or business address (fifth mistake).
Most of these brokers keep extensive records. They have to, as most of them are located in
highly bureaucratic places where they must pay taxes. A few of them have, on occasion, been
known to not only have frightfully good memories, but also to be very helpful to investigators,
lest their businesses be harassed. The fact that most lawyers and financial services will open
their files to the cops is an unfortunate fact of life, but there is not a whole lot that you can do
about it. You have the option of either being very elusive when dealing with corporate agents
or risk making yourself the future target of an investigation. Sorry, but those are the facts. If
you wish to deal above-the-desk, use maildrops, anonymously obtained cashier's checks and
a pen-name.
There are, of course, brokers who do not advertise and charge higher prices in exchange for
increased privacy. These are generally companies that will provide the exact same services as
advertising brokers, but with the subtle and potentially crucial difference that they will destroy
your file the second you have acknowledged receipt of your documents. I have tested a few of
them and found them to be kindred spirits, even to the extent that a couple of them will insist
on being paid in advance for making a phone call to discuss customer requirements. They
display a reassuringly anarchistic attitude towards official and private investigators alike. If
hard pressed, they will not hesitate to identify a customer as a certain Mr Donald Duck,
currently on a five year back-packing trek of Nepal. Prices are, on average, 10 to 40 per cent
above those normally charged, but then privacy usually does take some kind of initial cash
outlay to put in place.
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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.
WHAT IS A PRIVATE LOAN?

Nonetheless, we all have to borrow money from time to time, perhaps to finance a business,
perhaps to purchase a new property, perhaps to simply get through a few tight days until a
better alternative can be arranged. This means that at one time or another, we are all forced to
deal with banks and their penchant for detailed forms in triplicate. The good news is that just
as there are ways in which you can privately deposit money with a bank, there are also a few
alternatives that will allow you to borrow money in a relatively private manner. The bad news
is that such private loans cost a lot more than their full-disclosure competition. For loans issued
without a credit check, interest rates generally start at around 15 per cent, but rates of 20 per
cent or more are not uncommon. Privacy has become a much-valued commodity in our over-
regulated societies. Like all things that are scarce, but in high demand, financial privacy comes
with a steep price tag.
In order for a loan to be truly private, it should be made without credit checks that will leave
a trace in computers and databases for years to come. You should also not have to submit too
much information about yourself, such as your income tax return, when applying for the loan.
Once the fact that you have borrowed a certain amount of money, for a certain designated
purpose, for a certain designated period of time, makes its way into financial databases, any
and all hope that you may have harbored for privacy has been wiped away. Detailed
information concerning the amount of money you have borrowed, as well as what you have
spent it on, will be available for anyone who may care to look. Private data collection agencies
love to put such tidbits of information together so that they can form a detailed financial
picture of you and your spending patterns.
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Banking in Silence
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.
USING OVERDRAFT FACILITIES

One source of private money is a checking or current account that comes equipped with an
overdraft facility. Although this system is basically designed to protect you from overdrawing
your account, it can be used as a means of borrowing money privately. Once issued, you can
use an overdraft facility to pay for just about anything in complete privacy. You can even use
it to borrow good old untraceable cash. There is no need to tell your bank the reason that you
are borrowing its money, which makes an overdraft facility the ideal way to finance sensitive
purchases or investments. Better still, if you request overdraft protection when opening your
account, even the very existence of your overdraft can be kept relatively private. Only one
credit report will be generated, as your bank will use the same credit report to both open your
account and approve the overdraft.
Of course, once you have borrowed money from the bank in this manner, you should pay it
back as quickly as possible. This will not only prevent you from being hit with heavy interest
charges, but will keep a continual line of credit available. Once you have established a pattern
of promptly repaying the entire overdraft, your bank will also be more than happy to extend
your credit limit, meaning you will continually be able to access larger amounts of private
money. If your checking or current account does not currently have an overdraft facility, apply
for one, even though this application will probably generate a credit report. This is a small
sacrifice to pay for the ability to spend borrowed funds in total privacy, should the need ever
arise. You need not use an overdraft facility simply because one has been issued, but in an
emergency the availability of private money could be a real lifesaver.
USING CREDIT CARDS

While credit cards are one of the least private ways in which you can pay for goods or services,
they do offer an easy way to borrow money privately. In most countries, you can receive a
completely anonymous cash advance through an automatic teller machine. Limits vary from
US $100 to US $300 per day, depending on both where you are and the policies of the bank
that has issued your card. Another alternative is to arrange a cash advance over the counter at
just about any bank. In many third world countries, this is the only alternative. The amount that
you can receive is then determined by the cash advance limit of your card, which may be
slightly lower than your overall credit limit.
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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.
USING COLLATERALIZED LOANS

Another way of borrowing money privately is through a collateralized loan, a loan in which
you leave something of value with the lender in exchange for cash. For small amounts, you
can visit a local pawnbroker. Such loans offer complete privacy, as they are only known to you
and the pawnbroker. You bring in something of value, such as a camera, television or stereo,
and in return you are issued with a pawn ticket and a tiny wad of private cash. To reclaim your
property later, you take in the pawn ticket and pay back the money, plus interest. Of course, if
you make use of a pawnbroker, make sure that his problems do not become your own. Many
pawn shops are loosely veiled fronts for money laundering. If Big Brother starts sniffing
around a local pawn shop, take your business somewhere else.
For larger amounts of money, there are a few banks that are more than happy to hold on to
your property as security against a loan that they issue. You can borrow against just about
anything of value: precious metals, numismatic coins, rare stamps, jewelry, furs. Such items
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Banking in Silence
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.
USING SECURED CREDIT CARDS

Another type of collateralized loan is the secured credit card. These little plastic wonders can
not only help you borrow money privately, but can also be of assistance in just about all areas
of banking privacy. If used properly and with a little forethought, secured credit cards can help
you create a financial profile through which your purchases can be rendered all but
untraceable. Secured credit cards are of value not only to PTs, but can also help those still
resident in high tax jurisdictions. As the day of the cashless society is ushered in, thankfully
there is still one avenue available for those interested in keeping their own affairs private.
What exactly is a secured credit card? It is simply a credit card that is tied to a
corresponding savings account or some other form of collateral. Physically, secured credit
cards do not look different from any other type of credit card. It is only by looking into the
records of the account that one can discover that a certain credit card was only issued because
someone put up a security deposit. This security deposit means that the issuing bank can breath
easier. It need not worry that you will run off with its money. Most clients tend to be those who
need a credit card, but are unable to get one. They may be foreigners with no local credit
history. They may be locals with a bad credit history. Whatever the reason, the very existence
and need for credit cards have created a niche industry. Although secured credit cards may
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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.
APPLYING FOR A SECURED CREDIT CARD

As credit cards were originally a product of American society, it should come as no surprise
that most banks that offer secured credit cards are located in the US. This means that, for the
most part, if you are interested in receiving a secured credit card, you will have to venture into
the den of the lion. Worse still, many banks that do issue secured credit cards are only willing
to deal with Americans or individuals who are at least resident in the US. Some banks are not
even willing to issue cards to individuals who are from another state than that in which the
bank is located.
The requirements concerning the bits of paper that a bank will want to see before issuing
a secured credit card vary tremendously from bank to bank. A few banks are only willing to
deal with customers who they have already turned down for a traditional credit card. Some
banks require that you open the secured credit card account in person. Other banks require that
you submit proof of income or demonstrate that you have been steadily employed or have
been living at the same address for a certain period of time. A few banks even go so far as to
ask for copies of your tax return from the past few years. Others insist that you maintain an
existing checking account. Others are satisfied if you just provide an address and a telephone
number and yet others require almost nothing and will be happy if all you supply is a post
office box number.
As secured credit cards were created for other purposes than financial privacy, most banks
remain blissfully unaware of the uses that they can serve for PTs and the like. This means that
even in the most regulated jurisdiction on this planet, there are still a few banks that can be of
use to those who value their financial privacy. All banks based in the US will only deal with
clients who are based in the US, but most do not require that you submit proof of residence, a
green card or anything else of that nature. They assume that if you receive all correspondence
at a US address that you must live in the US. In other words, if you do not happen to be based
in the US, then a maildrop or a friend who is based there could work wonders for you.
Providing a social security number, if one is required, is unfortunately a problem not so
easily overcome. Most banks will want to have a social security number on file not so much
for the actual secured credit card, but for the corresponding bank account that you must open.
There are a few ways, however, that you may be able to convince a bank to open an account
without social a security number. You could, for example, tell the bank that although you live
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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.
PROVIDERS OF SECURED CREDIT CARDS

There are more than one hundred banks in the US that offer secured credit cards in one form or
another. Of course, those who are either American or at least resident in America will have far
more options when choosing a bank. Factors such as the amount of your invested capital that
you are allowed to borrow against may become important. A few banks are willing to let
investors borrow up to 150 per cent of the amount placed on deposit. These are: Capital One
Card Center, PO Box 85609, Richmond, VA 23286-9195, USA and First Consumers
National Bank, Lincoln Center Tower, 1260 SW Greenburg Road, Suite 600, Portland, OR
97223, USA. Tel: +1 503 293 6181 or +1 800 876 3262. Another bank willing to extend credit
to 125 per cent of the amount placed on deposit is Star Bank Credit Department, PO Box
956, Cincinnati, OR 45201, USA. Tel: 1 800 999 0619. Star Bank is, however, only willing to
conduct business with those who live in the states of Ohio, Indianapolis and Kentucky.
Those who do not live in the US will have to be slightly more creative when approaching
banks that issue secured credit cards. There are a few banks that do not require that a host of
documents be submitted when opening an account, such as proof of minimum income. These
banks are willing to work with individuals who have never before been issued credit and also
appear to be willing to do business with those who are not officially resident in the US, but just
"live" there. These banks are: Bank One, Lafayette, NA, Credit Card Services, PO Box
450, Lafayette, IN 47902, USA. Tel: +1 317 423 0454 or +1 800 395 2556; Central National
Bank, Broadway & Charleston, 14th Street, Mattoon, IL 61938, USA. Tel: +1 217 234
2265 or +1 800 876 9119; First Deposit, PO Box 800, Tilton, NH 03276-0800, USA. Tel: +1
800 356 0011; Signet Bank, 11013 West Broad Street Road, PO Box C32131, Richmond,
VA 23261-2131, USA. Tel: +1 800 333 7116.
By writing to any or all of these banks, you should receive a wealth of information on how
to obtain a secured credit card. I am in no way connected to any of these banks, but merely
recommend them because they may be able to help you achieve a level of banking privacy.
Remember, however, that each of these banks is subjected to a host of reporting requirements
as they are located in the heartland of Big Brother. Do not expect them to be friendly to PT
causes or even to the idea of banking privacy. Hold your cards close to your chest when dealing
with them. If a bank turns out to be particularly helpful or, for that matter, particularly
unhelpful, please let me know. Your information can be incorporated into a future edition of
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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.
BUILDING A CREDIT HISTORY

I have been told that secured credit cards can be used to build a credit history for an alternate
identity. Such accounts could be opened through the mail and make use of maildrops, invented
social security numbers and the like. I have even heard that a credit report is automatically
created once one is requested for a certain name and social security number, even if no such
credit report existed previously. Once a name appears in the computer systems of a country as
the holder of a credit card, it will begin to build a credit history. Better still, banks are often
more than happy to issue new forms of credit to names that have proven to be low credit risks
in the past.
Nonetheless, the major problem with this theory is that most banks which offer secured
credit cards are located in the over-regulated territory of Uncle Sam. Many of these banks will
simply not be willing to do business with you unless you provide a photocopy of your passport
or some other form of similar identification, meaning that only very creative individuals will
be able to use secured credit cards as a means to build a credit history for a new alias.
That said, it must also be said that secured credit cards can be an indispensable tool in
helping one repair a damaged credit history. In fact, most people who obtain secured credit
cards do so because they have not been able to receive a traditional credit card. Start slow and
work your way up. In the beginning, only ask for a small amount of credit and secure it with
a small deposit. Over time, as your new bank becomes more comfortable, other types of
private borrowing may become possible.
Also, remember when filling out the original application form to present yourself in the best
light possible. This applies not only for secured credit cards, but for any type of account
application. Give yourself the best possible job title that still accurately describes what you do.
Applicants who are self-employed or who own a business, can stretch their earnings slightly.
Others, who move around a lot or change jobs frequently, need not be so forthcoming about
their situation. Once your account has been approved and opened, no one will ever again look
at your application form, assuming that you faithfully make all payments on time.
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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.
THE BEAUTY OF BACK TO BACK LOANS

Lynden Oscar Pindling, the former prime minister of the Bahamas, lives mainly on loans. Most
of these come from foreigners seeking favors. Records show that the prime minister and his
wife received nearly US $17 million in gifts and loans from foreigners over a period of 12
years, starting in 1977. The difference between a loan and a gift seems to be unclear. Pindling
keeps scant financial records and although he does, on some loans, keep up interest payments,
most lenders never expect to be repaid. All loans were issued unsecured with little
documentation and no provision for the payment of interest.
Today, Sir Lynden, who was knighted by Queen Elizabeth in 1983, lives in Lakeview in a
property that has been described as something between a villa and a palace. His mortgage
payment is US $4500 a month. On top of this, the former prime minister must meet interest
payments on bank loans ranging from US $7000 to US $8000 per month. As his annual salary
was a relatively modest US $100,000, he must obtain new loans to keep his head above water.
For him, however, loans are not hard to come by. He was, after all, prime minister of the
Bahamas. The Miami Herald recently chronicled the country in an article titled "A Nation for
Sale". It had this to say: "You can buy an airstrip, or an island. You can buy citizenship. You
can buy protection. You can buy justice. And should your drug cargo get seized by police, you
can even buy it back."
For those of us with a little less influence to peddle, loans are harder to come by. Back to
back loans, however, are always a sure thing. Back to back loans, borrowing against your own
funds on deposit, are also cheap to come by. Instead of paying full interest, you normally pay
a "spread" to the bank or financial institution that has put the loan together. This spread is the
difference between the highest deposit interest rate and the lowest rate at which the bank lends
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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.
HOW BACK TO BACK LOANS WORK

The price for back to back loans is usually rather low. Of US $100,000 untaxed money sent
abroad, US $99,000 would come back to you as a loan. Of US $10,000 paid in interest, US
$9900 would be made on interest from the security held offshore. The US $9900 would be tax
free while the US $10,000 would be tax deductible, in a normal case. So even though it looks
like a back to back loan costs you something in the neighborhood of one per cent, you could
find yourself making money on the deal in the form of a tax deductible expense. The loser is
your government, since you won't be paying what they think is your fair share of tax. As a
result, back to back loans are a gray area of finance. They shouldn't be advertised too loudly.
As you are setting up your own loan, you can pretty well dictate the terms. Don't make them
too outlandish. An exotic blend could draw attention to you. Yet loans come in all shapes and
sizes. If you can keep everything at arms length, arrangements of the loan can be almost
anything. You are best off organizing back to back loans directly with a bank. This lends
substance and credibility to the arrangement. You also reduce the risk of something going
wrong, such as crooks absconding with your half of the "back" before lending it "back" to you.
Working with a bank you will have to do a bit of leg work. What you are asking for is a
personal loan that is secured by funds on a blocked deposit. That the funds belong to a
company, albeit a company you control, is no obstacle. You will get the loan as a personal loan
or any way you want it, regardless. Putting the loan package together is not too complicated,
but don't expect the bank to have a standard product ready. You need to tell them what you
want and how you want it done. You also need to negotiate fees individually.
In an ideal setup, your offshore company has money on deposit that earns tax-free interest.
This money secures your loan. If you are a tax payer, you can usually deduct interest payments
made to the bank, depending on the rules of your country and what the loan looks like. Most
foreign banks dealing with the private international community are familiar with back to back
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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.
PRAETORIAN FINANCE SERVICES

