Invisible Banking

Invisible Banking Offshore Banking and In v e s tin g with T o ta l Privacy Lance Spicer

Trident Press

Copyright  Lance Spicer 1997-2003 This book is copyright. All rights reserved. Apart from any fair dealing for the purpose of private study, research, criticism or review as permitted under the Copyright Act, no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise without prior written permission of the publisher.

Published by Trident Press Pty Limited PO Box 3068, Bangor NSW 2234 Australia Email: [email protected]

Web Site: www.tridentpress.com.au ISBN 0 646 32953 7 Third Edition March 2003 Australian Produced and Manufactured Disclaimer The material in this book is of the nature of general comment only, and neither purports nor intends to give any accounting, legal, tax or investment advice. Readers should not act on the basis of any matter in this book without first considering, and if appropriate taking, professional advice with due regard to their own particular circumstances. The author and publisher expressly disclaim all and any liability to any person or organisation, whether a purchaser of this book or not, in respect of anything, and of the consequences of anything done or omitted to be done by any such person in reliance, whether whole or partial, upon the whole or any part of the contents of this book. In no way is it the intention of the author or the publisher to encourage readers to evade tax or any lawful responsibility that they may have. The author and the publisher will not accept any responsibility for any errors or omissions. Always seek professional advice from a Licensed Investment Adviser or Solicitor prior to acting upon any information in this book.

Introduction to Lance Spicer Lance Spicer was born in Sydney NSW in 1960. He worked for 16 years as an accountant, financial executive and consultant to several major Australian and foreign corporations including Australian and foreign banks. In 1990, his expertise was called upon to assist in the investigation of missing assets as a result of the Qintex collapse. Before “semi-retiring” he was the financial controller of a major listed property and tourism group. In recent years, he has become a professional investor in addition to writing 25 books on various subjects such as investment, financial privacy, small business and the share market. Twelve of Lance’s books have now attained “best seller” status with books having been sold in over 75 countries around the world. Lance is a regular feature writer in magazines such as Australian Business and Money Making Opportunities, Exposure and Small Business & Home Based Income. In addition, he has spoken at several international and local seminars on issues of taxation, investment and privacy. His books have been featured on ABC Television’s LateLine program and discussed on radio in the USA and in Australia. Lance’s biography has recently been included in the Millennium Edition of Who’s Who in the World.

Table of Contents Introduction

1

Introduction to Offshore Banking & Investing A Brief History of the Offshore Financial Industry Who Goes Offshore? Examples of Actual Offshore Schemes Frequently Asked Questions on Offshore Banking & Investment Laws and Regulations Points to Consider before you begin Personal Banking

4 4 11 13

You Be Careful Out There!

39

Procedures in Offshore Banking & Investing Secrecy and Banking Changes Since September 11, 2001 Privacy Issues Andorra Austria Bahamas Bermuda British Virgin Islands Cayman Islands Channel Islands Czech Republic Denmark Hong Kong Isle of Man Israel Liechtenstein Luxembourg Panama Switzerland Turks and Caicos Internet Banking

43 45 47 51 54 56 59 61 62 65 67 69 70 71 74 75 77 80 81 84 85

What Type of Accounts are Available? Anonymous Bank Accounts Austria Czech Republic Croatia Lithuania Current Accounts Deposit Accounts Fiduciary Accounts Certificates of Deposit

88 88 90 91 93 94 95 96 97 97

16 20 36 37

Table of Contents Twin Accounts Investment Accounts Precious Metal Accounts Credit Cards, Debit Cards & Cash Cards How to make your offshore banking work ……..and keep it private Maintaining Secrecy Cheques…are they the worst thing in the world? Opening your account Depositing to your account Withdrawing from your account Investing using your offshore account Working examples of how others have used their offshore banking facilities Borrowing money offshore Merchant Facilities Offshore

98 98 98 99 109 110 112 113 114 126 128 133 139 141

Investing Investing in gold Buying your shares online using your Offshore Structure

143 144 148

Asset Protection

150

How and Where to Establish your own Private Bank British West Indies Antigua Nauru Vanuatu Western Samoa

159 160 161 161 162 163

Tax Haven Strategies

166

Recommended Safe Banks

179

Index

181

Other Trident Publications

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Offshore Banking and Investing in Privacy

Chapter 1 Introduction In 1995, I wrote The Invisible World wondering if it would sell and who would buy it. I wasn’t sure whether there would be a large enough market for this information to make it worthwhile, but I knew a lot of people who had asked me to help them set up an offshore structure and I was always answering questions about ways to save on tax. I thought to myself there must be some sort of demand for this information, even if I only sell the book to my friends and their friends. I underestimated the impact The Invisible World would have by a long way. As it turned out The Invisible World is in its ninth reprint and revision and has sold tens of thousands of copies world-wide. The book is unique in Australia as it’s the only book of its type, written specifically for Australians. It also put all the information you need to set up an offshore structure in one book. I didn’t think for a minute the book was breaking new ground, but as it turned out, it did, and with phenomenal success I’m happy to say. During the few years I was consulting, numerous people had specific questions in relation to offshore structures that The Invisible World didn’t cover. These questions were nearly always directed at the actual ‘mechanics’ and methodology involved in setting up a banking and investment structure and how to move funds and assets around and while The Invisible World answered a lot of questions in this regard, it didn’t go to the next step of actually showing my readers exactly how to undertake many of the banking and investment issues in a

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Invisible Banking step by step way. Also, it didn’t go too deeply into the actual offshore banking procedures, asset protection strategies and actual business transactions as this would have made the book twice as long and possibly a little daunting. This brought me to the realisation that what was needed was a second book, one that concentrated primarily on the actual “mechanics” and looked at the banking and investing aspects in much greater detail. In late 1996 I started work on the second book in the ‘Invisible’ series, Invisible Banking. As you will see, it continues where the first book left off. The primary subject of the book is basic and advanced offshore banking strategies and procedures. Looking at how to deposit funds, withdraw funds, investment and how to maintain absolute financial privacy. I have also included actual examples of how others have set themselves up successfully. Another area I have expanded on is Asset Protection. The concept of Asset Protection, using offshore structures, is becoming more and more popular in the US and Europe, and will also become a major issue here in Australia. What “asset protection” means is placing personal assets in corporate and banking structures that place ownership (but not control) with an entity (company or trust) or somebody other than yourself. This is done to ensure potential litigants are unable to take your assets or make claims against assets that you have worked hard for. The bottom line is you own nothing but the shirt on your back, so therefore you have nothing to lose and the litigants have nothing to gain. These schemes are relatively easy to set up and they may prove to be a blessing when you need them. What does “Asset Protection” have to do with a book on banking? Many of the issues and subjects raised in this

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Offshore Banking and Investing in Privacy book and The Invisible World are very closely related and to be able to transfer assets and cash offshore into an Asset Protection Scheme, you will probably need this book to do so efficiently and with total confidentiality. To those that have bought The Invisible World, you will find that a couple of sections of this book are similar in subject matter. This is because this book has been written as a ‘stand alone’ book that should cover all relevant subjects involved in private banking practices. Where possible, these subjects have been updated and revised so you are sure to get something new out of it. I hope you enjoy the book and gain some valuable information from it that may assist you in achieving financial privacy and security. Lance Spicer, Sydney

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Invisible Banking

Chapter 2 Introduction to Offshore Banking & Investing A Brief History of the Offshore Financial Industry Offshore tax havens, which preceded the modern form of offshore financial centre, were of British origin designed to shelter assets from the economic uncertainties following World War II. The tax haven's key product was private banking to manage the estates of rich families in a tax-free environment. The motivation to use remote islands to establish these centres was economic, to create good local employment opportunities. Early pioneers were the Channel Islands of Jersey and Guernsey off the coast of France, and Bermuda in the mid Atlantic. These days, offshore financial centres include 6 of the world's top 12 banking centres involved in corporate finance and individual investments. The foreign deposits of Japan (US$1,010B), US (US$750B) and France (US$500B) combined, are now less than the combined influence of the largest 6 offshore centres of the Cayman Islands (US$570B), Luxembourg (US$495B), Hong Kong (US$430B), Switzerland (US$500B), the Bahamas (US$420B), and Singapore (US$410B). The role of offshore financial centres in the international financing of corporations has developed into a

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Offshore Banking and Investing in Privacy huge industry. Corporations find offshore centres indispensable for their expansion into new markets at competitive costs. For example, offshore centres already dominate such international activities as shipping, aircraft financing and captive or self-insurance. Close to one million offshore companies have been incorporated in the past decade, and most of the world's and Australia’s leading corporations have operations in at least one offshore centre. Examples include ANZ in Guernsey and the Cayman Islands, Commonwealth Bank in the Netherlands Antilles, Boral in Panama and Bermuda, IBM in Dublin, American Airlines in Bermuda, De Beers in the Isle of Man and GE and CNN in Cyprus. The world's leading financial institutions have all increased their offshore financial services, including ANZ, Westpac, Chase, Citibank, Goldman Sachs, Standard Chartered, Rothschilds, Royal Bank of Canada, Deutsche Morgan Grenfell, Credit Suisse, Lloyds Bank, Barclays Bank and Bank of America. And the list goes on. As you can see offshore banking is now big business and also very legitimate and legal. Offshore industry expansion is accelerating at a rapid rate and as a result US$5.7 trillion was being held in offshore financial centres by wealthy people, companies and institutions through bank deposits, under discretionary management (trusts, brokerage accounts) or invested in offshore mutual funds. Offshore bank deposits and assets in offshore investment funds on their own each accounted for over US$1 trillion. The number of offshore centres is constantly increasing all the time with newcomers such as Ireland, Madeira, Mauritius, Labuan in Malaysia, the Seychelles and Malta being added in recent years. More states, Botswana

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Invisible Banking in Africa, the Czech Republic and Hungary in Europe for example, are passing laws to enable the establishment of offshore services in their countries as well. There are even moves for Norfolk Island to join their ranks. Offshore activities still include international tax planning, using legal mechanisms to reduce, eliminate or defer taxes on income, wealth, profits and inheritance, or to accumulate tax-free income offshore pending recognition in a taxable jurisdiction. However, the principal function of offshore centres is no longer to minimise current and future taxes or to avoid foreign exchange controls. They are now on the cutting edge of new corporate, investment, trust, insurance, partnership and banking legislation and are amongst the first to offer unique structures such as limited partnerships, asset protection trusts, purpose trusts and limited duration companies, while continuing to provide the only effective shield against the dangers of confiscation, expropriation, tort law abuse and sanctions. There are great variations between services rendered in different offshore jurisdictions, and it is no longer an easy matter to decide the best venue to serve a particular financial need. For example, the degree of specialisation that has occurred has placed Bermuda as the top insurance and reinsurance haven, Luxembourg, Dublin and Guernsey are at the forefront of offshore investment funds, the British Virgin Islands in the formation of International Business Companies, Jersey in offshore trusts, the Caymans and Bahamas and the Isle Of Man in offshore banking, the Caymans in medical liability insurance, Barbados in Foreign Sales Corporations, and so on. Geographic focus is another factor. The Caribbean centres

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Offshore Banking and Investing in Privacy cater particularly to US and Canadian needs. Those in the Channel Islands and British Isles relate more to British expatriates. Australians and Kiwis (although I don’t subscribe to the theory that we can’t use any offshore financial centre we like) tend to use Vanuatu, Nauru and the Cook Islands. I’m not a big fan of these places though due to our government’s funding and political agendas in these places. Cyprus accommodates East European needs, Mauritius focuses on Indian Ocean trade, and Ireland, Luxembourg, Gibraltar and Madeira attempt to act as gateways to the European Union. Service providers such as international tax planners, trust lawyers, accounting firms, asset management companies, estate planners, bankers and security dealers are establishing offices offshore in droves, and must all become more familiar with the best attributes of different jurisdictions if they are to advise their clients properly. The days of their services being rendered through a single jurisdiction are coming to a close. Everybody has different needs, so you must be careful when it comes to selecting a jurisdiction. What works for Americans, may not work for Australians because our laws are quite different. The offshore financial industry is often portrayed in the media as a hedge for illegal enterprise and tax evasion. This notion is misleading and to a major degree incorrect. Practically all offshore jurisdictions have concluded Mutual Legal Assistance Treaties with the US, UK, Canada, Australia and other countries to formalise the prevention of illegal transactions. New laws are being passed to criminalise the misuse of offshore financial institutions for illegal purposes. Many of the world's most respected banks, including Australian, European and US banks, have

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Invisible Banking established operations in offshore centres. For example, 47 of the world's top 50 banks have operations in the Cayman Islands alone. It is most important to recognise that the offshore financial services industry is in transition from institutions serving the very wealthy and large international businesses, to a much broader-based clientele of middle market corporate and private customers attracted to a widening variety of broad-based fiduciary, trust, brokerage, and other investment services. Offshore financial institutions are now actively seeking the business of a much broader range of investors, and the formation of offshore trusts and offshore companies is soaring. The explosive growth in offshore investment funds, which already represent assets of more than US$1 trillion and begins to rival the US domestic mutual funds industry in size, is a good example of the offshore industry becoming more mainstream. Luxembourg, which deals mostly in offshore funds, is now the fourth largest investment funds centre in the world. In due course, offshore funds will outgrow even the largest domestic fund centres. It simply makes good sense for investors in an increasingly global economy to invest in higher yielding vehicles with inherent tax benefits and little or no cross-border constraints. The urge to invest directly in emerging markets is driving the growth of offshore funds still further. Through reciprocal relationships and compliance with UK unit trust regulations, offshore funds are routinely able to be marketed freely to the public in

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Offshore Banking and Investing in Privacy Europe, Australia, and by special agreement, in most industrialised countries in Asia, including Japan. Freedom from excessive regulation is a major attraction of offshore centres and is the reason that banking, insurance and shipping registration have become important pillars of the offshore industry. In addition, offshore centres frequently permit diversification into activities not permitted in Australia. Companies subject to heavy regulation in their own country in the face of less regulated foreign competitors, find their only solution in using offshore centres. For example, to engage in the securities business, which is denied them at home, US and Japanese banks solve the problem by establishing offshore entities. A new wave of financial instruments is moving offshore for the same reason. The wave includes hedge funds, closed-end investment funds, debt instruments, and Eurodollar trading, to name just a few. The concentration of equity markets in the largest industrialised economies is diminishing as stock exchanges in jurisdictions besides the traditional ones expand, and emerging markets move toward centre stage. The predictable result is a growing need for private investors and institutions to diversify their portfolios. When they discover how easy it is to trade internationally through an offshore centre, that demand too will grow. To facilitate direct investing in global markets the demand for taxneutral offshore structures such as limited partnerships is expanding. The threat of increased European regulation as the EU takes root has sparked renewed interest in offshore products, stimulating additional growth. The liberalisation or abandonment of foreign exchange controls in many

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Invisible Banking Latin American, African, and other countries is contributing to additional growth in the use of offshore services. Offshore banks and trust companies are gearing up in anticipation by creating online facilities to accommodate remote electronic transactions. Several major banks are providing remotely accessed international banking services from offshore centres. OCRA, (this company has an office in Australia and the group has been mentioned extensively in The Invisible World) is an offshore company registration group with offices in 18 different jurisdictions, and is offering offshore company incorporation services on the Internet. The dramatic changes in global communication currently happening everywhere are profoundly influencing the way in which many businesses are conducted and will further stimulate direct international investment. Another avenue of growth in offshore services is the use of offshore asset protection trusts (APTs) to safeguard savings against attack from frivolous claims, which unfortunately now happen all too often within the vagaries of certain law practices in Australia. By making it easy for high- risk professionals or businesses to establish asset protection structures in offshore jurisdictions with some of the most advanced laws providing greater certainty of protection, the anxious needs of many new clients can be served. The laws and services are in place to facilitate the security and privacy these individuals require. To become commonplace only requires wider knowledge of the benefits available and easier access to the services, both of which are currently occurring. These trends present unique

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Offshore Banking and Investing in Privacy opportunities for very substantial growth in a market, which is currently still relatively unknown.

Who Goes Offshore? Normal, honest, hardworking people. They are innovative, have a keen sense of judgement, and a healthy dose of common sense. They have worked hard for the financial rewards they enjoy, and they want to work just as hard to protect, and increase, those assets. Quite often these people are: People seeking to reduce or defer tax liabilities Professionals holidaying or working overseas Politicians who need to establish blind trusts or hold personal assets offshore to comply with conflict of interest legislation (Did I say honest and hardworking?) Non-profit, charitable and aid organisations Manufacturers selling their products overseas Corporations and partnerships wishing to conduct or attract business overseas Families wishing to establish family, charitable, and personal trusts Estates administering assets on behalf of beneficiaries who are possibly minors Service industry personnel working overseas People with assets received through inheritance, lotteries or business interests. The main priorities of these people are:

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Invisible Banking Protection of assets from the threat of litigation, bankruptcy, seizure, political instability or future legislation which might adversely affect your family's financial well-being such as currency exchange controls, death and inheritance taxes (which will possibly make their return in Australia in the next decade), gift taxes or capital transfer taxes. Estate Planning and Trusts to hold investments, family assets and estate property so that investment income accumulates and provides for (or eventually passes on to) designated beneficiaries with minimal tax liability. Confidentiality & Privacy to ensure that private and family business interests, investments and spending patterns stay private. Lawful reduction of Income tax on investment income and capital gains through carefullystructured international investment planning. A few important things to consider Like any financial structure, there is no offshore structure where one-size-fits-all. A well designed offshore plan will be put together to suit the individual's personal needs. If you are considering your offshore options, I suggest you consider the following issues as they will have a bearing on which way you decide to go. Your Personal Circumstances Where are my assets and what is my personal situation? Birthplace

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Offshore Banking and Investing in Privacy Citizenship Current domicile for living and doing business Permanent residence Retirement domicile Your financial goals What do I want the offshore plan to do for me? Asset protection from the threat of litigation, bankruptcy, seizure, or political instability. Estate planning and trusts which prepare for future tax legislation (eg. an inheritance tax or wealth tax). Confidentiality of financial interests. Lawful reduction of taxes. What activities do I want to manage through my offshore vehicles? Investment portfolio (retirement/estate planning) Banking and credit card facilities Real Estate Ownership Operating/holding company ownership and management Which assets should I place under my offshore umbrella? Domestic or Foreign Investments Foreign Real Estate Business Holdings Superannuation Funds/Retirement Plans

Examples of Actual Offshore Structures The following are examples of how people have used offshore structures. 1. Mining Engineer

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Invisible Banking “An engineer who recently developed highly-effective oilfield technology found himself quite unexpectedly wealthy after signing millions of dollars worth of contracts with major oil companies throughout the world. He required an offshore structure before the bulk of his income began to accrue. For his personal assets, he created a British Virgin Islands (BVI) discretionary trust for asset protection and estate planning, in conjunction with a Marshall Islands corporation and an Austrian bank account for maximum growth and confidentiality. On the business front, the marketing and management of his business will be handled through a Isle of Man corporation setup to take advantage of its favourable domestic tax rate”. 2. A Wealthy Individual with a Divorce Proceeding “A wealthy individual, in the midst of a bitter and prolonged divorce action, was shocked to discover that a significant amount of money had been misappropriated by his estranged spouse, over several years and without his knowledge, before the marriage turned sour. The few remaining assets in his name became the subject of intense scrutiny by his spouse's lawyers. As these assets were the sole source of income for himself and his son, he needed to protect them from any interim court order, which might result in liquidation before final settlement was reached. He placed his investments in Gibraltar through an asset protection trust. Gibraltar boasts an excellent trust law which is less radical than certain other offshore jurisdictions, yet affords sufficient asset protection to the Settlor in cases where interim orders may differ significantly from the final court settlement”.

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Offshore Banking and Investing in Privacy 3. A Young Family “A young family with sizeable assets wanted to acquire several holiday properties overseas. In the event of their deaths, the parents wanted to ensure that the property could be transferred with as much insulation against future local tax legislation as possible (eg. death duties, wealth tax, increased stamp duties, etc.)They placed their properties into a St Kitts and Nevis (in the Caribbean) holding corporation where property could be transferred to third parties through shares rather than by transferring the underlying assets themselves. St Kitts and Nevis is a no tax jurisdiction with complete anonymity provisions in their corporate law, as well as minimal corporate maintenance requirements”. 4. Computer Programmer “A successful computer programmer recently completed a software program which he is in the final stages of selling to a larger computer company for a lot of money. The sale would have resulted in his company being assessed at the highest possible tax rate. The solution was an arms length trust and corporation structure set up in an intermediary country, which maintains a tax treaty with the country the royalties are going to be paid from. The country recommended had a far more favourable tax rate for royalties from intellectual property. Withholding taxes from the originating country are very low. As a result, the profit from the sale of his software will be assessed in the foreign country, where his corporation was created, at a much more favourable rate. In addition, he opened a Jersey bank account where the money is accumulating. This young man now has the peace of mind of knowing that the royalties are safely accumulating in a quality investment portfolio

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Invisible Banking with a reputable bank until he decides what to do with his hard-earned profits”. You may be able to identify with some of the examples described above, but as you see they are all different and require different setups and methodology which we will discuss in depth a little later on.

Frequently Asked Questions on Offshore Banking and Investment Q. What does offshore investing mean? A. Offshore, at least with respect to the financial world generally, means a jurisdiction other than where the investor lives. The foreign countries most favoured for investment purposes have laws, which give distinct advantages to the investor or business person. These laws may take the form of local no-tax or low-tax liability on all investment income regardless of the residence of the investor (Bahamas, Cayman Islands, Turks & Caicos Islands), local tax exemptions for non-residents of that jurisdiction (Channel Islands, Gibraltar, Belize, Luxembourg, Vanuatu) tax holidays for certain types of local investment (Portugal, Netherlands Antilles, Ireland, Jamaica) or favourable tax treatment through treaties and agreements with the investor's home country. Q. Do I have to travel overseas to invest offshore? A. No. Offshore investing does not mean that you have to live overseas, sell your local investments, or even

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Offshore Banking and Investing in Privacy visit your foreign bank accounts, corporations or other offshore facilities. Offshore investing can be done from your own home using e-mail facilities on your home or business computer. Also, using public telephones (Use phone cards for convenience and privacy) or faxes at the local post office. Why not use the home phone or fax I hear you ask? If you use your home phone or fax you have just given anybody who wants to know, an idea of what you’re up to, and a permanent record and paper trail to your bank, adviser etc. For those less urgent requests, the mail is fine, and untraceable. Q. What are the main reasons for having my wealth placed offshore? A. As we discussed earlier, they are: 1.Asset Protection – To secure against future claims such as bankruptcy, judgment creditors and other litigants, etc. 2.Estate Planning – Family and Protective Trusts; (possibly as an alternative to a Will) for accumulation of investment income and longterm benefits for beneficiaries on a favourable tax basis. 3.Confidentiality – From competitors, adverse claimants and other parties from whom you wish to keep your business or personal interests private. 4.International Tax Planning – Advantageous use of foreign jurisdictions and their tax rules for reduction of tax liability.

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Invisible Banking Q. Is it legal for me to have offshore investments, companies, and bank accounts? A. Absolutely, because every western nation encourages international trade and enterprise, there are usually no restrictions on residents doing business or having bank accounts in other countries. Reporting requirements on such accounts however, differ from country to country. Australian reporting requirements can be intrusive and to a large extent these heavy handed rules depend solely on the honesty of the investor in question, such is the secrecy provided by these offshore centres. Offshore investment vehicles are routinely and legally used by sophisticated and reputable high-net-worth individuals and corporations worldwide. Q. What about income tax on income I've earned offshore? A. Australia, New Zealand and most other high-tax countries require residents to declare their income on a worldwide basis. No matter where you earn it, tax is payable when income accrues to you, or in certain circumstances, when it accrues to an entity which you control. That is why most countries impose no restriction on where one's business interests, investments or bank accounts can be located. We will discuss some of the tax implications as well as some of the exemptions in the next chapter.

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Offshore Banking and Investing in Privacy Q. If I have to pay taxes, what is the advantage of investing offshore? A. There are many other legitimate reasons to invest offshore which do not relate to taxes. But there are some little known tax loopholes that can be exploited legally. However, there are other important reasons to consider going offshore as well, including asset protection, estate planning, confidentiality, better investment yields and taking advantage of active business interests overseas. Q. I want to keep my affairs confidential for reasons other than tax minimisation. Is confidentiality and privacy guaranteed? A. With the right choices, your privacy can be absolutely guaranteed. Except in the event of proven criminal activity (excluding so-called "fiscal offences" such as tax evasion or other money collection disputes. Australia is one of the only countries that has criminalised tax avoidance or evasion. Tax haven jurisdictions never respond to information requests made on the basis of Australian tax evasion), most offshore governments uphold strict confidentiality laws for banks, corporate registries, and trust companies. These laws protect offshore investors from third parties, including both private and governmental authorities. Q. What's the minimum amount I have to place offshore to make it worth my while? A. There is no minimum amount required. However, most people will weigh the one time set-up costs (usually A$2,500 to A$10,000 and annual fees charged by the

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Invisible Banking jurisdictions for things like registration fees etc.) and determine if it’s worthwhile to invest offshore. In my opinion you should be looking at an investment of at least A$10,000 or have an offshore income stream that can easily be diverted into an offshore structure. Q. Do I need a company or trust set up? A. No, not immediately anyway. Most people establish offshore trusts and companies prior to opening bank accounts so they can use the company name to provide extra privacy. Quite often the beneficial owner or shareholder of a trust or company can be kept confidential or even unknown in the case of bearer shares or nonexistent trust beneficiaries. Obviously, the cost of these structures range from around A$2,500 up depending on the jurisdiction you choose and the complexity of the structure you propose. Another important factor to consider is, with a corporate structure not only do you increase your privacy and muddy the waters even more, but it allows you take advantage of certain Australian Tax legislation in relation to double tax agreements and legitimising offshore businesses that may earn tax exempt income for the company itself or even the company’s employee (you). If you require information on corporate setups and the like, I suggest you obtain a copy of The Invisible World. This will give you detailed information on how to establish these corporate structures yourself including where to setup, how much it will cost and who you should speak to in each jurisdiction. In addition, over 40 tax havens are detailed and analysed. An order form is included in the back of this book.

