Editor’s note: the following is an extract from this weekend’s Q Bytes newsletter. If you would like a free, no-obligation, no-spam subscription to Q Bytes, please click here.

This morning I got up bright and early to write Q Bytes, only to be hit by computer problems and spend the next two hours trying in vain to fix a video driver issue. Of course I have my secure laptop – mainly used for e-mail – as backup, but when writing I like to use my big monitor, the one on which I cannot now fix the resolution.

This problem reinforced the extent to which we rely on technology in our day-to-day lives. The vulnerability. The world we live in is all interconnected, at many levels… We all know that technology is not foolproof. And even more ominously, we all know that technology includes an on-off switch that somebody controls.

For example: What if the networks used for ATM machines and credit/debit card payments went down, even for a day or two? Can you imagine the panic? I think the chances of this actually happening sometime in the not too distant future are pretty high, all things considered. It may be due to technical problems, or a cyber attack… or it may simply be a conscious decision by those with access to the on-off button.

I remember a few years ago when Northern Rock Bank collapsed in the UK, millions of pounds were transferred out via internet banking during the night by desperate account holders until the system ‘mysteriously collapsed.’ This was one bank, very small in the global scheme of things. I wonder how that would pan out on a bigger scale… like a run on the dollar, if China decided to stop supporting Bernanke’s printing press?

Financial markets are particularly at risk. After the events of September 11, 2001, financial markets were shut down for several days. If a catastrophe of similar proportions, natural or man made, were to hit the USA, it’s a safe bet that the same thing would happen again – a so-called ‘bank holiday.’  Even a purely electronic catastrophe could hit the financial markets. Brokerage accounts would of course be blocked. Where would that leave all those people who have bought gold through the stock markets as a ‘safe haven’?

And for those who worry about how to avoid gold confiscation, similar to what happened in the 1930s… if you were the government, would it be easier to go round door-to-door hunting down physical gold for confiscation… or would you just switch off the stock exchange and seize something like the SPDR GLD ETF? There’s $58 billion dollars right there in just one company…

A seizure of financial assets would be politically unpopular. An “emergency equities sales tax,” however, presented as a windfall tax on evil speculators who have brought the country to its knees, might be more palatable for the masses. Forcing people to put their retirement funds into government bonds or state pension plans (empty promises) for ‘security reasons’ would be seen as protection for the masses. We’ve already seen this exact technique used in France, Hungary and Argentina.

Going back to the technology, our systems are so delicate these days because they rely on the internet. Even a decade ago this was not the case. Now, everything from your TV and home heating system, to the checkout at your local store could stop functioning if there was no internet. I consider all this interconnection a huge risk. The world is getting more fragile all the time. We are living in strange times where anything could happen.

You might think I am very pessimistic. But that’s not the case. I just like to analyze risks, do my best to minimize them, then carry on with enjoying the good things in life. That is where we at Q Wealth differ from conspiracy theorists, survivalists or ‘preppers.’

Preppers might want to build a backup internet system using ham radio data transmissions. They might fill up their basements with canned and dried foods. That’s a perfectly valid option, but I would be more inclined to make sure if there was a major catastrophe, I could be sure of getting quickly to a second home in another country with a well-stocked wine cellar, from where I could safely manage my investments in farmland and physical precious metals that don’t depend on stock markets or internet.

Knowing that I have my family taken care of, enough assets protected in the best offshore banks, the right residencies and second citizenships in place, rather than leaving any of this to chance or conventional wisdom, allows me to sleep soundly at night.

Beyond that, and more excitingly, we are investors and speculators at heart – we know how to manage risk. That is what we do best. And all this uncertainty going on in the world is actually a  fantastic opportunity – probably a once-in-lifetime chance to generate real, long term wealth. As long as you understand the risks, you can not only prepare for them, but turn things around to your financial benefit.