If you would rather not go it alone, there are a few companies that either directly offer back to
back loans or are willing to assist you in establishing one. Praetorian Finance Services, based
in both the Turks and Caicos Islands and New Zealand, is one such company. Their program
is somewhat complicated, largely due to the fact that it is used as a means to sell what is called
a Mortgage Guarantee Policy of Insurance. To participate in the back to back loan program,
you must pay for this insurance policy. It is included in the overall fee. In the event of your
death or disablement, this policy would then automatically payoff your debt position.
Whatever you have pledged as security for the loan would then become available to your heirs.
Praetorian Finance Services is willing to allow you to pledge not only cash, but also
possessions as security for the loan. The only requirement is that possessions should not be
items which must be registered, such as land, buildings or motor vehicles. The best items to
offer are collectibles, such as coins, silver sets or even household contents. You must also open
up an offshore account, in your own name, and fund it with at least 10 per cent of the overall
amount of credit that you desire. You then qualify for what is referred to as a credit facility.
This does not seem to mean that you can use your possessions to borrow cash, as the entire
facility will not be made available until you have established a good credit rating with the
company. This basically seems to mean that, in the beginning at least, you will only be allowed
access to the money deposited in your account. You lend it to them, they lend it back to you.
The plan is advertised as an alternative to more expensive arrangements involving offshore
holding companies and trusts. It is implied that you can achieve a certain degree of asset
protection by pledging your valuables as security for an offshore credit line. This mayor may
not be true. As long as you maintain use of your possessions, a court could decide that your
entire arrangement is a sham and that your possessions are, in fact, still your property and
liable for seizure. Remember that governments maintain jurisdiction over everything that
remains within their borders. Nonetheless, if all you want is a straightforward back to back
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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.
OWNING YOUR OWN BANK

A few advisers recommend that you buy your own offshore bank. They claim that purchasing
a bank charter in a liberal tax haven can provide you with privacy and tax benefits previously
unimaginable. They point out that when establishing a bank in a loosely regulated jurisdiction,
you need not worry about cumbersome regulations and capitalization requirements. They then
say that you can invest your money through your own personal bank and thus achieve
complete privacy as you no longer have to worry about meeting the demands of an offshore
banker, who in turn has to worry about Big Brother breathing down his neck. Such advisers
also insist that US investors can legally avoid a myriad of taxes and reporting requirements.
Advisers that make such claims, coincidentally, also usually happen to be in the business of
supplying ready made off-the-shelf banks for prices ranging anywhere from US $10,000 to US
$25,000 or more.
One such individual who has achieved a certain degree of notoriety in the offshore banking
world is Jerome Schneider. Through his WFI Corporation based in Beverly Hills, California,
he claims to have sold in excess of 750 bank charters, all based in tiny Caribbean or Pacific
islands. Of course, in its promotional material, WFI Corporation does not mention the fact that
many of the banks that it has opened over the years have later been closed down by
government regulatory agencies. As a case in point, 319 out of 350 existing banks in
Montserrat were recently closed by the Bank of England. Of these banks, more than 200 were
established originally by WFI Corporation. In 1980, Schneider was fined in Los Angeles for
failing to substantiate claims made by his firm in the Wall Street Journal. In 1983, he told a
US Senate Subcommittee that he had paid as little as US $300 for Marshall Island bank
charters that he later sold for US $15,000 or more.
My advice is that you should not even consider buying a bank unless you are interested in
becoming a banker. A bank is less than worthless for merely handling passive assets. Why less
than worthless? Because owning a bank always involves substantial annual running costs and
annual taxes or payments in lieu of taxes, not to mention accounting, filing and domicile fees.
Yes, it is true that for US tax purposes, an offshore bank owned and operated by a US citizen
is allowed to accumulate its profits tax free. Most advisers, however, fail to mention the fact
that in order to qualify for this tax exemption your bank must be a real bank and not just a
personal holding company for your assets. A real bank has mainly outside customers and
makes its money in the banking business. Running a bank is a full time job that usually
involves the cost of many employees and multi-million dollar risks and loans. The typical
charter buyer is much like the person who buys a noble title. You get a pretty piece of paper
that you can then hang on the wall. Aside from admiring the actual certificate or impressing a
few friends who don't know what it's all about, an offshore bank charter is quite worthless.
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WHAT TO LOOK FOR IN AN OFFSHORE ADVISER

Throughout this report, I recommend that you avoid middlemen whenever it is humanly
possible to do so. It must be said, however, that there are some situations in which the use of
an offshore adviser is simply unavoidable, such as when forming an international trust. I also
understand that some of you will feel more comfortable when venturing into the international
banking arena, if you do so through the assistance of a qualified adviser. Others may simply
not have the time to manage their own affairs and are left with no alternative but to work
closely with an offshore adviser or two.
Whatever the case, if your situation merits the use of an adviser, be very careful when
choosing those with whom you will share your secrets. These individuals will be provided with
detailed information concerning your financial affairs. Many problems can be avoided right
from the start by simply choosing the right adviser. To begin with, you should make certain
that your advisers are at least roughly of the same mindset as you. There is no way that an
aggressive entrepreneur and a conservative and overly cautious attorney will ever be able to
work well together. You want to work with people who share your views on investment
practices, on government and on the fact that your money is indeed your money. If for some
reason, even a basic personality clash, you do not get along with your adviser, your investment
portfolio can only suffer. You want to work with people with whom you can build a solid
business relationship based on mutual respect.
You should also work only with advisers that have a great deal of experience in the areas of
international banking and investment that pertain to your particular situation. If you have
already decided that you would like to invest in a particular banking haven, search for an
adviser that specializes in that haven. You may even want to look for an adviser that actually
lives in that haven and can personally oversee your investments. If, on the other hand, you are
interested in maintaining a wide diversity of investments in various jurisdictions, work only
with advisers that specialize in such a broad perspective. Whoever you choose to work with,
they will be far more helpful if, through their work with other clients, they have already
established the sort of setup that you are interested in establishing. Such practical experience
could well prove to be invaluable.
Another way in which you can judge the quality of an offshore adviser is by looking at his
network of contacts and associates. An adviser that is well connected with key individuals,
politicians and institutions within your chosen banking haven could open doors for you that
would otherwise remain firmly closed. Such contacts often make the difference between the
smooth implementation of your plan and an endless run around. It helps enormously if your
adviser knows key government individuals in your banking haven, particularly if you would
like to engage in a business that is highly regulated. Your adviser should also be able to
recommend other advisers. If your overall setup will be highly complicated, it may well
require the expertise of several advisers, each of whom is well versed in a particular area of
international investment practices. The more resources that your adviser can put at your
fingertips, the better.
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THE ATTORNEY-CLIENT PRIVILEGE

It is often recommended that you work only with advisers who are established professionals.
While professional status does not guarantee that your adviser will be competent, it does at
least mean that he is honest enough to hold on to his license. It also means that he should
possess at least some technical knowledge in his chosen field. In my mind, however, practical
experience is far more important than bits of paper that an adviser can tack on to his office
walls. However, the advantages of working with educated professionals should not be
overlooked. For example, when working with a lawyer, one of the benefits that you receive is
the protection of the attorney-client privilege.
The basic concept behind the attorney-client privilege is that in order for an independent
legal system to function properly, it must ensure that all communications between an attorney
and his client are confidential. In most western democracies today, the only information that
you have any hope of keeping private is that which is exchanged between you and your lawyer.
No similar protection exists for doctors, psychiatrists, journalists or even priests. In many
countries, such individuals are, in fact, under a legal obligation to come forward if they have
information about a crime that has been committed or is about to be committed. It is only with
your lawyer that you have any hope of keeping your communications private. The fact that
"most politicians come from a legal background undoubtedly played no small part in creating
this special exemption. It also plays no small part in keeping the attorney-client privilege part
of the status quo.
Or does it? In the US, there have recently been a number of cases in which lawyers have
been forced to turn their records over to court judges. Any bits of information that the judge
believes may be of interest to the IRS are soon dispatched to the appropriate taxman. Also, as
was explained earlier, attorneys in the US are under a legal obligation to report any cash
payments that they receive for amounts that exceed US $10,000. When several prominent law
firms tried to fight this requirement, they lost. The courts ruled that the government's need for
such information outweighed the demise of the attorney-client privilege in such cases.
Apparently the fact that this reporting requirement basically amounts to a lawyer testifying
against his own client and limits the ability of that client to receive a fair trial did not matter.
Since that ruling, searches of law offices for records of cash payments have become
increasingly common. Even the wiretapping of telephones in the offices of attorneys has
become a frequent practice. Again, such invasions of your privacy by government henchmen
are repeatedly deemed to be perfectly legal, even in cases where government snooping is
carried out without a court order.
The only good news is that most other western countries have yet to follow the US in its
attempts to eliminate the attorney-client privilege. In the UK, for example, this right to privacy
is respected by both the Inland Revenue and the courts. Only in very big criminal cases has the
attorney-client privilege been breached. The fact of the matter is that the Inland Revenue
knows that it would attract far too much bad press if it started using IRS methods. This deters
the taxmen from going after attorneys in all but the largest of cases. So, unless you are a multi-
millionaire, high-profile outspoken tax evader, it is highly unlikely that the Inland Revenue
will risk attracting all sorts of bad press and parliamentary criticism merely to find out what
you have been doing with your money.
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CHOOSING AN OFFSHORE ADVISER

Of course, in any country, the fact that a law firm could be blackmailed into supplying
confidential records to government officials should never be ruled out. The taxman can often
produce miraculous results by merely mentioning that he may soon start an investigation
concerning your attorney himself. Once in a while, scandals involving such a breach of
confidentiality make their way to the papers. Far more often, they are hushed up. For such
reasons, it usually best if your adviser is not located in your home country. Anyone still closely
connected to your home country could very easily be subjected to all sorts of pressure to
release information concerning your investment activities.
Your adviser should, however, be familiar with your home country and well versed in all
laws and legislation that affect you. The best advisers are often expatriate attorneys. Such an
adviser will not only be familiar with your fears and concerns, but should also be able to
provide a wealth of information concerning investment opportunities. The major thing to look
for in an offshore adviser is someone who will be able to meet your particular needs. His
loyalty should rest first and foremost with you. Agree ahead of time that you will be the first
to know if anyone starts to ask questions concerning your account. Even the smallest advance
warning is all that is necessary to move your money half way around the world and out of
harm's way.
Also be aware that as in all other fields, there are a number of sharks out there keen on
separating unscrupulous investors from their money. Be highly skeptical of any proposal that
sounds too good to be true. Avoid advisers who insist that it is in your best interest to put the
bulk of your money into a single investment. They are far more interested in selling that
investment than in looking after your concerns. The international investment world is large and
varied. There are no one-size-fits-all solutions. The best advisers are those that view each
client as a distinct individual and are willing to design a specific plan to meet his needs.
How exactly do you go about finding the perfect adviser for your particular situation? The
preferred way is the old fashioned way - through personal contacts. Ask for recommendations
from those who you know and trust. If you do not know anyone who may be able to make such
a recommendation, a few advisers who specialize in matters related to banking privacy have
been supplied in the Resource List at the back of this report. Each of these individuals has been
of assistance to other readers of this and my other reports. Finally, remember when looking for
an adviser that, as with all things in life, it pays to shop around and compare prices. The same
asset protection plan sold by one adviser can often be arranged for half the price through
another. Having said that, however, I am reminded of the age old adage that advice is often
worth exactly what one pays for it.
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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.
THE AUSTRIAN SPARBUCH

The Austrian Sparbuch is without a doubt the most reliable of all truly anonymous accounts
currently available. It is an institution almost as old as banking itself. As German speaking
readers will know, the word "Sparbuch" literally means "savings book" or what is generally
known as a passbook. Physically, this account is nothing more than a 14 page booklet, really
just a folded piece of cardboard. The name of the bank is printed on the front of the book. The
pages inside contain a computer printout of the most recent transactions pertaining to the
account. You may remember this benign looking contraption from the days before checkbooks
and Visa cards conquered banks everywhere and changed people's habits forever.
For privacy purposes, the Sparbuch beats flat out all other accounts currently on offer. The
Sparbuch is for all intents and purposes a bearer passbook. Whoever is in physical possession
of the book is presumed to be the owner of the account and may do with it whatever he wishes.
To safeguard against the theft or loss of the passbook, a "Losungswort" or code word is agreed
upon when the account is opened. All one need do to access funds held in the account is present
the passbook and state the Losungswort at any branch of the issuing bank. As the account is a
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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.
WHAT A SPARBUCH CAN DO

The Sparbuch has a number of huge advantages over any other type of account offered by
banks outside of Austria. For one thing, the account can be opened in any name desired. As
you need not provide identification or references, your alter ego will find it almost
unbelievably easy to open his first account in Austria. It is also possible to maintain the
account in the name of a company - whether offshore or conventional - without having to
furnish documentation, transcripts from the company registry or anything else of the sort. The
account can even be opened in no name whatsoever. Such an account is known as an
"Ueberbringer" account, which roughly means "bearer passbook". As the term implies,
whoever physically holds the passbook is presumed to be its legal owner.
Not only does one not need to show identification when opening a Sparbuch account, but,
in addition, one is not required to provide an address. In other words, no paper trail is created
when the account is opened. Also, in the nature of things, no account statements are ever
mailed out to account owners. Instead, the book itself is automatically updated upon
presentation at any branch of the issuing bank, even if the account is left dormant for years. If
that sounds like an odd advantage, think of the kind of damage that is all too frequently
inflicted on unwary individuals when statements and letters from banks are intercepted by
spouses, tax authorities, police and other privacy invaders. This all means that it is absolutely
impossible to establish just who opened the account by means of checking available records.
No records have ever been created except for the physical Sparbuch itself and its
corresponding account number in the bank's computer system. It is absolutely impossible for
anyone to determine the true identity of the owner of the account.
It is also entirely legal to transfer a Sparbuch from one person to another without giving the
bank or anyone else notice. In certain countries, it has been made a (victimless) crime to sell
or even give away a passbook. This, of course, stems from the tasteless wishes of certain
politicians and bureaucrats to collect as much knowledge and as much data about bank account
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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.
HOW A SPARBUCH WORKS

Being in reality a bearer passbook, a Sparbuch account does not as a rule offer a very high
interest rate. An account which allows immediate access to all funds without prior notice
generally offers in the area of three to five per cent. This can be increased to between six and
eight per cent by agreeing to give the bank 12 months notice before withdrawing funds.
Interest is compounded annually. Also, a Sparbuch account may only be denominated in
Austrian schillings, which are not in the EMS, the European Monetary Snake. Indirectly,
however, the schilling has for the past few years been tied to the German mark and is therefore
a remarkably stable and reliable currency. In the real world, this offers a greater degree of
stability than the Swiss franc does.
In order to make a deposit, one can walk into a branch of the bank in question and plonk
down cash in any currency which will then be converted into schillings before being credited
to the account. Similarly, one may freely mail checks denominated in Austrian schillings and
made payable to the bank or the fantasy name of the account. Such checks can be mailed to any
branch of the relevant bank. A note should be enclosed that advises the bank to credit the checks
to the Sparbuch, quoting the account number. Of course, SWIFf transfers may be made to a
Sparbuch account in exactly the same way that SWIFf transfers are usually made. Naturally,
one does not need to indicate the bearer nature of the account when ordering the transfer.
It is not possible to make SWIFf transfers from a Sparbuch account. You or someone you
trust will have to go to Austria to visit a branch (any branch) of your bank and make the
appropriate withdrawal. However, some banks allow withdrawals to be made if you send them
the Sparbuch by registered mail with an enclosed note providing instructions on how much
should be withdrawn and where it should be sent. You will also need to send the code word,
preferably in a separate letter and, of course, will have to pay applicable charges to have a
check made out and mailed back to you with the Sparbuch. Standing orders, monthly transfers
and the like are not possible with a Sparbuch account. The passbook absolutely must be
presented to the bank to make a withdrawal. This means that losing the book is almost like
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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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IS THE AUSTRIAN SPARBUCH AN ENDANGERED SPECIES?

