Recent news reports
October 24, 2002 7:33 AM   Subscribe

Recent news reports have started me wondering about Swiss bank accounts and other offshore banking options. Whether you want to protect your assets, live tax free, incorporate with few regulations, launder money, or just escape from the US, an offshore account seems to be the way to go. Just make sure you don't get scammed.
posted by MeetMegan (12 comments total)
P.S.: The news link I posted has been posted here before...but I figured it was okay, since the point of my post wasn't the news, rather, it was offshore banking.
posted by MeetMegan at 7:35 AM on October 24, 2002

That's interesting stuff. I'll bet there is a lot of scamming going on here. Hell, if people fall for the Nigeria bit, how hard can it be to convince them that they can avoid paying taxes by putting all their money in your 'bank'...?
posted by Fabulon7 at 8:01 AM on October 24, 2002

OTOH, there are lots of legit businesses that protect themselves by incorporating overseas. I've seen several Canadian companies dodge the Canadian corporate taxes by incorporating in Barbados. Of course, here in the states corporations and blind trusts are generally easier to set up. The Patriot Act, though has made it much tougher for Americans to be involved in overseas transactions. Further, it even restricts legitimate transactions such as forbidding me to post the proceeds of property sale to my brokerage account without first processing it through a US bank.

All that said, I'd be curious to learn what strategies remain legal and relatively easy to accomplish in regards to offshore asset protect. Mostly from an informational basis, of course.
posted by shagoth at 8:11 AM on October 24, 2002

That last link is fascinating - a pre-9/11 Senate report that notes two "particularly noteworthy" "due diligence failures of U.S. banks."

Shagoth, are you suggesting it's "legit" for a company to set up a shell elsewhere simply to escape taxes from the country in which it was born? But if you want to learn more from the pro-offshore banking perspective, try this site, which links to articles about how the Patriot Act "shreds financial privacy and creates huge, new US federal police powers over banking and securities firms" and scary scenarios to frighten rich people. "Offshore Bank Accounts: They're not just for millionaires anymore."

Thanks for this post, MeetMegan.
posted by mediareport at 8:46 AM on October 24, 2002

All that said, I'd be curious to learn what strategies remain legal and relatively easy to accomplish in regards to offshore asset protect. Mostly from an informational basis, of course.

Very few. The loopholes have gotten much smaller over the last few years - and, as shagoth notes - the Patriot Act has tighened them considerably more (Title III of the Act, which refers to financial institutions, is pretty intense ... in essence, the US financial community has been drafted as a data gathering, filtering, and reporting arm of the US intelligence community). Swiss Bank accounts used to be an option, but at this point they are more of a headache than a benefit. In practice, the act of opening one, and funding it is quite difficult to do without alerting US authorities that you are doing so. As one of the articles stated, the taxes on interest are quite high, and the only way to mitigate this is by doing things that alert the US that you are doing something.

That said, if you have enough money, there are always ways of somewhat managing the tax burden. (For instance, if someone does a high volume of equities trades, often not holding large positions for more than a few days, they'll get hit with serious taxes - however ... imagine that they start their own mutual fund, hire a couple of managers to manage it, and then simply buy 100% of it's shares. The fund managers can then do the same trading, but from a tax perspective, it looks as though you haven't done anything at all except held the same number of shares of the fund ... no transactions to be taxed). But I probably shouldn't be talking like this.
posted by MidasMulligan at 8:46 AM on October 24, 2002

on C-Span this morning, they had a Mz ? Olson, the newly appointed undersecretary of the treasury for tax policy and she spoke about this very thing. from what i could gather, and as MeetMegan pointed out, this type of thing has been on the rise in the last few years. Mz Olson said that the govt was looking into cracking down on these types of activites now. some of the callers wanted to know which companies exactly were using these havens/loopholes/whatever and she said that the SEC site had a list of companies that were filing for such status, but i was too lazy to look.
posted by memnock at 9:02 AM on October 24, 2002

No, really Midas. We don't mind. Please continue...
posted by bemmett at 11:44 AM on October 24, 2002 and its sister sites is an amazing resource on this topic.

Not that I would know anything about it, of course... Honest!
posted by dagny at 12:36 PM on October 24, 2002

Mutual funds are requirted to pass on 90% of their realized gains to shareholders as capital gains distributions. This is why the variable deferred annuity business is so strong.

You're right. Actually that particular strategy is not really used in the US - it is common in some EU nations, however (e.g., Spain, where capital gains taxes are astronomical).
posted by MidasMulligan at 12:56 PM on October 24, 2002

Shagoth, are you suggesting it's "legit" for a company to set up a shell elsewhere simply to escape taxes from the country in which it was born?

Don't know about Shagoth, but I'll say it. Yes. For those that believe they are entitled to any taxes they feel like imposing on individuals or companies, I suppose moving might be seen as "escaping".

From my own perspective - having money and owning a company - I'm going to optimize my actions to whatever degree I can within the bounds of the laws of the different nations on earth ... and believe this to be as "legit" - because every two-bit politician up for re-election thinks its perfectly "legit" raise my taxes to fund his/her favorite little pork project to get back into office.
posted by MidasMulligan at 9:38 PM on October 24, 2002

Oh, no. God knows, the United States probably never did anything to make business easier for you.
posted by raysmj at 12:03 PM on October 25, 2002

Yeah, that's the point, really. You develop a business in what's arguably the richest, most capitalist-friendly country on earth, and then at the first sign of a cheaper tax rate anywhere "on earth" you set up a dummy shell to avoid paying U.S. taxes? I'm surprised, Midas. Do bottom-line considerations always trump patriotism for you?
posted by mediareport at 2:00 PM on October 26, 2002

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