This is our philosophy at Q Wealth. Security – with an investing and financial focus. If you’d like to hear more, the first thing to do is become a full member. The second thing you should do, once you are a member, is interact with our office. We have some great people who have access to little-known practical solutions to protect and grow your wealth in a secure offshore environment. A lot of it’s written up, but even more is in our heads, and everyone at Q Wealth can point you in the right directions.

HONG KONG EVENT EARLY BIRD SIGN-UP

This leads me right in to our next point, the Q Wealth Symposium, taking place in Hong Kong this October. We had a couple of very successful conference calls on this topic this past week, and many astute readers have already signed up, taking advantage of our early bird bonus.

However, if you missed the calls for any reason, don’t worry, you still have a chance…

You should plan to be in Hong Kong for three days: October 21 and 22 will be ‘classroom’ style presentations and discussions, whereas on the 23rd the presenters and others will be available for informal meetings. For example, we will have bank representatives from our best offshore banks on the spot, so if you bring the right documents with you you’ll be able to get your offshore bank account number then and there. This will be your opportunity to open a multi currency account or a non-dollar-denominated private bank account. You will be able to meet international private bankers at the event.

We’ll be covering topics like banking and secure investing, gold and silver purchase and storage (including gold storage in the Singapore free zone), and second residencies and passports, in a lot of detail. You’ll have a chance to meet the presenters as well as other like-minded individuals to exchange ideas. You can expect to leave this event having joined the dots… in other words, with a detailed road-map of where you want to get to and the specific practical steps you need to take to get there.

If you’re looking for information on how to protect assets in your retirement nest-egg, pass on value using trusts and foundations to the next generation, start a new international business, or take advantage of offshore investment opportunities in the new economy, this event is for you.

There’s a good reason why we have chosen to hold this event in Hong Kong, the obvious platform for investing in China. You’ll learn about how to buy or invest in Chinese currency, yuan renminbi, for example. But it’s not a Hong Kong centric event. We’ll also be talking about practical banking, investing and residence opportunities in places like Switzerland and Singapore, Panama and Latin America.

Until the end of May we are offering a substantial early bird discount, and I would encourage you to sign up now as places are limited. If you have any specific questions, please email Fredrick on events@qwealthreport.com – or to sign up go to our Events Page.

It’s not often that major developments occur in Southern Europe in the month of August. Montenegro’s announcement of its new instant second passport by investment program this past week is an exception.

Perhaps the Montenegrin government hoped to avoid the inevitable backlash from certain nationalist and socialist politicians in the European Union, while attracting the attention of wealthy Americans, Russians and Chinese at whom the program is aimed.

Montenegro has just become only the third state in the world to offer an economic citizenship program, along with the Caribbean island nations of St Kitts and Nevis and the Commonwealth of Dominica. Austria has a similar program with a few more strings attached, while Paraguay, Uruguay and the Dominican Republic are known for their relatively liberal grants of second citizenship after a period of residence. (More information on citizenship by naturalization programs.)

Montenegro is the youngest country in modern Europe, having voted for independence and achieved international recognition in 2006. However its history dates back to Byzantine times. (See Wikipedia entry on Montenegro)

Since independence, Montenegro has boomed, fuelled by a surge of foreign offshore investment… to date mainly from wealthy Russians who have felt comfortable with its Slavic culture, stunning coastline, visa-free travel to the European Union, and confidential offshore banking regime that has been substantially cleaned up following some scandals in the 1990s.

By launching an official economic citizenship program, however, the government of Montenegro hopes to attract investors from further afield, by co-operating with international law firms, trust companies and offshore service providers. We don’t doubt they are taking aim at the huge Chinese market, as well as the increasing flow of Americans who – spurred on by policies like Obamacare and the HIRE Act – are looing to renounce US citizenship for tax, privacy and asset protection reasons.

The new Montenegro economic citizenship program will require an investment of at least EUR 500,000, some of which goes direct to the Montenegrin Treasury and the rest of which must be used to generate business and employment in Montenegro.