Over the past few years the international community has become increasingly aware of the
existence of anonymous accounts in Austria. Needless to say, most governments are not overly
fond of the idea the idea that just about anyone can achieve total banking privacy with little
fuss on the European continent. The fact that Austria joined the European Union a few years
ago has also played a key role in bringing the brunt of foreign pressure down on Austrian
officials. This pressure led to the recent change in policy concerning Wertpapierbuch accounts.
Previously these accounts worked much like Sparbuch accounts, but also allowed one to trade
anonymously on the world financial markets. One is now required to show identification
before using the trading facility of such accounts.
Sparbuch accounts, however, remain unaffected and have only proven to be all the more
popular as a result of the free publicity that they received concerning the demise of the
Wertpapierbuch account. Austrian officials are fiercely opposed to any and all suggestions that
they should change the anonymous nature of Sparbuch accounts. At present, it is estimated that
26 million anonymous accounts are in existence. Together, they contain almost US $130
million in funds. Undoubtedly, the fact that Austria receives 22 per cent in tax from the interest
earned by each of these accounts plays no small part in determining the vigilance of Austrian
officials. Both politicians and bankers deny that their country is a haven for illegal earnings.
They also claim that the country's legal basis for offering such accounts is sound and above
reproach from EU bureaucrats.
In short, this seems to mean that for the foreseeable future Austrian Sparbuch accounts will
not only remain available, but will also remain unaffected by all foreign attempts to interfere
with them. This door may close at some point down the line, but until then you have an option
which is unique in the world. You can open a major bank account without having to provide
even one scrap of identification. No ID, no mailing address, no bank references, not even a
single professional reference is required to open these accounts. They can be issued in any
name. No statements are mailed out. No paper trail is ever created. No tax collector, no
grumbling ex-wife and not even the bank itself can identify who opened the account or who
currently controls it.
ANONYMOUS CORPORATE CREDIT CARDS

An individual who goes by the name of Sinbad often appears in the pages of The Freebooter,
a newsletter for PTs and others interested in personal and financial privacy. His articles always
concern the topic of banking privacy and are usually highly informative. One such article
recently offered a product that is unique, a completely anonymous corporate credit card. The
card can be issued in any name. Better still, there are no requirements that one submit
identification, credit reports or even an address and telephone number. The card is technically
not even a secured credit card, at least as far as the issuing bank is concerned, although it works
in much the way that a secured card does.
The program involves a company registered in Malta. This company has apparently made
arrangements with its bankers to have corporate cards issued to its "executives". As the
company is liable for any expenses incurred on all cards, the issuing bank does not bother to
vet applications. The bank also assumes that this company knows who its employees are and
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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.
THE PILL PROGRAM

Another anonymous secured credit card is offered by an organization known as Prosper
International League Limited (PILL), which is based in Belize. This program has a little bit of
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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.
IS PILL TOO GOOD TO BE TRUE?

Does this all sound too good to be true? Well, stop and think about it. The major problem with
this program is that it is not low-profile. Your new anonymous credit card will not stay
anonymous for long if you must advertise your participation in a multi-level marketing
program far and wide. Even sharing your little secret with a few sympathetic friends could get
you into hot water one day. Worse still, Big Brother has already taken more than a casual
interest in this program as a whole. He does not like the idea that anonymous credit cards can
be so easily acquired.
After seeing the program advertised, one reader in Belgium decided to translate marketing
materials into French and distribute them amongst students of hers. She ran an advertisement
of her own in a local newspaper. She then sat back to wait and reap the fruits of her
entrepreneurial labors, but instead was subjected to an unwarranted and unnecessary invasion
of her privacy by government henchmen. Her home was searched. Records, pertaining to a
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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.
WHAT HAPPENS WHEN YOU DIE?

The fact that you have hidden at least some of your assets in a private account raises the
obvious problem of how to transfer these funds to your heirs upon your death without raising
suspicion during your lifetime. If you leave behind an account held in a name other than your
own, your heirs may never be able to access such funds. Even offshore accounts held in your
own name will have to be located before they can be passed on to the next generation.
Arrangements for the proper transferral of your assets must be made before you die. If you
do nothing, the fine print in your account opening papers usually provides that after some long
period of inactivity in your account (like 20 years) the account becomes the sole property of the
bank. Obviously, with this incentive, the bank is going to make absolutely no effort to find your
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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.
ARRANGING FOR A PRIVATE WILL

Like most people, you have probably already written a will. Your will, however, should not
include all your worldly goods, it should only include those that the world knows about. A will
can literally come back to haunt you. If you wrote it early, you will probably be making
changes to it. The existence of your will is semi-public knowledge. In a court case, with you
as the defendant, your will can become Exhibit A, a revealing document that lists all of your
assets as well as your intentions. Think about this. If you are at all concerned about your
financial privacy, you should keep certain things out of your will. Of course, if some of your
assets, such as a private offshore account, are not listed in your official will, you will have to
come up with another way of notifying your heirs of the location of these assets.
Fortunately, there are many possibilities that allow you to work your way around this
problem. One way is to leave instructions about the existence and testamentary disposition of
the account in a sealed envelope with a trusted third party. This person should probably live
outside the jurisdiction of your home country. You can tell your kid or wife that she should see
this person for a sealed envelope in the event of your death. The trusted third party should have
some incentive to see that your heirs get the envelope - like being told that US $2000 will be
delivered to him by the heir upon your death if he delivers.
Another alternative is to make use of the services of an impartial lawyer, preferably in a
country where you are not known and do not have any other dealings. Tell the lawyer that you
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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.
USING A POWER OF ATTORNEY

In many countries, estate taxes and probate can be avoided if you give a power of attorney to
your designated heirs. The Swiss, for example, do not require that inheritance tax or probate
proceedings be completed before transferring the bank accounts of deceased foreigners to
heirs. In fact, most continental European countries will honor a power of attorney even after
the death of the person who created it. Thus, a power of attorney in Switzerland or
Liechtenstein can take the place of a will, meaning that there will be no cost for probating an
estate. All your assets can be taken over and distributed by whomever you have given the
authority to do so. You can make arrangements, such as with an impartial third party as
explained above, for a power of attorney to be delivered after your death so that the person you
appoint does not know the location and value of your assets during your lifetime. You could
also leave a power of attorney form on deposit with your bank.
Just be sure to check with your bank to make sure that your testamentary instructions can
be carried out as per your wishes and expectations. Then do the necessary paperwork. All
powers of attorney must conform to the local rules of the country in which they will be used.
Sometimes, this means that they must be very specific, other times that they cannot be written
in English. More often than not, however, a wide ranging and general power of attorney will
be accepted. Check before making any of the necessary arrangements. 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 the problem. Apart from powers of attorney,
two forms that you can use in all of your own dealings are survivorship and joint rights forms.
A copy of each of these has been reproduced for your convenience in Appendix C at the back
of this report.
The use of a power of attorney to transfer assets will, however, not work in all countries. In
both the US and the UK, a power of attorney dies with its maker. The same holds true for most
countries that belong to the Commonwealth. In these countries, you will need to work with a
will, probate and all of that expensive bother. The basic idea behind these requirements is that
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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.
A WORD ON BIG GOVERNMENT

It is legally possible today for the government of just about any country to pass whatever laws
it desires and arbitrarily punish citizens for breaking them, even if those laws constitute a
flagrant violation of the constitution of the country in question. A gross example: the United
States Constitution says that church and state must be kept separate and that no official religion
may be established. Fine, right? Now take a look at a piece of US coinage and read the fine
print - "In God We Trust". Keep religion and state separate? Doesn't much look like it. The
law forcing the US Mint to print these four words on US currency was passed at the behest of
a fascist, raving maniac senator by the name of Joe McCarthy back in the fifties. Heard of him?
Then you also know what states and governments are able to do in terms of passing blatantly
illegal and intolerant laws and enforcing them at the point of a gun.
It happens everywhere. Germany and France, for instance, still have the draft. They also
have laws that make it possible to be a conscientious objector, such as on the basis of religious
faith. So far, so good. However, to prevent too many people from finding out about these laws,
another set of laws exists that make it a crime for anyone to write or otherwise publicize the
fact that a legal loophole exists for avoiding the draft. In China, most criminal laws are secret.
Even lawyers have a difficult time finding out what behavior is legal and what is illegal when
they are trying to build a defense for clients. I tell you this to make it painfully clear that
although the tactics outlined in the preceding parts of this report are presently legal in most
countries, they may not be so for long.
Furthermore, I am warning you that some of the techniques outlined in this and the
following chapters of this report have already been reclassified as illegal activity in many
countries. I emphatically do not recommend that anyone break the law of any country for any
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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.
BANK SECRECY DOES NOT EXIST

For all practical purposes it is best to assume that bank secrecy in the true sense of the concept
does not exist. Once upon a time, something resembling bank secrecy could be found tucked
away in various comers of the planet. Even today, some offshore locales do offer a semblance
of bank secrecy, but for the most part such assurances are merely a marketing gimmick. All
banks and tax haven jurisdictions advertise their oh-so-strict bank secrecy policies when they
are interested in attracting new customers and their money, but often the situation is entirely
different when push comes to shove. The fact of the matter is that you, as an individual, do not
mean a whole lot to governments or even to individual banks. They merely boast about the
banking secrecy that they offer to lull you into a false sense of security and to lull your money
to their shores.
Every country in the world that promises bank secrecy has lifted its veils to local or foreign
investigators at one time or another. Some do it on a daily basis. If you rely on your foreign
bank and its policy of banking privacy to protect your account from outside scrutiny, you
should at the very minimum create some sort of a backup plan. In a tax case you may be saved
in the last innings because your foreign bank refuses to let others look at your bank records,
financial statements and the like. However, more often than not, foreign banks readily waive
bank secrecy. There is simply too much at stake for them not to cooperate with Big Brother
and his henchmen. Perhaps they also realize that even if they do stand up for you and protect
your right to bank secrecy by refusing to divulge information about your account, your home
country has other ways of getting the information it is after. France has bribed bank employees.
Greece was involved in a scheme through which it bought stolen records from Swiss banks.
The US routinely lies to just about everyone.
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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.
TRUST ONLY YOURSELF

The best way to hide your assets from the authorities and everybody else looking to steal from
you is, first and foremost, not to disclose your total portfolio to begin with. You can then go
about doing what you have to do in total secrecy. Once you disclose an asset, of any nature,
that information will go on file and may later be dug up to help authorities seize or attach that
asset. Of course, a few countries have already outlawed this simple and reliable method of
protecting what is yours. Some countries have gone so far as to require that citizens make an
exact statement of all assets not only owned, but also controlled, such as by power of attorney.
Although it is tempting to advise those of you caught in such circumstances to silently tell
Big Brother to bugger off, I cannot. Again, I must stress the severe consequences that could
result from not complying with any of the various reporting requirements that have been
brought into play in many countries. Again, I must advise you to follow some of the more
complicated but legal advice already spelled out in this report. Is there any other alternative?
Yes, as I have also said throughout this report, you could also break free and live the life of a
PT. In other words, if you currently live in a jurisdiction with across the board full disclosure
laws, in a country that has made it illegal for you to invest your money as you see fit, under
the thumb of an oppressive government that has even outlawed the use of offshore
corporations and trusts, then my advice is very simple - move!
The best protection against any and all invasions of your financial privacy today and in the
future is nothing more than your own wits. It's that simple. You must put your own do-it-
yourself plan for banking privacy into motion all by yourself. You need not confide your
actions to expensive lawyers, chatty accountants or shady consultants who will then know all
of your secrets. The less stable your home government is, the more important it becomes to
move assets internationally and establish a layer of banking privacy. For Joe Tycoon, already
living the sweet life of a PT expatriate in Monte Carlo, financial privacy is an added luxury.
For Mustafa Rabid, on the wrong side of a political power struggle between ruling clans in
Iran, financial secrecy becomes a lot more than a luxury. For him, it can mean the difference
between freedom and imprisonment, even death. In these cases, banking must be done in
silence and by you, no one else. Your financial privacy is too important to be left to lawyers,
accountants or anybody else claiming to be a professional. It is you and you alone that will
consistently look out for your own best interests.
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THE NAME GAME

The first step in establishing your own rock solid bank secrecy is to consider the use of a
different name or alias. This simple approach often produces results that far surpass all other
methods designed to achieve banking privacy. A name change, even a temporary name change,
is a very real possibility that you should consider from time to time. You are breaking no laws
in English speaking countries by having more than one name or identity. In the United States,
a new name can be acquired by simply adopting any name and using it. This is not illegal
provided that you do everything by the book, simply using an assumed name is not in and of
itself automatically illegal. The legality of such practices is instead determined by the
surrounding circumstances. In general, you can only get in trouble for using an assumed name
if you do so with the intent to defraud. In a victimless situation, in which no one (including
your home government) is hurt or defrauded, using a pen-name or a stage name cannot lead to
anyone pressing charges against you.
How do you get another name? There are hundreds of ways. The easiest is just to begin
using a new name. For some purposes, such as the issuing of a passport, a new name may have
to be registered with the local county recorder. In the US, both the federal as well as state
governments do not maintain registers of name changes. This means that with over a thousand
small counties in existence, all of which maintain their records in various states of
disorganization, it is unlikely that even a registered name change would allow anyone but the
most intrepid of investigators to discover your past identity.
Finally, you can also legally change your name upon acquiring dual or multiple nationality.
(I have a great deal more to say about the benefits of multiple nationality in my other reports,
but for now will limit the topic to this little discussed advantage.) Most countries allow you to
adopt a more suitable name upon becoming a citizen. In the US, Guiseppi Verdi becomes Joe
Green. In Israel, Dov Vardi. In Japan, Kazo Midori. In an Arab speaking country, Mohammed
Khadra. The possibilities are almost limitless, but remember when adopting a new name that
it is always best to keep your new identity simple and uncomplicated. Geoffrey DeBeers von
Steuben might be impressive, but if you want to blend in, it is better to be known as Harry
Carlson. If you are of Italian descent, Mario Rossi beats Michaelangelo Buonarrotti. One PT
friend whose name used to begin with Z, became Allen Albrite. He says its better to be put at
the front of the line than at its tail end.
Having variable identities enables you to ensure your personal safety in almost all areas of
life. All past problems, whether they involve sour marriages, ongoing litigation, credit records
or even traffic convictions can be pushed aside with a simple name change. If your name is Von
Steuben, no lawyers will try to serve notices of lien on property registered in the name of Rossi.
Even in more personal areas, a new name can work wonders. Perhaps you recently suffered a
temporary slip in judgment and became involved with a man or woman who is now far more
interested in your money than in intimate pillow talk. Perhaps even, a jaded lover has gone
completely round the bend and currently makes a hobby of taking potshots at you.
Disappearing until the shooter cools off is a lot safer than filing a complaint with the local
police.
If you have no past problems, your old name can still serve as an alternate identity. Future
problems in your new name can be left behind by reverting to your original name or an even
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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?
OPENING A TRULY PRIVATE BANK ACCOUNT