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Offshore Banking and Investing in Privacy The next section details the Australian Laws and regulations in relation to offshore investment, income from offshore sources, cash transactions, corporate structures and a few tips on how to comply with these ominous regulations including a few loopholes.

Laws and Regulations There are a few issues that must be considered before using any information in later chapters of this book. Some of them may apply to you, some of them may not, but they should at least be considered and a judgement made about whether you have exposure in any of these areas. There is one rule above all others that must be adhered to in respect to your offshore business dealings, all transactions should be 'arms length'. Tax avoidance measures under Division 13 of the Tax Act allow the commissioner to reallocate income and expenses if he deems transactions not to be 'arms length'. So, if you set up an offshore business structure, ensure it appears arms length in the commissioner’s eyes. Tax Havens - Can they still be useful? In July 1990 an Accrual Taxation System was introduced in relation to Controlled Foreign Companies (CFC's). The introduction of this system reduced the benefits and therefore the use of tax havens. The government in January 1993, introduced further legislation to close up some major loopholes that still existed. These changes are known as the Foreign Investment Fund (FIF) measures and are discussed further in this chapter. The past use of tax havens by huge companies has seen some

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Invisible Banking of these companies avoid many millions of dollars in tax. These days due to changes in the law it has made the use of tax havens for privacy fairly difficult, but not impossible as long as amounts transferred are small and infrequent. What is meant by small? Less than A$5,000 can be paid to an overseas company without being reported to the government by the bank. The bank can also report any transaction or transactions it feels could be suspect regardless of the amount involved. Therefore, payments of a 'legitimate' nature (with an invoice) under A$5,000 to a foreign company will generally escape the view of prying eyes. Why do I pay tax on income I earn overseas? Section 25(1)(a) of the Tax Act makes the point that a taxpayer, whether an individual or a company, who is a resident of Australia is taxable on all income from all sources whether made inside or outside Australia. Certain income derived by foreign companies or trusts is attributed to Australian taxpayers on the Accrual Taxation System despite whether they actually receive the money or not. Secrecy laws in certain tax havens are quite often used in this situation, much to the frustration of the tax department, but of course this could be deemed illegal, so check with your accountant or tax advisor. What is meant by Attributable? Basically, attributable means, regardless of whether you received the cash, the income will attract tax in Australia. If it's not attributable, this means it will only attract tax when the income physically enters Australia.

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Offshore Banking and Investing in Privacy When the money enters the country, one of two things can happen. It will be taxed at the normal rate less any tax you paid overseas (foreign tax credit) or it will be deemed exempt and you pay no tax (this can be tricky). I've included a few of the little tax saving tips further on. Controlled Foreign Companies (CFC’s) A CFC is a foreign based, but Australian owned or controlled company. The Accruals System is a reasonably complicated one. What it attempts to achieve is to attribute foreign source CFC income to Australian taxpayers. To establish if your foreign CFC income is going to be attributable to you in Australia you must work through this rather complicated testing procedure. Unfortunately, I know of no easier way so please bear with me on this one. Step One Establish if the country in which you have a CFC setup is a listed or unlisted country. The following countries are Broad Exemption Listed Countries for the purposes of the foreign income accruals system: Canada, New Zealand, France, Germany, Japan, UK and the USA Now you have determined if your selected jurisdiction is listed or not.

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Invisible Banking Step Two If your country was Unlisted (not on the above list) does it pass the Active Income Test? To qualify as active income you must answer yes to the following questions. Has the CFC been in existence at all times during the statutory period (ie full year)? Has the CFC a permanent establishment - not a post office box? Have you maintained accounts in accordance with accounting standards? Has more than 95% of your gross turnover qualified as Active? Active income is income that is not dividends, interest or royalty payments. These are regarded as Passive, everything else could be regarded as Active. Further explanation of Active income is made a bit further on. If you answered YES to all questions, then no CFC income will be attributable to you (ie. Not taxable). If you answered NO to any question, then I'm afraid you'll be paying tax on your CFC income. Step Three If your country was Listed: Did it derive income that was Designated Concession Income? (i.e. Not taxed or taxed at a special low rate in that country.) or income sourced in unlisted countries that is not taxed?

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Offshore Banking and Investing in Privacy If you answered NO then you're off the hook and no attribution of income will be made. Of course if you answered YES you must keep answering questions. Step Four If you answered yes to Step 3 in relation to Designated Concession Income, Did this income qualify as Active Income? (see Step Two) If you answered YES this type of income is not attributable Step Five If you answered yes to Step 3 in relation to income sourced in unlisted countries that is not taxed and/or you answered no to Step 4, then does the income qualify for the section 515 exemption? The section 515 exemption applies to FIF income that would normally be attributable but is deemed exempt under certain total investment limits. The limits are that the total you, your associates and your family have invested in all non-resident companies, trusts or life policies does not exceed A$50,000. Now, this means your investment, not your income. This part of the legislation is a little vague, but my interpretation is that if you had A$49,500 invested in a company in a listed or unlisted country, and it was returning a dividend equalling say, 30% return on investment this would be deemed tax exempt. If your total investment offshore is only A$50,000 or less, then your income is not attributable. If your

25

Invisible Banking investment was greater, brace yourself, you could be paying tax. As you can see the Tax Department doesn't make it easy. Foreign Investment Funds (FIF’s) Unfortunately, this is another piece of long-winded bureaucracy gone mad, but I'll try to simplify it as best I can. Introduced on 1 January 1993 to close up some fairly major loopholes that the CFC legislation didn't cover. The FIF measures apply where a foreign company or a trust, although not controlled by Australian residents, is an attractive investment vehicle because it allows for the accumulation of income offshore in low tax-free countries, thereby allowing the investor to minimise his or her liability to Australian Tax. The main difference between a CFC and a FIF is that the CFC is controlled by Australian residents and the FIF is controlled by foreign residents. The loophole allowed you to have a CFC like company being looked after and controlled by someone on your behalf and the tax man wouldn't know. Now the good news, there are exemptions, the main ones are: Active Business Income (as discussed earlier), interests held as trading stock, and small investors. Let's look at each exemption individually.

26

Offshore Banking and Investing in Privacy Active Business Income If a foreign company is involved in 'Eligible Activities', the Australian taxpayer will not be subject to FIF taxation in respect of their interest in that company. What's 'eligible'? Who knows? What we do know is what's not! Banking and the provision of finance, investments in commodities, life insurance, general insurance, funds management and activities in connection with real estate (other than construction) are all out. Everything else is OK. But there is a snag, it must be able to pass what they call the 'balance sheet test'. This test involves proof that at least 50% of the company's assets were involved in 'eligible' activities. There is another test but this relates strictly to foreign public companies. Trading Stock Where a taxpayer’s interest in an FIF form part of the taxpayer’s trading stock and the taxpayers elects to bring those interests to account at market value, then any income accruing on the FIF will not be subject to taxation. Small Investors If, as a taxpayer you are a person and not a company you can get exemption if your interest in the FIF is less than A$50,000. This limit includes not only you, but also your wife or husband, kids, step kids, trustee or your partner. In simple terms you can invest A$50,000 in an offshore trust or company and the profits remain tax free until such time as the funds are repatriated. There doesn't appear to be a limit on the 'yield' of your investment.

27

Invisible Banking Are there any other ways to invest offshore and save tax legally? Without being dishonest and hiding your affairs from the tax office, by using the often impenetrable secrecy barriers established by certain jurisdictions, you have very little room to move being an Australian resident. But there are legal ways to achieve tax savings and they are: Be an employee of an offshore company. If you are an employee of an offshore company and employed overseas for a minimum of 91 days, the salary that you are paid will be exempt from Australian tax as long as it is not exempt in the country you were paid. In other words you must pay tax in the offshore country. What you could do here, would be to establish a company overseas that earns enough income to pay you while overseas 'working' for the company for three months. You would pay local personal income tax which of course would be in a jurisdiction with lower rates than our own and possibly in country where company tax is high, this way you reduce your company profit to nil by way of your salary. You do this each and every year while taking an overseas holiday at the same time. The trick is to find a country with low personal tax and company tax based on profit that will grant you a permit to work for your own company. For instance, Guernsey would be fairly good choice at a maximum 20% on your wages compared with a top rate of nearly 50% here. One thing to remember though is that the income you earn whilst overseas may be taxed at a lower rate but when it comes time to calculate your Australian tax, the offshore income will be added to your local income to calculate your tax liability. This means

28

Offshore Banking and Investing in Privacy your marginal rate will be increased but you won’t be taxed on the offshore income. For example if your total income was all offshore income, your local tax would be zero, but if your local income was $5,000 and offshore income was $15,000 you will be taxed on the $5,000 as if you had earned $20,000 (ie $5,000 x 20% = $1,000 tax, plus Medicare levy). Refer to sections 23AG and 23AH of the Tax Act for more information. Profits earned from Australian company.

an

offshore

branch

of

an

You will be exempted from Australian tax on profits earned in a 'Listed' country as long as profits are subject to tax in the 'Listed' country. The Act stipulates that the tax you pay must be of a nature that taxes your profit. Which means flat tax situations are probably going to be knocked back. The profits must also not be Designated Concession Income in the listed country. Designated Concession Income is income that has been either not taxed at all, or taxed at concessional rates (under some incentive scheme for instance) in a listed country or is income from an 'Unlisted' country. Where profits are earned in an Unlisted country, the income will be taxed in Australia less any foreign tax paid. Why is this available only on 'Listed' countries? Because the taxation office believes that 'Listed' countries have tax rates similar to our own. This way it believes you won't receive a benefit investing in a 'Listed' country. In the past people have incorporated a branch in the Canton of Zug in Switzerland (a listed country up until 1997), diverted most of their income to that branch, paid local company tax of around 10% of their profit. This meant that they can bring the money in to Australia without paying more tax because they have paid the

29

Invisible Banking normal tax for a resident company based on their profit. Most of Switzerland has a company tax rate of around 37.5%, the Australian Tax Office must have overlooked Zug in Switzerland. (Full details are revealed in The Invisible World.) Refer section 23AH of the Tax Act. Seek residency offshore The other loophole which is a little on the radical side is to adopt Perpetual Traveller status, or cease being a resident of Australia, just enjoy long holidays here. This is definitely a desperate move, but on the other hand if your playing with millions, maybe it's worth it, ask Mr Murdoch and Mr Skase. We talk a little more about being a “PT” further on. The “Other” Alternative used by Thousands Of course there will always be those people with absolutely no conscience at all that will set up an offshore company and bank account in a “high secrecy and low tax” country. They'll arrange for that company to earn a sizeable income (possibly through foreign investments or transfer pricing) and not advise the Tax Office of their offshore company's existence. They then obtain a cash card from their offshore bank that's connected to Cirrus or Maestro international banking networks and draw down cash from Australian ATMs completely undetected and undetectable. And what's more astonishing, they've been doing it for years. Have these people no shame! Read on and all will be revealed on exactly how these scoundrels do it. I don't know how they can live with themselves! Was Gordon Gekko (Michael Douglas in the movie Wall Street) right when he said "greed, for want of a better word, is

30

Offshore Banking and Investing in Privacy good!" I suppose it depends on how much tax you pay each year. If you were to undertake a scheme such as the one mentioned above, it could be deemed illegal by the tax office and you could be fined or worse! Always seek professional advice before doing anything. Double Tax Agreements - Will they affect me? Australia has DTA’s with basically the same countries that I listed as 'Listed for CFC purposes' earlier in this chapter (with the notable exception of Luxembourg). As very little of the contents of this book concerns these countries, there isn't much need to look too deeply into DTA’s. But we do look at some of the advantages and tricks that you can use when we get to the chapter on Tax Haven Strategies. Contrary to what the name implies, they do not tax you twice, they can save you a lot of money by ensuring that you don't pay twice when dealing with two countries that have signed treaties. In some instances they can be used to your advantage, by paying tax in a country with lower tax than say another that may have otherwise been your country of residence. You see, the point of DTAs is that you only pay tax once. DTA’s are often used when one treaty country has slightly or possibly a substantially lower rate of income tax. If structured correctly, the amount of tax paid can be lower than would normally be paid if the investment was left in Australia. This only applies to certain types of income and only applies between treaty countries.

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Invisible Banking Is there a general Australian Government Policy on Tax Avoidance? Absolutely, this policy is wide-ranging, complex, and controversial. The general anti-avoidance provisions of the Tax Act are contained in Division 13 and comprising Sections 136AA to 136AG and apply to arrangements entered into after 27 May 1981. Basically, it goes like this, if the Commissioner believes that transactions you have undertaken are of a 'sham' nature or if he believes (and the courts believe) that what you have done has been a deliberate attempt to avoid tax then they can fine and reassess you on the suspect transaction. Also, if they deem the transactions not to be at 'arms length', they can also apply Division 13 as we said earlier. Is it possible to be a perpetual traveller to escape paying tax in Australia and what is the definition of a resident of Australia? Firstly, let's define 'resident', this area appears to be a little grey to me. Obviously, a resident pays tax in the country in which he or she resides. A resident is defined as someone who dwells permanently or for a considerable time, who has their business interests or job and family within that country. In my opinion, a resident would be a person who spends more than half of his or her time in that particular country or the country where they spend more time than any other. Citizenship and nationality do not constitute liability to taxation. Also, keep in mind that a person can be a resident of more than one place (Lloyd v. Sully). The whole question of what defines a resident could take a chapter on its own so I suggest if you are serious

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Offshore Banking and Investing in Privacy about the residency issue, seek professional advice from a solicitor. Now to the question of being a perpetual traveller. A perpetual traveller is somebody that travels the world never staying in one place long enough to pay tax. If you don't mind living on the run - you're welcome to it! For instance, if you stay in most places for more than six months tax traps will start closing just about everywhere. In Singapore it's only 60 days! I've read that perpetual travellers (PTs) organise their lives in at least 5 countries, and this is OK if you really are looking for a nomadic existence. If this is what you want here's how you would organise it. Country No.1 - Business Base. These are the countries in which the PT earns his money and nothing else. Keep in mind to look for administrations which will look after the entrepreneur with things like free commercial real estate, investment subsidies, interest free loans as well as tax exemptions, and which limit bureaucratic regulations to a minimum for this purpose. Some of the Caribbean states are excellent in this regard or you could try the more orthodox addresses such as London, Tokyo and New York. Other possibilities worth looking at are Zurich, Singapore, Frankfurt and Milan - in that order. Why did I miss Hong Kong? Too risky, nobody knows what the Chinese Government will do. Communists can never be trusted, especially when it comes to preserving capitalism. Country No.2 - Passport and Citizenship Issuer. Passport havens whose travel documents can be used in many countries without the need for visas and which

33

Invisible Banking require very little of it’s expatriates when it comes to things like tax and military service. Australia and Ireland are perfect. Country No.3 - Domicile. This is where you will be spending a lot of your time, perhaps even living in your own home, during your unavoidable breaks in travel. The Channel Islands, Andorra and Bermuda would all be fairly good. Country No.4 - Asset Management. Preferably, this asset management base should allow you to have trustees or solicitors manage your assets, insurance and business affairs in your absence. Requirements: qualified asset managers, bank secrecy assured by the law, tax exemption for non-residents. The best place is Liechtenstein, followed by Austria, Luxembourg, Turks and Caicos, Switzerland, Channel Islands and the Isle of Man. Country No.5 - Playground. These are countries with a high standard of living, easily accessible without too many bureaucratic regulations (such as visas), as well as no restrictions or limits on the duration of your stay. Suggestions: New Zealand, Caribbean, Pacific countries. American tax consultants advise "long term vacationers" in the US to take the following precautions to avoid being declared as residents liable to pay tax: always have your return ticket with confirmed booking ready, don't register your flat in your own name, don't be available at your US office all the time, don't maintain any US bank accounts (at least, don't have the bank

34

Offshore Banking and Investing in Privacy statements sent to your US address) and don't operate with US letterheads. In short, clearly show that your ties with your old residence outside of America outweigh everything else. What is an Offshore Information Notice? The Tax Commissioner can issue one of these to get you to produce documents in 90 days that he believes are relevant to the assessment of your tax bill. The Tax Commissioner must hold the belief that the information is known by the tax payer, the information is held outside Australia and the information is kept by way of mechanical, electronic or other device outside Australia. In the case of documents, he must hold the belief that the documents are outside Australia, whether or not they are also available within Australia. Conclusion to Tax Matters The general theme of Australian Tax Law in relation to offshore dealings is basically to make sure you pay tax at rates similar to Australia if you don't actually pay tax here. Since they introduced CFC legislation in 1990, the opportunities to pay less tax by investing offshore have almost dried up. I once heard Australia described as a "taxation wasteland" by an international finance author. Currently, the government is imposing some new regulations to stop the growing incidence of people and companies putting money offshore or channelling profits through tax havens. This includes taxing all passive income unless it was derived in the US, Britain, Japan, Germany, New Zealand, France or Canada. No plans are being made to change the 'A$50,000 rule'. Despite what the tax office

35

Invisible Banking might tell you or what your paranoia suspects, the tax department is slowly losing the battle against offshore tax avoidance because they simply can't obtain the information and because it is in the interest of those that could furnish the information, not to. The government has eventually come to the conclusion that the only way to stop the 'Offshore Tax Drain' was to introduce a GST, as virtually every other first world nation has. If you refer to earlier editions of this text, you will see this predicted as the most appropriate way to solve this dilemma. You should be seeking absolute privacy and confidentiality in your personal lives and finances, but not paying your due income tax is breaking the law and will land you in trouble. Remember, Tax Minimisation is Good! Evasion and Avoidance are Bad!

Points to Consider before you begin There are many offshore banking centres round the world. Make sure the one you choose is compatible with your needs. For example, do they speak English? Are there a variety of well known international banks resident? Is there legislation protecting not only your secrecy but your legal rights? Is the geographic location suitable? These are just some of the questions to ask yourself before you select a jurisdiction. Does the jurisdiction have good telecommunications? Can I fax requests or instructions to my bank, or even email requests using a password?

36

Offshore Banking and Investing in Privacy When you first contact the bank, are they friendly and helpful? This possibly gives you an insight into the sort of treatment you can expect when you open an account. Does the bank have a proven track record of secrecy, good service and profitability? Can the bank offer you a variety of accounts in a variety of foreign currencies? What fees are charged on these accounts? Do they offer other services like safe custody, mail holding etc? Do they issue debit or cash cards that can be used anywhere in the world? Do they offer competitive interest rates on all accounts? Ask these questions before you settle on any jurisdiction or bank. It is better you know now, rather than receive unpleasant surprises later. While I have included only banks and jurisdictions that I believe are worthwhile, things do change. And they can change quickly, look at our own banks and how they constantly change the rules, the fees and their attitude towards customers.

Personal Banking In recent years the proliferation of offshore banking has taken off. No longer is it the realm of the rich. The average person is now looking offshore for their banking needs. The offshore banking system has realised this shift and they have started adapting their services and products to suit the average person. The Swiss are still living in the past, but the rest of the tax havens are realising the “mums and dads” business

37

Invisible Banking is definitely worth having. For example, Credit Suisse still require 350,000 pounds sterling to open an account. Sure, for that they wait on you hand and foot, but it is only banking, money in and money out. They claim it’s “justifiable economics”, I say it’s unrealistic, and they will change in time. These days accounts can be opened from one pound sterling and up. For instance, Barclays offers an international debit card and high yield check book account as part of its standard offshore banking package which starts at 1,000 pounds. Lloyds, another superb British bank in the Isle of Man offers a one stop shop type concept. Their Overseas Club package includes credit or debit cards, telephone banking, financial planning services, mortgages, pensions, insurance and in house financial planners in addition to the usual bank account with a cheque book. Cater Allen is a great bank that offers the HICA account. It includes high rates and a Gold Visa Card as well as a cheque book in multi-currencies. The opening deposit must be US$5,000. Cater Allen have extended banking hours to 12 hours per day which makes banking in Australia quite convenient. Midland in the Isle of Man and Jersey goes one step further and offers 24 hour banking by telephone, which is fabulous. They offer accounts from 1 pound and include a debit card as well. Gone are the days of offshore banking only being for the rich!

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Offshore Banking and Investing in Privacy

Chapter 3 You Be Careful Out There! There are private banks popping up all over the place these days and it’s always interesting to find a new one pop up and even more interesting to find out whether or not it’s real. One that was recently uncovered was the new and impressive sounding Anglo American Bank Group I immediately took a look at their web site at http://www.angloamericanbank.com . If you take a look at it (assuming it's now still there!) you will no doubt be as impressed as I was with the professional appearance of the site and the apparent wealth of information it contains. But on looking a little closer, on the pages entitled 'About us' they told me nothing about who really owns and runs the bank except making grand statements about it being part of Anglo American Group plc and there were no further details about them either! What the site details did reveal however was that if I wished to open an account, the head office address to which hard copy of the on line account application was to be mailed was 489 Lucas Street, St.George's, Grenada, WI being the address that I was also invited to send checks or Western Union wire transfers to initially fund the account with a minimum of $1,000. On further investigation, it seems 489 Lucas Street (their advertised address) is a tiny cottage style private house with a small brass plaque outside with the name of some other bank on it, not Anglo American. The following is an account by someone who actually went there. “I stepped inside into a small grubby hallway off of which there were 3 or 4 doors each with the hand written sign with the name of a bank over it. I knocked and entered the one marked Anglo American to find

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Invisible Banking myself in a small office with one male and one female in it plus a computer terminal. The gentlemen in the office told me his name was Mr Lenk - from his accent and appearance he appeared to originate from somewhere in Asia. I told him I had come to open an account but he was clearly not pleased to see me. He said they only did business via the Internet but I asked if he could just answer a few questions prior to my opening an account. Such as, who owned the bank, who were the directors and where were they to be found? Mr Lenk said, "We cannot disclose information about the owners and I cannot give you the names of the directors but I can tell you that the managing director is from Latvia". Not feeling any more reassured, my next question was "How can I feel comfortable about the security of my deposits with your bank?". Mr Lenk replied, "If you deposit money in Anglo American Bank the securities in your account will be protected up to US $25,000,000.00. The Securities Investor Protection Corporation (SIPC) covers up to US $500,000.00, and we provide an additional protection in the amount of $24,500,000.00, which the Excess SIPC Coverage issued by a subsidiary of the American International Group, Inc. Guarantees.". The rather interesting reference to 'securities' rather than 'cash' was of some concern. The assets and liabilities of the bank seem also to be secret which would have you think the whole thing is probably a deck of cards. It all sounds impressive, but unfortunately so many failed banks in the past have sounded just as impressive. It appears that Anglo American Bank do have a valid offshore banking licence issued in Grenada and they may well not be breaking any laws. But of late the Grenada Government have revoked many offshore banking licences having been seen to be presiding over previously poor regulation and it’s been suggested to them that Anglo American Bank should at least be 'looked at'. In the mean time and if they are still around, I

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Offshore Banking and Investing in Privacy suggest you avoid them and any banks that sound a lot like them. You can never be too careful. Here’s another recent example of the type of thing that’s going on. The Lionheart Bank in Montserrat is another phoney bank operating on the internet. The following is the alert issued: ALERT 2003-5 OCC ALERT Subject: Unauthorized Banking Description: Fictitious Internet Offshore Bank, Montserrat Date:

March 18, 2003

TO: Chief Executive Officers of All National Banks; All State Banking Authorities; Chairman, Board of Governors of the Federal Reserve System; Chairman, Federal Deposit Insurance Corporation; Conference of State Bank Supervisors; Deputy Comptrollers (districts); Assistant Deputy Comptrollers; District Counsel and Examining Personnel RE:

LionHeart Bank and Trust Company Limited PO Box 350506, Fort Lauderdale, Fl. 33335

[http://www.lionheartbank.com] The Financial Services Commission of Montserrat has advised the Office of the Comptroller of the Currency that LionHeart Bank and Trust Company Limited is not registered in Montserrat. The regulatory authorities of Montserrat have not issued any type of license to an entity with that name. Also, the regulatory authorities of Florida have not authorized LionHeart Bank and Trust to conduct banking business in that state. Please be guided accordingly.

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Invisible Banking Any information that you may have concerning this matter should be brought to the attention of: Mail: Cynthia Ferrell, Assistant Commissioner Financial Services Commission Government of Montserrat PO Box 188 Brades, Montserrat, West Indies Tele: (664) 491-6887 Fax: (664) 491-9888 E-mail:[email protected] and Mail: Florida Division of Banking 200 East Gaines Street Tallahassee, FL 32399 Tele: (850) 410-9111 Fax: (850) 410-9548 Brian C. McCormally Director, Enforcement & Compliance Division

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Offshore Banking and Investing in Privacy

Chapter 4 Procedures in Offshore Banking & Investing We have examined why people use offshore banking centres and their advantages and how they can apply to you, now it’s time to actually look at how these accounts can work and how to apply them to your own particular situation.