Although the announcement is new, insiders have been suspecting for some time that Montenegro passports were available to prominent wealthy investors. One of the most infamous to date is former Thai prime minister Thaksin Shinawatra, who now travels on a Montenegro passport. Mr Shinawatra was convicted in absentia in his homeland on corruption charges, but denies all the charges against him and has announced plans to invest in Montenegro, possibly in some of the luxury hotels along the coast where he has reportedly been staying.

Details of this new second passport program are not yet entirely clear, except that it will be substantially more expensive than established competitors such as the St Kitts and Nevis program that also offers its passport holders visa-free travel to the European Union.

Rest assured however that we at Q Wealth will be monitoring the situation closely and we are already in contact with the government of Montenegro with regard to an interview and citizenship FAQ for the autumn Q Wealth Report. If you are not yet on our free e-mail list, sign up now to receive updates.

A question that comes up frequently is why offshore account opening procedures require so much information. As an offshore banking consultant, I get to see the account opening processes of many different banks in different jurisdictions, and how widely they vary.

I can see both sides of the equation – the bank’s perspective, and the client’s… and my job is to act as intermediary and make sure both parties understand each other. I’ve become quite good at that over the years, if I say so myself.

So, how do you open an offshore bank account? You will typically need your passport, one or more bank reference letters, and proof of source of funds. More on the practical aspects of complying with these requirements in part 2 of this article that I will publish here on the Q Wealth blog next week. But first, let’s look at why all these questions are necessary…

I can fully understand that if clients are seeking privacy, they may not feel comfortable baring their financial souls to their bankers. But there are good reasons why banks need to collect so-called ‘Know Your Customer’ information. And there are steps you can take as a client to manage your banking and to protect the confidentiality of information you hand over.

• The first and foremost reason is because the law dictates it. In all reputable jurisdictions, banks are required to collect certain information. Failure to comply would have absolutely dire consequences that may include closure of the bank and/or prison for its managers. You are looking for security – and dealing with banks that are prepared to bend, break or flout laws is not the way you are going to find security. There are only a few places in the world left where you can still open accounts without ID and – trust me – you don’t want to be banking in those places!

• Secondly, banks also have to protect themselves and their reputations, in order to protect their honest clients. If they take on clients who bring heat to the bank, it is bad news for you. So you should really be happy to deal with a bank that is quite picky about the clients it takes on. For example, if it turns out later that you were involved in white collar crime like running a ponzi scheme or any kind of unlicensed offshore investment activity, the bank will almost certainly be on the receiving end of a lawsuit from people who lose money. Sometimes scammers are very good at hiding their activities, and they look like honest, respectable business people. If the bank has never met you before, they really need to check you out.

• Thirdly, many people compare offshore account opening procedures to opening an account in their home country. This should be obvious, but it’s not the same thing. One thing that might have escaped your attention, though, is the extent of Big Brother databases that exist in your home country. Banks will automatically run a credit report when you open an account, even if you are not applying for credit. They can check you out online. Offshore banks, however, cannot run online credit checks. To do so would leave an electronic footprint that would generally be a breach of confidentiality laws. That is why they have to ask new customers for a lot more paperwork. Of course, it’s more convenient for the customer that the bank can verify everything online and doesn’t have to ask the customer for so many documents. But such online checks completely nullify any expectation of privacy in the relationship.

• Finally, it’s just good business for banks to know their customers. If they know a bit about who they are and where you are coming from, they can give you better quality advice and they can respond more intelligently to your requests. They can be proactive in offering services you might need, that you might not even know existed. Having a good relationship with your private banker is absolutely beneficial. That banker will be more motivated to look after you. Try to be a ‘perfect client’ for the bank – that way, if for some reason you really need a special favour from the bank at some time in the future, you are much more likely to get it.

