Wealthy Latin Americans have been banking in Uruguay for decades, but it is less well known as an offshore banking centre in the rest of the world. That could be good news for your privacy, says offshore banking commentator Peter Macfarlane.

Uruguay has acquired a nickname, “the Switzerland of South America” due to its discreet Swiss style private banks and its low profile participation in the offshore finance business. Although it’s not generally known as a tax haven, Uruguay was one of four countries that acquired a higher profile than they wanted for their offshore financial sector businesses this year, being blacklisted by the OECD / G20 summit as a non-cooperative tax haven. However, in a very civilized manner typical of South America’s most stable country, Uruguay was also one of the first to be removed from the offshore banking blacklist. So what’s the story?

Uruguay today has two different categories of banks. There is the domestic banking system, dominated by two government-owned banks, the largest of which is Banco de la República Oriental del Uruguay (BROU). Founded in 1896, BROU previously performed many of the functions of a central bank. Today it is posible for foreigners to open accounts in the domestic system, but Uruguay Residence will typically be required, and it is hard to open offshore corporate accounts for foreign corporations.

Of more interest to non-residents of Uruguay are the so called ‘S.A.I.F.E.’ These are local Uruguayan entities that are wholly owned by established foreign banks. Their offshore status means that they are prohibited from doing business in the local market: for example they cannot do business with Uruguayan residents, and they cannot offer local checking accounts. They can however provide a full range of commercial and private banking services to foreign, non-resident individuals and companies.

The idea of allowing foreign banks to participate ‘offshore’ in Uruguay was originally to stabilize the local system with the resulting influx of foreign capital. Despite drug money scandals in the early nineties and the fallout from the Argentine financial crisis, Uruguay has managed to maintain a clean, under-the-profile radar – and this is one of its main attractions today.

We frequently introduce our paid-up members to a couple of these foreign banks operating in Uruguay. One is located in the capital, Montevideo, while the other is located in the trendy tourist resort of Punta del Este. A personal meeting is required, but need not be held in Uruguay. For example if you choose to work with one of the Swiss or European private banks with a S.A.I.F.E. in Uruguay, the meeeting could be held at the European headquarters and then the paperwork would be sent to Uruguay to get the account open.

If you would like to know more about how to open an account at one of these offshore banking institutions in Uruguay, check out our Practical Offshore Banking Guide which is available free for download in our Members’ Area. (If you are not yet a member, you can join online right now)

Uruguay, it should be said, respects offshore banking and its bank secrecy in its constitution – definitely a positrive sign.  Notwithstanding inevitable partial piercing of bank secrecy in recent years, the right attitude remains.

Following the OECD G20 blacklisting, for example, furious articles like this one (in Spanish) appeared in the local press condemning attacks on Uruguayan sovereignty by larger nations abusing their powers. Some of the convincing arguments from that article, translated into English:

- The OECD text says that tax havens should bring themselves in line with “international standards” for tax-information sharing, as if it were a UN convention or some other multilateral agreement signed by Uruguay. Really it’s an OECD convention, of which Uruguay is not a member and has nothing to do with.

- Why are they doing this? Because over several decades OECD countries have been expanding and complicating their systems of taxation – out of all proportion with the return these administrations give to taxpayers. In other words – it’s their problem. What does Uruguay have to do with it?

- How does bank secrecy benefit Uruguay? In reality the question isn’t being put the right way. Bank secrecy is consecrated in the constitution. Of course there are limits and norms to bank secrecy, but these aren’t pre-requisites. In other words… it doesn’t matter if it benefits Uruguay or not, it’s a right. Full stop.

Thank you for the translations to offshorenet.com

Finally, any mention of Uruguayan banking on the internet would probably not be complete without a mention of Capital Conservator Treasury Services, a high profile player in the international offshore banking business. Capital Conservator originally set up as a Uruguayan entity but a few years ago they decided to change their place of incorporation, keeping only back office functions in Montevideo.