Modes of Banking These days, offshore banking has become quite sophisticated. You can deposit and withdraw by mail (using registered or couriers) or you can choose Fax, Telephone or E-mail. The last two can however be a bit of a problem. With letters and faxes, you provide your signature and this can be checked against bank records before the transaction is passed, but with Telephone or E-mail there can be a problem. To solve the problem of fraud, the banks issue you with a password. This password must be kept absolutely secret, because if someone else uses it, you may have a devil of a time tying to convince the bank it wasn’t your fault. So, if banking using the telephone or email be very careful. If you elect to operate your account this way, you may be asked to sign an indemnity form, which absolves the bank from any responsibility. All e-mail should be encrypted.

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Invisible Banking Choosing a Banking Haven The first thing we must do is to look at the different banking havens and see what each one has to offer us. My first piece of advice before we start is, don’t invest large amounts of funds in jurisdictions that don’t have a solid record of democracy, good government, stable economic conditions and are major and recognised offshore financial centres. A background of British colonisation or control is also a major advantage due to the fact that they usually have laws based on British common law. If you have vast amounts of cash to invest, I suggest you place it in several different banks, in several different jurisdictions to ensure all your eggs aren’t in one basket. When seeking a banking haven, make sure the country doesn’t impose withholding tax or currency controls. Also, make sure the jurisdiction you invest in doesn’t have a major international political agenda. These countries can sometimes upset western countries resulting in the seizure of funds, the blocking of communications and such like. Finally, make sure the jurisdiction has rock solid bank secrecy laws that have been made law and that provide heavy penalties for anybody within that jurisdiction that may breach an investor’s confidentiality. If you are planning a structure that will include more than just banking, such as incorporating a company, trust, or even a whole corporate structure, look for a jurisdiction

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Offshore Banking and Investing in Privacy that doesn’t impose investments or profits.

taxes

of

any

kind

on

foreign

Now to an extremely vital issue - Bank Secrecy - this is the cornerstone to everything you will do with your nestegg. I have listed some jurisdictions that are recognised offshore banking centres. You will note the list is by no means complete, and there is a reason. I have only listed the countries I would invest in, plus a few other more notable countries. When it comes to the less than favourable countries, I’ll let you know why I have concerns. One thing must be kept in mind though, even though I don’t like a jurisdiction for banking purposes doesn’t mean it isn’t good for other things, like incorporation for instance.

Secrecy and Banking changes Since September 11, 2001 I have had quite a few people asking me what changes have been made to offshore banking since September 11 and I thought I should bring you up to date on the major change that has occurred. For some time now the OECD and the FATF (Financial Action Task Force) have been placing enormous pressure on jurisdictions and financial institutions to implement more controls on who banks with them, where the money comes from and whether governments around the world are getting their cut in the form of taxes or not. The major changes that have occurred have centred on the self regulated “know your customer” regulations that most banks have introduced. This entails proving the source of funds, absolute identification of the account holder and the signatories. This has disturbed many people and they think this

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Invisible Banking information is immediately available to the whole world, but it’s not. It is information held by the banks and would only be requested by others in the case of criminal activity. The laws within these jurisdictions still allow a high degree of confidentiality. As you may well realise every offshore corporation or structure needs a bank account. The ability to open that account depends upon the bank's acceptance of the corporate documentation. Already major banks offshore are refusing to open accounts for corporations in jurisdictions of which they do not approve (so always check with your incorporation agent first as per The Invisible World). In most tax havens, they have enacted new legislation, to counter such things as drug trafficking and terrorist activity. In addition, “All Crimes” laws now exist in most jurisdictions and go beyond the previous anti-money laundering laws to encompass all forms of criminal activity. Suspicious transactions have to be reported to the authorities, including suspicion that a client may be breaking the law of his own country. Some laws, though, have been drafted to omit most tax offences which is not surprising. Tight controls are being introduced on the activities of incorporation agents as well, so that they maintain certain standards and that their activities are subject to scrutiny. The practical consequences of these laws are that regulation will increase and the questions asked will become more searching. Honest and serious clients will have no difficulty answering these questions or complying with regulatory requirements. If you’re a criminal, you will have a hard time of it! Current Due Diligence for Opening Offshore accounts and Establishing Offshore Companies Normal requirements are now -

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Offshore Banking and Investing in Privacy A Professional and/or a bank reference Certified copy of passport or driver’s licence Utility bill such as Electricity or Council rates An understanding of the your activities and type of business Anticipated annual turnover Source of funds

The Information Exchange Myth All the commitments made by the various offshore centres to the OECD include an undertaking to exchange tax information by 2005. This could be seen as the death knell for the offshore centres, but most of the recent commitments made have included the so-called 'Isle of Man' clause. This says that such undertakings will only be put into effect if the member countries of the OECD themselves comply with the terms being asked of the offshore centres. On balance, it seems very unlikely that major countries like Luxembourg and Switzerland will be complying with the OECD's own rules by 2005, let alone have a full network of information exchange agreements in place. On this basis we believe that there is a bright future for international corporate structures for some considerable time to come.

Privacy Issues Whilst most countries have statutory bank secrecy legislation, it has unfortunately been watered down by numerous attacks Governments around the world, the FATF and the OECD. All these groups have co-ordinated their attacks to break down the walls of secrecy that have been in place for so long. The reason is mainly to stop the big fish and the

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Invisible Banking seriously naughty people laundering funds and not paying huge amount of tax. The main focus has been in two areas: •

Withholding tax: Many governments are seeking to impose withholding taxes on interest paid to account holders. In the case of Europe, this will not apply to non-residents of the EU (with the exception of Switzerland which already taxes its non residents) but of course for enforcement purposes, details of what interest is paid and to whom will have to be made available to governments who enquire. Countries such as Austria, Andorra, Liechtenstein and Luxembourg are resisting. However, it doesn’t take a genius to see the direction things are going.

•

Money Laundering: This is their main focus – serious crime. These days, the mere mention of which has bankers going weak at the knees. However, even though you are not a “criminal” involved in money laundering, you may be accused of doing so, this will of course be enough to see you account details to appear faster than you can say, “ …….. account details please!”

So, faced with this, how do we ensure some degree of privacy in these uncertain time post-September 11? It’s not easy, but there are ways. They are: 1. Don’t get investigated in the first place! 2. Make sure your account is classified as non-resident and non-citizen, as it should be. 3. Don’t hold accounts in your own name, which is pretty obvious.

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Offshore Banking and Investing in Privacy Ok, let’s look at 1. Don’t get investigated in the first place! Doesn’t take a genius to work this one out does it? However, there’s a little more to it than that... people going offshore often ask about so-called “reporting requirements”. Will the bank report my account to my home government? The simplest way to answer this question accurately is to say “not unless they are asked”. With very few exceptions, offshore banks do not routinely report the existence of accounts to foreign governments. In the rare cases where they do, they will usually warn you first. By definition you can’t have a ‘secret’ account if you tell other people about it. So, they idea is, keep it to yourself. Now, I’m not saying you don’t report that account, that’s in your name, to the tax department, to do so is of course against the law, but that of course is only if the account accrued interest to you or the account is “yours”. Some people do of course keep these accounts “secret” and not reveal their accounts on tax returns, but they are often careless and leave a paper trail linking their onshore and offshore businesses. Never do this! It may seem fairly obvious, but it’s such an important point there can be no harm in repeating it. Our second point is, Make sure your account is classified as non-resident and non-citizen. This is fairly self-explanatory. Many countries deduct withholding taxes from interest paid to their citizens, and report the interest paid to their local tax authorities. Of course, from this the authorities can get a pretty good idea of your account balance too. However, most of these same countries do not deduct tax from non-residents and neither do they report the interest paid to anyone. In some countries it is a simple matter of giving your bank an address overseas, whilst in others (such the UK) you will be required to sign a non-resident declaration form similar to the IRS W8 form which non-US residents must sign when opening accounts in the USA. So, ensure that your address is one outside of the country you have an account in and also, if the account is

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Invisible Banking within Europe, make sure your address is to. The EU is introducing some laws that will allow some transfer of information between member countries so be aware of this if you wish to retain some privacy. Another thing, did you know banks also record your citizenship. To maximise your privacy, avoid holding accounts in your country of citizenship even if you don’t live there. Whilst taxation is legally based on residence, who knows what could happen in the future. A quick example: a usually very efficient and professional European health insurer recently sent out letters to all its British citizen policyholders informing them that due to changes in British law they would now have to pay VAT on their premiums. A couple of days later they realised an error had been made and that the change applied to UK residents, but not to the numerous British citizens living outside the UK. In this case no harm was done, but imagine the catastrophe if they had been a bank, and the list of account holders had been sent to the UK authorities in error. Lastly, Don’t hold accounts in your own name. This one really solves a lot of privacy problems. You can pick a new nationality which will be held in the computer. You can pick an overseas address. And you can pick a new name. This way, your privacy is almost 100% watertight. The nationality and address mean it’s almost impossible that your account would be routinely reported under the current and proposed rules... but if all else fails, and a routine report is made, it will go to the “wrong” tax authorities under the “wrong” name. Now you may be thinking of second passports, legal name changes and virtual ID documents, blah…blah…blah. However, there is a simpler, more legally watertight way which is fairly harmless and requires less psychological preparation and less risk and money. Just form a legal entity. The account will then be held in the name of that entity. By entity I mean an IBC (International Business Company). There are many fancy variations you might think of, but the bog-standard IBC is perfect for this purpose and can cost as little as a few hundred

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Offshore Banking and Investing in Privacy dollars each year. You will still be a signatory on the account and effectively have full control over the account, but it won’t be in your name…...your privacy is now assured. If you would like to know more about how to do this legally, simply obtain a copy of my book, The Invisible World.

Offshore Financial Centres in Detail As you read through the banking havens details, you will notice I have rated each jurisdiction either, Excellent, Highly Recommended, Recommended, or Fair. I hope this helps make your selection a little easier. Just one other thing, I wouldn’t bank with any jurisdiction rated Fair, these jurisdictions are there really for comparison and information purposes only.

Andorra Andorra is a small country (sovereign state in 1993) in the Pyrenes mountains that run between Spain and France. From the time of Andorra's first historical record under Charlemagne up to the present, private individuals, professionals and trading companies were fully exempted from income tax. Only institutions such as banks, insurance companies and hotels had to pay tax to the Andorran Government. Bankers and insurance companies paid less than one percent of their deposits and premiums, and the hotel industry just a few pesetas per room, per night. The only real money the tiny state made was from

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Invisible Banking the 2% to 4% customs duties levied on the various imported goods brought in for sale to tourists and locals. The currency employed is French francs or Spanish pesetas, your choice. But, multi-currency accounts are available. The banks also offer current accounts that pay reasonable interest. You won’t have too much of a problem with language as English is widely understood by the banking community. Andorra’s internet banking is second to none. Opening personal accounts here is pretty easy if you are prepared to travel there, but corporate accounts are very, very difficult. We recommend starting with a personal account, doing some business and developing a personal relationship with a manager... then later maybe you will be able to open a corporate account. However, the corporate veil is less necessary here since Andorra is not a member of the European Union and routine reporting is an extremely long way off.

Bank secrecy is maintained strictly by the ten Andorran banks, not so much by their Swiss approach to efficiency but more because of the laid back approach to detail, both the customers' and the banks'. Bank secrecy is not legislated, but appears to function to a certain degree. I've read that it is a recommended hideaway for money in cases of marital disputes since even your spouse won't get any information. Andorra is rated Highly Recommended Agent who can assist with all manner of issues relating to Andorra

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Offshore Banking and Investing in Privacy March and Partners SL PO Box 2.222 Andorra La Vella Andorra Phone: 0011 376 837595 Fax: 0015 376 835008 Email: [email protected] Agent who can assist with Bank Introductions Servism SL Roc Escolls 3-4A, Ave Meritxell 20 Andorra la Vella, Andorra Phone : 0011 33 628 860 414 Fax : 0015 33 628 863 797 http://www.servissim.com

Banks Bank Agricol Comercial PO Box 49 C/ Mossen Cinto Verdaguer 6 Andorra Phone: 0011 376 821 333 Fax: 0015 376 861 361 Email: [email protected] Banc Agricol http://www.bancagricol.ad Credit Andorra Credit Andorra http://www.creditandorra.ad

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Invisible Banking Austria When Switzerland was forced to relax its bank secrecy laws in the 1970’s due to international pressure, it was Austria that has come to the fore as a major offshore financial centre. And they have done a great job. The anonymous Sparbuch accounts were probably the most popular offshore banking product in the world, but unfortunately in 2000 they went to God. The EU and the OECD saw to that. But even though the Sparbuch is gone, bank secrecy is still entrenched. Kreditwesengesetz or the Bank Law of January 24, 1979 states that any bank employee that passes on information will be subject to one year's imprisonment or a fine equivalent to one year’s salary. Information will only be released to authorities in case of criminal proceedings. But what's even better than Austrian bank secrecy is the completely anonymous Austrian bank account. If the bank doesn't know who you are, then they can't pass out any details about your accounts. Christopher Skase used these accounts to good effect. In recent times, Austria has become the "darling" of the offshore banking scene. Unfortunately, since Austria joined the European Union there has been immense pressure placed on the Austrians to relax their secrecy rules, and to a certain extent it has been successful. It is a sad fact that Austria doesn’t have quite the bank secrecy it used to have. Although, Austrian bank secrecy is still up there with the best in the world.

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Offshore Banking and Investing in Privacy Bank charges in Austria are about half of those imposed by Switzerland. The banks deduct 22% withholding tax on your behalf from your interest earned each year. Fortunately, your details are not given to the government, nor does the government want them. Austrian legislation introduced recently requires banks to report all foreign currency transactions amounting to more than 200,000 Schillings, so keep transactions reasonably small and use possibly a number of accounts. Another thing to keep in mind when opening a 'bearer account' is that they are limited to 10 million schillings, but there is no restriction on how many accounts you can have. They also will not accept foreign currency, they must be in Austrian schillings. Austria is rated Excellent Banks CentroInternationale Handelsbank AG Tegetthofstrasse 1, PO Box 272 A-1015 Vienna, Austria Ph: 0011 43 1 515 200 Fax: 0015 43 1 525 861 Citibank (Austria) AG Lotheringstrasse 7, PO Box 90 A-1015 Vienna, Austria Ph: 0011 43 1 756 534 Fax: 0015 43 1 739 206 Wide range of services available to offshore investors.

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Invisible Banking Bankhaus Daghofer & Co. Postfach 16 A-5010 Salzburg, Austria Fax : 0015 43 662 8048 333 Anglo-Irish Bank Rathausstrasse 20 PO Box 306 A-1011 Vienna, Austria Phone: 0011 43 1 406 6161 Fax: 0015 43 1 428142 The best contact in Austria is Dr Peter Zipper, chairman of the ANGLO IRISH BANK Vienna branch. This was formerly a small Austrian bank which was purchased in the late nineties by this Irish bank. Dr Zipper is a regular speaker on the offshore seminar circuit and most of his clients are wealthy PTs. Accounts can be opened by mail. Check out http://www.angloirishbank.at

Bahamas The Bahamas is very popular as a banking and tax haven with Americans mainly due to its geographical position. It’s only 30 minutes by plane from Florida and also it’s visited by hundreds of cruise ships each year with holidaying Americans. It is a remarkably stable former British colony, which gained its independence in 1973. There are no taxes on

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Offshore Banking and Investing in Privacy the islands for foreign owned investments, income or assets. In recent years, the Bahamas has come under pressure from the US due to the fact that the place has been used as a haven for drug traffickers, mafia money and other rather unsavoury types. But, the US has still been unsuccessful in eliminating bank secrecy. The compromise has been the Mutual Legal Assistance Treaty that allows for the release of information to US authorities where certain people have broken the laws of both countries. Tax evasion doesn’t count as a breach of Bahamanian law. Bank law of 1965 prohibits the relaying of any information (other than mentioned above!) regarding bank or trust transactions gained through "the fulfilment of one's duties or in carrying out one's legal functions", except if the Supreme Court should request the information. US appointed private detectives have repeatedly tried to get on to the accounts of its citizens by employing suspect practices, sometimes with success. However, those people could not be convicted since the information was not gained through legal means. The Bahamanian government considers the American actions such as this unlawful. Therefore, attempts by other governments would be regarded in much the same way. The Bahamas is also a popular incorporation centre for IBC’s (International Business Companies), if you would like more details on the advantages of establishing an IBC in the Bahamas (or anywhere else for that matter), The Invisible World can help. An order form is included in the back of this book.

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Invisible Banking Even though the Bahamas are incredibly popular with Americans I have my doubts about the place. It’s the first place the American authorities look. Despite my doubts there are US$220 billion in the banks there. The Bahamas is rated Recommended to Fair Banks Swiss Bank Corp Swiss Bank House PO Box N7757 Nassau, Bahamas Phone : 0011 242 394 9300 Fax: 0015 242 394 9333

Hang Seng Bank Euro Canadian Centre PO Box N3019 Nassau, Bahamas Phone:0011242322 2173 Fax: 0015 242 394 9333

Lloyds Bank PO Box N-1262, Nassau, Bahamas Phone : 0011 242 322 8711 Fax: 0015 242 322 8719

Barclays Bank PO Box N-3221, Nassau, Bahamas Phone:0011 242 322 4921 Fax: 0015 242 322 8267

Fund Managers Magnum Global Investments PO Box 555539 Nassau, Bahamas Phone: 0011 1 242 3942547 Fax: 0015 1 242 394 3284 Website: www.magnumfund.com Magnum have some amazing funds that are very highly regarded.

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Offshore Banking and Investing in Privacy

Bermuda Bermuda is situated about 1,000 kilometres off the east coast of the US. It is composed of more than 200 islands. Bermuda is still a dependent British colony. It is one of the most established tax havens in the world. It imposes no taxes on foreign income, capital gains or profits. There are also no withholding taxes on income earned from your Bermuda based investments. Bank secrecy is not assured by law, but the provisions of the British common law, which is also valid here, appear to effectively prevent the passing out of confidential bank and trust information. Bermuda has entered a Tax Information Exchange Agreement with the US. While this is a problem for US citizens thinking of Bermuda as a place to stash some tax free money, it actually works out quite well for everybody else. This is also due to the US not pursuing Bermuda as it would have if no agreement had been signed. Another thing is Bermuda will not accept criminal money and this has also reduced international pressure on the haven. Bermuda has no other treaties of any type with any other countries. The banking system in Bermuda is highly developed with quite a few major international banks having a branch there offering services to foreign investors. To open an account is like opening an account at home. You must answer a lot of questions, and prove beyond doubt who you are. This is not a reporting requirement by the government, as it is here. It is to make sure you are not a criminal, as far as the bank is concerned. If you aren’t, you don’t have a problem and your details will remain totally confidential. If the banks handed out your information every time some foreign government asked, the islands would lose

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Invisible Banking their second largest industry overnight. As I said before, Bermuda imposes virtually no taxes and they regard other countries attempts to track down tax evaders with little concern and very little co-operation. For the authorities in Bermuda to get excited, it must be a criminal offence in Bermuda. Bermuda is also quite a good place to incorporate companies. Many public companies in Australia have registered subsidiaries in Bermuda. Total deposits in Bermudian banks were US$18 billion in 2001. Bermuda is rated Highly Recommended. Banks Bank of N T Butterfield PO Box 195 Hamilton HM AX Bermuda Ph : 0011 1 441 295 1111 Fax : 0015 1 441 292 1220 Complete range of offshore banking facilities available. Bank of Bermuda PO Box HM 1020 Hamilton HM DX Bermuda Ph: 0011 1 441 295 4000 Fax: 0015 1 441 295 7093 Major bank in Bermuda. It has a wide range of services available including Cards. Bermuda Commercial Bank (Barclays) PO Box HM 1748, Hamilton HM GX, Bermuda Phone : 0011 1441 295 5678

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Offshore Banking and Investing in Privacy Fax : 0015 1441 295 8091 Funds Manager Voyager Management Ltd 129 Front St, Hamilton, Bermuda HM12

Phone: 0011 441 296 4545

British Virgin Islands This group of islands in the Caribbean is better known as a place to incorporate companies (IBC’s) and form trusts for asset protection than as a banking haven. But, there are some benefits. Firstly, it is a low profile banking haven. It also has a good record of maintaining confidentiality and bank secrecy even though bank secrecy isn’t officially legislated. It maintains no tax treaties with anyone. The islands are currently a British colony. There are six banks on the islands offering a variety of services to the foreign investor. The currency is the US dollar. The islands don’t impose income or profits taxes, nor do they charge withholding tax on interest earned in their banks. However they do charge a tax of 15% on dividends arising in the islands. It is one of the cheapest and best places to form a company or trust. Total deposits in BVI banks were US$9 billion. British Virgin Islands is rated Recommended Banks VP Bank (BVI) Ltd PO Box 3463, 65 Main St

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Invisible Banking Road Town, Tortola British Virgin Islands Ph: 0011 1 284 494 1100 Fax: 0015 1 284 494 1199 This subsidiary of a well known Liechtenstein Bank, offers numbered anonymous accounts to individuals. A wide range of investment products available. Bank of East Asia Wickhams Cay 1 Road Town, Tortola, BVI Phone:00111284 494 6775 Fax: 0015 1284 494 3234

Chase Manhattan Bank PO Box 435 Wickhams Cay 1 Road Town, Tortola, BVI Phone: 0011 1284 494 2662

Cayman Islands The Caymans are a group of islands in the Caribbean about 800 kilometres from Miami. It is a British colony, by choice. It elected to remain a colony when Jamaica gained independence in 1962. It was actually part of Jamaica prior to that date. The Confidential Relationships Preservation Law passed in 1976, threatens anyone who divulges Cayman Islands bank information, gained in the course of his work, with a penalty of US$5000 or 2 years imprisonment. According to the government's interpretation, it is also illegal to help foreign tax investigators get information. One snag, as the Cayman Islands Bank went bankrupt in 1974, the receiver in the bankruptcy saw himself unable to give the creditors any kind of information regarding the claims and liabilities due. However, in July 2000, the Money Laundering Act was passed and it allows overseas regulators access information, including data on the identity of

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Offshore Banking and Investing in Privacy customers in “appropriate regulatory circumstances”. What this means is simply if there is a major instance of money laundering or financial crime, expect the Caymans government to turn your details over to whoever has produced evidence of your wrong doing. Opening an account has recently become only slightly more difficult. You will be asked to prove your identity as well as have at least one genuine reference. You will also be asked where your money came from. This is because during the eighties there were a few drug money scandals that damaged the island’s reputation and this has made the local bank managers a little more cautious about who they accept money from. Any cash deposits over US$10,000 must be reported to the government as suspicious. The Caymans don’t have any form of direct taxation, withholding tax or capital gains taxes. Tax evasion is not viewed as a crime, which has frustrated US officials for years when trying to track down non-taxpayers. They have no tax treaties with any country. The local banks (and there are 500 of them) control about US$500 billion, so as you would expect, the banking system is well developed. It is also a popular place for Asset Protection Trusts and IBC’s. The Caymans have unfortunately relaxed their bank secrecy a little in 2000 due to the American led Financial Action Task Force (FATF) forcing some changes to laws relating to money laundering and other criminal activity. This shouldn’t have any great effect on the average offshore investor. The Cayman Islands are rated Good.