Banking secrecy, as I’ve often said, is far from dead, despite the propaganda that would have you believe otherwise. I even believe now that the tide has turned. Bank secrecy is a basic human right, and is more necessary than ever. What is rather passé is trying to use bank secrecy for illegal tax evasion, by holding undisclosed accounts. By taking good advice, choosing the right banks, using international asset protection structures, and carefully managing your residence and citizenship, always staying within the law, you can still keep your finances completely and utterly private. Nobody is saying it’s easy… but you can do it, and it’s worth it.

So, as one of my banker friends is fond of saying, if you unilaterally choose to waive some of the account opening requirements, you will just be causing delays for yourself. Clients who try to avoid complying with requirements will be viewed as suspicious right away. Then, trouble ahead is almost a self-fulfilling prophecy.

Bottom line? If privacy is a concern to you (and it should be) do your homework and choose a bank where you can be confident that your information will remain private. Do your due diligence on the bank first. You should only do business with people you feel 100% comfortable with, and this applies to banks and any other business relationships. Anything less than 100% and you won’t sleep soundly at night. The Practical Offshore Banking Guide 2010 can help you do this due diligence. Once a bank has passed your own due diligence smell test, then be prepared to give them the truth, the whole truth, and nothing but the truth.

More Americans than ever before are renouncing US citizenship. That’s the conclusion of a recent article in the New York Times. The steady stream of US citizens expatriating is turning into a flood – to the extent that many US consulates now have a waiting list for appointments to renounce citizenship.

Taxation, offshore investment and banking issues are, unsurprisingly, the main reasons given for renunciation by former Americans. The most productive Americans no longer want to be American… because they don’t feel they are being treated fairly or reasonably by their government.

American expatriates are furious at US attempts to tax their worldwide income… but the straw that broke the camel’s back in this case is the fact that due to the HIRE Act and money laundering legislation, both US banks and offshore banks are beginning to treat American passport holders as personas non grata, denying banking services and unilaterally closing bank accounts.

There’s an interesting change of mindset going on too, according to the NYT article. I quote:

“What we have seen is a substantial change in mentality among the overseas community in the past two years,” said Jackie Bugnion, director of American Citizens Abroad, an advocacy group based in Geneva. “Before, no one would dare mention to other Americans that they were even thinking of renouncing their U.S. nationality. Now, it is an openly discussed issue.”

…

“It is a sad outcome,” Ms. Bugnion said, “but I personally feel that we are now seeing only the tip of the iceberg.”

Renouncing American citizenship certainly doesn’t have the stigma attached to it that it might have had in the past. It seems to many like a smart business decision. Of course what the Times didn’t mention is the fact that in order to renounce American citizenship, the person renouncing must first have a second citizenship.

Many Americans are entitled to European Union or other countries’ citizenships based on ancestry – having a parent or even a grandparent born in other countries can open up a door to obtaining a quick and cheap second passport.

Those who are not so lucky may look instead to economic citizenship programs such as those of the twin island federation of St Kitts and Nevis, or the nature-island nation the Commonwealth of Dominica, the only two countries where one can still ‘buy’ citizenship. (Dominica and Dominican Republic are two different countries, often confused) The cost of such programs is usually in the six figure range, but it still makes good business sense to those who might be paying hundreds of thousands or millions a year in taxes. With the St Kitts and Nevis program, at least, one can invest in real estate and hopefully resell the property at some point in the future.

Fortunately, there’s a third route for those who are not millionaires, but still cherish their freedom: obtain a second citizenship through naturalization. This can typically be achieved for under $10,000, though of course it takes time… typically 3 – 7 years, depending on the country chosen and the category they are applying under. Some of the best countries for those wishing to follow this route are Uruguay, Paraguay, Dominican Republic and Ecuador.

More information on second passports and citizenships appears regularly in The Q Wealth Report. If you’re not yet a member, you may choose to subscribe to the full privately-published newsletter, or sign up for the ‘lite’ free offshore asset protection and second citizenship news in Q Bytes.

