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In the last few years and since September 11th
in particular, things have definitely changed in relation to the approach
I have noted from Offshore Review readers who contact me about setting up
some kind of offshore structure.
On the one hand, I now get many e-mails which start with words like "In
view of all the recent erosions of confidentiality, I don't suppose it is
now possible to set up a useful offshore structure ……" and there are
probably many more that now do not even bother to contact people like me
because they think the same.
But on the other hand, with Big Brother Governments daily giving
themselves more power, particularly with asset forfeiture and reporting
demands on banks, I also get many potential clients wishing to do
SOMETHING to protect their hard earned assets but not realising that the
ground rules HAVE changed and things DO now need to be done somewhat
differently.
In the old days, buying an offshore company and setting up a bank account
for it in one of those nice offshore islands which catered for such
structures was the way.
Often the banks did not need much, if anything, in the way of ID for the
signatories to the account and, even if they did, it was on the assurance
that even the existence of the account would not be revealed to anyone.
In some jurisdictions, it was even a criminal offence for banks or other
financial institutions to reveal such details to anyone, and I mean
anyone!
The previously unheard of crime of terrorist money laundering has changed
all that!
Now it is being used by Big Brother Governments all over the world to
make reporting demands on banks to which they never would have previously
responded, but the mere mention of which now makes all banks go weak at
the knees. So much so that they will hand over any and all details that
are in their possession to any government authority who might demand it.
Even banks in jurisdictions which previously have resisted such demands
are having to comply, regardless of what they might still say about
client confidentiality. Otherwise, their governments will simply revoke
their banking licences, as is happening in many of the Caribbean offshore
islands.
So if you have an offshore bank, brokerage or credit card account and the
financial institution involved required any details of your ID when
setting up that account, even if you are using nominees and are not the
signatory to the account, you should now work on the basis that sooner or
later your involvement or beneficial ownership of that account could be
known to Big Brother.
So what are the practical solutions to this problem if you already have
such an account to which you can be linked, or you have a need for an
offshore account to which you cannot be linked?
First, if you already have an account where the bank, broker or credit
card issuer holds some kind of ID about you and it is an account that you
would not wish to come to the knowledge of any 'authority', then you
should immediately engage in some damage limitation. If the account was
opened in the name of an IBC and you are on record as a director or the
beneficial owner of the IBC, then the quickest way to deal with that and
still keep the account is to inform the bank or whoever, that the IBC has
been sold to someone else.
That should at least put a stop to any further damage, although it will
not protect you from any already done! How and to whom the 'sale' of your
IBC is apparently made is, of course, important, at least in relation to
what the banks are told, because there is no point in apparently moving
the ownership of it to any entity or individual to which you can still be
linked.
A trust, an individual trustee or another IBC are all possibilities for
new ownership, but some expert advice will certainly be needed because,
if the disposal is done carefully, it could even help mitigate any damage
done before the sale is made, depending on how the account has been used.
If you are in the position of not yet having, but still needing an
anonymous offshore banking, brokerage or cash card account, then there
are still plenty of ways this can be done. But do not be tempted to
purchase any such package which asks for ANY kind of ID that will be
passed onto the bank. If you want the existence of that account to be
totally confidential for whatever (legal!) reason, it is now simply naïve
to think it will remain so, if you provide such ID.
The alternatives are to use Trusts, Individual Trustees, Banking Groups
or other third party arrangements to open such accounts or to effectively
provide you with banking facilities. All of this will, of course, require
a large degree of faith and trust in whoever is going to 'stand in' for
you as the apparent signatory and/or beneficial owner of the account. But,
in many cases, it was ever thus!
While many IBC owners have, in the past, had their names on record with
the banks as beneficial owners, presumably to give themselves some
comfort, the accounts have frequently been operated via Nominee Directors,
Powers of Attorney or Trustees who have effectively had the day to day
control of those accounts. With the right relationship, trust, and above
all, proper documentation in place, there is no reason why such
arrangements cannot work perfectly well. But, it is all fairly pointless
if the real identity of the beneficial owner is still known to the banks.
So, it is but a small step for the 'Trust' of the recorded apparent
beneficial ownership to be passed over to such a third party as well, but
a giant step in terms of removing the potential of being connected with
that account!
But it does not end there. Having done so it is then vital that
transactions with such accounts do not link the real beneficial owner
with the account.
Just sending funds directly to an offshore account even one which there
is absolutely no evidence that you are connected, is not always smart
unless there is some sound commercial explanation for doing so.
With governments in many countries monitoring all but the smallest
transactions that go 'offshore', it could lead to suspicion and possible
investigation at the very least and can be easily avoided by the use of
pass-through accounts, third-party invoicing or other similar methods.
So if you have commercial and legal reasons for still wanting to operate
'offshore' it IS still relatively easy to remain anonymous, it just needs
doing with care and regard for the changing times! |
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