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Invisible Banking Banks Barclays Bank PO Box 68 Grand Cayman British West Indies Ph: 0011 1 345 949 7300 Fax: 0015 1 345 949 7179 Wide Range of offshore banking services Finsbury Bank PO Box 1592 Transnational House West Bay Rd Grand Cayman British West Indies Ph: 0011 1 345 947 4011 Midland Bank Trust Corporation PO Box 1109, Grand Cayman, BWI, Fax : 0015 1345 949 7634 British American Bank PO Box 914GT American Centre Dr Roys Drive Grand Cayman, BWI Phone: 0011 1345 949 9898 Fax: 0015 1345 949 6064 Royal Bank of Canada PO Box 245 Grand Cayman, BWI Phone : 0011 1345 949 4600

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Offshore Banking and Investing in Privacy Fund Manager North Star Fund Managers PO Box 1792 5th floor, Anderson Square Bldg George Town, Grand Cayman, BWI Phone: 0011 1 345 945 7310

Channel Islands This group of islands just off the coast of France has been part of Britain since the Norman Conquest of 1066. To maintain their loyalty to the Crown, the islands have over the years been granted virtual autonomy in all things except defence and foreign policy. There are no taxes imposed on foreign companies or withholding taxes on dividends, bank interest etc. Accounts can be opened in a wide range of currencies but the interest paid on Sterling accounts tends to be a little higher. Numbered accounts are also available for further anonymity if you wish. The principal banking centres are Jersey and Guernsey. The banking system is very well developed rivalling the most sophisticated in the world. Bank secrecy has not been legislated, but it is usually effective in practice, especially for non-residents. Of course, if you were a multi-millionaire criminal wanted in England, you wouldn't exactly deposit your ill-gotten gains in a Guernsey or Jersey bank, but for the average Australian, the outlook is pretty good. Many of the banks require their employees to sign contracts to commit them to absolute bank secrecy. However, expect the banks to make sure your and your money are free

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Invisible Banking of crime. They will ask a lot of questions and their procedures have been approved by The US Internal Revenue Service. Most of the worlds’ major banks have branches here, as do over 300 international investment funds. The islands are also an excellent place to incorporate an offshore company or trust. The only problem with the Channel Islands being the fact they can’t provide bearer shares, and this can be a real problem. Bank deposits are impressive at US$250 billion, so it’s not a bad place to bank and should always be considered for personal banking. Jersey and Guernsey are rated Excellent Banks Lloyds Bank PO Box 10 9 Broad St, St Helier, Jersey JE4 8NG Phone: 0011 44 1534 284000 Fax: 0015 44 1534 284406 Standard Chartered Bank (CI) Ltd PO Box 830 Standard Chartered House Conway St, St Helier Jersey, JE4 8PY, Channel Islands Ph: 0011 44 1534 507001 Asia-Pacific Customers Ph: 0011 44 1534 507 343 Fax: 0015 44 1534 507112 Offers a wide range of services including Current Accounts, Deposits, Debit, Cash and Credit Cards. Multi-currency accounts etc. Accounts can be opened by mail. Banking by phone and Fax available. The Extra Value Deposit Account comes with an International Debit card. Minimum balance is A$2,000. Other accounts as low as A$1,000. Accounts are also

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Offshore Banking and Investing in Privacy offered in Australian Dollars. International Corporate Debit Cards available to use with the added anonymity of an IBC. The Woolwich Guernsey PO Box 341 St Peter Port Guernsey Channel Islands Ph: 0011 44 1481 715735 Fax: 0015 44 1481 715222 Their International Account is an instant access account that can be opened with as little as A$1,000. It pays 6.40% PA. The Woolwich is a major British Building Society. The Abbey National Treasury International Ltd PO Box 545 Jersey JE4 8XG, Channel Islands Fax: 0015 44 1534 21615 They have a wide range of instant access accounts on offer. Offshore Plus is their Current Account which gives you Debit Card access. US dollar accounts are available. Also in the Isle of Man and all over the Caribbean. TSB Bank Jersey PO Box 597 8 David Place St Helier, Jersey JE4 8PY Channel Islands Ph : 0011 44 1534 503100 Fax: 0015 44 1534 503047 They offer Current accounts with Card and Chequebook access from a minimum 2,000 pounds opening balance. Offshore Premium Account, 2,000 pounds to open, tiered interest, Debitcash card called the TSB Bank card, VISA system includes sterling cheque book

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Invisible Banking Barclays Bank PO Box 784 Victoria Rd Georgetown, Jersey JE4 8ZS Channel Islands Phone : 0011 44 1534 880550 Fax : 0015 44 1534 505077 Email: [email protected]. This bank is one of the best offshore banks around with branches worldwide. They have a wide range of accounts, cards and services. If you contact them they will provide an offshore banking information package by mail.

Czech Republic The Czechs are taking over where the Austrians left off. This former Soviet bloc country has taken to capitalism like a fish to water. Communism was never welcome here (was it welcome anywhere?). The Czechs have granted nearly 200 banking licences but most of these banks are unregulated and should be avoided, but some of the regulated international banks are OK. The Czechs have been pushing Austrian style Sparbuch accounts with total anonymity for a while now, which does tend to make up for the lack of any tried and proven bank secrecy laws. If you want some more information on the Czech Republic’s emergence as a banking haven and more information on their anonymous accounts, turn to the chapter on Anonymous Accounts. The Czech Republic is rated as Recommended

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Offshore Banking and Investing in Privacy Bank Union Banka AS UL 30 Dubna C.35, 702 00, Ostrava, Czech Republic Ph: 0011 420 69 610 8111 Fax: 0015 420 69 211 586 Email : [email protected] A wide range of products offered including anonymous accounts

Denmark Denmark is probably the easiest place in the EU to open a bank account, which is great because it’s also very low profile. There are two banks there which have long courted the offshore/PT market. It was only in the past few years that they started requiring ID to open accounts. Now, their publicity material asks for passport or ID card copies, but we have heard on the grapevine that they have already started demanded notarisation of such ID copies. If you can get through without notarisation, open an account now while it lasts. Finansbanken is the new name for the Bank of Copenhagen, a small, single-branch bank located in that city which was until recently owned by the IKEA furniture retailing family. This is the bank which offers free SWIFT wire transfers, and which many PT service providers open accounts at for their clients, charging hefty fees. Well, you can either download the simple single-page form from their website or write and ask for a brochure, and you can easily do it yourself for free. Jyske Bank continues in the same vein. Jyske is one of Denmark’s largest retail banks and has much better internet banking than Finansbanken. Account opening is all carried out

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Invisible Banking by mail and you can either commence the process via the website, or request a brochure. Banks Finansbanken Lautrupsgade 7, Kalkbrænderihavnen, 2100 København Ø Denmark http://www.finansbanken.dk Jyske Bank Private Banking, Vesterbrogade 9, DK-1780 Copenhagen V, Denmark http://www.jbpb.com

Hong Kong Current bank secrecy is based on British common law, and on various Banking Ordinances, which stipulate penalties of up to HK$100,000 or 2 years imprisonment for violations. In practice, getting information from local revenue offices through official channels is possible and common. Foreign authorities are generally not given any information, but this is no guarantee. This applied up until the 1 July 1997, after that, it’s still not entirely clear, although local practitioners state that nothing has changed and investors are still welcome and that their affairs are still kept strictly confidential. Hong Kong is rated Fair Bank Hong Kong Shanghai Banking Corp. 1 Queens Rd Central, Hong Kong Ph: 0011 852 5 822 1111 Fax: 0015 852 5 810 1112

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Offshore Banking and Investing in Privacy Cash cards and a wide range of other services offered.

Isle of Man Like the Channel Islands, the Isle of Man is virtually autonomous in all things except defence and foreign affairs. It has its own parliament and legislates its own laws. The currency is the British pound. There are no taxes on foreign profits, income or capital gains. There are also no foreign exchange regulations. One of the main things that attract foreign investors to the island is the fact that the banks on the island tend to pay a higher rate of interest on the deposits. The banking system is well established with at least 50 banks operating including some of the biggest banks in the world. As far as bank secrecy is concerned, the Law of 1975 stipulates a fine of 400 pounds for passing on internal bank affairs to third parties. The banks are extremely guarded in giving out information to foreign tax authorities. Recently, there has been talk that the Isle of Man is not as secure as it once was. This is not quite correct. Disclosure to the British government of British residents’ accounts has been available for some time but it certainly doesn’t affect Australians, Americans or New Zealanders. In recent times, there has been some pressure brought to bear by the EU, but thus far this has little or no effect other than to enrage nationalistic Manx politicians who are screaming for total independence from Britain and to do what they like and tell the EU to mind their own business.

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Invisible Banking The Isle of Man is one of the most well established professional tax and banking havens in the world. It excellent communications and has a large number of banks incorporation agents on the island. Incorporation costs among the cheapest in the world.

and has and are

The Isle of Man is rated Excellent Banks Lloyds Bank PO Box 5, 7 Douglas St, Peel, Isle of Man UK IM5 1BA Phone: 0011 44 1624 638084 Fax: 0015 44 1624 843885 Cash Card (Visa Electron) comes with an Instant Savings Account. Singer and Friedlander – My top pick! Samuel Harris House 5-11 St Georges St, PO Box 197 Douglas, Isle of Man, IM99 1SN Phone: 0011 44 1624 699222 Fax: 0015 44 1624 699200 I have it on good authority, this bank is very good. You have probably never heard of them but don’t let that put you off. They offer accounts in all major currencies and open accounts from 2,000 pounds and provide a credit card (including Amex) as well as cheque book. Ask about their International Debit card and multi currency accounts. This bank may surprise you. Midland Bank PO Box 20, 10 Victoria St, Douglas, Isle of Man UK Phone: 0011 44 1624 623051 Fax: 0015 44 1624 625619

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Offshore Banking and Investing in Privacy High Interest Cheque Account, no minimum opening amount, provides an ETCPLUS Card, Eurocheque card. Instant cash throughout Europe. This account also offers a regular cheque book, a Eurocheque cheque book is useable in 40 countries in and around Europe, as well as direct debits and standing orders. Note that Midland Bank also has a branch in Jersey but this only offers a Eurocheque card for Eurocheques, not for cash withdrawals. Cater Allen Bank PO Box 62, Carrick House Circular Rd, Douglas, Isle of Man, UK Phone: 0011 44 1624 644 700 Fax : 0015 44 1624 644 763 Email: [email protected] Formerly the Tyndall Bank. The Corporate Visa Debit Card will only accept UK, IOM and Eire companies. Personal accounts are no problem. Another very good bank! Barclays PO Box 9 Barclays House, Victoria St, Douglas, Isle of Man Phone: 0011 44 1624 682 828 Fax: 0015 44 1624 682 899 Excellent range of products and services to the offshore investor. The Derbyshire PO Box 136 HSBC House, Ridgeway St Douglas, Isle of Man IM99 1LR Phone: 0011 44 1624 663 432 Fax: 0015 44 1624 615 133 e-mail: [email protected]

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Invisible Banking Fund Managers GAM Fund Management 11 Athol St Douglas, Isle of Man UK Phone: 0011 44 1624 632632 Fax: 0015 44 1624 625956 Mercury Fund Managers 12/13 Hill St Douglas, Isle of Man UK Phone: 0011 44 1624 671128 Albany International St Mary’s The Parade Castletown, Isle of Man IM9 1RJ Phone: 0011 44 1624 823262 Hansard International PO Box 192 Douglas, Isle of Man Phone: 0011 44 1624 688000

Israel Israeli bankers are quite conservative and have not yet embraced internet banking. However, it is very easy to open an account, either personal or corporate, at one of Israel’s largest banks the ISRAEL DISCOUNT BANK. ID in the form of a certified passport copy is required, but this can be conveniently dispensed with until you actually want to withdraw the money. Unlike in most other countries you can obtain an account with no ID, pay in as much money as you like, then activate the

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Offshore Banking and Investing in Privacy account by sending in a certified passport copy. Request nonresident opening forms by email or by mail from the dedicated office. Bank Israel Discount Bank Business Promotion, International Private Banking, 16 Mapu Street, Tel Aviv, Israel http://www.discountbank.net [email protected]

Liechtenstein This small central European country lies between Austria and Germany. If you are looking to invest less than US$250,000 you can forget Liechtenstein. The banks here only want to deal with high net worth individuals. If you are flush with funds, you will find the banking system very good even if there are only three banks. There are no taxes to speak of if your income has been earned outside the country, including no withholding tax. Another major benefit is the government guarantees all bank deposits, so if the bank goes broke, your money is safe as long as the government doesn’t go broke as well. Bank secrecy guaranteed by the same article (47, Paragraph 1 and 2, Law on Banks and Savings Banks) as in Switzerland. However, the group of people under obligation to maintain secrecy is bigger in Liechtenstein - even liquidators, the tax commissioner and other "representatives" belong to this group. The latter could be anybody, eg. an indoor plant supply person putting pot plants in the bank or the manager of a computer centre working closely with the bank. Also, the

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Invisible Banking complex international agreements which undermine the Swiss system are not applicable to Liechtenstein. According to Liechtenstein's Revenue Code (Article 9, Paragraph 3) details regarding Holdings and other companies are subject to bank secrecy and nothing can be given out. Bank secrecy may only be lifted when dealing with money that is derived from serious crime such as drugs, robbery etc. Liechtenstein has often come under fire as a result of its liberal taxation and banking secrecy. It has been accused of harbouring "flight capital," money that is taken out of a country to get it beyond the reach of local authorities. Banks will not accept money from any country where specific laws prohibit the export of capital. But Liechtenstein maintains that in the case of European Union nations, where no restrictions on the transfer of capital exist, no flight capital exists. Switzerland has been pressuring Liechtenstein to conform to its regulations on money laundering, but the country has been resisting the pressure. Liechtenstein has had its own strict laws against money laundering in place for decades. Liechtenstein's banks will not accept money made from illegal activities. Since 1989, they have stopped accepting foreign funds from offshore funds unless they are represented from an attorney registered in Liechtenstein. Even Swiss lawyers are not acceptable. A potential problem could be the language barrier, German is the official language and English is not widely understood. Keep this in mind before choosing Liechtenstein. In all other respects this is a top banking haven. US$60 billion resides in the local banks. Liechtenstein is rated Excellent

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Offshore Banking and Investing in Privacy Bank Liechtensteinische Landesbank Stadlte 44 PO Box 384, SL-9490, Vaduz, Liechtenstein Ph: 0011 75 6 88 11 Fax: 0015 75 6 83 58 Wide range of services available. English spoken. Fund Manager and Bank AVG Asset Management Triesen, 9495, Liechtenstein Phone: 0011 41 75 3993845 Fax: 0015 41 75 3993846 AVG have a wide range of services available.

Luxembourg Luxembourg is one of the world’s fastest growing offshore (even though it is landlocked) financial centres. Situated between France, Belgium and Germany, this founding member of the European Union has, to some extent, gone against the grain in regards to its high taxing neighbours. It has encouraged funds from around the world by offering no taxes on income produced outside the country. There are also no withholding taxes on dividends or interest. There are over 230 trading banks in Luxembourg holding close to US$200 billion in deposits. It also is the most popular place in the world for fund managers. Pressure from the EU and the international community has made sure the criminals and money launderers stay away. Bank officers can be held responsible for accepting criminal money, so this has developed into paranoia among the local bankers. The result

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Invisible Banking being, quite a lot of questions asked about the origins of your funds. Bank fees are about half the price of Switzerland for the same level of service. It is also a requirement that all bank officers in all banks be fluent in not only French, but also German and English. This makes life a lot easier if you choose Luxembourg as a place to invest. All deposits are guaranteed by the government up to a limit per account of 500,000 Luxembourg Francs. Bank secrecy has been protected since 1981 not only on behalf of private persons, including money hungry heirs (bank employees called to the witness stand in inheritance proceedings need not testify) but extends even to foreign authorities in tax evasion cases. (They refer to Article 2 of the European Legal Assistance Agreement: "Legal assistance may be denied in cases when the request is made with regards to criminal acts which are seen as fiscal crimes".) With this the protection, Luxembourg is even better than Switzerland. Only in the case of serious crimes does the European Law Enforcement Treaty (of which Luxembourg is a member) compel it to give out information. Even in this case, it is not a judge who has to make the final decision before the account details can be disclosed. Without the express approval of the Minister of Finance, nothing can be done. Having said all that, there are changes afoot! Pressure from the EU is building and to their credit, they have not yet done so. Luxembourg is the most privacy-oriented country in Europe when it comes to banking, much more privacy-oriented than even Latvia or Switzerland. However, relying on Luxembourg bank secrecy would be a dangerous game these days as they will almost certainly be forced to sell out in the not too distant future. When opening an account in Luxembourg you will be asked, as we said before, about the origins of the money and you will be expected to have a letter of reference from a

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Offshore Banking and Investing in Privacy solicitor or banker as well as be required to show personal identification. Once this is done, your details will be totally confidential, regardless of who is asking. Luxembourg is rated Excellent Banks Fortis Bank 12-16 Avenue Monterey L-2163 Luxembourg Phone: 0011 352 46 800 437 Fax: 0015 352 46 800 697 http://www.ebanking.lu The good thing about this bank is the fact they have internet banking and a very wide range of offshore services available. My sources have told me this is an excellent bank. Cortal Bank 10, rue Nicholas Adames BP 390, L-2013 Luxembourg Ph: 0011 352 25 37 25 Fax: 0015 352 25 37 38 A wide range of offshore services by the Cortal Bank. Funds Managers Templeton Investment BP 169 L-2011 Luxembourg Phone: 0011 352 466 6671 Fleming Fund Managers European Bank and Business Centre 6 Route de Treves L-2633 Senningersberg Luxembourg Phone: 0011 352 3410 3020

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Invisible Banking Fax: 0015 352 3410 2053 Flemings have some excellent funds with excellent yields. Very highly regarded.

Panama Popular years ago as a place to hide money, these days it’s still popular as a tax haven. As a banking haven, I have reservations, even though some of the biggest banks in the world are there. The reason I have concerns is because it wasn’t that long ago that the government was run by the corrupt Manual Noriega and the place was invaded by American marines. This isn’t a good report card. On the other hand, it is quite easy to open a bank account and get hold of a credit card. As far as bank secrecy goes it appears pretty good. Bank Law No. 17 enacted in 1959, states that bank employees, who reveal the existence of bank accounts, account balances or the identity of account holders, with up to 6 years in jail, and fines up to US$10,000 or both. Even local authorities have no right to information except in criminal cases. Foreign authorities as a rule, will not be given any information. Panama is rated as Fair Bank Banco General 5 B South Ave and Aquilino de la Guardia St Casa Matriz, Panama Ph: 0011 507 265 0303 Fax: 0015 507 265 0206

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Switzerland In recent times it has 'fallen from grace' due to it handing over Nazi records and those of criminal figures. While this may seem morally correct, is it the start of something bigger? It would seem so. Over the last few years there have been a reported 500 to 1,000 breaches of Swiss banking secrecy each year. Swiss banking secrecy was first made law in 1934 due to Nazi Germany making it illegal to have foreign bank accounts. This was a way to ensure all the German money in their banks wouldn’t disappear overnight. Since that time the law has been amended and improved, until recently when the US authorities started attacking the Swiss over hiding tax evaded funds. This has resulted in a watering down of the laws by way of international tax treaties with the US, Australia and many other countries. Even though the Swiss stand firm when it comes to tax evaders, because tax evasion is not a criminal offence in Switzerland, the US authorities have “surprisingly” found that these same people have been involved in “criminal activity” (other than tax evasion), and they have been able to get access to the information that way. This is unfortunately the way of the future. Governments accuse people of alleged serious crime, and the banks cough up all your information. On the other hand, if they use this little trick too often, the banks will start to see through their little scam and start requesting to see evidence of such crime being committed or even asking whether you have been charged or not. This may frighten the authorities off, particularly if they have to charge you with crimes you didn’t commit and they know it. If this ever happened, and keep in mind this is only being done by the US government, you could sue the government and in addition, bring them publicity that nightmares are made of. I wouldn’t be

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Invisible Banking too concerned about this change in events, I think it will be short-lived and only ever used on “big fish” that really have committed some sort of offence. Cash Transactions of over SFr25,000 are reported to the government. Swiss anonymous numbered accounts are also a thing of the past. It is also increasingly difficult to open an account with more than 100,000 SFr cash. Switzerland, while being very efficient and having a certain degree of its legendary bank secrecy, in fact has two major problems. The first, is the accounts in Switzerland are very expensive to operate. You think bank fees in Australia are a problem! The other problem is that they impose a 35% withholding tax on your interest. The only way around this is by opening a fiduciary account. I will explain what a fiduciary account is (as well as all the other accounts) in the next chapter. There are 600 Banks in Switzerland, some are easy to get along with, some aren’t. Some banks will require massive minimum deposits and others are happy with a few dollars. If you really want a Swiss bank account, I suggest you shop around for the best deal, and a bank that is willing to deal with you. It helps to mention you are not American, the IRS gives them the jitters. Switzerland is rated Highly Recommended (but costly) Banks Robeco Bank 16 chemin des Coquelicots, Case Postale CH-1215, Geneva 15 Switzerland

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Offshore Banking and Investing in Privacy Phone: 0011 41 22 939 01 39 Fax: 0015 41 22 341 13 92 Personal accounts start from US$25,000. The good thing about this bank is the fact that they also operate the superb Robeco Fund. They also speak English. Bank Leu AG Bahnhoffstrasse 32 Zurich, ZH-8001 Switzerland Phone: 0011 41 1 219 1111 Fax: 0015 41 1 219 3197 BSI – Banca della Svizzera Italiana PO Box 6901 Lugano Switzerland Ph: 0011 41 91 809 31 11 Fax: 0015 41 91 809 36 78 Scweizerische Bankgesellschaft Bahnhoffstrasse 45 8021 Zurich Switzerland Ph: 0011 41 1 234 11 11 Fax: 0015 41 1 236 51 11 Lloyds Bank PO Box, Geneve 11, 1211 Switzerland Phone: 0011 41 22 307 3333 Fax: 0015 41 22 307 3424 Being a British bank they may not have quite the arrogance the Swiss banks seem to demonstrate when dealing with “small” depositors. Give them a try.

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Invisible Banking Credit Suisse Postfach 1 8070 Zurich SKA, Switzerland Ph: 0011 41 1 212 16 16 Fax: 0015 41 1 333 25 87 http://www.creditsuisse.ch Zuger Kantonalbank PO Box 6301 Zug, Switzerland Ph: 0011 41 41 709 1111 Fax: 0015 41 41 709 15 55 Zuger provides internet banking. SWISSNETBANK.COM AG http://www.swissnetbank.com This is an internet only bank but gets our highest recommendation for being the one notable exception to the general rule of Swiss banks being stuffy and bureaucratic when it comes to account opening. If you don’t mind paying an intermediary to handle the legwork and bureaucracy, an excellent but rather expensive one is MICHELOUD AND COMPANY on the web at http://www.swiss-bank-accounts.com

Turks and Caicos The Turks and Caicos are a group of islands in the Caribbean. They are a self governing British colony. In recent times, they have enacted the Confidential Relationships Ordinance. The bank secrecy laws in the Turks and Caicos are believed to be (according to some experts) the toughest and

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Offshore Banking and Investing in Privacy most solid in the world today. The US authorities have had no luck trying to make any impression on the local banks. The Turks and Caicos have signed no treaties with any country and it would appear they have no intention of doing so in the future. There are no taxes of any kind imposed on foreign investors or foreign income. The local currency is the US dollar, which makes the place even more attractive a place to invest or open an account. You can expect a few questions from the bank when opening your account as they are determined to only attract non-criminal funds. There are some major international banks now established on the islands. It is also a popular place to incorporate IBC’s and to form trusts. The Turks and Caicos are rated Recommended Bank Barclays Bank International PO Box 61, Cockburn Town Grand Turk, Turks and Caicos, British West Indies

Internet Banking In recent times, I have received many requests for information about banking on the Internet. And as some of you may well know, there has been a mini-boom of Internet Banks starting up all over the world. Some of them are just “add-ons” to existing banks and others are pure internet only banks.

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Invisible Banking One in particular that has attracted a lot interest (sorry about the pun) is a bank called Paritate Bank in Latvia. It has attracted a lot of funds from Australian investors mainly because of the way it is marketed, but I won’t get into that. Personally, I don’t like it. It reeks of future problems. I won’t go into them all now but the major one is that is in Latvia. Hardly a stable place to put your money. If Internet companies are in trouble in Australia and the USA due to lack of profits, what are the chances of an Internet company getting into trouble in Latvia? Are there government guarantees on your deposits? What’s the Latvian economy like? What is the financial strength of the bank? Too many risks in my opinion. The name is also a worry, it seems it is a play on the name Paribas Bank, which is a well-respected European Bank. However, there is an alternative. The Bank of Ireland has started up its own pure Internet Bank. It’s called Fsharp Bank (www.fsharpbank.com). It is registered in the Isle of Man and you will need an offshore company to open an account. However, all reports about it have been good. They also pay 10%pa on some accounts, an excellent return from a bank. Fsharpbank.com Ph: 0011 44 1624 644300 Email for 10% account: [email protected] Website: www.fsharpbank.com Another good Internet bank is USABancShares.com. They have recently worked with rock star David Bowie in launching his new Internet Bank, www.bowiebanc.com. Both these banks offer above average returns on deposits and well worth looking at. If you would like a good bank, offshore, that has good Internet facilities for simple offshore banking, try: www.natwestoffshore.com

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Offshore Banking and Investing in Privacy Ph: 0011 44 1534 282 164 Fax: 0015 44 1534 282 665 They are based in Jersey and part of the giant Nat West Group.

Privacy Tip

When contacting your bank or anybody else offshore, never use your office or home phone. These phones leave a paper trail (your phone bill) that can be traced. Always use a phone card at a public phone, these are untraceable….at the moment. The FBI in the US wants phone card issuers to issue cards that record the actual details of the calls on the card. Just to be on the safe side, once the value of the card is used, destroy the card.

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Chapter 5 What Type of Accounts are Available? Most of the havens will have similar services and products. They also use a totally different terminology to describe accounts to that used here in Australia. First, let’s look at the Anonymous Accounts that are still available around the world today and move on from there.

Privacy Concern! All non-US banks operating US$ accounts are required to report all account details to the US government. If this concerns you, it would probably be a good idea to stay out of US dollar accounts and go for another currency instead. Stay out of Australian dollar accounts for similar reasons.

Now let’s look at the different accounts that are available to offshore investors. The first is the famous or infamous anonymous accounts.