Q Wealth continues to be your one stop shop for offshore banking and asset protection information. We offer impartial advice you won’t find elsewhere, together with a high level of personal service – including our Q Wealth Events. If you aren’t yet on our list, sign up now and receive our weekly Q Bytes e-mail newsletter as well as our free five part course ‘Secrets of the Super Rich’ covering offshore banking, international asset protection, freedom, and wealth creation.

by Peter Macfarlane, Joint Editor

Most continental Europeans like to take an extended vacation in August. But for those of us in the offshore banking and asset protection business, that just hasn’t been possible this year. I’ve also been relatively quiet in terms of my blogs recently, but it’s not because I’ve been on holiday. Quite the opposite. I’ve been beavering a way at full inboxes and stacks of paperwork from clients. In fact, business this August has been busier than most busy months in other years. It seems people are finally getting the message. Your assets are safer offshore! This in spite of a huge publicity campaign suggesting the opposite and backed by all the media resources the government could muster.

One of the main focuses has been the war of words this summer between Switzerland and the United States. But what practicaln implications does this have for those who already have Swiss bank accounts, or for those who are considering opening a Swiss account for the first time? That is what I will examine in this article.

Last week we heard the news from Swiss private banking giant UBS that they had finally reached agreement with the US IRS. Of course, nobody seriously expected a banking, watches and chocolate trade war – an agreement had to be made after appropriate posturing for a while on both sides. The terms of the agreement are still unclear – probably as part of a face-saving exercise for the IRS. My guess is they really didn’t get much actual data on account holders. Maybe a few thousand blatant tax evaders who had been stupid and lazy enough to evade taxes by holding assets in their personal names in undeclared accounts were turned over. If these people had been following our advice from even ten years ago they wouldn’t have had a problem!

However, the IRS got exactly what they set out to get in the first place. This case wasn’t really about information at all. It was about publicity.

Appropriately for those who speak with forked tongues, the IRS sent out a two-pronged warning message: first, to the US public and the world at large, that ‘Big Brother’ doesn’t approve of offshore banking. Thousands of American citizens with accounts at UBS suffered a lot of sleepless nights, and perhaps quite a few have decided to ‘turn themselves’ in anyway via the current tax amnesty arrangements even though their information never had been revealed and never would be. That is why it is so important, if you want to go offshore, to make sure you have access to the right information (shameless plug for our services here!) Those Americans who still believe and trust their own government – a fast shrinking minority – might be dissuaded from opening further offshore accounts.

The other prong of the IRS war of words was a message to Swiss banks, and to a lesser extent offshore banks in general. Banks across Switzerland and elsewhere have been busy closing the accounts of US citizens, based on ‘policy decisions.’ This again, of course, was part of the IRS’ plan all along. Other banks and governments have been taking note too: for example I’ve been hearing reports from Singapore and Hong Kong of banks closing offshore accounts belonging to Australian citizens, as the Australian government is showing of every sign of stepping up the attacks… probably emboldened by the success of the IRS publicity machine.

UBS was taught a lesson. An interesting article in this week’s Economist entitled Offshore Private Banking: Bourne to Survive, “UBS has been haemorrhaging funds, with an outflow of SFr30 billion ($28 billion) so far this year. But the country’s next four biggest listed banks, Credit Suisse among them, have had private-bank inflows of SFr31 billion.” A point of the Economist article is that people have abandoned the bank (UBS) but not the country or the concept.

Another of the Economist’s points is that most people are not actually in Swiss banks for tax reasons. I’ve long written that tax stopped being the major factor in driving people offshore years ago. Sure, people don’t like to hand over half of the fruits of their labour to the state. I can understand that and I’m sure you can too. But in the bigger picture, it is the distrust of big government that is driving people to protect their wealth offshore.

Tax, just like say electricity or salaries, is an expense people will pay if the environment for doing business is right. It would be a stupid person who would lose 100% of something just to save 50% of it. But what governments don’t get is that they have to make the whole business environment attractive. And the way the government should do this? Just keep their noses out of people’s private business and lives!