The most private bank account possible is one that you own and control, but that has been
opened in a name other than your own. Your new bankers need not know your real country of
origin, citizenship or residence. In fact, they need not know anything about you that will allow
them to link your account with your true identity and citizenship. In order to open such an
account, you may have to tell a few white lies to your bank, but again such actions are not
illegal provided that you do not intend to defraud anyone, particularly your bank. Your new
bank may be obliged by law to determine the identity of new clients, but you as a customer are
under no legal obligation to tell anything at all to the bank.
With a ghost account opened and operated strictly by mail, you can have your alter ego pay
bills that you would rather not pay yourself or write checks that you would rather not have to
clear at home. By establishing an account according to these principles, you are buying
yourself the most precious luxury available in the international community today, rock solid
bank secrecy. Best of all, it will not cost you anything. Whatever name you choose, opening
an offshore bank account is free. Even checks are free. A high interest, dollar denominated
checking account opened with a mail order British bank in the Channel Islands does not cost
anything to open. Once your new account has been established, you can structure your
expenses so that your paper trail at home shows only what you want it to show. When this
happens, you will have reached the point where you are effectively banking in silence.
Many individuals first choose to establish an offshore corporation and then use that
corporation to open a bank account in a name other than their own. Such a roundabout
approach is not necessary and is definitely far more costly than a do-it-yourself approach. Still,
some people are uncomfortable with the idea of banking under a pen-name. It is all a matter
of what will work best for you. Of course, using corporations and trusts to achieve banking
privacy is far less desirable than the use of an entirely separate identity, if the business
established can eventually be traced back to you. Perhaps the most secure approach involves
a combination of both an offshore structure and an alternate identity. If a bank account is held
in the name of the XYZ Foundation and has as its signer a Swiss lawyer whose books state
that the true owner or party at interest for the account is your alias and alter ego, Joe Doaks,
you have created a three-tiered impenetrable blockade for creditors and tax collectors.
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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.
OBTAINING ALTERNATE IDENTIFICATION

The biggest hurdle in opening a bank account in the name of an alias is that banks in almost
every locale demand proof of identification. More often than not, they also demand that they
receive a copy of such identification for their records before they agree to open a new account
and accept deposits. This was not always the case. Less than ten years ago, most banks were
more than happy when a new customer walked in the door. Seldom did they ask for ID. While
one used to be able to flash a season holder's ticket to the Metropolitan in New York (it worked
in Luxembourg), today most banks routinely expect nothing less than a passport. Depending
on your attitude and where you are in the world, there are ways of talking them out of this
stipulation, but generally speaking, some type of identification is required everywhere you
open an account in person.
One possibility is to make use of what is commonly referred to as a "banking passport".
Briefly, this magical document is a passport that one obtains merely for purposes of
identification. It is not used for travel. The banking passport is one way in which an identity
can be established to collect fees, royalties and the like. Its purpose is purely and simply to
make your assets disappear into the accounts of your alter ego. More information on the uses
of a banking passport as well as how to go about obtaining one is provided in the latest edition
of The Passport Report, also published by Scope International. This invaluable report will
show you how you can acquire a second passport from more than 80 different countries.
Banks may also ask for proof of your address or some other form of supporting ID. If they
don't ask for such identification when opening the account, they probably will at some point
262
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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Banking in Silence
A TRUSTED INSIDE CONTACT

In addition to providing identification, many banks also require that you provide a reference
when first opening an account, particularly if you are doing so through the mail. This
reference is not meant to be in relation to your financial status, but is instead meant to confirm
your name, address and signature. That's all. As long as all three things match, you're in the
clear. Sometimes a bank will want a reference from your existing bank even if you open the
account in person. This is a sign of trouble, a sign that they don't believe your story. Give them
the reference, then let the account lie dormant. Forget about it. If you can't give them a
reference, make up some excuse and close the account before it even opens. This happened to
one reader who showed up in Andorra with a South American passport. According to his
passport, he was fluent in Spanish. He even had a Spanish name. Nevertheless, he spoke
English with the bank, forgetting that in Andorra everybody understands Spanish in addition
to Catalan, the national language.
Normally, you are expected to give your daily bank as your reference. I don't. I always refer
to an obscure Swiss bank where I have an account established just for that one purpose. A
Swiss bank is an okay reference to give, although the Swiss hardly ever confirm anything. Of
course, if you are banking in the name of an alter ego, you may have problems when
attempting to open your first account in this name. In this case, it may be wise for you to
observe the enemy for a moment and see how they have managed to get around such obstacles.
In the eighties, when the Central Intelligence Agency was looting money from American
Savings and Loan associations to pay for some of their unauthorized freelance operations,
they made use of several friendly helpers with their own banks and S&Ls. Some of these
bankers didn't have a whole lot of business and hence didn't have a whole lot to do. One
trusted inside contact sat in his office all day with nothing to do but pick his nose. His business
could be taken care of in 30 minutes, yet he had to stay in the office eight hours a day. The
rest of the time, seven and a half hours of boredom, he spent calling S&L owners with the
same predicament. They then put together some of the deals that American taxpayers are
paying for today.
This banker was more than willing to help out if somebody needed a gold-plated bank
reference. Even if the client was an alias, alter ego or ghost, one could count on this trusted
inside contact. Other banks would call him up. "Sure," he would answer, "I know Robin Hood.
Mr Hood is a pillar of our local community here and has been a customer for years." Helping
out with foreign banking, this trusted inside contact could usually fix matters whenever a mail
order offshore bank wanted a banking reference on a new client. This banker would find a
piece of stationery, then write a glowing reference which would read something like this:
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August 28, 199X
Village Bank
Cash Flow Street
Jersey, Channel Islands
United Kingdom
Confidential
Re: Davy Crockett
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.
USING NON-BANK FINANCIAL INSTITUTIONS

Non-banking financial institutions may be another option for those interested in stashing small
amounts of cash away from the prying eyes of Big Brother and his henchmen. In other words,
if banks have become too regulated to cater to your particular needs, you may want to consider
placing your money outside of the banking system entirely. In the US, there are many
storefront investment companies which operate much like banks but are not monitored as
closely as their federally chartered competition. Such companies are generally found in the
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Banking in Silence
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.
OPENING AN ACCOUNT AT HOME AS A FOREIGNER

From the Big Sky country of Montana to the polluted horizons of Germany's Ruhr district,
privacy minded individuals and businessmen have tried to beat the system by opening
checking accounts right at home, using fictitious names, phony social security numbers and the
like. As a general rule, in high-tech countries such tactics will no longer work. The computer
266
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.
MICKEY MOUSE RESIDENT PERMITS

First off, you don't really want to get yourself a residence permit. You can, but then the purpose
should be to live in another country (advisable, although PT style is always better) or to start
the clock running on a citizenship-cum-passport program. If you only want to get a residence
permit so you can go back to Sweden (or wherever) and claim to be an expatriate, there are
easier paths to freedom. Obtaining a residence permit is a headache. You need a bunch of
papers and will undoubtedly be sent from one government office to another for weeks, if not
months. This will take place in a foreign country where you probably do not even speak the
language. You then go to see your embassy. They are not helpful. Then you see lawyers who
rip you off and can't do much, because red tape is red tape. When you have finally lined all
your papers up, you sit back and wait.
Then come the photographs, fingerprinting, Interpol checks, embassy checks, crime
certificates, employment, education, parentage, proof of X, Y, Z all translated into some
foreign language and stamped by your embassy. After an interview, you finally get an okay.
Now all you have to do is transfer XX zillion dinars through the official channels, filling out
a currency form and letting the Central Bank rip you off because it exchanges your funds at a
ludicrous below-market rate. Having accepted that, you sit back and wait. And wait. Then,
three months or even a year later your residence permit arrives. It is nothing more than a smart
looking card that gives you the right to live in X-land. With the card, you cheerfully enter your
bank in Sweden. "Hi there, I am an expatriate, see for yourself. Now, I can open a foreigner
account and no one can tax my interest, nor report the balance, since I won't have to give out
my taxpayer ill number."
Is there an easier way to banking nirvana? Yes, instead of obtaining a residence permit, you
acquire a document known as a "Fancy Card that Looks like a Residence Permit, Smells like
a Residence Permit and Feels like a Residence Permit". It is not quite a residence permit, but
for all practical purposes will pass the muster in any Swedish bank or any other bank anywhere
that requires that you prove that you live in another country than the one you are actually living
in. Here is how it works. Go on a holiday. Most charter tour packages will do. Stay for a few
weeks. Choose one of the world class playgrounds, Spain, for instance, or Brazil or Portugal.
While on holiday, sign up with the locals. Normally a PT makes sure he stays off computers,
but now is the time to actually get on one or two, voluntarily. If you are never going to return
anyway, what does it matter?
In Spain, you can get a tax contribution number even though you are not and never will be
a taxpayer. The number itself is just your file number in their system, it does not mean that you
have to pay them anything. What it does mean is that if you ever decide to do so, the Spanish
authorities will know who you are and can ensure that your payment does not go missing.
(Partly a result of poor office keeping and filing procedures and partly the result of corrupt
268
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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KEEP YOUR MOUTH SHUT

Gucci ~s a name you ~ave probably heard before. You are probably familiar with the array of
expensive luggag~, bnefcases and handbags associated with the name. One thing you may not
kno,:, however,. IS th~t Dr AI~o Gucci also laundered more than US $11 million through
?oldmg comp~ll1:s. !II.S operation was almost foolproof. Gucci USA established a subsidiary
in the tax-free JunsdICt1?n of Hong Kong. This subsidiary was then given the task of designing
new products, conducting market research for these products and selling these designs to
overseas manufacturers. For its efforts Gucci Hong Kong received ten per cent of all of the
gross annual income of Gucci USA. In other words, Dr Gucci had set up his operations so that
ten per cent of the total income of his company was transferred beyond the reach of the US
taxman and into Hong Kong, which has no capital gains tax.
The plan worked without a hitch for 15 years. It even survived a thorough IRS
investigation. What happened to bring the whole operation crumbling down? Dr Gucci made
a common mistake. He shared far more information with those close to him than they could
ever have possibly needed to know. In the end, it was not the bureaucrats or an over-zealous
taxman that turned Dr Gucci in, but his own kids. When a family squabble over money did not
end to their liking, the Gucci children decided to make money in a different way. They went
to the IRS and handed over not only the name of Dr Gucci's holding company in Hong Kong,
but also the name of its bank, its bank account number and even the names of the two
Panamanian chartered companies that held the shares of the Hong Kong subsidiary and where
these actual shares where held. For their troubles, the kids demanded the standard rate of
payment for such informants, ten per cent of the overall amount seized by the IRS.
With such information in hand, the IRS was able to force Dr Gucci's Hong Kong bank to
tum over his records. It turned out that Gucci's Hong Kong subsidiary over its many years of
operation had only developed three designs. None of these designs had ever received approval
or resulted in an actual product. Worse still, they had been produced by an employee in New
Jersey. Dr Gucci was charged with having a "defective license agreement". In other words, his
Hong Kong company was shown to be just a front. Dr Gucci pleaded guilty and then enjoyed
an 18 month stint in the pokey. Of course, all of his problems could have been easily avoided
if he had just followed some very simple advice concerning who to trust and, more
importantly, who not to trust.
Another business that had the perfect front for working with large amounts of cash was only
discovered when a blabbermouth bragged to his girlfriend over the telephone. Her phone was
tapped on a totally unrelated matter. Big Brother's henchmen were undoubtedly delighted to
hear an unexpected, but detailed account of how a Beverly Hills art gallery was fronting for
money launderers. In March 1991, on a sun-drenched street in the heart of Beverly Hills, the
government moved in and confiscated all assets of the art gallery. The scheme used by the
owners had been simple. They would launder proceeds from other activities by overvaluing the
art in the gallery. For example, a painting sold for US $60,000 would later be appraised by
independent art experts to be worth only US $800. Laundered money made up the difference.
This art gallery would probably still be in the laundering business today if all involved
understood the most basic rule of banking privacy. Dr AIda Gucci would never have spent one
day in jail if he had paid similar attention. You are hopefully not involved in such illegal
270
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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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.
THE WAR ON FREE-FLOWING MONEY

Money, luckily, flows freely and disregards national boundaries. With the development of
computer and communications technology, the old concept of jurisdiction is losing
importance. Electronic fund-transfer systems whiz billions of dollars around the globe.
Governments do not like this development. They do not like the fact that, thanks to modern
technology, you can send your money to the farthest comers of the planet, literally within a
matter of seconds. Governments prefer the good old days, in which it was easier for
bureaucrats to monitor what your money was up to. Still, not to be outdone by advances in
technology, Big Brother decided to usher in a host of new legislation. As explained in greater
detail earlier in this report, money laundering was first turned into a crime in the United States
only a little over a decade ago, in 1986. Many other countries have since followed suit.
What has come out of all of this new legislation? Well, for a start it has become
painstakingly obvious that it is completely nonsensical to transform a series of related
transactions (now known as money laundering) into a crime. Even Big Brother has had a hard
time distinguishing completely innocent transactions from those that fall within the legal
definition of his newly designed crime. In 1990 and 1991, the US Congress held hearings on
the money laundering "problem". Officials and bureaucrats testified in front of a panel of
politicians. As the hearings dragged on, it became painfully obvious that these public
employees quite simply don't do any work for the money they receive. They do not even have
the faintest idea of the extent to which money is being laundered. All their figures were pure
guesswork, picked out of the blue and ranging from zero dollars per year to a staggering one
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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
274
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.
HOW POLITICIANS LAUNDER DIRTY MONEY

Of course, it should come as no surprise that the concept of laundering money entered our
midst as the result of the unscrupulous actions of politicians. Just as politicians are responsible
276
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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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?
THE BIGGEST LAUNDRYMEN OF ALL TIME