Anonymous Bank Accounts Important Note Lance Spicer and the publisher, Trident Press Pty Ltd do not condone or encourage the use of Anonymous Bank Accounts for criminal activities or for tax evasion. The purpose of these

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Offshore Banking and Investing in Privacy accounts should be for financial privacy and confidentiality only. In recent years there has been a lot of talk about these anonymous Austrian bank accounts, which as I said earlier are now defunct. These days other countries are getting in on the act. The EU and the OECD are doing their best to stop these accounts. The reason is, these accounts have been used by criminals for many years to hide money and because the owners of the accounts are virtually untraceable, the money goes unrecovered. These accounts usually require you to go to the actual bank in the jurisdiction involved and open the account personally. In the case of the now defunct Austrian Sparbuch, you had to be an Austrian resident to avoid having to identify yourself. The rules only applied in relation to actually opening the account, once it’s open you can do what you like. Many of the anonymous accounts are best opened through an agent as you will not need to identify yourself when obtaining the account. These agents have contacts either in the bank or within the jurisdiction and they are the ones that open the account on your behalf. Fees range from US$250 to US$500 but they are far more convenient than jumping on a plane and doing it yourself. Generally, all the banks require you to identify yourself, but they don’t usually take copies of this information nor do they put the information on bank records. The accounts are totally confidential. The problem with the bearer accounts is that if you lose the actual bank book or give it to someone else, the person in possession actually owns the money. You must ensure the actual bank book is secure in a safe or safety deposit box.

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Invisible Banking Let’s have a look at each of the more jurisdictions still issuing these anonymous accounts.

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Austria Up until recently the only true anonymous bank account was the Austrian "Ueberbringersparbuch" or bearer savings account book. A bank account opened for you, without even the bank knowing your identity. However, since Austria joined the European Union in 1995, it has come under extreme international pressure from the EU and the US to abolish the anonymous savings account. While the Austrian government has tried to resist this pressure they have unfortunately had to make some concessions. In 2000, the totally anonymous Sparbuch slipped into history and now it is no longer anonymous and must have an name on it and be identifiable through the bank. However, this doesn’t completely undermine bank secrecy in Austria. Other concessions made came in to effect in July 1996 when the anonymous "Wertpapierbuch" (securities portfolio book) was formally abolished in its previously anonymous format. For any assistance with Austrian banking, contact: Swiss Overseas Consultants In – Travaux Treuhand A.G. Residence Park – Industriestrasse 16 CH – 6300 Zug, Switzerland Fax : 0015 41 41 728 0809 Approx US$300 The proprietor of Swiss Overseas Consultants, Reinhard Stern is a friend of mine and a former Scope writer. I thoroughly recommend him. He has many good contacts in Switzerland and Austria and should be able to assist you on a range of banking issues.

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Offshore Banking and Investing in Privacy Bank Raiffeisenbank Kleinwalsertal AG Anlageberatungs-Center Walserstrasse 43 A-6991 Riezlern Austria

Czech Republic With pressure coming to bear on Austria, its neighbour the Czech Republic will probably take over as the next major anonymous banking haven in Europe. This former Warsaw Pact communist state (ex Czechoslovakia) has been vying to cater to the Eastern and Central European financial markets ever since communist rule ended. It is not a member of the European Union yet, but it is currently negotiating membership. Unfortunately, the EU is getting itself into a bit of a financial mess and it would only make things worse letting some of these economic lesser lights into the union. So, in reality it will be years before the Czech Republic is admitted. Therefore, very little pressure is being exerted on the Czechs in relation to their banking practices. The basic mechanism of the anonymous Czech savings account is very much like the former Austrian Sparbuch. The bank will not know your identity. The account is protected by physical possession of the account book, which is of course also a disadvantage if you happen to lose it. You have a password and this prevents any pilfering of your funds if you do happen to lose the passbook. The account is interest bearing and pays higher interest than its Austrian equivalent, up to 11% PA. Funds can be transferred from all over the world to the account

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Invisible Banking Prices for these accounts is around US $300 from most agents. Of course if you open an account in person, there is no charge by the bank. Your password can only be changed in person at the bank. All you have to do is prove you are in possession of both the book and your old password. Changing your password would obviously be a problem living in Australia, so maintain absolute secrecy of your password and don’t lose the book. Any foreigner can open a Czech savings account. They are also exempt from tax if they don’t reside in the Czech Republic. However, foreigners must identify themselves when opening such an account, which is exactly the same as Austria. This restriction applies only to actually opening the account, not later, when depositing or withdrawing funds. If you use an agent, no identification is required as the agent will be a Czech resident or citizen. They simply give you ‘their’ book for a payment. Depositing into your account is easy, either by electronic transfer, mailing a cheque or money order, or by turning up at the bank and depositing cash. Funds will be converted to local currency, the Czech Crown - a stable denomination linked at a fixed rate of 25% to the German mark and 75% to the US dollar. Withdrawals are a little more difficult; you must do those in person or by using a representative. They will have to show the physical savings account book and the password. If you wish to order one of these accounts, contact these banks:

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Offshore Banking and Investing in Privacy Banks Czech Export Bank Havlickova 3 CZ-110 00 Prague Czech Republic Ph: 0011 42 2 2167 3220 Fax: 0015 42 2 24214880 Bank Austria Revolucni ulice 15 CZ-110 15 Prague Czech Republic Ph: 0011 42 2 24892170 Fax: 0015 42 2 24892180

Croatia The Croatian Deposit Account works just like the Czech anonymous account. You can get a passbook and password as well as instant access. But you also now have to go in person to withdraw money, which can be a bit of a pain. Money can be deposited in cash, by cheque or money order or by electronic transfer. The fee for processing checks is about 1.5% of the value of the cheque and there is no minimum, so it is feasible to deposit even small cheques if you wish. Anyone, even foreigners, can open such an account without ID or reference as long as the account is a bearer account. Naturally, bearer accounts are fully transferable to third parties without notifying the bank who, after all, does not know the identity of the account holder. If you want a name on the account, they will want to see personal identification. The main advantage of this account over the now defunct Austrian sparbuch, is that you can deposit funds in any

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Invisible Banking convertible currency without a currency change. In effect, you have a multi-currency deposit account and are free to deposit and withdraw in any currency without charges or currency conversions. And the interest rates are higher than in Austria, too. Like all the accounts, they cost around US$300 each. They can be purchased from: Agents PT Shamrock Suite # 79, 184 Lower Rathmines Road, Rathmines Dublin D6, Ireland Facsimile 0015 353 1 633 5083 E-mail: [email protected] http://www.ptshamrock.com/ Bank Croatia Banka dd Kvaternikov trg 9, 10000 Zagreb Croatia Ph: 0011 385 2391 111 Fax: 0015 385 2332 470

Lithuania The Lithuanian Certificate of Deposit is a rather strange banking instrument. In recent years new, non-communist banks have been established. They lend out hard currency at nearly 70% and pay depositors up to 35% pa. This gives me the distinct impression they have a bit of a problem with

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Offshore Banking and Investing in Privacy inflation and their economy, but this shouldn’t put you off considering this style of investment. In order to take advantage of these rates, you have to sign a contract (which the bank will send you) for a minimum period of 3 months and a minimum amount of US$100. The bank does not ask for a copy of your passport and the account is opened by mail. You may be asked for proof of your signature. One thing you must keep in mind is that when the period is up, the bank will return your deposit plus interest by cheque in your name or transfer it to a nominated bank account. So using fictitious names is difficult. On the other hand, once this account has been opened with a smallish sum and without identification, you can then in turn use it as a reference to open another account with a bank, which requires references. In my opinion, I would probably stick with the Czech products for safety and reliability. You know what they say about risk equals return. Lithuania, like Latvia and Estonia are all a little risky. Bank Snoras Bank A. Vivulskio 7 2600 Vilniaus Lithuania Ph: 0011 370 2 231 456 Fax: 0015 370 2 231 156

Current Accounts This is the most common type of account you will find with most of the banks. You will find they often come with a

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Invisible Banking cheque book facility and a debit card. In certain circumstances you can also obtain a credit card, but the bank may request a substantial Cash Deposit as security for the credit card. The advantage of these accounts over most of the others is, they generally only have a smallish opening balance, and in some cases as low as a few dollars. But don’t expect mountains of interest, these accounts are notorious for their low interest rates and sometimes high fees depending on the jurisdiction you choose (Switzerland and Liechtenstein are the worst for fees). Some banks will allow you to have a multi-currency account. This is an account that allows you to deposit and withdraw in a number of different currencies. The fees on these accounts can be a little higher.

Deposit Accounts Deposit accounts pay higher interest and are more suited as an investment rather than a trading account. If you are after a trading account, the Current Account is what you’re after. The money in the Deposit Account will generally require some degree of notice before it can be withdrawn. The opening balance for these accounts usually start at around US$10,000 and go up from there. It is a good idea to keep the deposit in one of the world’s major currencies because the interest rate will be better. If you are considering opening a current account as well because you want a debit card, you may be required to open one of the deposit accounts anyway. The reason being, that the bank will require a cash deposit as security on the debit card. A better option may be to consider the Twin Account, it offers greater flexibility.

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Fiduciary Accounts Fiduciary Accounts allow you to invest in any of the world’s major markets, even Australia, but utilise the secrecy and privacy of the jurisdiction where you have opened the account. In addition the bank actually invests in it’s own name on your behalf allowing even more anonymity. As far as anybody is concerned it is the bank investing, not you. Opening deposits can be high depending on the bank and interest will be a little lower. Fees of course will be higher for this type of service.

Certificates of Deposit These accounts offer the highest level of interest available. They are issued in a particular currency and are then traded on the Eurocurrency market. They come in bearer form and can be traded freely. That means they are virtually an anonymous investment because whoever has possession of the certificate is the owner. They can have a maturity from 24 hours up to 5 years and the CD’s are traded quite a bit on a secondary market due to their bearer format. The banks also don’t generally charge a withholding tax on these accounts.

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Invisible Banking Twin Accounts Twin Accounts are a combination of the Current Account and the Deposit account. They attract a higher interest rate but add that to the convenience of the Current Account. Most of your funds are kept in the Deposit Account and when you need funds in your Current Account the funds can be automatically transferred across. The advantage of the Twin Account over two separate accounts is that you physically don’t have to transfer funds across to cover withdrawals and such like. The Twin Account is regarded as one account with a common account number. They are very convenient and highly recommended.

Investment Accounts Investment Accounts are generally only on offer with the larger international banks. They allow you to invest in commodities and equities. They often come in the form of a mutual fund which in turn invests in shares, futures, fixed interest and commodity investments all round the world. They generally have a high yield. The opening balance of these accounts can be as high as US$50,000, so shop around, all banks have different entry levels. Also, before you opt for this type of investment, get some literature from the bank first to make sure the investment has been performing well over the longer term. Entry fees may also be applicable.

Precious Metal Accounts Like the Investment Accounts, these investment accounts are managed by your bank or by their investment management

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Offshore Banking and Investing in Privacy subsidiary. These accounts allow you to invest in gold and other precious metals. The actual gold is often stored in the bank and they may charge you a fee for storage. Be careful when it comes to buying gold. If you don’t know what you are doing, you could lose a lot of money. Gold doesn’t appear to be the good investment it once was.

Credit Cards, Debit Cards & Cash Cards Quite often when you open a substantial account with a bank, say over US$5,000, you will be offered a Debit Card or Cash Card. Credit cards usually require a higher deposit. The Debit Card is one of the most convenient ways to withdraw cash from offshore accounts. The introduction of the ATM has changed the way we bank. It allows banks on the other side of the world to be almost as convenient as the one down the street. I recommend everyone who banks offshore should acquire a Debit Card.

How to get the best out of using Cash, Debit and Credit Cards When establishing your offshore bank account make sure you can have card access to your cash. This is a point I should reiterate when it comes to Austrian Sparbuch accounts, most of them are inconvenient to withdraw from due to the fact that you can’t attach a cash or debit card to most of them. And in the instances that you can, they usually don’t work outside of Austria. Where current accounts have been established with offshore banks, the easiest way to withdraw funds onshore is via a bank issued Debit Card, Cash Card or a Credit Card that can be used here in Australia and overseas. But note, for the

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Invisible Banking card to be any good to you, it must be connected to one of the worldwide card networks Cirrus or Maestro (Visa and MasterCard). If it isn't, it won't work at ATMs in Australia. Most banks offshore make it pretty clear that their cards work in thousands of ATMs worldwide but make sure by asking before proceeding with the account. Let’s look at the different cards available from offshore banks: Cash Cards You can use cash cards to withdraw cash from ATMs and you can withdraw about $500 to $1,000 per day, everyday, or about $180,000 to $360,000 per year! A good point about Cash Cards is that no credit checks are necessary. With a card you can get to your offshore money as easily as going to the local ATM. Keep in mind when using ATMs, that the only thing that's recorded, is your Cash Card number, not your name. It only recognises the issuing banks ID number and the account number. All transactions involving the onshore bank and the offshore bank are grouped together and funds are transferred between banks in one lump sum via the banks clearing system at the end of each day. The following day your offshore bank debits your account. Meanwhile, the cash-dispenser clearing system isn't the least bit interested in your withdrawal, it's only interested in recovering the cash (and the cash of thousands of other withdrawals) from your offshore bank. Even if someone did want to know who was using this card in Australia, they couldn't find out, because of the overseas bank secrecy laws involved. Cash Cards are global and most ATMs in Australia will allow the use of offshore issued cards from major banks as long as the offshore bank is connected to Cirrus or Maestro.

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Offshore Banking and Investing in Privacy Debit Cards These are becoming more and more popular here and overseas, as people become wary of credit. They work in much the same way as a credit card, but instead of you receiving a bill, they take the money from your bank account (which, of course, is offshore). They are accepted in exactly the same way as credit cards ie. you can use them to purchase things and also use them in ATMs to obtain cash advances. The downside is that when you use them to purchase goods onshore, the merchant will record your name on the voucher, and this is generally regarded as a no-no due to the paper trail you create. When onshore use it in much the same way as cash card, and when offshore use it any way you want. The Debit Card is probably the most popular product offered by offshore banks and a must for all offshore investors. Credit Cards Generally, the same as debit cards, except with one exception, the offshore bank may want a fairly large cash deposit as security to cover the possibility that you may not pay the bill, and being in Australia it makes their job of recovery very difficult. Totally Anonymous Credit Card A pretty good Card product that I have found, although a little expensive. This type of card allows you to access cash anywhere in the world without the need for ID or exposing yourself to any scrutiny. The advantages are: No identity cards need to be shown No corporate documentation is required

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Invisible Banking No one aside from yourself can find out where the money is or, or how much there is in the account If the card is lost or stolen, no one else can use it as it can only be activated with a pin number. The Bank does not know your identity. You can raise or lower the amount in the account at any time. This ATM card makes it easy to supply a dependent, friend, relative anywhere in the world with a weekly, monthly or annual allowance. You can give this rechargeable ATM card to an employee you send abroad to cover his expenses. It is a plastic "smart" card where the person setting it up decides how much money to back the card with, and whether or not to replenish funds. Stringent banking secrecy No signature required You remain unknown to the bank as the agent is in fact your sponsor and they actually open the account on your behalf and keep your details secret. Extremely low profile No reporting requirements Connected to Visa or MasterCard networks Important to note: This ATM card may not be used for laundering money or tax evasion or for any other purpose that may be deemed criminal. Under the new international "know your client" regulations, the agent will need your brief biography. This information will remain confidential. The bank holding the funds does not see nor do they ever have a copy of your passport or signature. You can if you wish, make cash deposits to your account in person at any of the branches of any international bank. You can even arrange to pay cheques into your account or transfer money.

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Offshore Banking and Investing in Privacy In most countries, there is a limit of approximately US$500 per card use. But there is no daily limit or limit on how many times you can use the card to withdraw cash. Generally speaking, you can empty out your account at any time. A minimum balance of US$1,000 is required to avoid fees and charges. Total Cost? Around US $4,000, which includes opening deposit of US $1,000. PT Shamrock PT SHAMROCK Suite # 79, 184 Lower Rathmines Road, Rathmines Dublin D6, Ireland Facsimile + 353 1 633 5083 E-mail: [email protected] For similar products.

Other Card Based Products Axxess International is by far the biggest issuer of offshore secured cards, and they have slightly more developed facilities including instant money transfers worldwide, for example. Their platinum card offers airport lounge access which is a valuable perk for frequent travellers. Their other offices include Winchester in the UK, Switzerland and Hong Kong. The Winchester connection makes it easy for UK cardholders to settle bills without the need for international wire transfers. If you wish to request a brochure and application forms by mail, contact: Axxess International (UK) Limited Southgate Chambers, 37-39 Southgate Street, Winchester, SO23 9EH, England http://www.axxess-international.com

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Invisible Banking Phone: 0011 44 1962 849097 Fax 0015 44 1962 867367 HORIZONCARD is based in Turks and Caicos Islands and can be found on the web at http://www.horizoncard.tc They are a smaller and newer player but offer similar services and similar quality to Axxess. Both the above companies are also willing to issue and administer co-branded cards. So if you are thinking of launching your own bank, you could give them a try.

Passthrough Accounts You may have heard of a “pass through account” which is the bridge between your offshore and onshore identities. You cannot simply wire money from onshore to your offshore account, because this creates an indelible paper trail and compromises your privacy. However, many people have not yet caught on to a problem which has come up recently. Namely, that the same risk exists when using your credit card in your “onshore” country. The subpoenas issued against MasterCard and American Express in Florida, USA specifically targeted Caribbean offshore cards, but I have heard that similar actions against jurisdictions such as Latvia are already underway. Therefore, if it’s important to you that your private account remains a secret, we suggest you avoid any and all plastic cards from that bank. If you need access to your money, open an account at a different bank with a card, and transfer funds on to the card account as necessary. Keep in mind, that a pass through account in your name will still attract an obligation to pay tax on the interest in most countries. Above all, keep it legal!

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Privacy Tips when it comes to Cards Before you obtain one, incorporate an IBC, and have the card issued in the company’s name. This will reduce the chance of anybody seeing your name on the card. In addition it muddies the water even more for anybody trying to track your account down. make sure it’s either Visa or MasterCard linked so it can be used everywhere in the world. Don't use them for large purchases as you may be remembered. Don't use them in places you're known or close to home. Only use them Offshore for purchases unless it Can’t be helped.

A Final Warning Be careful about carrying these cards around with you in case you lose them or you have an accident and somebody that shouldn't, notices your card. It sounds paranoid, but accidents can happen. Keep it hidden in a safe place. Trust nobody! Cards should be used to provide privacy and confidentiality and not for the purposes of tax evasion or avoidance.

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Invisible Banking Secured Credit Cards The anonymous or anonymised credit card is an excellent instrument of privacy protection. Typically, these will be "secured" cards with a credit line limited to your deposit. (They are also widely referred to as "debit cards".) If you have some money stashed away offshore, it can be very handy to have an offshore credit card to go with it. That way you have easy and ready access to your funds without incurring exorbitant banking charges or leaving glaring paper trails. However, a secured card is not yet by definition an anonymised one. Normally, it will still carry your name. If you don't want that for whatever reason, you may wish to opt for an anonymous credit card instead, made out in a different name, or even use the name of a bearer share company (IBC). Anonymous Corporate Credit Cards Before I begin, this is second hand information, that I’m told is reliable and legitimate, but I must admit I have not had a lot of experience with this product. Many people have asked me about the various credit card programs around and have asked me which ones are legitimate and which ones aren’t. I answer ‘I don’t know’. You see there are hundreds of these mail order credit card companies around, You know the ones, “No credit check, bankrupts welcome, no questions asked, send money to……”. I believe most of these are a sham to extract a fee from you and then tell you weren’t accepted

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Offshore Banking and Investing in Privacy and your fee was non-refundable (that was in the fine print). Any bank, worth its salt, is not going to give a bad credit risk a credit card, simple as that. If you think they will, you also believe in fairies. But, I have heard of a company in Malta that does issue anonymous credit cards in the name of your IBC or any other name if you wish, but they do have a downside. To obtain this card, you will not be asked for ID, credit references or anything else. Not even an address or phone number. Evidently, the company applying on your behalf has informed the issuing bank that you are an employee and that you will require a credit card and that they will be responsible for your debt. Unbelievable isn’t it? Read on, it will start to make sense in a moment. As the bank is guaranteed to get it’s money the applications are not scrutinised, because the company involved has a good repayment record. How does this company do it? By charging a small fortune. All fees are charged in British Pounds. The cost is as follows: Establishment fee GBP1,000 Yearly administration fee GBP175 Security deposit fee, which represents 200% of the credit limit. (The minimum limit is GBP 1,400), therefore the minimum security deposit fee is GBP 2,400. That means the minimum total fee to have one of these totally anonymous credit cards is 3,575 pounds. As you can see the company involved is well and truly covered

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Invisible Banking if the cardholder does something stupid or defaults. Should the cardholder exceed his limit or not pay his bill on time, I’m sure the card would be cancelled in the blink of an eye. The cards are applied for by mail and you must pay by International money order or bank draft. The card is sent to you a month later by registered mail. Contact with this company with the curious name of Sinbad, can only be made through their agent. “Henry Morgan” PO Box 191, St Peter Port Guernsey GY1 4NL Channel Islands UK You must send a letter requesting information in an envelope marked ‘Sinbad’ and send that to the above address and they will pass it on. You will then be contacted by return mail with details. Advice on Cards My advice when it comes to credit, cash or debit cards is, use a recognised bank, have the card facility attached to your Current Account and use the bank secrecy laws in the particular jurisdiction to maintain privacy. If you wish to open the account in the name of an IBC, have the cards issued in that name. Make sure the bank accepts IBC’s registered in the jurisdiction of your choice before you go ahead. If a recognised bank will not give you a credit card or if you have to pay a fortune for one, maybe you really shouldn’t have one …should you?

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Chapter 6 How to make your offshore banking work…… and keep it private We have talked about rules and regulations, jurisdictions and types of accounts that can be used offshore. It is now time to put it all into practice. I have assisted many people in putting together private offshore banking structures and one thing I have noticed is there tends to be a fair bit of similarity in all the structures put together. The reason for this is most people want the same things. They want: Absolute privacy Easy to establish Cost effective Produces a good return Efficient and easy to use And safe! All reasonable requests, and with the right approach, are easy to achieve!

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Invisible Banking Maintaining Secrecy The most important aspect is to maintain absolute secrecy. Don’t tell anyone you have established an offshore bank account and don’t flash your shiny new debit card to anyone. This is a temptation most people find hard to resist. It is human nature to show someone how smart you are by having your cash invested offshore. Sometimes people like to shock others by exposing how sneaky they are. Resist the temptation. These people will talk, as they will have absolutely no regard for what you have spent time and money setting up. It only takes one person to get ‘all funny’ and start making phone calls to all and sundry. Trust nobody. Make sure all documents, passbooks, cheques, letters etc are stored in a safe place well away from prying eyes. Don’t make phone calls or send faxes from home as this leaves paper trails leading straight to your ‘stash’. Use phone cards at public phones, use post office or business bureau faxes. When using somebody else’s fax, make sure you use a blank cover sheet so they don’t have a little read to whom you are sending your fax. Don’t use a post office or business bureau that knows you or is in your area. It’s too easy for them to work out who you are. If possible use encrypted e-mail as much as possible, this is fairly safe and doesn’t leave a paper trail that’s easy to follow. When sending mail, don’t put return addresses on your letters. Again, this is another give away, if the mail is returned to you undelivered. Never have mail from your bank delivered to your home or your Post Office box. Use a maildrop, such as Mail Boxes Etc. (they also have fax facilities). These people won’t do anything to jeopardise

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Offshore Banking and Investing in Privacy your business with them. But having said that, don’t give them your real name when opening an account. If possible, if you have registered an IBC, use that name to open a private box. If they still ask for personal ID, explain to them it’s being opened on behalf of your ‘boss’. Alternatively, look around for another maildrop. There are plenty of discreet maildrops around (The Invisible World has a Maildrop Directory). Don’t tolerate anybody being nosy, but don’t ever be rude to them. Just quietly take your business elsewhere. The aim is to remain low profile. If possible, I always recommend an offshore company with undisclosed directors and bearer shares registered in a jurisdiction that not only doesn’t give out information to foreigners, but doesn’t know who owns the company themselves. A few of these places exist and are detailed in The Invisible World. The purpose of the offshore company is to allow you to open all your accounts offshore in the name of your company and not your own name. Of course you never use the offshore company name at home (other than for maildrop purposes) and the name should never resemble the name of anything you use at home. The link may be a little too obvious. If you use your own name on your offshore accounts, the risk is obvious, if papers were to fall into the wrong hands. However, if everything is in the name of a company nobody has ever heard of, (in addition, they have no idea whether it’s a local company or not) it makes tracking down ownership extremely difficult doesn’t it? You could always say it’s your boss’s company and you know nothing about it. Not so easy when your name is

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Invisible Banking splattered all over it. An offshore company is good privacy insurance. Anonymous or bearer accounts are a good idea and allow you to dispense with the need for an offshore company, but they raise a few more problems. Firstly, if you lose the passbook, you could quite possibly lose your money. Secondly, these accounts aren’t generally very convenient or workable on a daily basis and this may not suit your purposes if you need to deposit and withdraw on a regular basis.

Cheques……why they are the worst thing in the world when it comes to privacy! Cash is untraceable, traveller’s cheques almost are, bearer bonds and other bearer securities nearly are, but cheques leave you totally exposed. Let’s consider what information is found on a cheque when it has been presented. Your name Your bank, branch and account number The date you drew the cheque Your signature The person or organisation you were paying The amount On the back the cheque will disclose: The destination Bank, Branch and account number Possibly the ID or signature of the presenter

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Offshore Banking and Investing in Privacy Not bad? If someone was trying to track down your financial dealings would they be missing anything? Not that I can think of! The cheque will be returned to your bank and the information will be stored there until somebody requests the information or a copy of the cheque. Who can request the information? Anybody from the government, litigants and bank staff. Need anymore convincing about the perils of using cheques? You should never: Pay for an incorporation by cheque Pay for a mailbox or maildrop by cheque Pay anybody offshore Deposit money into offshore investments Using cheques to transfer funds from one offshore account to another is OK if necessary, as long as nothing passes through your home jurisdiction.