As more and more business can be done from anywhere on the planet, why would people stay in a hostile business environment? It’s not just money that economies like the USA, UK and Australia are haemorrhaging at the moment. It’s the smart people like you and me who follow the money.

These days as the Economist says, banking clients are  “mainly in Switzerland for its political stability and well-run banks.” (Since early 2007, 135 banks have “imploded” in the USA, but not one in Switzerland) Nothing to do with taxes. They are trying to escape an unhealthy business environment with factors like inflation, devaluation, bank collapses, civil asset forfeitures and the like.

Why oh why then, and this pains me… would people move their assets into the four largest banks? I’m on record as saying Credit Suisse will likely be the next target. It may be this year, or next year, I don’t know. But Credit Suisse already agreed, for example, to some information exchange with the French government. If you are a new reader here, I invite you to explore this blog and the related articles and you’ll find some of my advice on alternatives to UBS for Swiss private banking. For example my articles on the Best and Safest Offshore Banks and Countries and Alternatives to Swiss Banks for Wealth Management.

The bottom line, however, is that there are better alternatives than big Swiss banks like UBS and Credit Suisse for your offshore accounts – whether you are looking for an active business account, an online trading account, or a more hands-off style traditional Swiss wealth management account. If you would like to know more, that is what we are here for. Our membership costs just $87 per year and entitles you to immediate access to a number of informative downloads – for example our recently updated Practical Offshore Banking Guide. If you are not yet a member, go ahead and sign up right now. Or if you are not yet ready to make that commitment,  sign up for our Free Five Part Course on Offshore Banking and Asset Protection first of all to get a feel for our material…

Anyway… I’ve gone on long enough, but for sure we will be hearing more about this topic. A lot more! I’m just on the way over to Panama City, Panama now and will shortly be reporting more from there on some interesting developments in the way the Panamanian government and banking system is handling the heavy-handed OECD and G20 threats. If you would like to receive this update on the offshore scene in Panama, sign up for our special Free Panama Offshore Report and I’ll be sure to get it to you. There’s no charge – all you need to give us is your e-mail address!

by Peter Macfarlane, Offshore Banking Expert for The Q Wealth Report

To judge from my inbox, the grandstanding by G20 leaders and the OECD is having its desired effect. In fact, it has two aims:

1. Publicity that portrays Brown, Obama and Sarkozy in a positive light while distracting voters from all the problems at home, caused by bankers in their home countries.
2. Scaring people off investing money in tax haven banks (ie, those banks in countries where banking secrecy is written into the law).

Of course, we cannot afford to dismiss the new OECD blacklists out of hand. But neither should we panic. And above all we should not be rushed into decisions that could cause problems down the line. Strategy for building wealth offshore should be well thought out for the long term. If you are one of the many who are concerned that your tax and offshore banking arrangements may not stand up to new scrutiny, then you should be taking some action now to put things right – but not panicking. We are happy to refer our readers informally to appropriate professionals.

Tax evasion through offshore personal bank accounts really is a thing of the past. It’s been passe for years. It’s not a particularly attractive business for any tax haven bank because it has the potential to cause lots of problems for relatively little reward. There are so many ways you can legally protect your privacy without having to rely on bank secrecy. For those who are interested, I’ve written a more in-depth article on the subject of the G20, the OECD and Banking Secrecy here.

We never have and never will promote tax evasion in The Q Wealth Report. We believe in full compliance with all applicable laws. That is what we write about consistently, and we have done so for well over a decade. Our view is that offshore banking is just one essential part of an overall long term strategy. Most of the clients I deal with these days are not motivated so much by tax (although that is obviously one of their concerns.) Most people are going offshore these days motivated more by security, asset protection, and the much better opportunities that exist offshore to profit from the recession. You can work, invest, retire or live in the world’s best tax havens.

My clients detest instrusive, Big Brother style governments. They subscribe to the view that attempts to redistribute wealth will simply end up redistributing taxpayers, who are increasingly voting with their feet. Our belief is that it’s much better to be living legally tax-free in a low-cost, healthy, tropical paradise… earning your living or managing your investments over the internet from a secure country where banking service and secrecy still go hand in hand. Meanwhile you can watch on TV as things get worse and worse in G20 countries, rather than watching from your window!