The Central Intelligence Agency came into being when Harry Truman signed the National
Security Act in 1947. The agency was designed to collect and process foreign intelligence
information, nothing more. Its activities were meant to be strictly overt. The CIA as it exists
today bears absolutely no resemblance to these original and rather humble intentions. Almost
from the beginning, the CIA concentrated the bulk of its energy on covert operations. As early
as 1953, when things in Iran were not quite working along the lines that those in positions of
power in the US would have liked, the CIA stepped in to help. The agency employed the
services of a well known money launderer to wash clean a little "financial assistance" for the
deposed Shaw in his efforts to overthrow the Mossadegh regime.
Later, during the Kennedy administration, it was decided that the local political situation
would run more smoothly if Fidel Castro was no longer in the way. Operation Mongoose, one
of the largest CIA covert operations to have ever been discovered, was soon born. The basic
aim of this operation was simple, the assassination of Castro. More than eight different plots,
involving everything from poison pills to exploding cigars, were put into motion. Castro
managed to stay one step ahead of such machinations, although others that Operation
Mongoose may have decided to eliminate were not so lucky. It later came to light that many
individuals involved in this covert operation were also linked with the Kennedy assassination,
including amongst many others Lee Harvey Oswald. It was also later discovered that the five
individuals who broke into the Watergate offices had very direct connections with Operation
Mongoose. To this day, the operation remains clouded in mystery and unanswered questions.
Only one thing is certain: Operation Mongoose and all of its activities were financed entirely
with laundered money.
Over the years, the CIA has made a habit of using laundered funds to finance such
operations. In the late 1970s, the Junta ruling Argentina decided to assist what later came to be
known as the "cocaine coup" in its efforts to restore military power to Bolivia, and oust its
center-left coalition. Argentinean agents turned to their friends in the CIA for assistance. The
agency complied by establishing two money laundering businesses in Miami to finance the
overall operation. Apparently the agency was not concerned that the leader of the coup,
General Luis Meza Tejeda, was known to maintain connections with South American drug
traffickers. In fact, Argenshow, one of the laundering companies established by the CIA, got
so involved that it directly laundered millions for a well known Bolivian drug dealer. In
exchange, Argentina sent ambulances to Bolivia, each one of which was loaded with weapons.
Argenshow later went on to foster connections with the Nicaraguan Contras.
278
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.
THE MOST SECRET ORGANIZATION IN AMERICA

Such scandals are far from uncommon. The incidents that we hear about, the stories that
actually hit the morning papers, are only the faintest glimmer of what is really going on behind
closed doors. We only hear about such scandals when those involved get caught, when those
involved slip and do something stupid. Most people operating in such positions of power are
far from what could be called stupid. They rarely make mistakes.
The CIA is known to maintain a slush fund of laundered money that it dips into whenever
financing is necessary for an operation that it knows Congress would never approve. The
director of the CIA is accountable directly and only to the president as far as this slush fund is
concerned. Congress is not even informed of the very existence of this money. Furthermore,
to insulate the president from any possible repercussions that spending this slush fund may
produce, Dwight Eisenhower created a top-secret committee, designed exclusively to advise
the CIA on the best use of these funds. This group was originally known as the 5412
Committee, after the National Security Council paper that created it. Although the name has
changed over the years, this special group remains the most secret organization in America;
not even the National Security Council is informed of its activities.
Who then is allowed access to the workings of this committee? The president, for obvious
reasons, is kept completely separate from any and all of its activities, at least on paper.
However, a space is usually reserved for the President's National Security Adviser as well as
the Secretaries of State and of Defense. The director of the CIA is also traditionally a member.
Who, then, is the rest of the membership composed of? No one knows, but these anonymous
men are undoubtedly not only some of the most powerful men in America, but also some of
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Banking in Silence
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.
A MONEY LAUNDERING INSTITUTION

Of course, the fact that I have concentrated so much of this chapter on American money
laundering practices is in no way meant to imply that it is the only country that engages in such
dirty dealings. Almost every country on the planet launders money for covert operations.
Every country engages in practices that it would rather not have to explain to its voting public.
Uncle Sam just gets caught a little more often, thanks to the Freedom of Information Act. If
other countries were to institute similar legislation, new stories of government deception
would similarly begin to emerge.
All one need do to be convinced of this fact is examine the case of the Bank of Credit and
Commerce International (BCCI). In July 1991, BCCI was shut down by the Bank of England.
By this time, it ran 430 branches in 73 countries. Those interested in a full history of the 19
year old multinational can find plenty of serious and not-so-serious narratives spinning tales
of woe and criminal wrongdoing. Today, there is no doubt that BCCI did not observe all laws
of all the countries in which it did business. There is also no doubt that BCCI can attribute at
least part of its phenomenal growth over the years to the assistance that it provided to
individuals who wished to deposit funds that could not exactly be considered lily-white. The
stories that have been written about BCCI never fail to mention such criminal elements.
Reports run on at great length about how bankers within this institution willingly provided
assistance to drug traffickers. More interesting, however, is the fact that one only rarely finds
any reference at all to the other type of money launderer that Bcel assisted in his efforts.
Many questions surrounding the involvement of various government organizations with
BCel not only remain unanswered, but for that matter are rarely ever even asked. Questions
such as why did the Bank of England take so long to act when it was first warned of
wrongdoing within BCel as early as 1985. Even two years later, when the bank was presented
with a detailed report from the City of London Fraud Squad, the Bank of England again failed
to take any action. It has even been suggested that the UK Security Services asked the bank to
delay the closure of BeCI by as long as 15 months, and that the bank complied. It is also
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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.
THE DOUBLE STANDARD

Why politicians would endeavor to transform one of their favorite pastimes into a criminal act
is indeed an interesting question. Ronald Reagan was instrumental in waging this war on free-
flowing money and bringing about new legislation that redefined money laundering as a
criminal act. Publicly, he claimed that money laundering allowed criminals to engage in their
illegal trades, that money laundering allowed drugs to infest the streets of America. Privately,
people working for him out of offices in the basement of the White House laundered money
from illegal arms sales to finance the Nicaraguan Contras. Obviously, as in almost all matters,
one cannot take politicians at their word. The issue of money laundering is again an example
of how politicians expect us to follow the rules that they set up, while imposing no similar
restrictions on their own behavior.
Consider the case of Robert B Anderson. Former Treasury Secretary, Navy Secretary and
Deputy Secretary of Defense in the Eisenhower administration, Anderson was convicted of tax
evasion and of operating an illegal offshore bank, the Commercial Exchange Bank and Trust
in the Caribbean sun-spot of Anguilla. On behalf of drug traffickers, Anderson and his bank
laundered large amounts of cash. Later, the bank folded, losing US $4.4 million in depositor
funds. What punishment was handed out to Anderson for so flagrantly engaging in the very
crimes that Big Brother had so painstakingly outlawed? Anderson was sentenced to one month
in prison, five months house arrest and five years probation. Jim Wright, former Speaker of the
House, was one of the more influential political chums who wrote to the court on his behalf.
In 1989, the very same Jim Wright was forced to resign following a House Ethics Committee
investigation stemming from charges of ethical misconduct.
Contrast this story with that of the case involving Vahe and Nazareth Andonian, Los
Angeles jewelers of Armenian descent, and private banker Raoul Vivas, their Argentinean
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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.
THE DIRECT ROUTE

The fact that politicians so easily break their own laws should tell you something. The fact that
politicians are hardly ever held accountable when caught breaking their own laws should tell
you even more. The stories of government money laundering presented in this chapter show,
yet again, that the intent behind this wave of recent money laundering legislation has a great
deal to do with imposing yet tighter restrictions on each and every one of us, and only very
little, if anything at all, to do with stopping crime.
These stories also show that politicians themselves understand that diplomacy and high
powered talks do not produce results in all situations in the real world. Rather than resorting
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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
While I am wholeheartedly opposed to the laundering of dirty money in the traditional

gangster sense of the term, I also understand that in our modern economic climate we must
each do whatever is in our power to protect our financial well-being. Sometimes the steps
necessary to achieve banking privacy just happen to be exactly what has recently been
redefined as money laundering by the bureaucrats. Such senseless policies do not change the
fact that anonymous accounts, international transfers and other such practices are valuable
tools, tools that can help everyone who seriously cares about protecting his financial privacy.
I again, however, must also warn those of you who either live in or do business in a highly
regulated jurisdiction that the information in this chapter is not intended for you. Consider the
advice contained on the following pages to be for informational purposes only, at least until
you can break free and relocate to a less restrictive jurisdiction. In fact, you will find that this
chapter is somewhat different from all other chapters contained in this report. For the most
part, rather than providing advice on what to do, this chapter will tell you what not to do. A
great deal can be learned from the experiences of others, particularly from their costly
mistakes. My hope is that their stories keep many of you from falling into similar traps.
THE MONEY LAUNDERING PROCESS

Before we can begin to take an unbiased look at money laundering, we must first understand
exactly what it is that we are talking about. We must first take a look at the process of
laundering money itself. This process can be divided into three separate stages:
1) The dirty or tainted money is made. This stage is usually the illegal stage, either because
the money comes from crime or because the money is legitimate income on which
income tax is not paid.
2) The money is deposited with one or more banks, usually in offshore accounts. The
process ends here for some. They are happy to have hidden their tainted money and are
willing to wait to reclaim it at some later date.
3) The money is laundered so that it can be brought back home and openly spent or
invested. This stage is the heart of the money laundering process. In short, the money is
whitewashed so that its origins can be explained, at any time, should such an explanation
ever become necessary.
This basic definition of money laundering shows that for the most part, readers of this report
need not concern themselves with money laundering. Why? Without dirty money you don't
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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.
BRINGING IT BACK HOME

Most of us who maintain a secret stash in offshore bank accounts are perfectly happy with just
that, at least for the time being. Our money has never been tainted. The only reason that we bank
in Bermuda or Gibraltar, as opposed to some other country, is because we feel that banks are
safer there. While our money sits idle in a foreign bank account - unknown to the taxman at
home - it earns a healthy, tax-free interest. As an added bonus, we don't have to waste valuable
time filling out silly government forms to please hungry bureaucrats. This anonymous money
held offshore sometimes serves as an insurance policy, in case of the proverbial rainy day. For
others, it is a private expense account that can be spent freely during trips or vacations abroad.
Whatever this private stash is used for, it should be clear, however, that simply moving
money into a secret offshore account has nothing to do with money laundering. If the bulk of
this money were one day to be brought back home and invested, one would soon find the tax
inspector knocking at the door. In order to bring tainted money back home and spend it openly,
the funds must first be washed. Simply moving tainted money through an offshore bank
account does not make it any less tainted. (Although, to be fair, I do concede that it is
somewhat tougher to identify the source of funds once they have been on a planetrip around
the world.) To clean tainted money successfully, one must also be able to explain where this
money came from and how it got where it is. This is the only way that tainted money can be
spent freely without fear of repercussions.
Traditionally, casinos and race tracks have been pointed to as fountains of sudden wealth.
To support these claims, creative non-taxpayers have been known to scour the betting windows
of race tracks and pick up winning tickets that others have discarded after cashing. Even
government lotteries can be used to support such a claim, as long as no record is made of the
winners. Of course, one must have proof of the purchase to begin with. It also helps if such
winnings, as is usually the case with government lotteries, are tax free. In Brazil a few years
ago, a crooked member of Congress was charged with corruption. His voting public wanted to
know how he was able to afford more than 50 apartments, maintain several private airplanes
and generally surround himself in luxury, all on a politician's salary. "I won the state lottery,"
he claimed, "I won the big prize, 26 times with the help of God."
Another crooked politician, this time a former member of the European Parliament, made
a lot of money from a block of shares that he held in a strange and somewhat unknown
Australian goldmine. More than ten years ago, when this individual was just starting out on his
path of legitimate business, this holding made it possible for him to magically beckon capital
every time the need arose. Goldmines are handy this way. Even though gold does not grow on
trees, it can be found in a mine, especially a secret mine on the other side of the world that
never fails to produce a little extra capital every time there is a pressing need. On a more
modest level, those in need of an explanation for a little extra cash have been known to
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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.
BEWARE THE TAX CONSEQUENCES

If you have not yet become a PT, you also need to look at the tax consequences of
whitewashing money. Normally, you will have to pay income tax on your newfound gains
wherever you are resident. At the very least, you will need to have a plausible legal explanation
as to why you consider your gains to be tax free. The actual logistics of how this works depend
on the local tax department for the country in which you reside. Of course, if you already enjoy
full PT status, then you need not worry about what your former taxman mayor may not think,
it is only those readers still resident in a high tax country that need to spend some time thinking
about how to hoodwink their tax departments.
Sometimes, working as a sales representative for a foreign company is enough. You get a
free company car, free housing and a generous expense account with a couple of foreign credit
cards thrown in for good measure to see you through. All of this is paid for by the foreign
company, a company that you created for that purpose. You can run this company through a
foreign lawyer or accountant. Better still, why not make use of a PT friend keen to help? In
some countries, this little scenario will not work. Depending on where you reside, busy-bodies
in the tax office could well get the idea that a company car carries a value and that free housing
is surely an unearned benefit that should be taxed. Usually, however, even the most Draconian
gulag will let you keep some semblance of a corporate expense account without it affecting
your personal tax status. So hold on to those credit cards.
In several countries, minority shareholders who invest in foreign companies can receive
their gains tax free, once they have held their shares for a minimum set period of time, often
three years. Liquidating such a solvent company after the minimum holding period will bring
all capital as well as earned interest and other gains home to each shareholder tax free. If the
company is located in a tax haven, even better as then it will not have to pay local tax either.
Just make sure from the outset that your taxman at home agrees with your interpretation.
Sometimes he will want the foreign company to have carried out some sort of real work -
whatever that is - because in his screwed-up mindset, mere investment is less than noble.
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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.
WHERE TO AVOID DOING BUSINESS

In 1994, the US Drug Enforcement Agency prepared a memo on how to uncover money
laundering practices. At the heart of this memo was a list of countries thought to be used by
money launderers to wash their dirty funds clean. This memo was distributed far and wide,
even internationally through the DEA liaison at each American embassy. Rumor has it that
some countries took offense. Pakistan, in particular, was reported not to be happy with finding
itself on the US list of money laundering centers. If it was any consolation, Uncle Sam did at
least include four of his own cities for good measure. The list in full is as follows:
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.
FOLLOW THE PROFESSIONALS

Governments are dishing up an ugly pack of lies, but there is a solution. We are not criminals.
We don't want to be criminals. We don't break any laws, nor do we want to break any laws.
At the same time, we don't want to be the unwitting victims of laws that were never meant to
affect us in the first place. Why should we accept getting into trouble because of some
regulation that was originally put in place to nail a narcotics trafficker? Only a stooge is dumb
enough to let his government put him in the line of fire. Right. So what to do? Simple, follow
the lead of the most successful financial operators. Study how they beat the system. Observe
the methods they utilize to hide their money and get away with it legally. Then copy them
shamelessly.
For years, the most skilled criminals have known how to keep their money hidden and free
from the risk of government seizure. If they can, so can we. If someone is successfully and
legally banking in total silence, we have the right to copy his methods, then use them in our
own financial affairs. The methods top criminals use to manage their money are legal. Banks
are never even aware that their funds are tainted. By studying how the criminals get around
each and every new law and reporting requirement, you can learn how to do the same. Using
their methods won't make you a criminal. On the contrary, it will make sure that your financial
affairs remain your own private concern. You are not a criminal, yet you can safely copy the
way they succeed to make sure that you, yourself, never get unwittingly caught in the system.
Just because you use sophisticated banking techniques perfected by international crooks,
does not mean that you automatically are a crook. Just because criminals use anonymous
accounts and bandits love international transfers that do not leave paper trails, does not mean
that the rest of us should stop taking advantage of what the world has to offer. Just because
criminals use get-away cars does not mean that every law abiding citizen should stop using
cars. This is logic, but a logic that the bureaucrats refuse to understand. In their eyes just
because criminals sometimes use foreign banks and anonymous transfers, such activities
should be made illegal for everyone, honest citizens and taxpayers included. Turning money
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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.
DON'T STAND OUT