Opening your Account This is a simple procedure and most banks facilitate the use of the mail to do this. Of course it would be totally impractical to expect someone to fly overseas to open a bank account. Most offshore investors never see the bank or travel anywhere near the country involved. There is absolutely no need to..….ever. There are also a lot of people out there that will tell you that you need an agent to open an account for you and the banks won’t talk to you without their, or another agent’s reference. Rubbish! The banks would much rather deal with you than an agent. The only time an agent is required (as we spoke about earlier) is in the case of anonymous accounts in the Czech Republic.

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Invisible Banking Where ID is required you are just as capable of doing this as the next person. The reason they ask for ID is not to inform on you, but simply to ensure they aren’t accepting funds that are the proceeds of real crime like drugs, robberies etc. So don’t get too paranoid about the questions, unless of course you are one of these people. My suggestion to you is to contact two or three banks in the jurisdiction of your choice and have them send out some information to you (to a maildrop if possible or possibly ask for it be sent by courier and you will pay the charges). Once you have all the information, select the account and bank that suits your requirements, fill out the forms and send it all back by mail. You will probably hear from them in a week or two with all your account details. Most of these banks are far more discreet and careful than the banks here. You will be pleasantly surprised by their professionalism. As an example, if they ring you because there is a problem with your account and you don’t answer the phone they will never say who they are or where they are from. They may just leave a message from a ‘friend’, their first name (which you will know because they like to use first names) and a message to call back and not leaving a number because ‘you have the number’. Alternatively, they will call you back later. You will be very impressed by these people. Too bad our banks aren’t as good.

Corporate Account Opening Procedures Banks are subject to guidelines and regulations that are designed to ensure that money launderers are unable to utilise banks to hide their assets. Therefore, they require

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Offshore Banking and Investing in Privacy the following information prior to processing an application to open a corporate bank account: 1. A character or Bank reference relating to the beneficial owner(s) and / or controllers of a company addressed to the required bank. The reference should state that the beneficial owner(s) and / or controller(s) has (have) been known to the referee for a period of time and is (are) considered to be trustworthy, respectable and suitable for the purpose of operating a bank account. 2. Certified (by a solicitor) copies of the passport(s) of the beneficial owner(s) and / or controller(s). 3. A description of the company’s intended investment and / or trading activities. 4. An indication of what the company’s first year’s turnover is to be. 5. An initial deposit, to fund the new bank account, commensurate with bank policy. Note: For personal accounts, only items 1, 2 and 5 would be required.

Control of Accounts The opening of an ‘offshore’ bank account is one of the primary concerns of people. All major banks recognise the importance of being able to carry out instructions expeditiously, with many banks now providing on-line computer facilities that provide information to the authorised user and the ability to effect either interaccount or external electronic transfers. Customers preferring to issue instructions by facsimile are able to establish coded systems with the bank to ensure both confidentiality and security.

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Invisible Banking Many people, who because of their diversified business dealings, travel plans and logistics, often elect to appoint agent signatories to the bank mandate. I’m not keen on this idea, but it does work for some people. This system ensures that client instructions (subject to verification) are dealt with immediately. Coded systems can also be set up so clients can fax their agents’ offices 24 hours a day, 7 days a week, with their instructions. These instructions are then forwarded immediately to the relevant bank for further processing. For clients preferring to discharge payments by cheque, upon request the agent will forward cheques, against a verifiable instruction, to the recipient. This method assists confidentiality as all cheques carry agent signatories, not the beneficial owners.

Depositing and Transferring…… and Not leaving Paper Trails – Ultimate Privacy Before we look at depositing to your account, I should make one thing very clear, transferring money to an offshore account is not illegal. After tax is paid, you can do what ever you like with your money, regardless of how much. Having an offshore account or banking structure is also not illegal. The government and local banks just want to keep your money in Australia to prop up the Fractional Reserve Banking System, Bank profits and Tax collections. If your money leaves, so does their chances of getting at your money. Depositing to your account on a regular basis and maintaining privacy is tricky. But, there are a number of

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Offshore Banking and Investing in Privacy good ways that don’t create too many problems. Let’s have a look at each method individually. Cash Deposits The next time you travel overseas take a few thousand extra with you and deposit it into your offshore account. This is not always convenient, especially if you rarely, if ever, travel overseas. However, it does represent the most anonymous way of depositing funds offshore. Keep an eye on reporting requirements when entering or leaving countries with cash. Make sure you remain well below those reporting limits. Another good way is to withdraw a cash advance while overseas from your Onshore credit card and deposit this in the offshore bank account. You can either extend your limit on your card while you are away or by simply paying an amount of money into the card to put your card in credit Be warned when making cash deposits at banks, some banks view with suspicion amounts that are close or exceed their local reporting requirements, so be prepared to answer a few questions. Better still, keep your deposits small so they don’t attract any attention. Bearer Bonds Bearer Bonds are simply investment bonds that have been issued to the ‘Bearer’. They can be freely bought and sold without creating a paper trail. The banks or financial institutions that issue them regard the owner as the person that has possession of the piece of paper (the bond). It is simply a matter of purchasing them from a bank for cash or a cash equivalent, and then proceeding to your offshore

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Invisible Banking bank with them in your pocket. You avoid having to deal with the currency reporting rules and so forth. Bearer bonds come in two forms, the coupon and noncoupon bond. The coupon bond has small coupons attached to it, which are removed at specified intervals and redeemed for cash. This represents the interest component of your investment. The non-coupon bond is as the name implies, a bond with no coupons attached. With this type of bond the interest is calculated into the face value. For example, if you buy a bond for $1,000,000 over a period of 7 years and the compound interest rate is 10%, the bond will cost you $500,000. The $500,000 difference between the face value and the cost, is the interest you will earn over the next 7 years at 10% per annum compound. You simply take your bond offshore, redeem it for cash and deposit the funds into your account. That simple. If you have relatives or friends from overseas coming to visit you, get them to purchase the bond for you as the names of foreigners will appear on the paperwork at the bank, and nobody is interested in ‘non-tax paying foreigners’, are they? Make sure you can trust them otherwise they could run off with your bond. This is the major problem with bonds, while they don’t attract the suspicion of cash, if lost, they are just as valuable. So, make sure you protect them just like you would cash. When buying bearer bonds, make sure you only buy them from an internationally recognised bank or insurance company. Otherwise you could have problems redeeming them overseas.

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Offshore Banking and Investing in Privacy Electronic or Wire Transfers While electronic transfers to an offshore account represent the easiest way to transfer money around the world, they do leave paper trails. My advice is if you are going to use this method to transfer funds offshore would be to: Never use your own onshore bank. Never give the bank a cheque from your personal account or your own bank. Never transfer funds into Australia from your offshore account. Send only small odd amounts that could represent the payment of an invoice from an offshore company. Never exceed the reporting limit, never, ever. Never use that bank ever again for a transfer. Where possible, use a ‘Passthrough’ account. This is an offshore account that simply accepts your transfer before transferring it on to the final destination. This has the effect of breaking the link between here and your ‘real’ offshore account. The bank secrecy laws will protect the destination account by using the laws in the Passthrough jurisdiction to good effect. The Passthrough account should not be with the same bank or in the same jurisdiction as your real offshore account. If it is at all possible, use those relatives or friends from overseas to transfer the money. This breaks all links with you. Bank Cheques Bank cheques or international bank drafts are another way of transferring funds. For example, it can appear that

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Invisible Banking you are paying an invoice offshore or even onshore. Onshore? Yes, by issuing the cheque payable to your IBC (Offshore company) for want of a better name could be, ‘Johnson Automotive’ you could be just paying the guy down the road to repair your car and he wants a bank cheque. Have the cheque issued in Australian Dollars to keep down any suspicions and the offshore bank will simply convert the cheque into the account currency when they receive it to credit to your account. Simply mail this cheque registered mail to your offshore bank with account details and any instructions you may have. International couriers are even more discreet and more reliable than the mail so possibly give them a try. Traveller’s Cheques Not as high profile as drawing a bank cheque or international bank draft. Quite often people purchase traveller’s cheques as a way of investing in foreign currency or simply to take overseas in lieu of cash. Very little suspicion is raised and an insignificant paper trail is left. Simply purchase some traveller’s cheques in any currency that is acceptable to your offshore bank (preferably the currency your account is denominated in) and send them signed and made out to yourself (or the account name) to your offshore bank with depositing instructions. A computer database that can track the name on traveller’s cheques has not been invented, so any paper trail created is very, very murky.

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Offshore Banking and Investing in Privacy Another little trick used by experienced PTs and offshore investors is to purchase American Express or other worldwide traveller’s cheques before you travel. Once purchased, destroy them, and then when you have arrived at your destination, report them lost and have them replaced. In doing this you have avoided the need to report transferring cash or cash equivalents from one country to another. In addition, you have muddied the waters even further. Also, keep in mind the Cash Transactions reporting legislation, keep all cash transactions well under the $10,000 limit. Even $9,000 may be reported as they report “suspicious” transactions. $7,000 or $8,000 is about right. Don’t let the teller put you off by asking what you want to do with the cash or travellers cheques, simply be polite and tell them you need cash to buy something. They just want you to take a bank cheque instead. You see, banks don’t carry much cash any more. One thing to keep in mind is to check with whomever you’re sending travellers cheques, as sometimes they won’t be accepted, as generally they need to be countersigned in front of the person receiving them. When dealing with incorporation companies and banks most people don’t have a problem with travellers cheques as long as they clear it with them first. The alternative is the money order, which is almost as anonymous, failing that the international bank draft, but never a personal cheque or credit card.

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Invisible Banking Money Orders Similar to traveller’s cheques only you must nominate who you want the money order made out to. Better to use traveller’s cheques, they are far more versatile. Legitimate Offshore Payments for goods and services By paying for goods and services that are related to an ‘associated’ business offshore that provides you with goods and services on a commercial basis can be a way of accumulating funds offshore. You simply have a ‘degree of ownership’ of this offshore company. An offshore company billing your onshore company for goods and services provided, creates a legitimate tax deduction onshore. At the same time funds are transferred offshore into the offshore company’s bank account when the bill is paid. As long as these transactions are made on a commercial basis and you declare your interest in the company when it comes to tax time, you have not broken any laws. To minimise your tax in relation to your ownership/part ownership of the offshore company, I suggest you have a look at the options I have put together in the chapter, Laws and Regulations. Of course it has been common (and illegal) practice in the past for people to set up an offshore company for the sole purpose of creating tax deductions here. They have in the past had the offshore company produce reports or send them goods with an invoice, the onshore company then sends them a cheque which is then banked into an offshore

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Offshore Banking and Investing in Privacy account. The company and the bank account are set up in separate jurisdictions that both impose banking and corporate secrecy so the beneficial ownership and the directors can never be found out. On the surface of it, the offshore company seems legitimate, but it’s not. This practice has been going on for years and the US as well as our own authorities, can do nothing but hope the business owner makes a slip up. The secrecy laws in certain jurisdictions make gathering any information impossible, because to hand over this information is illegal. For every one they catch, a hundred more get away undetected. Another little (and legal) trick the smarter business operator has been using in recent times, is the use of countries which have Double Tax Agreements with Australia. By using these countries as a main destination or even as a “Passthrough” destination, they have been able to reduce tax substantially and legally. Later in the book we will discuss these issues and ways to use the law to your advantage when it comes to offshore investment. See ‘Tax Haven Strategies’ Diverting offshore payments There are many people involved in MLM programs these days. And quite often what these people do, particularly if the royalty payments emanate from overseas, is to divert them directly to an offshore account. This can be done by simply asking the organisation to deposit the cheques directly into your offshore account or by you sending the cheques by mail or courier directly to your offshore bank with depositing instructions.

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Invisible Banking Also, I should mention cheques drawn on any bank, whether here or overseas can be banked anywhere in the world. The bank receiving the cheque simply converts it to the local currency and deposits that amount to your offshore account. Just make sure the cheque isn’t Australian, because the cheque will be returned to the issuing Australian bank with all your account details written all over it. Keep in mind though you may be breaking the law if you don’t declare all attributable income you earn from offshore sources. Check with your accountant or solicitor. Purchase small collectibles onshore You can purchase small antiques or small collectibles like coins, gold, South African Krugerrands, Platinum, stamps, jewellery or rare books and sell them offshore and deposit those funds into your offshore account. Only do this sort of thing if you know what you’re doing. Single Premium Insurance Policies Purchase a Swiss single premium life insurance policy. Any Swiss insurance company will do, try Zurich Insurance. You make a single lump sum payment for the policy and then borrow back 90% and deposit these funds into your offshore account. The interest rates are generally low and at the same time you get life insurance coverage. Secured Credit Cards. With deposit backed cards, you don't have to provide the same level of personal identification - even better if a

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Offshore Banking and Investing in Privacy trust owns the account. That way you can access funds from ATMs or purchase goods and services without attracting any attention. Money Market Accounts. You can write a personal cheque to your money market account, then use a money market cheque to move funds to your offshore account. This still leaves a paper trail of sorts, but is difficult to uncover, especially if you later close the money market account. Western Union. You can use this service to make fast money transfers. It costs more than what banks charge, but you can retain your privacy - provided you keep the transfers below certain limits. All Cash Converters Stores are agents for WU. First Class Airline Tickets. This is an unusual one. With an open first class air ticket, you are able to gain a refund if you later change your plans. Armed with a "high value" ticket, you have in your hands a nice "invisible" and convertible form of money.

Privacy Tips Do not draw a cheque from your onshore account and deposit it into your offshore accounts. This leaves a trail straight to your offshore account. Do not transfer funds from your onshore account to your offshore account. Again, this leaves a paper trail.

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Invisible Banking Withdrawing from your Account Before we start talking about how to repatriate the money, let’s talk about how it can be used offshore. Here are a few suggestions: Use the money to pay for your overseas holiday. Once you’ve left Australia, simply drop in at a branch of your bank, or any bank for that matter and withdraw some cash to use while overseas. Use the funds to purchase offshore property. Use the funds to invest in offshore or even Australian equity markets. Simply transfer some funds to an offshore stock broker and give him instructions to buy and sell shares by phone or fax. He could for instance, purchase Australian shares on your behalf through an offshore company you have established. Leave the funds offshore in various investments as part of your future retirement plan. As you can see there are lots of ways to use the funds offshore if you wish. Now let’s look at the ways you can privately bring the cash back home. Keep in mind what we discussed earlier about the tax implications. Most income repatriated will of course be taxable and even if it is not repatriated, it may be deemed taxable (attributable income). Use these techniques for privacy and confidentiality, not tax evasion or avoidance. Cash One of the ways people repatriate funds from their offshore accounts is to actually go overseas, withdraw it from the bank and bring it back with them. This is fairly inconvenient and costly if you don’t travel overseas regularly for other reasons. You also have to keep an eye on reporting

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Offshore Banking and Investing in Privacy requirements when you’re moving cash. (see my tips on traveller’s cheques) Bearer Bonds This is a variation on the cash method. The difference being instead of bringing back cash, you bring back bearer bonds and have them redeemed or sold at home. Gifts If you have foreign relatives, having them give you gifts of money can work out nicely indeed if you observe the tax rules in relation to gifts. To ensure the gift is not taxable, the gift should be made from a relative and should be on the basis of a personal gift and not for any services rendered otherwise it will be regarded as income. Of course, repatriating cash this way is anything but low profile. Everybody would know about it, your relatives overseas, the bank and the tax office. Another idea would be to get your kind relatives to send you a very expensive antique or other collectible items. Some items may attract duty on entering, so keep an eye on duty rates. Of course if you decide to sell these personal items later, that is entirely up to you. Another idea that I think has genuine merit is to purchase gold bullion coins (Krugerrands or Australian Nuggets) or platinum coins, and those might be ‘given to you as a present from kind and caring relatives’. The other good thing about Australian bullion coins is they have a face value and that’s the value that they enter they country at when it comes to customs declarations because they are in effect cash. A one ounce coin has a face value of $200, but a “real” value of possibly over $500.

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Invisible Banking Using Cards This is the most convenient way of repatriating cash. The best and most private way is to use ATMs to withdraw a daily amount of cash. For this you must have an account with a Credit, Debit or Cash card attached. This card then should be linked to a world wide network such as Cirrus or Maestro (Visa and MasterCard). Without this link the card will be useless. Most of the banks I have mentioned earlier in this book, have these card facilities available. The difference between the Cash Card and the Debit Card is that the Debit Card can be used in much the same way as a credit card, whereas the cash card can only be used to withdraw cash from ATMs. The Debit card when used to buy goods or withdraw cash from ATMs, immediately reduces the balance of your offshore account. To withdraw cash from a local ATM couldn’t be simpler. When you use the card the only thing recorded in the bank’s records is the account number. This number also records the banks details. At the end of each day, all these transactions are summarised by the bank and then a bulk transfer in or out, as the case may be, is done from your offshore bank. This whole function is performed by computers and as you could imagine, the process is rather a large one dealing with millions of transactions per day. The name on the card is not recorded. However, I still think it’s better to have the extra privacy of an offshore company and have its name on the cards. A few privacy tips to observe when using ATMs: Never use the machine where you do your normal onshore banking. Just in case somebody gets nosy or you are recognised. Never use the same machine all the time. Keep changing ATM locations.

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Offshore Banking and Investing in Privacy Never use the machines at the same time of day. Don’t establish a pattern that others can observe. Always withdraw different amounts. Again, to break up any pattern. Wear sunglasses if possible, when using machines. ATMs have cameras and it’s not a good idea to be recognised on film. If you obtain a card of some description, and I suggest you do, I recommend you use the card when overseas as much as you like, but exercise a little caution when using it at home. Don’t charge things to your offshore card if you know the shopkeepers or they know you. Don’t use it at shopping centres you frequent. Only use it for ‘one off’ purchases at shops you are unlikely to return to. Another little tip, make sure you have a signature that nobody can read, again this stops anybody knowing exactly who you are. This is only helpful when using a corporate debit card that has a company name on it.

Investing using your Offshore Account Funds can be often invested offshore with greater returns than you can achieve at home. A stockbroker, in say, London or the Isle of Man can purchase stocks anywhere in the world for you, including Australian shares if you wish. It is a simple matter of just wiring some funds from your offshore account to your broker’s account. Never use a broker in Australia, as the funds will be wired into Australia and thus leaving a paper trail. Brokers can also come in handy when it comes to paying bills. For instance, you can ask your broker to draw a cheque made out to whomever you like. Of course, these funds would

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Invisible Banking be drawn from your account with the broker, which would hold the proceeds of share sales etc. Your offshore broker can also assist you with investing in a wide range of investments including Bearer Bonds too, so ask for details. Swiss Annuities Swiss Annuities are one of the most favoured investment products in the world today. They are ideal for the offshore investor who doesn’t need to repatriate their funds. Swiss Annuities are investments made with Swiss insurance companies. The Swiss insurance industry is, without a doubt, the best in the world having never had a corporate failure in the industry’s entire history which spans nearly 150 years. It works just like a savings account but instead of the money going into a bank, it goes into an insurance company. It is a low risk, guaranteed interest, return investment, that is quite flexible. There are no up front fees so the full amount you pay for the annuity certificate is the amount invested. To invest you will need a minimum of US$10,000 (or equivalent) to purchase your first certificate. After that, you can increase your investment with additional deposits of US$5,000 or more at any time. You can cash in your annuities at any time, but you will suffer a small penalty of income if you withdraw within 12 months of depositing. When it comes to the income stream, you decide when you are paid and at what intervals. The annuities are not subject to any tax whatsoever in Switzerland, not even the 35% withholding tax that you are charged on interest in Swiss bank accounts. Of course the income will be deemed taxable in

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Offshore Banking and Investing in Privacy Australia. Joint annuities are possible, this will allow you to include your spouse. The income comes from two areas, the fixed interest that you are advised of at the start which is in the range of 3%-6% per annum. The other is the share of profits the annuity attracts from the insurance company. The annuity can be issued in a number of currencies such as Swiss Francs, Deutschmarks, US Dollars, French Francs, Sterling and Euros. So, if you know what you’re doing, you can also make a profit on exchange fluctuations. There are basically two types of Swiss Annuity, the Immediate Annuity and The Deferred Annuity. The Immediate Annuity is generally for someone who is in retirement or close to it and wants to draw income almost immediately. The Deferred Annuity is for someone who wants to build their annuity investment over a period of time by making regular payments to their account and possibly re-investing their income into further annuities or other investments. One of the major features of Swiss Annuities is the fact that according to Swiss law, insurance policies and annuities cannot be seized by creditors. They are also exempt from Swiss bankruptcy proceedings. As long as the annuity has been formed in the right way, not even a foreign court can request the annuity be handed over. What you do is, ensure that the beneficiary of the annuity is not you. For instance, make your spouse or your children the beneficiaries. This can also be helpful in tax planning back home, as well as covering your backside. The other great thing is that you are protected by excellent secrecy provisions, so it is unlikely any foreign government asking questions would be told anything. To find out more about Swiss Annuities ring any Swiss Insurance Company for details or you can write away to the

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Invisible Banking addresses below and these agents can send you further information. For Details Contact: Banque Union de Credit Rue du Mont Blanc 3 PO Box 1176, 1211 Geneva 1 Ph: 0011 41 22 732 7939 Fax: 0015 41 22 732 5089 Union Bank of Switzerland Bahnhofstrasse 45 8021 Zurich Switzerland Ph: 0011 41 1 234 1111 Fax: 0015 41 1 234 6480

The Basics of Swiss Annuities Annuities fit into the category of long-term, low-risk investments such as your home, gold, and other safe investments belonging at the base of your investment pyramid. The basic concept is quite simple: A deposit is made (similar to a bank deposit), minimum US$10,000, maximum: US$1 million per policy. The owner tailors the terms to their specific needs. They can choose annuity payments to begin immediately or to be deferred for a number of years so they can accumulate. Payments can be received for life or for a fixed number of years. They are made by cheque or bank transfer and are a combination of accrued interest, profit dividends and a portion of the capital invested. Upon the death of the person insured, the surrender value is paid to the designated beneficiary. Adding funds before annuitisation is sometimes possible but not always recommended. Locked-in rates may be

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Offshore Banking and Investing in Privacy jeopardised in some cases when interest rates have changed since inception and the respective policy does not offer the initial rate for add-ons. Currently, gross rates range from 3.25-7.0 % pa. They differ depending on the age and sex of the annuitant, as well as the specific program and terms selected. Swiss insurers allow you to liquidate at any time without surrender penalties, except during the first year when a small fee of approximately SFR 500 is charged. If you need cash immediately, funds are readily available. You may use an annuity as collateral for a loan. Up to 80% of the value of an annuity can be borrowed during the accumulation period. A loan can be obtained directly from the insurance company, or if desired, the annuity policy certificate can be deposited with a bank as collateral and the bank will lend the funds. There are no Swiss taxes on Swiss annuities. This is one of the reasons why a Swiss annuity can be much more rewarding than a Swiss bank account where all interest is subject to annual taxation. In most countries, no taxes are due while an annuity is in the accumulation phase. Once the payback period has started, taxes are due on the interest part of the payments only. Policyholders receive annual statements showing the breakdown of payments into return of capital and interest. You should consult a financial planner or accountant before doing anything.

Working Examples of How Others Have Used Their Offshore Banking Facilities I have put together some examples to illustrate exactly how people have used their offshore banking and corporate

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Invisible Banking structures. These are actual examples I have heard about and while I don’t condone any attempts at breaking the law, I believe the structures below are legal and only become illegal in the instance of tax evasion, by not reporting income. There is nothing illegal about having offshore companies, offshore bank accounts or even establishing associated companies offshore. What is illegal, is when they are used to avoid or evade tax illegally in Australia.

1. An individual wishing to keep foreign source income out of his resident country and maintain privacy and confidentiality. Anybody can establish this very simple banking structure. The steps to be taken in chronological order are: The first step is optional and recommended. It involves establishing an IBC (International Business Company). The reason for this is to add another layer of secrecy and confidentiality to your structure. The company’s name will appear on all the bank account information. The ownership and control of the company is almost impossible to prove if set up correctly. Details of how to do this are revealed in The Invisible World. Establish a bank account with a Debit Card facility in a banking haven in your name or that of an IBC. This is done simply by writing or faxing a number of offshore banks and requesting details to be sent. Mail back the completed forms and the opening deposit, and within a couple of weeks the account will be opened. It is simply a matter of re-directing your income to this account by advising who ever is paying you, to deposit the funds directly to this account or to maintain a higher level of privacy, mail the cheques offshore yourself.

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Offshore Banking and Investing in Privacy Withdrawals are made by using your Debit Card at various ATMs locally. This offshore banking structure is the most basic and the most common employed by people today. It works remarkably well if you observe all the privacy rules we have been talking about earlier. At this point out, that in preserving his privacy, he is still obligated to pay tax on the income derived as not to do so is against most western countries laws. In most cases you don’t have to produce details of where the income was derived, just to declare it as income and pay tax on it. 2. A local professional establishes an offshore company that in turn charges his local operation professional fees. Let me say before we look at this common set up, that depending on the beneficial ownership and control of the offshore company and the jurisdiction it is established, the profits earned by the offshore company could be deemed attributable foreign source income (and therefore taxable) to the local professional. So, I recommend caution in the way a structure like this is formed. Even though many people hide the ownership and control of these offshore companies behind impenetrable secrecy laws and bearer shares (although bearer shares are becoming rarer and rarer), it is still against the law not to declare the income earned. Double tax treaties can be used to good effect legally to reduce the tax burden. Overall, you can save a significant amount of tax if structured correctly. The steps taken in chronological order are: Firstly, an IBC was established in the British Virgin Islands. Once the IBC was registered, a bank account (Current account) was opened in the BVI. This account was opened to serve as a Passthrough account only. Another account is opened in a different jurisdiction. In this case it was Jersey.