Many of our readers are interested in offshore investing and offshore investment funds, and they frequently contact us for advice. The question we are most frequently asked is: Do high yield investment programs really exist?

In this article we look first at offshore investing scams and how to avoid them, then we will move on to the topic of genuine alternative offshore investment opportunities that can legitimately generate high returns for investors.

Of course,  programs referred to as HYIPs (High Yield Investment Programs) do exist, but most of them are scams – or more specifically ponzi schemes. There are internet HYIPs where you can invest $10 and get $20 back the next day. And there are more sophisticated scams, involving complicated terminology like ‘bank debentures’ or ‘standby letters of credit’. There are whole websites dedicated to scam concepts like ‘offshore fund leasing.’ People frequently lose hundreds of thousands of dollars to these more sophisticated rip-offs. Such funds, once lost, are almost impossible to recover.

One of the ironies about such deals is that the scammers often claim that they are making money with exotic named things inter-bank trading, seasoned notes, and other mysterious offshore financial instruments… some so secretive that ordinary bankers don’t know they exist!

Years ago we used to ridicule such ideas. We used to say that the bankers didn’t know about them simply because such things don’t exist. But the last few years have proven us wrong – there are indeed weird things going on behind the scenes that most bankers don’t understand or even know about! For starters, most bankers don’t seem to realize the facts about the giant Federal Reserve scam, a privately-owned company, printing money backed by nothing, that is responsible for the devaluation of the dollar. And very few bankers understand or have even heard of the mysterious forex operation CLS Bank that settles around $5 trillion worth of transactions every day. The lesson here is that all good scams have an element of truth.

But, here at Q Wealth we like to accentuate the positive. So let’s rephrase the question a bit. Are there any legitimate offshore investment funds where you can make say 10% or 15% return with little risk? The answer is yes, such opportunities do exist. But it does take some work to find them. And once you find them, you should be prepared to dedicate some time to monitoring them.

The general rule is that the higher the rate of return, the higher the risk. Some people are happier than others to accept risk. For example you might dedicate a small part of your investment portfolio to high risk ‘play money’. Younger people can generally afford to accept a higher degree of risk than persons approaching retirement. Absolutely the worst thing you can do, of course, is to put everything into one offshore investment because the worst can always happen.

So where do you find such opportunities? In Q Wealth Report of course! We are constantly on the lookout for genuine investment opportunities and funds that have the offshore advantage. What is the offshore advantage? Since there is no tax deducted at source and no automatic reporting, you can often roll over profits and reinvest them, rather than paying tax on the income. Over a period of five or ten years, the compounding effect can be huge.

The rule of thumb is that with onshore investment funds you might take three steps forward, then two steps back as the tax is deducted. With offshore investing funds, you take three steps forward, then the next year you take three steps forward again… and so on, and so on.

In our flagship Q Wealth newsletter, we frequently spotlight offshore investment funds and opportunities that we have done full due diligence on. There is always a risk, but we can help you minimize it. Since the investments we feature are generally managed offshore, you can participate as a sophisticated investor or via your offshore corporation, foundation or IBC.

Frequently Q Wealth Events also turn into incubators for great offshore investment ideas, that have a potential for high return. Getting together for a few days with like minded, free thinking individuals and simply brainstorming is a fantastic way to get these offshore income generating opportunities off the ground. Our next event will be in Ireland in September, and we will be focusing it even more than ever on offshore investments. Even if you only have a small amount to invest, consider coming along. Contact us to be put on the list and we will let you know as soon as the dates are fixed.

Finally, if you are interested in our offshore investment advice and are new to this site, don’t miss the opportunity to sign up for our free five part course Secrets of the Super Rich, delivered free and without obligation to your e-mail inbox. You will also receive a free subscription to Q Bytes newsletter, which from time to time features serious high value opportunities too.