Many professional money launderers are hopeless romantics. They like intrigue and exotic
places. They put their money where serious businesses would never dream of depositing funds,
such as in Nauru. Since you don't want anyone to mistake you for a money launderer, stay
away from colorful locales. Go where only blue-chip institutions would go. If you frequent
Vanuatu, Nauru and other out of the way places with too much enthusiasm, you could be
mistaken for a crook. Crooks are attracted to the odd-ball and the weird. They are often
hopeless romantics, living in their own worlds of cartoon-style adventures.
Consider the example set by Franklin Jurado. A sophisticated financier with homes in Paris
and Luxembourg and a degree from Harvard, Jurado was in many ways the prototype money
launderer. His master's thesis was on money laundering, theory that he soon put into practice.
Behind his suit and tie, Jurado hid a reckless streak. He was conservative on the outside, but
wild at heart. His lust for adventure drove him to place funds in banks so far off the beaten
path, that investigators felt that they had no choice but to take a closer look. While he was
researching new opportunities in Moscow, the Luxembourg police charged him with
laundering US $36 million through 33 different banks. Jurado is now a resident of the pokey,
with Luxembourg generously footing the bill.
So, lesson number one, if you want to bank in silence successfully, is don't stand out like a
sore thumb. You want to blend in with the conservative and utterly cautious "blue chip"
business-crowd. Whenever you choose where to bank, always ask yourself if this location is
something ffiM would use or if General Motors would open an account there. Islands like
Guernsey and Jersey pass this test. Other islands like Nauru and Tuvalu, do not. The fact of the
matter is that some of Jurado's moves simply did not make commercial sense. ffiM's finance
department would never have made them. This, in part, led to his downfall.
Jurado also made another far too common mistake, he kept detailed records that led to his
conviction. When Jurado was arrested, Big Brother seized his computer networks as well as
his fax machine, which contained the numbers of major banks and other contacts. The
authorities were thus able to piece together a detailed picture of his affairs. His advice now to
others, "Don't keep any papers in hard copy. Keep everything on the computer and then make
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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.
GOVERNMENT MADE MONEY LAUNDERERS

When there are not enough criminals the government will create them. So it seems to anybody
who bothers to examine the long list of sting operations that various US agencies can be held
responsible for during the last ten years. Consider the case of Jose Lopez. Born, raised and still
living in Los Angeles, Lopez had a good job and a great future. He had never been involved
with crime and detested criminals. He also felt very strongly about politics. He knew that the
world was not black and white, as newsprint makes it out to be. He also knew that, more often
than not, government is in the wrong. As a loyal citizen, he paid more than his fair share in
taxes, but longed for some breathing space and just a tiny bit of tax-free income on the side.
As a supervisor at the Security Pacific National Bank, he worked with the central cash
vault. After witnessing years of abuse by heavy-handed federal investigators, he eventually got
fed up. He decided that if there was any way he could help the other side, he would. So, when
he received an offer to launder US $364,000 for a five per cent commission, he agreed. The
money, however, was clean. It had been given to him by undercover IRS agents. Unaware,
Lopez opened bank accounts using fictitious names on behalf of his clients, so they could
withdraw their profits at will. In the end, Lopez as well as four of his bank associates were left
with no choice but to plead guilty to money laundering charges.
Another case involved the firm of Brown and Carrera. In 1987, this firm was poised to
make the big league laundering money from its base in Atlanta. Partner Jimmy Brown
appeared to have ties with the New York Sicilian Mafia. He was a fast-talking Irish-American
blessed with a grasp of accounting and a shrewd business mind. Partner Alex Carrera appeared
to be street smart and confident. He was a Cuban-American who spoke English and Spanish
with equal ease. Within a few years, millions in US funds were rolling through the offices of
Brown and Carrera.
Whenever the two did business they had a backup. They also carried a weapon and were
wired for sound. Weapon? Wired for sound? Backup? Precisely. Carrera was not called
Carrera, his real name was Cesar Diaz, a special agent for the Drug Enforcement Agency.
Diaz's partner was really Johnny Featherly, also a federal agent. By pretending they had
underworld connections, the two lured both crooks and legitimate business people into
thinking that Brown and Carrera could whisk untaxed money out of the country. If you found
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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.
EARLY WARNING SIGNS

Another case involved Eduardo Martinez Romero, a cattle rancher and former financier.
Romero made money throughout the 1980s by lending his name to fellow South Americans so
that they could launder money through Panama's Banco de Occidente. In 1987, some US $5
million of Romero's money was somehow tied up in North American banking red tape, or so
his "laundry" claimed. In reality, his laundry was a sting operation and the people helping him
stateside were all US federal agents. The real reason for the hang-up, the DEA was
photographing every 10 and 20 dollar bill to keep track of how the money would make its way
through the world's financial network. This painstaking operation took time. According to one
source, although photographing money is not standard procedure, it is something that the DEA
indulges in quite often.
No one wants to be the target of a government sting. How can you avoid one? Don't do
anything wrong. Unfortunately, this advice is not much good today when, thanks to pigheaded
bureaucrats, many perfectly normal business transactions have been transformed into criminal
activity. So what is one to do? Be careful. If there is a strange delay in getting your money
followed by vague excuses and stalling for time, you may be under investigation. Also beware
of people acting like B-grade movie gangsters. People helping you bank in silence are not bad
guys. They are not crooks, but rather professionals that conduct their business with a loyalty
to you, the client. They are not big bad crime figures. Yet government agents seem to think that
they are.
Federal agents have, in a confidential memorandum to local US law enforcement, stated
their silly beliefs that big time drug barons and other bad guys have a certain "look" and that
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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.
MORE WARNING SIGNS

Beware of anybody asking you to meet them outside your own country. If they want you to
travel, make sure that you choose where you go. Many countries conclude stings by napping
even foreigners on their own soil. The US is, as ever, the market leader, but many countries are
learning a little too quickly that playing dirty pays. Whenever you meet somebody, try to meet
on your own territory and in a location you know. If this is not possible and your partner has
chosen the site, ask yourself if he could have wired the site with sound or video equipment
prior to your meeting. Taking a stroll through the park even at night when cameras only work
with hard-to-procure nightscopes is advisable if you are inclined to be paranoid. Also, as
undercover agents almost always work in pairs, meet one-on-one if you can.
Whatever your skill, be careful about advertising it. If you have found a good and quiet little
money spinner, keep it to yourself. Share it only with PTs you know and trust. Don't ever help
criminals and don't ever help people you don't know well, no matter what hard-luck stories
they claim to have. Never reveal any of your secrets. Not even to friends. And as the old saying
goes, beware of strangers bearing gifts. If someone approaches you and offers you money to
help him out, you could be talking to an undercover agent. There is no way of knowing until
it is too late.
Finally, if your bank orders you to close down your account, it is time not only to do just
that, but to seek cover as well. The legal departments of large banks are terrified that they may
unwittingly assist in what some future government crackpot at some point down the road
determines to be a so-called crime. In one federal suit filed in New York, nine banks and three
foreign corporations were listed as assisting in the laundering of US $433 million. None of the
banks was found guilty of illegal activity, but the money involved was determined to be the
property of the US government, and the banks were instructed to make full restitution. I repeat.
None of the banks was found guilty of anything. Yet the US government told them to pay US
$433 million. This request, of course, was made under threat of otherwise using brute force to
close down each and every one of these banks.
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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.
JUST SAY NO!

A long time ago, your author, too, slaved away to keep useless bums alive. Every morning after
spending an hour on the freeway in bumper to bumper rush hour traffic, I could look forward
to another pleasant 12 hour work day, sweating to please the bureau-rats. If they weren't
conning me, my business partner was. My employees were robbing me blind. On top of it all,
I had to deal with customers who didn't pay, claiming "the general bad economic climate" as
their reason for stiffing me. Upon returning home, if my wife was not out fooling around with
other men, she was yelling at me for not spending enough Quality Time with her in front of
the soap operas.
Then, one day, an old school chum wrote me. He had retired at the age of 40, then moved
to the Bahamas. He was living tax free, stress free, even wife free. This made me see the light
During the next year, in rapid succession, I lowered my all-too-high tax bill, got rid of my
crooked business partner, fired my employees, got a divorce and then finally sold off my
business. I, too, was ready to live my life as it was meant to be lived. I vowed never again to
pay taxes nor any other bills to rats who didn't deserve my money. You, too, can kick the tax
habit and live your life in complete freedom. Just say no!
Begin planning your future today. Not paying tax is only part of the picture. Even when
you are tax free, PT style, your money is still not immune unless it is stashed where no one
can find it. When you bank in silence, outsiders will be left with no way to determine how rich
or how poor you are. If no one knows where your bank records are located, they will never be
searched and examined. You will be banking in silence, with no one any the wiser. Outsiders,
be they an alimony-hungry ex-wife, stupid government bureaucrats, dishonest business
partners or just run-of-the-mill crooks, will not have the slightest inkling of your net worth.
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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.
TAKING THE NECESSARY STEPS

Your first step is to familiarize yourself with some of the big and perfectly legitimate banks
that operate offshore. You will come across a lot of familiar names, as many offshore banks
are wholly owned subsidiaries of some of the largest Canadian and British financial
institutions. American banks are represented offshore as well, but they are generally more
cautious. They saw what happened to Edmund Safra, the Jewish owner of New York's
National Republic Bank. The IRS became upset when it noticed that the National Republic
Bank was spreading its tentacles abroad and opening subsidiary banks in some of the more
notorious tax havens.
What Safra did, however, was completely legal. The IRS couldn't stop him, but they
nevertheless harassed him almost relentlessly. In unrelated money laundering cases, the US
authorities did everything they could to indict Edmund Safra personally. One suspect in the
Kopp affair in Switzerland held bank accounts at Safra's bank. Solely because of this
coincidence, the investigators used this suspect in their attempts to catch Safra. As it turned out
the suspect was exonerated. Safra and his bank eventually received a clean bill of health, but
US banks had learned the lesson. They saw what could happen if they expanded too rapidly
into places that their own version of Big Brother does not like. This is why today you will find
Dutch banks, Danish banks, British banks, Canadian banks, German banks, Swiss banks, but
only a few US banks in the tax and banking havens of the world.
When first making your arrangements for silent banking, you may want to begin by
acquiring an Austrian Sparbuch, while they are still available to foreigners. Then, you can open
one or two accounts with a "mail order" bank. These are not fly-by-night outfits. If you pick a
bank located in the Isle of Man or in the Channel Islands, you will see that these banks that
operate almost exclusively through the mail are subsidiaries of the largest British banks. Some
of them are happy to open accounts in any currency. Most of them will issue a check book right
away. Some will even give you a debit card (VISA) or a charge card (American Express). A
simple letter of enquiry or private phone call to any of these banks will produce a stream of
detailed brochures.
Where to start? Some of the banks listed in Appendix B at the back of this report may prove
to be just what you are looking for. Alternatively, expatriate magazines are usually rich with
ads. Resident Abroad, a colorful monthly carries the most. Pick up any issue and choose
between no less than 20 different financial institutions. Advertisements for just as many mutual
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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.
EXPLORE THE WORLD

While establishing your own level of banking privacy, you may want to travel a bit. Visit some
of the more scenic banking havens of the world, where you can combine business with
pleasure. Andorra is one. In my double issue report on Andorra and Gibraltar, I tell you all that
you need to know about this gem of a tax haven. Including, of course, extensive hands on
information on the ins and outs of secret banking in Andorra. Some of this information is so
obscure that not even the Andorran authorities know about it!
When opening an account in Luxembourg and Liechtenstein, for instance, banks will ask
you whether you want mail sent out or not. Tell them no thanks, just like in Switzerland. You
will then have to show your passport, but will not be asked to provide an address. Instead, the
bank's computer will contain only your name and account number. For your address, a "care
of' the bank with the bank's own address will appear on the screen and in your file. Thus, all
statements sent to you will actually be sent to your bank, by the bank itself. These will be kept
in your file until you call and instruct the bank to forward your mail. Whenever you visit the
bank in person, you will be given your mail. As The Andorra and Gibraltar Report will show
you, banks in Andorra go one step better. They assign you a private, bank operated post office
box. You can then not only receive the bank's mailed statements, but mail from everybody else
as well. Your friendly banker servicing you as maildrop operator.
Not all banks are so accommodating. Before you start making enquiries, you will have to
establish a few places where you can receive mail, bank statements and the like in various
personal or company names. The best source for such maildrop facilities currently available is
The Worldwide Maildrop Guide, published by Scope International. This book contains over
140 of the world's most professional and proven maildrop services, in all major countries.
Each maildrop listed has been contacted recently, meaning you will not waste valuable time
writing to services that do not offer what you need or that have recently gone out of business.
Consult the PT Booklist for more information on this and many other titles of interest to those
concerned with protecting their financial privacy.
You will probably also want to establish a cover or an alias that cannot be linked to you in
any way. To do so, you can make use of an offshore company that is owned by means of bearer
shares. This company could then be used to open private accounts in the developed banking
havens of the world. In these locales, you will find professional bankers who know their trade
and are willing to do that extra bit to attract your business. Alternatively, you may want to
acquire a camouflage or banking passport for use in less developed countries, where banks are
not quite so sophisticated or at the very least are not used to serving foreigners.
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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.
HOW THE RICH ARE DROPPING OUT

The assets held by banks located in a string of islands in the Caribbean rival those of the entire
US banking system. Of the 15 EU members, tiny Luxembourg holds the fattest deposits in its
banks. Guernsey, Jersey, Gibraltar and the Isle of Man have together attracted more foreign
deposits than all mainland UK banks when counted as one. These migrating billions are one
sign that when the going gets tough, the money gets going.
Where does the smart money go? Everywhere, as long it is left in peace and as long as local
politicians don't try to dream up ways to get their hands on it. Follow this money and you will
have found your own pathway to financial and personal freedom. Allover the world, tax
havens and banking havens are becoming the new money superpowers. The wise are moving
away from high-tax, high-regulatory red tape banking and turning to little-known islands
where it is possible to bank in silence. If you have not already enjoyed and experienced some
of the thrills, advantages and benefits of secrecy and confidentiality in an international setting,
now is the time to take your first step. Privacy will protect, preserve and expand your capital
in the world of international finance.
Allover the world, millionaires and billionaires long ago learned the secrets of maintaining
as well as enhancing their vast estates. How? Simply by protecting them from being eroded by
unnecessary taxation. Their methods are legal (and sometimes not so legal). Fortunes have
been built and then preserved by using the secrets of untangling the taxation web. Few people
not in the top-wealth level have been privy to these secrets. This is now changing. The
powerful monopoly on financial planning still exists, but if you are fed up with having to bear
an incredible burden without relief in sight, you too can join. Your first step is to understand
that tax offices the world over are in business for one purpose and one purpose only, to grab
what money they can. Tax laws are not written to tell you what you can do, but instead only
exist to tell you what you cannot do.
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FINDING FREEDOM IN AN UNFREE WORLD