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Invisible Banking The IBC had stationery printed, letterheads, business cards (with the name of a nominee director who is a resident of the BVI) and also blank invoices. The IBC was then contracted by mail to perform certain functions and prepare certain reports on behalf of the local professional. A price was ‘agreed to’. All this seemingly normal business behaviour was committed to paper with correspondence to back up all transactions. In actual fact, all the correspondence was prepared by the local professional locally but he did have letters posted to himself from offshore. The BVI company then ‘sent’ the local professional an agreement to sign and return before the BVI company would commence ‘work’. The BVI company then ‘sends’ him the reports and other work requested a few weeks later. These reports have of course been prepared by the local professional himself. An invoice for the services provided by the offshore company is also sent. He effectively is working for two companies – the local company and then the offshore company. And while he can do this legally, it should be noted that it could be deemed a tax avoidance scheme by the tax office if the only purpose of the transaction was to reduce tax, so ensure it is done for “commercial reasons”. This can be facilitated simply by not owning the company yourself and being remunerated by the offshore company in some way that makes sense. So in effect, you are contracting to an offshore company that you have nothing to do with. The local professional then pays the account and sends a cheque as ‘instructed’ to the BVI ‘passthrough’ account. The bank was then given instructions to wire the payment on to the Jersey account. This transfer is absolutely untraceable. The payment of the consulting firm in the BVI has created a deductible expense here and the income is tax free in the BVI because the income was earned offshore. The result - a nice little nestegg of cash offshore.

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Offshore Banking and Investing in Privacy This structure could have been ‘cleaned up’ by possibly interposing a Dutch company and using a Netherlands Antilles tax haven company instead of the BVI company. This amended structure would have allowed the favourable use of Double Tax agreements between the Netherlands and Australia as well as using the unusual tax arrangements between the Netherlands and the Netherlands Antilles. I will go into this a little more in the chapter, Tax Haven Strategies. 3. Local Inventor and two partners have developed a product and have signed a contract to supply manufactured items to a Swiss Company. This structure is bordering on being rather complicated but if you sit down and think about it for a while, it will appear fairly straight forward. This structure required 3 companies to be established, one locally and two offshore and each company had a bank account opened. Secrecy and privacy was paramount in the partners requirements. The steps taken in chronological order by the 3 partners were to: Establish a Local company and assign the patent of the item to the Local company. Organise manufacturing contract with Chinese Manufacturing company. Cost $3.00 for each item to be manufactured. Establish a Hong Kong company with nominee directors and shareholders. Open a trading bank account in Hong Kong with the local partners as signatories. Prepare a contract to market and distribute the items worldwide between the Hong Kong company and Local company. This contract also allowed the Hong Kong company to on sell some or all of the distribution rights to a

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Invisible Banking third party. Local company sells items to Hong Kong company for say $3.25. Profit of $0.25 subject to tax in Australia. British Virgin Islands company established using an incorporation agent offshore. The British Virgin Islands company has bearer shares and directors can be the 3 partners or nominees. The British Virgin Islands company enters into an agreement with the Hong Kong company to distribute items worldwide. The Hong Kong company sells the items to the British Virgin Islands co. for $3.50 each. Profit in Hong Kong of $0.25 and subject to Hong Kong tax. British Virgin Islands company enters into an agreement with the Swiss purchaser to provide items at $5.00 each. Profit of $1.50 accumulates in the British Virgin Islands. As it is an offshore transaction, there is no tax payable in the BVI. Any funds repatriated will be taxable here. Establishment of a British Virgin Island company Bank Account in Isle of Man. Manufacturer in China sends goods directly to Swiss purchaser, but the invoice is sent to the Local company. Invoice to Swiss purchaser issued from the partners confidentially, but in the name of the British Virgin Islands company instructing funds to be remitted directly to the company’s bank account in the Isle of Man. The Hong Kong company issues an invoice from the local partners confidentially to British Virgin Islands company for goods, and British Virgin Islands draws funds to Hong Kong company trading bank account. Local company issues invoice from here to Hong Kong company and Hong Kong company sends funds to Local company. Local company then pays Chinese manufacturer. All administered locally using different letterheads and invoices.

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Offshore Banking and Investing in Privacy At the end of the day what happened to the $2.00 profit on each item? Well, $0.25 was left in Hong Kong which will be subject to Hong Kong’s 16.5% profits tax. Hong Kong tax will be $0.04 on each item. Continuing on, $0.25 profit was incurred locally at a tax rate of 36%, the tax will be $0.09 on each item. The profit left in the BVI, amounts to $1.50 of which no tax is levied. Therefore, the total tax paid on the transaction is $0.13 out of $2.00, that’s a rate of 6.5%! The estimated cost of a setup like I’ve described above would be in the region of A$5,000.

Note: In establishing a structure such as the ones described above, keep in mind tax laws and your obligation to pay any taxes.

Borrowing Money Offshore “Excuse me Sir, but I think Sir may have the plague”. That’s what it sounds like when you try to borrow money from an offshore bank. However, not all banks are like that. You may especially get that reaction trying to arrange an offshore mortgage on a home, mainly because you are trying to borrow so much, and also because the bank is one country, and the property and you, in another. I have prepared a table of lenders that will consider an Australian property or a property elsewhere for that matter but I have also included a few that will lend in Europe and the UK just in case you are considering a holiday home. They all lend to Australians.

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Invisible Banking Bank Abbey National Barclays Lloyds TSB NatWest Northern Offshore

Loan to Val. 80%

Loan Period 25 years

80%

25 years

75%

30 years

80% 80%

25 years 25 years

Loan Min. 50,000GB P 30,000GB P No minimum 50,000 50,000

Lend on Property Only UK and Spain Anywhere Anywhere Only UK UK and IOM

Northern Offshore can be contacted at: PO Box 113 60 Circular Rd Douglas Isle of Man IM99 1JN Phone: 0011 44 1624 629106 Fax: 0015 44 1624 627508 The rest of the lending banks are shown elsewhere in the book. Due to the inconvenience to the banks, rates are a little higher. In addition some banks, including some shown above will provide “back to back” loans. This is where the bank will lend against an offshore deposit or portfolio which they will hold as security. This is ideal if you require a personal or business loan onshore. In addition, something new has hit my desk courtesy of a reader that you may find interesting. A private bank in Vanuatu, The Equity Investment Bank offers loans for a

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Offshore Banking and Investing in Privacy number of purposes and they may be worth talking to. At this stage I can’t vouch for them. Equity Investment Bank Moore Stephens House Kumul Highway Po Box 1401 Port Vila, Vanuatu Ph: 0011 678 24619 Fax: 0015 678 26008 E-mail: [email protected]

Merchant Facilities Offshore Barclays Bank is present in many of the offshore Financial Centres, but the reason it deserves a special mention here is as one of the big British banks which maintains a close relationship with many of the countries which used to be British. So close in fact, that even if they don’t have branches there, they offer merchant accounts to many businesses located in various locations. These merchant accounts are opened entirely by mail and are operated from the UK head office in pounds sterling using old-fashioned paper based merchant terminals. These merchant accounts are cheap to set up, require no agency credit check, the processing rates are very reasonable, and there is no such thing as a holdback or refundable reserve. Sounds too good to be true? Well, of course these accounts are designed for local onshore businesses such as shops and hotels. But I’m sure with a little creativity and a strategically located maildrop aboard one of the smaller islands, you could open your very own completely “tax free” merchant account. I’m not going to tell you exactly how to do it here because we don’t want everybody doing the

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Invisible Banking same thing... but check out the “Barclaycard” area of the bank’s website as a start. http://offshorebanking.barclays.com Also remember obligations under your country’s tax laws. It may not be as tax free as you think, but it is private!

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Chapter 7 Investing From Your Bank Account It is quite a simple matter to invest from your offshore bank account structure. Obviously, it may be necessary to form an offshore company to provide anonymity but also it may be necessary to actually gain access to some of the better investments. In my books, High Yield Investments and High Yield Investments 2, which both detail over 50 of the world’s best investments, some of these fund managers have a mandatory requirement for you to have an offshore company not simply a bank account. So, it’s best to check first. In the instances where a company is not required, investing is simply a matter of obtaining a prospectus or proposal from the company offering the investment, and signing and sending off a cheque (from your offshore account) if everything is in order. Simple as that. Having a cheque book is a good idea simply because it makes life a lot easier. If you don’t obtain one, you must write or fax the bank and request them to draw a bank cheque and send it to you so you can attach it to the investment application form, all a bit tiresome. One thing though, always keep your cheque book hidden from prying eyes. If you are serious about setting up an offshore investment and banking structure, I suggest you obtain a copy of The Invisible World. It describes, in detail, exactly

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Invisible Banking how to go about setting up an offshore investment structure using a company or trust, as well as looking at the top 40 tax havens in detail. There is a catalogue and order form at the back of this book. I recommend that you do set up an offshore company if you are going to invest more than A$50,000. Remember what we said about Section 515 of the Tax Act. You can invest up to $50,000 without having to pay tax on the income unless you repatriate it. Once you get over this amount you must report it and pay tax on it regardless of whether you repatriate it or not. An offshore company or trust correctly established can offer the possibility of deferral or minimisation of the tax.

Investing in Gold In recent times, I have been asked on many occasions, my opinion of investing in gold. I have also been asked, on just as many occasions, to include something in my books on the subject. Well here it is. I have tried to trade gold for profit on a few occasions and unfortunately haven’t had much luck. Not that I have lost money, but the return for effort just wasn’t there. You see, one thing I have observed over the years is the relationship of gold to the Australian dollar. Whenever the dollar has been high historically (compared to the US$) the gold price has also been high. These days the dollar is historically very low, and consequently the gold price is low as well. My point is, if the Australian dollar and the gold price both move up and down at a relative rate, which they tend to do, the gold price which is stated in US$ will

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Offshore Banking and Investing in Privacy convert back into much the same Australian dollar rate. It’s frustrating, the gold price goes up and so does the Australian dollar, result no profit, when the gold is converted back from US$ to A$ the amount you receive is much the same and then the commission comes out and you are lucky to make any money at all. But having said all that, there is a reasonable argument to have some gold as a hedge against economic disasters, inflation and a possible recovery in the gold price, even in Australian dollar terms. So, I have put together a bit of information for the gold aficionados. The best time to buy gold is when the relative price of an ounce drops below A$450 per ounce, which indicates it’s close to its historical Australian dollar low. What to buy? Well let’s start off with what not to buy. Don’t buy jewellery because you pay a premium for the work involved in making it. Anybody that has bought jewellery and then tried to sell it will know, you are lucky to get back half of what you paid, because you only get paid the value of the gold and stones. The other thing not to buy, is rare coins made of gold. Again, you are paying a premium over the gold price. Unless you really know what you’re buying, don’t attempt it. Also, don’t buy bars of bullion, they are too expensive and hard to sell in some places. The best thing to buy is gold bullion coins minted by a government. Never buy coins minted by private firms, they are useless and frowned upon by dealers. There are only a handful of coins even the dealers will touch and you should stick to them – and nothing else.

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Invisible Banking Canadian Maple Leafs: Canadian Maple Leafs are a very popular choice, being 100% pure gold (most mints add a percentage of copper to their coins to toughen them against wear and tear). Maple Leafs have been minted by the Canadian government in large quantities since 1979, when one million of the 1oz coins were put into circulation. Since then, very large quantities have been minted and circulated internationally. They will cost you approximately 3-4% commission on top of the spot price. Canada is a stable politically correct country, factors that will stand you in good stead when you're ready to liquidate your holdings. Maple Leafs are minted in 1oz, 1/2oz, 1/4oz and 1/10oz sizes. US Gold Eagles: The Eagles have been minted by the United States government since 1986 and are very popular with US investors. The 1oz coin contains 91.67% gold, 5.33% copper and 3% silver. There are approximately 6 million 1oz coins in circulation. There is a precedent however – the US confiscated gold coins in the last depression. In those days gold put a strict limit on governments ability to inflate. Eagles come in 1oz, 1/2oz, 1/4oz and1/10oz sizes. Expect to pay around a 4% commission. South African Kruger Rands: South Africa has once again been accepted by the world community as a democratic country, Kruger Rands have re-emerged as one of the most popular bullion coins. They have the lowest premium of any widely held gold coins and can be traded anywhere. During the years of South Africa's isolation, Kruger Rands were traded on world markets, despite sanctions and prohibited importation into the US, thus illustrating their popularity. Large numbers of

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Offshore Banking and Investing in Privacy Kruger Rands are in circulation internationally. The coins are not pure gold, as they are mixed with other metals to provide hardness. However, they do have 1 oz of pure gold and that’s what you’re paying for. They come in 1/4oz, 1/2oz, 1/10oz and 1oz sizes. The one ounce being the most popular with investors. They only carry a 1% commission generally, this making them the cheapest gold product. Australian Gold Nuggets: Our own gold coins, minted since 1986. These coins comprise 99.9% pure gold. There are far fewer Nuggets in circulation than Maple Leafs, Eagles or Krugers, nevertheless they are pretty popular and widely accepted. Nuggets are produced in 1oz, 1/2oz, 1/4oz and 1/10oz sizes. They will attract 34% commission and are well worth buying as a collector’s item, in my opinion. Tradeable with any gold dealer in Australia. British Britannias: Minted by the Bank of England the Britannias made their first appearance in 1987. The 1oz coins contain 91.7% pure gold, but like the Krugers do actually contain the amount of gold specified, they just mix it with another metal to harden up the coin. There are not great numbers of these coins in circulation but their pedigree makes them easily accepted and therefore no problem to liquidate. They are available in 1/10oz, 1/4oz, 1/2oz and 1oz sizes. Outside of these coins, I wouldn’t touch other gold bullion products. I know for a fact these are all easily traded but I can’t vouch for anything else.

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Invisible Banking Never allow a gold dealer to hold your coins “in safe keeping”. Hold on to them yourself or possibly put them in your pocket and take them to your offshore bank where you can deposit them in a safety deposit box. Gold dealers and “gold banks” are one of the easiest ways of losing your gold and therefore your money. If looking for a Gold Dealer, look in the Yellow Pages under “Gold” and you will find quite a few of them.

Buying Shares Online for your Offshore Structure It’s one thing to set up an offshore company and bank account, it’s another thing to be able to use it properly when it comes to investing. One of the puzzling things is putting investments actually into your offshore company and being able to take them out when you need the cash. Now, to most people this will involve the purchasing and selling of shares. Some people may even wish to trade shares regularly through their offshore structure. Well, if you do and don’t know who to speak to, here are a few brokers that will accommodate you. www.consors.de These guys are German but allow you to trade in New York as well. www.schwab-worldwide.com Part of the huge US online broker Charles Schwab. In particular, check out their operations in the Caymans and Hong Kong. They are best for offshore investors.

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www.credit-suisse.com As long as you are not a Canadian or US citizen, they will accept your business www.etrade.co.uk This broker is good if you have an Isle of Man or Channel Is company. Note: all of these brokers are discount brokers too, so they’ll be relatively inexpensive.

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Chapter 8 Asset Protection Asset Protection has become a major issue in the United States and in the near future, it will become just as big an issue here. The reason is the ability and success of people litigating against you for all sorts of things and the inability of the legal system and the reluctance of insurance companies to protect you. The only answer is to own nothing! They can’t take what you don’t own. In recent years, offshore experts have developed the Asset Protection Trust and other offshore structures to stop litigants being able to make claim on your assets. When coupled with an offshore banking structure, the asset protection structure becomes a total financial package offering day to day banking convenience, total privacy and security of all your assets. For most individuals, the offshore banking structure will be all they want, but in time I believe more and more people will see the benefit of an overall package covering their assets as well.

Don’t Break the Law Don’t leave asset protection until the last moment. If you transfer assets with the intention of depriving or cheating someone with legal rights to the asset, this is fraud and if convicted you will go to jail. And the transfers will be declared void. Be smart, transfer them before somebody makes a claim on them. This makes it legal.

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Offshore Banking and Investing in Privacy Suggested Offshore Structure This is an outline of a suggested offshore structure prepared for your information. It is legal, but the onus is on you to pay any taxes that may be applicable. Purpose Asset Protection: To remove any threat to your assets due to litigation, new Wealth or Inheritance Taxes (Death Duties). Estimated Cost A$6,000 including incorporation of two companies, establishment of two bank accounts, first year fees in relation to Registered offices, Nominee Directors, Nominee Shareholders if required, Annual Returns, professional advice and assistance. This amount does not include stamp duty, legal fees, commissions etc associated with the transfer of assets or opening deposits for bank accounts. Legislation & Laws Applicable Transfer of property assets to a foreign entity must first gain Foreign Investment Review Board Approval. Foreign Acquisitions and Takeovers Act 1975 (as amended) For the purpose of acquiring Land or business interests in Australia. A foreign entity is defined as a foreign company or trust if a foreign resident holds a substantial interest in the company. Substantial is deemed to be in excess of 15%. There is currently no problem with foreign corporations or trusts acquiring residential or urban land in Australia. Part 4.1-Division 2 of The Corporations Law – Foreign Companies

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Invisible Banking A foreign corporation can trade in Australia only if it has been registered with the ASIC. This requires the company to produce the following documents: • Certificate of Incorporation • Certified copy of it’s Constitution • List of directors – Names, addresses, place and date of birth, residing.- (Use nominees for added privacy) • If any directors reside in Australia they must also produce a memorandum from the company detailing their responsibilities and powers. • Principal place of business or registered office. • A local agent is also required.(Within Australia) • A copy of its Balance Sheet and Profit and Loss each year. The Commission may require these items to be audited in certain circumstances. • Register of shareholders. This may not always be possible in the case of Foreign Bearer shares. Nominee shareholders are the way to go. • Foreign companies must register and supply all this information if they want to do business in Australia. If all you want to do is hold assets, there is no need to register. Australian Income Tax Assessment Act Non-resident trusts pay rates of tax similar to nonresident individuals which basically means you don’t get the tax free threshold. Foreign companies pay the same tax rate as resident companies. Anti-Avoidance Provisions under Section 25A This legislation would only apply if the purpose of the structure was to avoid tax. This Asset Protection Program structure could be used quite easily to avoid taxation without detection but you must realise this would be against the law. The purpose of this structure is to provide asset protection and financial confidentiality and secrecy.

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Offshore Banking and Investing in Privacy Division 6AAA – Section 102 – Non-Resident Trusts If a trust were to be incorporated into the structure, and it was used purely to reduce taxation by appointing non-existent beneficiaries to receive the income, thus avoiding liability yourself, the Commissioner can place the liability to pay tax with the original Transferor(You). Land tax, Capital Gains Tax and Stamp duty In establishing this structure you must consider the imposition of land tax, as you won’t receive an exemption, as it’s not a privately owned residence. Also, in transferring or selling the property to an offshore structure, stamp duty will need to be paid. Capital Gains Tax may also be applicable in relation to any future property or asset sale. This must also be noted when establishment of the structure is considered. Privacy and Secrecy The privacy and secrecy that this structure will provide will be of a very high level. By using Bearer shares and nominee directors, the integrity of the structure is of the highest order. The use of certain offshore financial jurisdictions ensure banking secrecy due to the high standards of banking practice and legislation protecting your confidentiality. Required 2 Offshore Companies with bank accounts. 1 in Turks and Caicos Islands-bearer shares, but those shareholders should be nominees for the purpose of FIRB approval, nominee directors with bank account in Jersey or IOM. 1 in Isle of Man – bearer share warrants, nominee directors with bank account in IOM. Plus, possibly an offshore trust with one of the companies acting as trustee. The asset would be held in the offshore

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Invisible Banking trust and the beneficiaries would be either your spouse or your children, unborn grandchildren etc. Legality Fundamentally, there is nothing illegal about this structure. The only problems you will have, is if you don’t pay tax on income generated by the investment company in the Isle of Man (if applicable) and if you don’t pay tax on your bank interest. The other problem you could strike, from a legal point of view is, if when asked by the ASIC or ATO whether you have any beneficial interest in these companies, you may have to declare you hold the bearer shares - but maybe you shouldn’t hold the bearer shares then should you?

Structure Tip. The companies could be owned by a foreign trust who holds the bearer shares and the directors of both companies may be the trust itself. The trustee would then control both companies and if structured in a particular way, nobody would ever know who the trustee was. The beneficiaries of the trust could be your unborn children or grandchildren. The trustee of course, would be you or a nominee. Or, you could hold a power of attorney granted by the trustee to administer the trust in the trustee’s name. Keep in mind what we said earlier about Division 6AAA of the Tax Act.

The Structure Flow Chart This will display the ‘Mechanics’ of the structure and show you exactly how it will work. This can be adjusted or adapted for a number of uses including offshore business dealings, offshore income streams, investing etc.

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Offshore Banking and Investing in Privacy When looking at the flow chart, follow the steps rather than the arrows. The steps are in chronological order whereas the arrows follow flow of ‘Funds’. The idea is to simultaneously sell the property and invest the funds, using the same money. Prior to doing this, the two companies (and trust) and the two bank accounts need to be established.

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Invisible Banking Flow Chart

You Step 1. Your Assets, such as your home, investment properties, investments, business.

Step 7. You invest money with the offshore company 2. This company issues you with shares. The dividends or capital gains from this investment is assessable income in Australia. Whether this company ever makes a profit is unimportant. It could even become ‘bankrupt’ in the future taking your money with it.

Step 2. Sell assets to Offshore company 1 on minimum commercial terms. Alternatively, the trust would hold the assets

Step 3. Offshore company 1 established with bearer shares and nominee directors acquire assets

Step 6. Cheque drawn from company a/c 1 to buy assets. Funds rec’d from company a/c 2 after cheque just drawn from a/c 1 is banked and contra’d

Pays Land Tax

Step 4. Establish offshore company 2 involved with manufacturing, developing goods, hi-tech etc. In a different jurisdiction to the Step 2/3 company. Income from this company will be assessable in Australia other than amounts relating to the $50,000 investment limit.

Step 5. Both companies (1 & 2) open offshore Bank account in different jurisdictions – Major Banks

Step 9. Leases back property to you if it’s your own home. You pay a commercial rate of rent directly to offshore company 1.

Step 10. If cashflow with the rent proves to be a problem, link the account you pay the rent into to a cash card and withdraw cash back via ATM’s

Step 8. Round robin cheques by transferring investment monies to contra against cheque drawn to purchase property. Electronic transfer between the two accounts will be OK.

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Offshore Banking and Investing in Privacy HOW HIDDEN ASSETS ARE FOUND Here are a few techniques, which may be used to locate funds being kept offshore: 1. Checking passports (and travel agents) for evidence of visits to "high profile" destinations such as: Switzerland, Cayman Islands, The Bahamas, Isle of Man, Netherlands Antilles, and other known banking and tax havens. Travel to these types of areas will surely throw up a red flag, giving seekers a place to start looking for your assets. 2. Examining telephone (home, business & hotel), fax and mobile (cellular) phone records to identify undisclosed business connections and contacts. 3. Reviewing credit card statements to determine who you do business with, where you travel (domestic & foreign), and what products and services you use. These records leave a revealing paper trail miles long. 4. Garbage is often sifted through for information such as statements, invoices, correspondence, and other relevant material useful in tracking your affairs. Use a high-quality paper shredder, discard your garbage at another location, or burn and crush it. It sounds drastic, but what you throw away says a lot about you, and many leads can be found there. 5. Compiling a list of parties that you have a relationship with (business or otherwise) by recording the return addresses on your incoming mail. This technique can disclose friends, associates and partners. If you must receive important mail at your residence or business address, be sure to have your correspondents omit using a return address. Suggest using a maildrop.

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Invisible Banking 6. Looking into banking transactions. All cash deposits $10,000 or more must be reported by your bank to the federal government. Keep transactions under $10,000.

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Chapter 9 How and Where to Establish your own Private Bank Many people have asked me about offshore banks and how to establish them. I touched on the subject when I wrote The Invisible World, but people wanted far more specific information on the subject, so here it is. All jurisdictions, both onshore and offshore, have the facility to grant banking licences to qualified applicants. In general terms, jurisdictions like Australia, UK and the US impose much stricter requirements on applicants and consequently the cost of setting up a bank here would be greatly increased. The offshore jurisdictions offer some interesting possibilities because they allow a bank to operate free of tax on profit and it’s possible to set up a bank without the need to maintain a physical presence within the jurisdiction other than that which can be easily provided by a service company or agent.

Some things you can do with your own offshore bank The mind boggles with some of the things you can do with an offshore bank of your own. For example: Set up your own banking instruments (eg. bonds and securities).