I’ve always written that if you need to rely on banking secrecy to protect yourself, you might as well give up. By that I mean that if you want to protect your assets, you should hide them where they cannot be found. You should take care to avoid any and all paper trails leading to them. If nobody knows where to find your stash of cash, nobody will ask your offshore bank about you. That is true secrecy. If the taxman knows where your money is, it’s already too late.

I imagine some people will be reading this article as first time visitors to The Q Wealth blog, who are keen right now to know what banks and countries are safe to invest in. Well my basic advice is to wrap everything in secure offshore corporate structures (for example, Belize or Panamanian corporations). Do this through reputable professionals who respect security – not through internet merchants competing to provide the lowest price, who just want to sell you a stack of papers and then move on to the next case (until it is time to charge your annual renewal fee).

If you feel that your financial arrangements are not watertight, then now is a good time to start taking a look at them. Offshore banking is one important aspect of any overall financial privacy and asset protection structure – it is covered in our free e-book The Practical Offshore Banking Guide 2009. Then, you should be looking at other wealth preservation and alternative investment strategies – for example, we have another free e-book covering Precious Metals Investments. Gold Bullion is one of the most secure, inflation-proof investments, and in the e-book we tell you how you can legally buy and store it offshore. Oh, and did I mention that there is absolutely no requirement to report gold bullion on your tax returns?

Then there are many other things you can do to protect your assets and help them grow. Consider second residency or even a second passport. By now we are getting more in to intangibles. Second passports can increase your security and flexibility. Then again, they could solve any OECD/G20 banking secrecy problems at a stroke! By changing your citizenship to a neutral country that does not tax its expatriates, you can give your asset portfolio and offshore bank account a new lease of privacy.

Of course, in this article we can only scratch the surface. The good news is that in our quarterly Q Wealth Report newsletter you will benefit from our first hand reporting and updating of news affecting your offshore investments. We don’t just get our information from the internet. I myself spent last week flying around Europe for a series of meetings with high level bankers and tax haven government officials, because I know the things they say off the record often mean more than the committments they make on the record.

As a subscriber to Q Wealth Report, not only do you obtain instant access to those two e-books plus a series of other special reports and white papers, but you will have access on an ongoing basis to this unique first-hand insight that I don’t believe you will find anywhere else. You will also have privileged access to our network of Q Wealth Experts. These are people located around the world who know and understand, live and breathe, freedom, wealth and privacy.

With the right team on your side, the latest OECD efforts really are “much ado about nothing.”

by Peter Macfarlane, Offshore Banking Expert at The Q Wealth Report

I’m writing today with a pint of Guinness in front of me from a pub in County Cork, Ireland, where I have just arrived to prepare for the Q Wealth event with Richard Cawte and Thomas Bolther this weekend. Over the next few days here on the Q Wealth blog I’ll be giving you very brief sneak insider preview of something I’ll be talking about this Saturday to a select group of readers who have chosen to join us here in Ireland.

In essence, I’ll be talking about the changes being brought about in offshore banking by the UBS case, and the pressure from the USA, France, Germany and elsewhere by means of the forthcoming G20 summit in London. Is it hot air and hype? Or will the offshore banking business as we know it be irreperably damaged? Which are the best private banks for wealth management long term? Are Swis banks still good? These are just a few of the questions I plan to answer.

I’ll also be talking about the strengths, weaknesses and contingency plans of the various private banks and offshore brokerages featured in our 2009 Practical Offshore Banking Guide, and of course I’ll be talking about my new Gold Report – both of which are available right now for download in the Members’ Section here on site.

Check back here over the next three or four days for this series of mini-postings that I’m going to call “The Truth About Offshore Banking and Asset Protection.” This information is absolutely free, as is our Secrets of the Super Rich email course. If you haven’t signed up for the free course yet, please do go ahead and do so! For further information you might enjoy learning about our opinions on the best offshore banks.