The pathway to greater financial freedom is hidden in pages written not by tax collectors, but
by free men who have been there before you. They have employed all of the various
possibilities step by step for their own personal benefit. From this experience, they learned
how to carve out some peace and quiet in the modem world the hard way. Very few are eager
to share their secrets. They fear that if too many become aware of the hidden opportunities,
that such paths to freedom will disappear forever. They are afraid that too many will get on the
boat and that politicians with nothing else to do will then write a new regulation or that the
door will simply close, all by itself.
The fortunate few are sharing valuable information and slowly building an underground
network. We are fed up with the lies and claims that, against all better knowledge, point the
finger at us and call us the bad guys. From the bank teller, green with envy, to the bureaucrat
who is merely greedy, we get blamed for all the ills of this world because we have a bit of
money. Keep your head down, friend. People are shooting at us. They label us as tax evaders
and brand us with the recently created, yet heinous title of money launderer. Sometimes they
use even worse pejoratives. The smear tactics never seem to end, but they remain groundless.
Bald and chubby old rich guys with buck teeth always get the short end of the stick. For
reasons that are completely unfounded, everybody thinks that we are some strange sort of
financial criminals.
Now we are fighting back. All we want is the right to carryon our own financial affairs in
private, like free men amongst ourselves. The revolt of the rich has started, as futurist Alvin
Toffler in 1993 rightly predicted it would. PTs can join. It's the most democratic club in the
world because you don't have to do anything to join, no subscriptions, no dues, no membership
cards and most important of all, no records. The club is strictly low-profile. Such
revolutionaries of today are in much the same position as anti-communists under Stalin. We
can equally relate to the plight of freethinkers who found themselves living in the Third Reich
under the Nazis.
Still, there are things that we can do to counteract the almost daily invasion of our privacy,
an invasion conducted by a host of individuals who are completely unrelated to us and have
no legitimate reason to meddle in our affairs. A PT will always be able to blend in. At the same
time, he can fight back by refusing to let governments separate him from his money or
jeopardize his liberty. There is hope for the future. Look at what happened to Stalin and Hitler.
The same thing will happen one day to our own totalitarian-minded dictatorships of high-
handed bureaucrats. You cannot fight a knife with an atom bomb. You cannot swat mosquitoes
with an axe.
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 100526,3226@compuserve.com. 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.
CHEAPEST ACCOMMODATION IN A TAX HAVEN

An accommodation address on a Channel Island is available for £600. This includes mail
receiving and forwarding, telephone forwarding, fax and billing services as well as super-
confidential banking. See The Channel Island Report for a full explanation of this unusual
situation. Or, you could set up an address immediately by sending £600 to Scope International,
but I recommend that you read The Channel Island Report first so you know and understand
the various procedures involved.
INTERNATIONAL TELEPHONE SERVICES

If calling from outside of the US, you can use a service provided by AT&T to reach any toll
free (+ 1 800) number in North America. This service is called USA Direct. Customers need
only dial the local USA Direct access code for the country that they are in and then ask an
English speaking US operator to dial the desired service. Calls are billed at normal USA Direct
tariffs. A list of access numbers can be found in just about every daily issued of both the
International Herald Tribune and USA Today. Callback services which advertise in the
international press can also connect you to toll free numbers in the US. However, as you must
provide a number to be called back on, such services may well reveal more about you than you
care to share.
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
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.
FINANCIAL PRIVACY BOOKS

The Eden Guide to Complete Financial Privacy by Barry Reid, author of the infamous
paper trip books, is a good guide for those who are not yet wealthy enough to make offshore
investment a viable option. This book focuses primarily on how to create a layer of financial
privacy with your onshore affairs, good advice even for those who have stashed a sizeable
nest-egg safely offshore. It is available from Eden Press for US $24.95. Contact: Eden Press,
PO Box 8410, Fountain Valley, CA 92728, USA. Tel +1 800 338 8484 or +1 714 556 2023
or Fax +1 715 556 0721.
The Insider's Guide to Bank Cards with no Credit Check by Randy Gorchoff is also
available from Eden Press. This guide, which is updated annually, gives detailed information
on the secured credit card programs on offer by more than fifty US banks. This book is an
essential reference for anyone interested in acquiring a secured and completely private credit
card without the need of going through a middleman. It offers a wealth of information for only
US $19.95.
Maildrops can help enhance your banking tactics and Scope International publish The
Worldwide Maildrop Guide which provides comprehensive details of over 100 tried and
trusted maildrop services in various countries. This indispensable guide is priced at £29.95 /
US $49.95.
TAX HAVEN BOOKS

The Tax Haven Report by Adam Starchild is an authoritative introduction to the subject and
covers all that one needs to know to get started in the search for the right tax haven. This report
is published by Scope International. See back pages for more information.
The Tax Exile Report by Marshall Langer covers expatriation and the tax consequences of
changing residence and citizenship in great detail and has become the authoritative source of
information on these subjects for non-professionals. The standard reference work on tax
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.
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Resource List
INSPIRATIONAL AND INFORMATIONAL BOOKS

Bridge Across Forever and Jonathan Livingston Seagull, by Richard Bach, published by
William Morrow, New York. International best-seller available in most bookstores.
The Good Earth, by Pearl S. Buck. Great story about the capitalist tradition in ancient China,
yes China. Considered to be a classic, so you shouldn't have much of a problem finding it.
How to Retire at Age 35, by Roger Terhorst, Bantam Books. You also can find this one in
almost any bookstore, if not order it.
How I Found Freedom in an Unfree World, by Harry Brown, published by Avon Books,
959 Eighth Avenue, New York, NY, USA.
Free to Choose, by Milton Friedman, also published by Avon Books.
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
Centro Internationale Handelsbank AG, Tegetthoffstrasse 1, PO Box 272, A~IOI5 Vienna

Tel +43 1 515 200, Fax +43 1 525 861
Citibank (Austria) AG, Lothringerstrasse 7, PO Box 90, A-lOIS Vienna

Tel +43 1 756 534, Fax +43 1 739 206
Creditanstalt, Schottengasse 6-8, A-IOIO Vienna
Girocredit, Schubertring 5, A-I 0 11 Vienna

Tel +43 1 711 9410, Fax +43 1 713 7032
Girozentrale, Schubertring 5, 1010 Vienna
Osterreichische Landerbank, Am Hof 2, A-lOlO Vienna

Tel +43 1 531 240, Fax +43 1 531 245
317
Banking in Silence
Raiffeisen Zentral Bank, Am Stadtpark 9, 1030 Vienna

Tel +43 1 211 360
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
Cormar Bank & Trust Ltd, PO Box N-4232, Nassau
Coutts & Co (Americas) Ltd, PO Box N-7788, West Bay Street, Nassau
Tel + 1 809 326 0404
Gotthard Bank International (Nassau), PO Box N-6312, ruM Building, Nassau

Tel + 1 809 325 1531
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
The Bank of N.T. Butterfield, PO Box 195, Hamilton HM AX

Tel +1 809 295 1111, Fax +1 809 2924365
Bermuda Commercial Bank, Barclays International Buidling, 44 Church Street, Hamilton
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
Hong Kong and Shanghai Banking Corporation, 1 Queens Road, Central

Tel +852 5 822 1111, Fax: +8525 810 1112
offers cash cards that can be combined with several different accounts
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
Liechtensteinische Landesbank, Stadlte 44, PO Box 384, SL-9490 Vaduz

Tel +75 6 88 11, Fax +75 6 83 58
Verwaltungs und Privatbank AG, PO Box 885, SL-9490 Vaduz

Tel +75 2 66 97, Fax +75 2 66 97
MALTA
Bank of Valletta Ltd, 58 Zachary Street, Valletta
Tel +356 243 261/8, Fax +356 230 894
Lombards Bank (Malta) Ltd, 67 Republic Street, Valletta

Tel +356 232 631, Fax +356 246 600
Mid-Med Bank Ltd, 15 Republic Street, Valletta

Tel +356 239 801, Fax +356 249 805
SWITZERLAND
Banca del Gottardo, Viale Francscini 8, Lugano
Tel +41 91 28 11 11
all banking services, beautiful architecture
Bank Julius Baer & Co AG, Bahnhofstrasse 36, Zurich

all banking services
Tel +41 1 228 51 11
BSI Banca della Svizzera Italiana, Via Magaetti 2, Lugano

Tel +41 91 58 71 11
all banking services
Citicorp Investment Bank, Bahnhofstrasse 63, Zurich

Tel +41 1 205 71 71
Commerzbank (Schweiz) AG, Lintheschergasse 7, Zurich

Tel +41 1 219 71 11
investment banking, capital asset trustee
320
Banks
Credit Suisse, PO Box 590, Paradeplatz 8,8001 Zurich

Tel+4113331111
one of the largest Swiss banks, universal bank
Deutsche Bank (Suisse) SA, 3 Place des Bergues, Geneva

Tel +41 22 739 01 11
Nomura Bank (Schweiz), Bahnhofstrasse 71, Zurich

Tel +41 1 219 91 11
Japanese owned
Rothschild Bank AG, Zollikerstrasse 181, Zurich

Tel +41 1 384 71 11
capital asset trustee, corporate finance
Swiss Bank Corporation, Private Client Department, Paradeplatz, 8022 Zurich

one of the largest Swiss banks
Swiss Volksbank, Weltpoststrasse 5, Bern

Tel +41 31 32 81 11
universal bank
Uberseebank, Limmatquai 2, CH-8024 Zurich

a medium sized bank
Union Bank of Switzerland, Bahnhofstrasse 45, 8001 Zurich

Tel +41 1 234 11 11
one of the largest Swiss banks, universal bank
TURKS AND CAlCOS

Barclays Bank International Ltd, PO Box 61, Cockburn Town, Grand Turk
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.
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Banking in Silence
CHANNEL ISLANDS
Barclays Guernsey, PO Box 41, St Peter Port, Guernsey
Tel+441481723176,Fax+441481710439
offers Visa debit card
Birmingham Mids Guernsey

Tel +44 1481 700 680
mail order banking, minimum investment of £5000
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
First National Guernsey

Tel +44 1481 710 4000
mail order banking, minimum investment of £25,000
Halifax International Jersey

Tel +44 1534 59840
largest English building society, mail order banking, minimum investment of £50,000
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
TSB Jersey, PO Box 597, 8 David Place, St Relier, Jersey

Tel +44 1534 27306, Fax +44 1 534 23058
check book and debit cards available, minimum investment of £2000
The Woolwich Guernsey, PO Box 341, St Peter Port, Guernsey

Tel +44 1481 715735, Fax +44 1481 715 222
second largest English building society, mail order banking, minimum investment of £500
322
Banks
Yorkshire Building Society, PO Box 304, St Peter Port, Guernsey

high interest rate from major player
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.
Newcastle Bank Gibraltar

Tel +350 76 168
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
Britannia International Isle of Man

Tel +44 1624 628 512
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
Midland Bank, PO Box 20, 10 Victoria Street, Douglas, Isle of Man

Tel +44 1624 623 051, Fax +44 1624 625 619
high interest checking account with no minimum opening amount
Standard Chartered Bank Ltd, Athol Street, Douglas, Isle of Man
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: _
Name:
- - - - - - - - - - - - - - - - - - - - - -_-
Relationship:
Percentage: ( ) %
Address:
City and - - - - - - - - - - - - - - - - - - - - -_-
state:
Country: _
Telephone no: _
Signature:
329
Other Special Reports
Available From
Scope International...
Other Special Reports Available from Scope International
l~
facts so you will be able to make your own decision without having
The Passport Report to rely solely on advice from expensive lawyers. It is the only book
by DrWG Hill on the subject that sets out thoroughly the legal process of
becoming a tax exile. You could save thousands, even millions from
the information contained in this easy-to-read Report. Beat the
Why entrust your life and freedom to anyone bureaucrats. Save your fortune from unfair taxes. Become a tax
government? exile TODAY.
With only one passport you are accountable to politicians who
can regard you as an expendable resource. But this need not be
the case. With two or more passports, you will not belong to any Think Like a Tycoon
one country. Your mobility is ensured and your personal and By DrWG Hill
financial independence can be preserved.
A second passport could save your life, your money and your
freedom. This valuable document can open up opportunities you
How to make a million in three years or less!
Discover the amazing formula that every single super-rich
never thought possible.
person has used to gain wealth.
It is a fact that many countries have well-established but little-
Yes, it is possible to become a millionaire in three years or
known procedures for issuing passports. Knowledge of these
less, plus at the same time have three times more fun out of life.
'exc.eptions' allows intrepid individuals to obtain multiple
Most people can only dream about becoming wealthy. They have
foreign passports, and thus choose the countries most suitable for
all the wrong ideas. "Why are some people rich? Why am I not
their purposes.
successful?" The author, Dr Hill, reveals in the first chapter how
Having researched 147 different countries throughout the
to avoid mistakes that keep 94 per cent of the population just
world, Dr Hill has selected 120+ that he feels you should know
plodding along in a miserable rut, dissatisfied with everything.
about. More than half of these are major countries covered in
You'll learn step by step how Dr Hill became a multi-
considerable detail.
millionaire. It really is easy once you know how. No need to
Absolutely everything you require to legally obtain dual
crawl up a corporate ladder for 30 years. Hill shows you how to
nationality is now inside this comprehensive and unmatched
do it simply and quickly.
Report. So, save yourself thousands in legal fees, cut out
. You c.annot go wrong with this ingenious volume. If you apply
bureaucratic bunglers and avoid hours of haggling. Learn all
Its practical concepts you will surely be a millionaire within a few
there is to know from this single exhaustive publication. It will
years. Take the first step on your path to riches.
open your eyes to options you've never thought of before.
The Passport Report contains almost 500 pages packed with
unique information. It is the most detailed and useful book of its PT • The Perpetual Traveller
kind. Should you manage to find another Report on the subject by DrWG Hill
which you feel is more comprehensive, we guarantee that we will
not only refund the cost of our publication, but also pay for the
other Report as well. Do you want to escape the control over your life and property
now held by modern Big Brother government? With PT the book,
you can discover true personal and financial freedom by
The Tax Exile Report breaking free and becoming a PT.
In a nutshell, a PT merely arranges his or her paperwork in
by Marshall J Langer
such a way that all governments consider him a tourist - a person
who is just Passing Through. The advantage is that by being
The Blueprint 011 how to Legally Avoid Taxes thought of by government officials as a person who is merely
Parked Temporarily, a PT is not subjected to taxes, military
Your taxes are higher than you think they are!
service, lawsuits, or persecution for partaking in innocent but
Did you know that in many countries you pay tax at three levels?
forbidden pursuits or pleasures.
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.
333
Flag 5: Playgrounds. Places where you would actually spend