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Invisible Banking You can issue letters of credit for yourself, certificates of deposit, provided funds are indeed there (don't do it otherwise, as this would qualify for fraud in most jurisdictions), letters of recommendation. Lift your corporate image by retaining your very own bank. This can facilitate business no end, whether you are involved in import-export trade, in industrial manufacturing, in up-market financial services, or simply want to impress your business associates and gain a cutting edge against your competitors – an offshore bank is probably the most powerful business tool money can buy. Issue your own bank references. There's a huge market for bank references. You can offer anonymous accounts to your clients (if permitted by law), charge them yearly basic fees. You could even issue your own credit ratings. Grant your own loans and mortgages. This could be a legal way of reducing tax and cash outlays. Seize your own assets before your creditors do. We will take a look at some of the offshore banking jurisdictions:

THE BRITISH WEST INDIES In the 1970s and 1980s many of the British Dependent Territories were happy to accept applications for banking licences with a minimum of paperwork and fuss. Some time ago, the United Kingdom imposed increased standards on these territories, so they are now unwilling to receive applications from anybody other than existing, internationally recognised banks. I therefore don’t think that jurisdictions such

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Offshore Banking and Investing in Privacy as the British Virgin Islands, the Turks and Caicos Islands, Cayman Islands etc. are worthy of consideration unless the applicant is a major financial institution.

ANTIGUA Antigua is an independent Caribbean Island which is currently welcoming applications for a banking licence which would be unrestricted (except from a prohibition on doing business with residents of the Caricom area). There is a requirement to have a paid up capital of US$1 million but no requirements regarding capital reserves or loan ratios are imposed and no physical presence on the island is needed, which cannot be provided by a management company. Antigua therefore represents a real possibility to obtain an unrestricted licence without the considerable costs, which would be experienced in most other competitive jurisdictions. The capital requirement is higher than that which is experienced in some of the Pacific rim Islands but Antigua is one of the few places where an unrestricted licence is available with relative ease. The estimate of costs for obtaining a licence would be approximately US$45,000 which would include the services of an agent in providing the necessary local director and management services required.

NAURU Nauru offers the possibility of setting up a bank with no requirement for local directors or any local presence apart from a registered office and company secretary in Nauru. These

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Invisible Banking services would normally be provided by an agent or solicitor on the island. Nauru will accept applications for unrestricted licences or for in-house type banks but in practice the authorities are unwilling to grant unrestricted licences to anybody other than an existing bank and would also impose a requirement that the applicant set up an office and associated infrastructure in Nauru. The capital requirements for an in house bank are low – US$100,000 - and the time scale is in the order of one to three months. A Nauru in house bank is prohibited from dealing with anybody other than associated companies and individuals but it would be possible for your client to set up a finance company, which could conduct a broader range of activities. For example, the finance company could take deposits from third parties and would then deposit the money with the bank. Any literature which was drafted could make clear reference to the fact that the finance company was a wholly owned subsidiary of “XYZ” Bank Ltd. The costs for obtaining this type of licence would be in the order of US$20,000 and time-scale would be one to two months.

VANUATU This is another jurisdiction that has indicated it is willing to receive applications for both unrestricted and restricted licences. The minimum criteria laid down is that each type of bank requires a paid in capital of US$150,000 but in practice it is unlikely that an unrestricted licence could be obtained by offering this minimum required level of capitalisation. A more realistic amount would be US$500,000 to be kept as cash reserves.

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Offshore Banking and Investing in Privacy Costs for obtaining a restricted licence would be around US$20,000 if you were to use a full service agent and less without one.

WESTERN SAMOA In my opinion Western Samoa is one of the better offshore jurisdictions, which currently offer restricted offshore banking licences. Unrestricted licences are not obtainable by anybody other than existing banks and require a minimum paid up capital of US$10 million. This will probably be unattractive to most applicants. Restricted licences require a minimum paid up capital of US$250,000 but the operations of the bank must be run through a local trust company or agent. This means that an element of third party control and involvement in the affairs of the bank is required but this has the advantage that local expertise is readily available to you.

Costs for a restricted licence would be US$17,500 and application time would be approximately one to three months.

Conclusion The best place to obtain a restricted license would be Western Samoa, with Antigua for the unrestricted licence. Irrespective of the jurisdiction you decide to proceed with, it will be necessary for you to furnish the following: 1) References from a leading bank, leading firm of lawyers and leading firm of accountants on each shareholder and each director.

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Invisible Banking 2) Police clearances. 3) Evidence to satisfy the authorities that the shareholders/promoters of the bank have substantial wealth and assets. 4) A detailed business plan which outlines the type of business that the bank will undertake, the way in which that business will be handled by the bank and estimates of turnover for the first 3 years. This is perhaps the most important document. 5) Evidence that the required minimum capital is available. 6) Curriculum Vitaes on all directors and shareholders which should show some expertise in running a financial institution/bank. This is the minimum required documentation. As you can see, some authorities will require that local directors be employed who are actually going to run the bank. In all jurisdictions it is always helpful if a local director who has banking expertise attaches his name to the application especially if the other directors are unable to show any relevant experience. Local incorporation agents can usually provide such directors upon request. Incorporation Agent that establishment worldwide:

can

assist

with

Bank

International Company Services Sovereign House 109 Lower Baggot St Dublin 2 Ireland Contact: Ms Eilish Murphy - Director Phone 0011 353 1 661 8490 Fax 0015 353 1 661 8493 If you would like further information on incorporating your own private bank, The Invisible World can give you names and

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Offshore Banking and Investing in Privacy addresses of further agents that can assist you. An order form is included in the back of this book.

Private Banks set up by Private individuals….. made good! Bank Crozier is one of the most professional examples I have come across of how to take a cheap offshore bank licence and turn it into something of quality. Bank Crozier have been accepted by all sides of the offshore community and, whilst remaining low profile, have gained a reputation for quality service. Their internet banking is excellent and they have recently introduced online share trading on many of the world’s top exchanges. Bank Crozier is licensed in Grenada and, more recently, in St Lucia, but is owned by a holding company in Luxembourg where they also maintain an office. The ultimate owners are Swedish. http://www.bankcrozier.com and http://www.croztrade.com Loyal Bank Ltd is chartered at Trust House, Kingstown, St Vincent, along with a whole stable of other offshore banks. This is in fact the local office of a major trust company and you, too, can run a bank from this address if you contact St Vincent Trust or their Liechtenstein associates http://www.saintvincent-trust.com But unlike many of their stable mates, the directors Loyal Bank have established a serious and efficient operation which is centred on their representative office in Budapest, Hungary. A visit to their multi-lingual website at http://www.loyalbank.com will provide information on their latest account offerings. In general account opening is simple, no fuss and no references, and no large minimum deposits.

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Chapter 10 Tax Haven Strategies Introduction The use of tax havens in day to day corporate life has, grown to be almost mainstream these days. To the small businessman and the private investor, the use of tax havens still probably seems a little shady. This shouldn’t be the case any more, as the use of tax havens to reduce tax or just defer it for a while, is now accepted practice all over the world. Many of the largest accounting and audit firms have departments advising major corporations how to structure their operations offshore. Tax havens have a strong appeal for many multinational companies established in foreign countries because of the advantages they offer for the legitimate avoidance or deferment of taxation on certain profits earned offshore. Profits harboured in a tax haven enable working capital to be used in the cheapest way possible. Traditionally, the tax haven has been used as a central point for handling paperwork and preparing and processing international trade documents. Many companies utilise tax havens for the passage of title of goods, so these transfers can proceed without the need for mountains of regulations and fees. Tax havens are also popular as places to administer patent, trademark and royalty agreements. Because of the intangible nature of patents, trademarks and royalty agreements, they are

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Offshore Banking and Investing in Privacy easily moved from one jurisdiction to the other and the cost of doing this is very low in tax haven jurisdictions. For instance, if a company with branches and subsidiaries overseas is a resident of a country with strict foreign exchange regulations, it may not want to repatriate the profits simply because if it did, it may have problems being able to transfer the funds back out if it wanted to reinvest them offshore. To solve this problem, it establishes a foreign intermediate holding company in a tax haven, not for tax reasons, but to avoid the foreign exchange control problems that it’s own country has imposed. By simply interposing a tax haven company in a corporate structure does not result in the reduction of onshore taxes in most cases, but it may allow tax deferral. Eventually, the parent company will receive the income and when it does it will be taxable and possibly without the benefit of foreign tax credits that may have been available had the profits been repatriated from a tax treaty country. Most tax havens don’t have tax treaties with major countries such as Australia, which prevents the favourable use of lower withholding taxes that would have been available had the country been a signatory to a tax treaty. To appreciate how using a tax haven can be beneficial to a normal business transaction, I have put together an example of a simple structure that is typical of the sort of problems that may arise between two countries. Company ABC which is located in Country A owns the patent to a product.

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Invisible Banking Company ABC receives a substantial amount of income as patent royalties from Company XYZ which is a resident of Country B. There are no tax treaties between Country A and B. The royalty from Company XYZ must pay 30% withholding tax on the payments it makes to Company ABC. This is the withholding tax rate imposed by Country B in relation to payments to Country A. And when the payment is received in Country A, Company ABC must pay tax on it at a rate of 36% on the remainder. This means these royalties have been taxed 55.2% in total. To reduce this tax, Company ABC creates a patent holding company, Company TH in a tax haven, Country OS. Country OS and Country B have a tax treaty which allows royalties paid in Country B to Country OS to be taxed only in Country OS and not taxed in Country B at all. The tax rate in Country OS is only 5%. Country A and Country OS also have a tax treaty and this allows royalties paid in Country OS to companies in Country A to be able to claim a foreign tax credit for the tax paid and withholding tax paid in Country OS. Company TH in Country OS then forwards the balance to Company ABC in Country A after deducting a withholding tax of 10%. This means the total deducted by Country OS has been 15%. The royalty is then received by Company ABC in Country A and is taxed at 36% on the balance less the foreign tax credit of 15% on the total. The total tax percentage incurred on the whole transaction was less than 31%. Compare this to the

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Offshore Banking and Investing in Privacy 55% they would have paid had they not used the tax haven. Country A Company ABC Receives Patent Royalties

No Tax Treaties exist between these two countries

Flow of Royalties

Country B Company XYZ Pays Patent Royalties

Flow of Royalties Tax Haven Country OS Company TH Tax Treaties exist OS-B OS-A

It is often worthwhile for a company to establish a subsidiary in a tax haven and give it a large bank account. The subsidiary is then able to lend out money to another foreign subsidiary after opening a time-deposit account that acts as collateral for the loan. Interest earned on the deposit account in the tax haven accrues free of tax. However, the borrowing of the loan by the onshore company may be tax deductible. This could be an opportunity available to those who wish to incorporate their own offshore banks. Real Estate Strategy Real estate investors could benefit by holding his or her properties in an offshore company. This is permitted in all tax

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Invisible Banking havens except Luxembourg. For example, not only do you achieve ownership anonymity. You gain the possibility of limiting capital gains tax liability by the owner of the company selling the shares in the company which is a foreign asset, instead of the property itself. This means if you want to sell a property, you simply sell the company to the buyer. As far as anybody is concerned, the property is still owned by exactly the same offshore company. It’s only the ownership of the company that has changed. Keep in mind this company does not have to register in Australia because it is exempt from registration if all the company does is hold property. Just ensure if you wish to do this, keep one property per company otherwise it makes it difficult to sell the company if you only want to sell one property. The buyer would also be able to achieve the same situation in the future and would benefit by not having to pay stamp duty in the first instance as in reality, the property has not changed hands.

Offshore Licensing and Patent Holding Companies Royalties or licence fees can be, in certain circumstances, sheltered from taxation by using an offshore licensing company. For instance, the owner of a patent can create an offshore licensing company and assign the rights to the offshore company. In turn, the offshore company then has the right to licence the patent to a foreign subsidiary. By having the royalties paid to the licensing company in a tax haven, profits are effectively shifted from the foreign subsidiary to the offshore patent owning company, which pays little or no tax on the royalties received. Income from other intangible rights, such as trade marks, copyrights, know how and franchising rights, can be earned without incurring withholding or

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Offshore Banking and Investing in Privacy income tax if a tax haven company is established to sublicence other companies in various countries. A tax saving can also be achieved on patent royalties by combining tax havens. Australia only deducts 10% withholding tax on Dutch companies. Therefore, if a tax haven company was established in the Netherlands Antilles with a Dutch subsidiary, and licences its Dutch patents to the Dutch company, the Dutch company, in turn, can licence to the Australian manufacturer. The Australian company can then pay the Dutch subsidiary patent royalties incurring only 10% tax. The Dutch company can then pay the royalty to the tax haven company (which is the patent owner), thereby avoiding Dutch withholding taxes on dividends. The Dutch company is not taxed in the Netherlands, and the tax haven company avoids any further taxation. Total tax is 10%. It’s possible to use a whole network of tax treaties and havens to good effect. Another example of what we’ve been discussing would be if a German patent owner assigned its patent to a Liechtenstein holding company. It then grants a licence to a Swiss company, which in turn licensed an Australian company. The Australian company would pay royalties to the Swiss company, which would only incur a 10% withholding tax. The Swiss company then pays a back-to-back royalty to the Liechtenstein company without any tax liability being incurred. The Liechtenstein company pays no profit or any other type of tax on the royalties received. The royalties can remain in the Liechtenstein company for as long as required or until the German company requires the royalties to be forwarded. As a further incentive, the Australian company could be owned by the German company and therefore a lot more

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Invisible Banking of the Australian profit before tax could be absorbed this way thus reducing Australian taxation. Offshore Financing A group of companies can use an offshore finance company to channel loans to an onshore subsidiary. By paying interest to the offshore finance company, the profits are effectively transferred from the onshore company to the offshore one. The onshore company would receive a tax deduction for the interest paid, and the offshore company would be exempt from tax because the income was earned offshore. It may be necessary to channel the interest through a variety of companies to reduce withholding taxes imposed on the interest. The offshore finance company is often used to raise funds for the whole group. When arranging these loans, the group must be careful not to breach any antiavoidance legislation that may affect the deductibility of the interest on the loans. Often this has been achieved by placing the offshore finance company beneath the subsidiaries to be financed and lending to each one of them on an individual basis.

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Offshore Banking and Investing in Privacy Holding Company

Subsidiary A

Loans

Subsidiary B

Subsidiary C

Loans

Loans

Offshore Subsidiary Finance Company – A Tax Treaty Jurisdiction to reduce withholding tax

Conduit Finance Companies are used to good effect by corporations to take advantage of Double Tax Treaties. The finance company would be established in a country with a tax treaty with Australia and then would forward the balance of interest onto a tax haven by way of back to back loans. The interest payment represents a tax deductible expense in Australia, but there also remains a small margin that will be subject to full taxation in the jurisdiction where the Conduit Finance Company was established. A suitable location for a Conduit Finance Company will require: An extensive network of double taxation treaties No or low withholding taxes on interest payments Corporate tax rules that allow the full deductibility of interest expense paid to non-residents.

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Invisible Banking The ideal location is the Netherlands. It has an extensive network of double taxation treaties. The Netherlands also has another major advantage, it imposes no withholding taxes at all on interest payments by a Netherlands company, regardless of where the recipient is located. This means that a Dutch finance company can pay interest to a tax haven company without withholding tax being deducted. Interest payments to a Dutch company are fully deductible for corporate income tax purposes, provided they are on commercial terms. Generally, 0.25% (quarter of one percent) is regarded as acceptable.

Australian Company Requiring Loan Loan to Aust. Coy at say, 12.25%

Finance Borrowed by Tax Haven Coy. At say 6%

Tax Haven Finance Company

Loan to Conduit Finance Coy at say 12%

Conduit Finance Company The Netherlands

On the above example, based on $100,000 loan, the Australian company would pay $12,250 in interest each year, which would be tax deductible. Withholding tax would

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Offshore Banking and Investing in Privacy deduct 10% on its way through to the Netherlands. This would leave $11,025 as income to the Netherlands company. This would then be offset by the loan with the Tax Haven company at 12%. This would leave a taxable income in the Netherlands of $225. The balance of $10,800 would be transferred withholding tax free to the tax haven company and the tax haven company would pay $6,000 interest on the original 6% loan. The amount of $4,800 would remain tax free in the tax haven jurisdiction. In instances like this, the lender may adjust the payment of interest to account for the Australian withholding tax, and this would also be tax deductible in Australia. Double Interest Deduction Companies In certain circumstances, offshore finance companies may effectively achieve a double interest deduction for a group by using sometimes complex structures. As an example, a group of companies borrows funds that are then injected into a finance company resident in a tax haven. The tax haven company then lends the money at a commercial rate to subsidiary companies within the group that are in different countries. This lending is often put through a Conduit Finance Company located in the Netherlands to take advantage of its double tax treaties. This can achieve a double tax deduction because the parent company has borrowed the funds and must pay interest and also the subsidiaries have also borrowed the same funds and must also make interest payments. One lot of money lent out twice creates two tax deductions and because the parent company and the subsidiaries are in

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Invisible Banking different countries the relationship of the funds is hard to link. In effect, interest is paid twice to the tax haven company and repaid once on the external borrowings with the profit of one lot of interest remaining offshore and tax free. Anti-avoidance legislation issues can be dealt with by ensuring that the companies involved have a commercial presence in each of the countries involved rather than a presence simply to facilitate tax minimisation. This can be done by having ‘employees and a permanent office’ involved in ‘legitimate’ activities.

External Borrowings Tax Haven Finance Company

Australian Parent Company Equity Capital

Loans

Netherlands Finance Company

Loans

Foreign Trading Subsidiaries

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Offshore Banking and Investing in Privacy Captive Insurance Companies A captive insurance company is a wholly or jointly owned foreign insurance subsidiary incorporated in a tax haven in which there is no tax or a minimum of tax on income from premium. Premiums paid to captive insurance companies are often tax deductible. There are a variety of good reasons for a larger sized business to consider an offshore insurance subsidiary, they include: Lower insurance costs because things like commissions, marketing and costs and other overheads are eliminated. Increased liquidity due to the premiums being available to invest offshore and this in itself creates profits available to the group. Ability to insure risks not normally insurable onshore. Superior coverage terms by writing a policy to suit the needs of the group. A captive insurance company is paid premiums to insure risks around an international group and then reinsures those risks around an international group and then reinsures those risks in the market. Reinsurance is also cheaper than insurance. Over a period of time the captive insurance company accrues substantial profits from its investment of the premium until such time as reinsurance is no longer necessary. Shipping Companies Most of us have noticed that it seems most of the world’s freight and container ships seem to come from either Liberia or Panama. This isn’t because these countries have huge merchant fleets, but because ship owners can

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Invisible Banking register their ships and shipping companies in these places and virtually avoid all taxes and at the same time reduce the cost of registering their ships. Other tax havens that offer favourable terms and benefits to shipping companies are the Bahamas, Bermuda, the Caymans, Cyprus and the Isle of Man.

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Chapter 11 Recommended Safe Banks As you investigate banks around the world, you may possibly run into ‘sham’ banks or banks setup by private individuals. Some of these banks issue credit cards (supposedly) and charge you a fee to examine your application. Sometimes their agents in Australia will declare ‘if you are broke or bankrupt, we will give you a card – No credit checks!’. Be warned! 90% are a rip off and you will never see the card nor will you ever see your fee returned. Only deal with legitimate banks and DON’T pay anybody a fee to open a bank account unless you are sure of what you are getting. It’s a jungle out there! Here are some banks that won’t rip you off. If you come across a bank you haven’t heard of and they aren’t on my list – stay away! Anglo Manx Bank - in the Isle of Man Banco di Roma – Monaco Banco General - Panama Bank Agricol – Andorra Bank America Trust - Caribbean Bank in Liechtenstein Bank of Bermuda – Bermuda and Gurensey Bank of Scotland Banque National de Paris – English speaking branches are good. Barclays Bank – Great anywhere BSI – Lugano , Switzerland Butterfields Bank - Bermuda

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Invisible Banking Cater Allen Bank – Channel Islands and Isle of Man – Very good Cortal Bank – Luxembourg Credit Suisse – Caribbean Croatia Banka – Croatia (the place is a little dodgy) Edmond de Rothschild – Monaco Finsbury Bank – Cayman Is. Grindlays – Jersey (Careful, they are Australian owned) Guiness Mahon – Guernsey Hong Kong Shanghai Bank – British owned not Chinese Leichtenstein Landesbank Lloyds – worldwide Midland Bank National Westminster – Isle of Man and the Channel Is. Raiffeisenbank Kleinwalsertal – Reizlern, Austria Snoras Bank – Lithuania Standard Chartered – Isle of Man and Channel Islands – Excellent Swiss Banking Corp. The Abbey National Treasury Int. – Jersey The Co-operative Bank – Guernsey TSB Bank - Jersey Union Bank – Czech Republic Union Bank of Switzerland VP Bank – British Virgin Is. Woolwich Guernsey Zuger Cantonal Bank – Zug, Switzerland

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Index A

C

Accrual Taxation System · 21, 22 Albany International · 74 Andorra · 34, 51, 52, 53, 179 Anonymous Accounts · 68, 88 Anonymous Bank Accounts · 88 anonymous Sparbuch accounts · 54 Anti-Avoidance Provisions under Section 25A · 152 Antigua · 161, 163 Asset protection · 13 Asset Protection · 2, 17, 63, 150, 151, 152 ATM · 99, 100, 102, 128 Austria · 34, 54, 55, 56, 75, 89, 90, 91, 92, 94, 99, 153, 180

Cater Allen · 38, 73, 180 Cayman Islands · 4, 5, 8, 16, 62, 63, 157, 161 Certificates of Deposit · 97 Channel Islands · 4, 7, 16, 34, 65, 66, 67, 68, 71, 108, 180 Controlled Foreign Companies · 21, 23 Credit Cards · 66, 99, 101, 106 Credit Suisse · 5, 38, 84, 180 Croatia · 93, 94, 180 Current Accounts · 66, 95 Czech · 6, 68, 69, 91, 92, 95, 113, 180

B

Debit Cards · 66, 99, 101 Deposit Accounts · 96 Designated Concession Income · 24, 25, 29 Division 13 · 21, 32 Division 13 of the Tax Act · 21 Division 6AAA · 153, 154 double tax agreements · 20 Double Tax Agreements · 31, 123

Bahamas · 4, 6, 16, 56, 57, 58, 157, 163, 178 Bank Cheques · 119 Bank Secrecy · 45 Banque Union de Credit · 132 Barclays · 5, 38, 58, 60, 64, 67, 73, 85, 140, 179 Bearer bonds · 118 Bearer Bonds · 117, 127, 130 bearer shares · 20, 66, 111, 135, 138, 152, 153, 154 Belize · 16 Bermuda · 4, 5, 6, 34, 59, 60, 61, 178, 179 Borrowing Money Offshore · 139 British Virgin Islands · 6, 14, 61, 62, 135, 138, 161

D

E email · 17, 36, 110 E-mail · 43 employee · 20, 28, 54, 102, 107 F Fiduciary Accounts · 97 Fleming Fund Managers · 79

181

Invisible Banking Lloyds · 5, 38, 58, 66, 72, 83, 140, 180 Luxembourg · 4, 6, 8, 16, 31, 34, 77, 78, 79, 170, 180

Foreign Investment Funds · 26 G Gibraltar · 7, 14, 16 gold · 99, 124, 127, 132, 144, 145, 146, 147, 148 Guernsey · 4, 5, 6, 28, 65, 66, 67, 108, 180

M Magnum Global Investments · 58 Mercury Fund Managers · 74 Midland Bank · 64, 72, 73, 180

H N

Hansard · 74 High Yield · 143 Hong Kong · 4, 33, 70, 137, 138, 139, 180

Nauru · 7, 161, 162 Netherlands Antilles · 5, 16, 137, 157, 171

I

O

Income Tax Assessment Act · 152 International Business Company · 134 International Company Services · 164 Investment Accounts · 98 Ireland · 5, 7, 16, 34, 164 Isle of Man · 5, 14, 34, 38, 67, 71, 72, 73, 74, 129, 138, 140, 153, 154, 157, 178, 179, 180

Offshore Information Notice · 35 P Panama · 5, 80, 177, 179 perpetual traveler · 32, 33 Precious Metal Accounts · 98 R Royal Bank of Canada · 5, 64

J S

Jersey · 4, 6, 15, 38, 65, 66, 67, 68, 73, 135, 136, 153, 180 L Liechtenstein · 34, 62, 74, 75, 76, 77, 96, 171, 179 Lithuania · 94, 95, 180 Lloyd v. Sully · 32

182

Seychelles · 5 Singer and Friedlander · 72 Single Premium Insurance Policies · 124 Skase · 30, 54 sparbuch · 93 Sparbuch · 54, 68, 89, 91, 93, 99 St Kitts and Nevis · 15 Standard Chartered Bank · 66

Offshore Banking and Investing in Privacy Swiss Annuities · 130, 131, 132 Swiss Overseas Consultants · 90 Switzerland · 4, 29, 34, 54, 55, 75, 76, 78, 81, 82, 83, 84, 90, 96, 130, 157, 179, 180

Turks and Caicos · 34, 84, 85, 153, 161 Twin Accounts · 98

T

Union Bank of Switzerland · 132

tax evasion · 7, 19, 78, 81, 88, 102, 105, 126, 134 Tax Information Exchange Agreement · 59 Templeton Investment · 79 the Foreign Investment Fund · 21 The Invisible World · 1, 2, 3, 10, 20, 30, 57, 111, 134, 144, 159, 164 Traveller’s Cheques · 120 Turks & Caicos Islands · 16

V

U

Vanuatu · 7, 16 VANUATU · 162 W Western Samoa · 163 Wire Transfers · 119

183