your time physically. Banking in Silence
PT the book, fully explains all Five Flags. It is a complete guide by DrWG Hill
to getting the most from life. It covers:
• Dual and multiple nationality. The complete manual on how to protect your money
• Tax avoidance (NOT evasion!). Banking in Silence is the only book of its kind. The subject of
• The ideal offshore investment. secret banking has only ever been skimmed by other writers. Hill
• Where (and where not) to keep your money. investigates it from beginning to end.
• Personal and financial privacy.
• Divorce and child custody. You will learn about:
• Crossing borders without hassle. • Over 40 banking havens.
• Avoiding trouble from bureaucrats. • Offshore corporations and trusts.
PT's 300+ pages are also packed with many case histories, • Borrowing money privately.
details of real-life consultations along with plenty of serious and • Secret accounts.
very useful advice. It includes a comprehensive and valuable • Why reporting requirements don't work.
Resource List giving numerous names, contacts and addresses • Obtaining alternate ID.
which will allow you to commence your personal plan for Find out where the smart money goes. This comprehensive
complete financial and personal freedom immediately. Report reveals unbelievable secrets about France, Greece,
Ireland, The Netherlands, and the Dutch Antilles.
Obtain a copy of Banking in Silence today and find out:
The Tax Haven Report
by Adam Starchild • How to earn tax-free profits legally.
• How to move money silently into your offshore account.
• How to avoid reporting requirements.
Tax havens need not be the exclusive preserve of the ultra- • How to benefit from a new financial privacy programme.
rich. People of average means need no longer be captive to the • How to obtain an anonymous corporate credit card.
State in today's modern jet-set era. In The Tax Haven Report,
Adam Starchild reveals these secrets of the ultra-rich so that us With Banking in Silence you and your money can achieve total
lesser mortals can take advantage of the many benefits tax anonymity and safety.
havens have to offer.
As modern governments continue to expand and swallow
human rights, deficits and taxes grow. All free-minded The Computer Privacy Report
individuals must seek a means to protect their assets from this out by DrWG Hill
of control monster. As Starchild explains, it is legally possible to
pay absolutely no taxes. Your government may want you to think
otherwise, but a very important point remains unnoticed. While Roam the globe electronically, raking in TAX-FREE
tax evasion is illegal, tax avoidance is not. This distinction is income 24 hours a day
crucial, and thus Starchild explains it at great length. Technology is advancing at a dizzying rate. Do not be afraid.
For entrepreneurs and businessmen, he explains the ins and In his most controversial Report yet, Dr WG Hill shows you how
outs of tax haven corporations and trusts, including how they are to keep your private electronic affairs private.
formed, how they are controlled, where they can be located and With computers, your office need have no address, no staff, not
most importantly, how they can seriously reduce, if not even so much as a single desk. But you can make millions! You
eliminate, the tax burden of your business. can be open 24 hours a day, 365 days a year. And you don't have
This Report is essential reading for anyone interested in to pay any taxes. This explosive new Report will give you all the
reducing their tax burden. With over 240 pages of vital tools you need. Say goodbye to bureaucracy and Big Brother
information we are certain that you can develop a successful plan forever!
to reduce your tax burden as a direct result of reading this Report. Dr Hill helps you set up and operate the secure paperless
office. You will learn how to use the most advanced pri vacy-
protection tricks to keep this office safe from outsiders, con-men,
PT2 • competitors, ex-wives and governments.
The Personal Privacy Rep~rt
You will find out:
by DrWG Hill
• How to fax the world at next to no cost.
• How to encrypt messages.
PT2 - The Personal Privacy Report is the sequel to Hill's • Which keys are most effective for keeping information
classic PT. It is the essential counterpart and shows you how best private.
you can put into practice the ideas contained in PT. In more than • How to stay anonymous on the information network.
200 fact-filled pages you will learn about the little-known tactics • The best ways to secure your passwords and passphrases.
and techniques of living tax free including:
Computers are the future. But you must protect yourself
• How you can triple your interest earnings. now. Prepare yourselffor the 21st Century!
• How you can gain when currencies move.
• The six best ways to transfer cash across borders.
• How to keep your communications confidential.
• The ten best low-profile mail tips.
and much, much more...
334
• Advice on taxes, and how to avoid them by setting up

The Russia Report private trusts and anonymous commercial Anstalts.
by Michael Kavanagh Dr Stern is a banking and privacy expert. Learn from his
experience and discover true financial independence.
A gold-mine of opportunity
Russia is a country of enormous opportunity. This Report The Isle of Man Report
shows you what's on offer and how to turn it to your advantage. by Charles A Cain
Avoid some of the pitfalls foreign entrepreneurs often walk into.
The author not only describes the mechanics of doing business in
Russia but makes valid suggestions on how to do it. The perfect base for your offshore company?
If you are considering doing serious business in Russia, you A uthor, consultant and international banker, Charles Cain
need to establish a 100 per cent Foreign Owned Company there. gives you all you will need to know to establish yourself in one
The author outlines the procedures, detailing all the appropriate of the world's most prestigious tax havens.
documents that are required. Once you have set up your 100 per In the Isle of Man there are no capital gains taxes, no
cent Foreign Owned Company, the author guides you through inheritance taxes, no wealth taxes and no gift taxes. And there are
what to do next, and how to avoid tax complications. only two forms of direct taxation. Although there is a 20 per cent
The good news is that moving money in and out of Russia is a tax payable on worldwide profits, there are MANY exemptions.
lot simpler than it used to be. Whether or not you set up a In fact most international financial transactions and business are
company there, at some point you'll need to come to terms with carried out TAX FREE.
the Russian banking system. Revealed in this unique Report is In the Report, Charles Cain accurately takes you through the
the possibility for a foreign company to lend a Russian company logistics of setting up your own private offshore company. He
money secured against shares in a bank. As the Russian economy sets out the legal requirements and goes through step by step
begins to settle, ownership of a functioning bank will be greatly from incorporating a company right through to winding it up.
sought after. All the secrets are revealed in this up and coming haven for
those who want to keep what's rightfully theirs. The only
Business Opportunities jurisdiction in the EU where you can run a full trading operation,
This in-depth chapter reviews some of the most attractive fully registered for VAT, but totally exempt from all income and
business opportunities in Russia, along with some to avoid. capital taxes. Profit from the amazing advantages of this island.
Potentially very lucrative the author's suggestions concern
exporting goods and services to Russia.
The Russia Report also deals with the practicalities for the The Monaco Report
foreign visitor including: by Scope International
• Visas and how to obtain them.
• How to get there and what to expect in Customs. How to become a legal resident of tax-free Monte-Carlo,
• Getting around the cities. Monaco
• Recommendations of where and where not to eat. Say goodbye to income, wealth and capital gains taxes!
• Affordable private and office accommodation. Monaco is ideal for your personal and company needs. Take
This Report is the essential guide for anyone concerned about advantage of the strict levels of confidentiality in Monegasque
seizing opportunities. Over 175 fact-filled pages of priceless banks.
information. There are many places where you could live and be free of
income taxes, inheritance and estate taxes and real estate taxes.
But most are too isolated, too cold, too hot, too Third World, or
The Austria 81 simply too dull. Monaco is the only tax haven offering non-stop
Liechtenstein Report action. This masterfully written Report goes into the question of
by Dr Reinhard Stern how to earn a living, manage a business, handle investments,
and forming corporations or trusts. The moves to win the game
Few people are aware that banks in Austria offer all the same are all in The Monaco Report.
advantages of their Swiss counterparts - plus the only true bank
secrecy laws remaining in Europe.
The Andorra 81 Gibraltar Report
The author Dr Stern outlines: and Secret Enclaves
• The dos and don'ts of investing in Austria. by DrWG Hill
• The accounts available to foreigners.
• Where the best banks are. Two Reports in one volume. Double value for money!
• How to live and do business in Austria without paying Discover a hidden haven for those few that are in the know.
taxes.
• How to establish residency. • Property is still affordable.
• How the policy of banking super-secrecy can enable you • Lowest prices in Europe on a huge selection of goods.
to open accounts or purchase securities, future options Without any big fuss or fanfare Andorra now has a thriving
and bullion coins anonymously. 100 per cent privately owned, local service-based economy.
Dr Stern also introduces Liechtenstein, answering vital Their unregulated banking system is among the safest in the
questions on this Principality, including: world. It is sound, prosperous, computerized, streamlined,
discreet and very customer orientated. Some of the wealthiest
• Setting up accounts. people in the world prefer Andorra's banks to those famed
• Attractive fund management plans and bank secrecy. institutions of Switzerland.
335
Dr Hill uncovers secret enclaves which could be your key to

tax freedom. Along with its natural breathtaking beauty, Andorra, The Channel Island Report
the mini-Switzerland, is now seen as one of the most favourable by Scope International
tax havens in Europe.
Plus... The Gibraltar Report Perhaps the greatest benefit of any tax haven is that you do not
The Rock of Gibraltar is one of the best places in the world to have to live there! The Channel Island Report gives all the details
register your tax haven company, your trust, your car, yacht or of a tax haven which meets this criteria. It is inexpensive and the
airplane. Dr Hill examines in great derail the financial initial arrangements can all be completed by mail. This particular
advantages of Gibraltar. He also considers quality of living, the tax haven is lOOper cent English speaking, and has tougher bank
real estate market, where to get one of the best car deals in the secrecy laws than Switzerland.
Europe and how to get the most out of Gibraltar. How to do it...
Chapters include: Basically, one rents or buys suitable accommodation, arranges
Confidential Banking in Gibraltar, How to Set Up Your Own for appropriate identity documents, and establishes a means
Tax Haven Corporation, Owning a Home in Next-Door Spain. whereby telephone messages and mail may be held or forwarded.
With the vital information supplied, including a Resource List of A checking account is opened, credit cards are obtained, and
important contacts, your feet will hit the Rock running. presto, the move is complete.
A mere change of legal address could typically double the
income of many people. Learn how to establish and maintain a
The Camplone Report tax haven domicile on a Channel Island (UK) for £50 per month.
by DrWG Hill
Switzerland's secret semi-tropical tax haven The Wealth Report

Dr WG Hill, the world's leading expert on personal tax by Adam Starchild
havens, predicts that Campione, a strange accident of history,
anomaly of geography and climatic freak, will be one of the most Capital Preservation Through Global Investing
fashionable tax havens of the next decade. This Report shows
Investing globally is one of the most successful ways to
anyone how to become a legal resident of this soon-to-be
accomplish capital preservation and growth. In The Wealth
discovered enclave of the super rich.
Report, Adam Starchild reveals how you can create an ultimate
Campione is a unique semi-autonomous community located
global portfolio of investments to hedge against inflation, taxes,
entirely within Switzerland. As a separate country from
confiscations, market fluctuations, currency devaluations,
Switzerland, it is not subject to any Swiss laws, Swiss taxes or
economic and political turmoil. ..
Swiss tax treaties.
Starchild reveals the little-known investment secrets that he
Campione is a part of the EU with all the benefits of passport
has been giving to his clients for the past few decades. He
free, visa free travel, and the right of its citizens to travel, work,
concentrates not only on preserving your wealth effectively, but
engage in commerce or perform services anywhere in the EU.
also on building it safely and securely. His recommendations
"Property values could continue to escalate like nowhere else in
are not high-flying investment tips, but rather solid,
the world", says Hill. This Special Report gives the who, what,
conservative recommendations that over time will help build a
where, why, when and how. Hill feels that Campione is a great
healthy nest-egg for you.
place to escape to, while still relatively uncongested.
You will learn how to build a secret stash of cash that
• You can use at any time.
The Swiss Report • Is tax-free and seizure proof.
by Marshall J Langer • Pays competitive dividends and interest.
• Has no government reporting requirements.
(even for Americansl).
The Swiss Report takes you inside this remarkable country and
the institutions that make it tick. The Report describes In fact if you had put $10,000 each year into this investment for
Switzerland's banks and it's world renowned bank secrecy. the last twenty years you would have $590,697 today!
Author, Marshall Langer believes that by using Switzerland Everything you need to get yourself started on a global path to
correctly it can be a base for you to earn money at a nil rate of tax. a secure fortune is in The Wealth Report.
(~
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.
336
• 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.
337

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BANKING IN SILENCE

CONFIDENTIAL REGISTERED COPY No. _

MAY NOT BE REPRODUCED OR COPIED IN ANY WAY

Copyright Scope International Ltd 1995, 1996, 1997

Scope International Ltd

3rd Edition 1997

British Library Cataloguing in Publication Data

Typeset by Scope International Ltd.

Chapter 2: Governments on a Collision Course 11

Chapter 3: Governments are After Only One Thing 25

Chapter 4: Governments Don't Play Fair 35

Part II: WHAT YOU'RE UP AGAINST

Chapter 6: Big Brother Goes International 67

Chapter 7: The Little Brothers 77

Chapter 8: Computers and Your Privacy 87

Part III: OPENING YOUR OFFSHORE ACCOUNT

Chapter 10: Finding Your Offshore Banking Haven 117

Chapter 11: Finding Your Offshore Bank 125

Chapter 12: Opening and Managing Your Account 135

Part IV: MOVING MONEY ANONYMOUSLY

The ABC of Bearer Bonding 151

Chapter 14: What to do About Reporting Requirements 157

Chapter 15: The Long Haul 167

PART V: BANKING HAVENS OF THE WORLD

Cyprus: Home for Offshore Shipping Companies 191

PART VI: ADVANCED BANKING STRATEGIES

Chapter 18: Borrowing Money Privately 225

Providers of Secured Credit Cards 230

Chapter 19: More Offshore Strategies 233

Chapter 20: Anonymous Accounts 243

PART VII: CREATING YOUR OWN BANK SECRECY

Mickey Mouse Resident Permits 268

Chapter 23: Getting Down to the Basics 285

Chapter 24: Putting it Together 299

YOUR BANKING PROFILE

CONSIDER YOUR CORRESPONDENCE

COMPLETING THE PICTURE

WHAT THEY KNOW ABOUT YOU

In short, a host of information concerning you, including detailed financial information, is

DON'T ALLOW YOURSELF TO BECOME A TARGET

THE OFFSHORE NEST-EGG

THE WAR ON PRIVACY

THE ALTERNATIVE SOLUTION

SOCIALISM IS A DIRTY WORD

HUGE REVENUE DEMANDS

THE SITUATION CAN ONLY GET WORSE

GOVERNMENT SPENDING CAN ONLY INCREASE

THE DECLINING VALUE OF THE DOLLAR

WHERE HAS ALL THE MONEY GONE?

THE COMING TWO-TIERED CURRENCY

THE CASHLESS SOCIETY

THE DEATH OF PRIVACY

THE MOST SENSELESS WAR IN HISTORY

THE WAR ON DRUGS CAN ONLY BE LOST

GOVERNMENTS ARE BASICALLY INEPT

ONLY SUCCEED IN CATCHING THE INNOCENT

INTRODUCING A VERY SPECIAL LADY

"You seem to be pleased about it."

THE DEATH OF FREEDOM

THEY'RE SHOOTING AT YOU

"Why?" asked Henry, "I didn't do anything wrong!"

INTERNAL REVENUE SERVICE OR MAFIA KINGPIN?

THE WORLD'S MOST CONFUSING LEGISLATION