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Introduction – We are going to discuss the movement
of funds from your own country or another country to an offshore bank
presumably in an offshore tax haven. We are not going to discuss any
illegal scenarios.
Why do People Move Money and Assets Offshore
– Many of you will first think taxes? Well you are wrong. How many
dictatorships are there in the world right now? Quite a few. There are
ruled by kings who are in office for life. They can confiscate funds at
will from anyone in the kingdom. How many military coup governments are
running countries? Quite a few and they too can grab money from anyone
in their jurisdiction at will. How many countries practice religious
persecution? Many with even death penalty for infractions. Confiscation
of wealth is a popular penalty involving religious persecution. How
many countries practice political persecution? Many. How many countries
have criminal gangs and organizations that are almost as powerful or as
powerful as the government in power? Quite a few and they often get
into the bank records in their country to see who to rob, kidnap,
extort or otherwise victimize.
Then we can get
into countries with out of control civil litigation systems where
lawyers can strip you of all your assets in an unfair system that is
out of control. Then we get into countries where kidnapping is
prevalent and we could keep going on and on. There are numerous reasons
for moving funds offshore where they can be safe other than tax
implications. High tax governments want you to think that offshore
banking and asset protection is only about tax avoidance but as you can
plainly see it protects people from a lot of evils the high tax
governments can care less about protecting people from.
Taking Cash Out of the Bank
– Well this is the first thing that comes to mind with most people. Let
me take the cash out and then transport it and deposit it into the
offshore bank account. This perfectly guarantees that there is no trail
to follow. Will this work? Sure and moving cash by itself is not
intrinsically illegal as long as you report it correctly but there are
some pitfalls to watch out for.
First of all many
but not all governments want you to declare when departing their
country with any amount of cash or negotiable instruments over $10,000.
They word these forms as to be unclear if it is $10,000 per person or
family. Usually per person, but do inquire. You can always have family
members take separate flights to avoid get snagged by vague
interpretative errors regarding the way the law was written. Do minors
count – usually not. Today with all the inspection machines and other
screening devices it is best to fill out the declaration form if
required to do so, when departing lest you have the funds confiscated
and face arrest. You may have to supply a source of funds statement,
which is to say where the funds were derived from. In some police
states it is really best not to move cash out since you may face a lot
of questioning. This also depends on the amount. If you say you are
going to a country to gamble at a resort and have $35,000 cash that is
one thing. If you say that you are going to buy a hotel for cash and
have $5,000,000 that's is going to be another story altogether. Other
factors are where you are going, who you are, where your passport is
from, what profiles the country ahs on you etc.
In
some countries removing large amounts of funds will trigger responses.
The bank will tell you they have to order in the cash and that will
take one or two days by armored car. Then they file suspicious
transaction reports with the government to see if they want to
confiscate your funds or arrest you or something. If it is $40,000 and
you said you were buying a boat or car from a private party for cash
that might not attract too much attention. If you tried the same thing
with $900,000 it would not be plausible and thus more suspicious. If
the figure was $3,500,000 even more suspicious. See how it works. In
some countries large cash movements are common and the banks do not pay
much attention to it.
Bringing Cash into the Offshore Country
– Ok once again not illegal if you do the required declarations in
almost every country in the world. Be prepared to explain the source of
the funds. Panama is a bad country to bring cash into – ill advised. It
is best to use a chartered plane, not airlines for substantial cash
movements. If there is a substantial amount of money security is too
difficult with a commercial airline. People can rob a duffle bag or
briefcase in airline terminal. They pass it on to an accomplice who
deposits the briefcase or duffle bag inside of another container and
maybe it gets passed to yet another accomplice who then leaves the
terminal quickly with your money and gets into a waiting car. Sure the
police may be able to piece a lot of this together in several hours
from the cameras but by then your money is long gone forever. Private
airstrips and chartered jets are much easier environments to maintain
security in. Large duffle bags can be placed inside the passenger
compartment without having to go into the baggage compartment of a
commercial airliner where there is about zero security.
Another
option is to use Brinks the armored car service or one of their
competitors to transport the cash for you on one of their jets. They
will insure the cash for up to $5,000,000. Extra insurance can usually
be obtained. They will require you to do all the due diligence
documents for the departure country (if required) and arrival country.
In
any event once the funds arrive in the offshore destination country
declarations including source of funds statements need to be filed.
Then security needs to be arranged with armored car transport directly
to the bank. If you feel armored cars are not private enough a caravan
of several SUV vehicles with armed bodyguards can be arranged. This
would make it harder for one to know which bank the funds went to.
Airport people cannot always be relied upon to be honest so the
security precautions are necessary to transport funds safely to the
bank for deposit.
Depositing Cash in the Offshore Bank
– This is 100% not suggested in Panama. Anything over $10,000 will be
refused. There are other countries like Guatemala where cash
transactions are much more an accepted way of doing business. The bank
will want some source of funds information and so forth. The bank
should be prepared beforehand for the deposit so they are ready to
receive it and the appropriate accounts are open and ready for the
deposits. Another alternative is to put the funds into a bank vault.
Sometimes this can be done at a government owned and operated bank or a
private bank. If it is a large amount your money may be kept segregated
in its own area in the bank. The bank does not put the money into the
banking system per se; instead it is kept in the vault. You get issued
a document showing the funds are in the vault, the amount, the date and
whom they belong do. It can be called a depository receipt, a SKR (Safe
Keeping Receipt) or just a receipt in general for the funds showing the
ownership, date and amount. You can have a law firm open an
International Trust Agreement and have the receipt in their name for
you protecting you through the trust agreement. Later on the funds can
be withdrawn, removed to another institution in the same or another
country or deposited into an account(s) in the bank. Expect to pay
points for this service.
Cash –
Cash is a complicated method of losing the money trail but highly
effective at the same time. Cash provides you with the most control and
privacy and thus it is disliked by many oppressive anti-privacy
governments. To de disliked is not the same thing as illegal.
Travelers Checks
– These if not filled out made payable to a specific person or
corporation are considered negotiable or bearer instruments and subject
to the same controls as cash. If you make the traveler check payable to
a person or corporation the government employees at the airports may
not understand that it is no longer a negotiable instrument since they
are usually not well trained in law. Best to treat travelers checks
same as cash. While it is difficult to trace traveler's checks it can
be done. Not all that secure but it does take the trail away from your
bank account that is sending the money, so to speak.
Bank Checks & Money Orders
– If they are made payable to a person or corporation then these are
not negotiable instruments and not subject to the controls imposed on
cash. Offshore banks often will not take a money order for deposit –
too much fraud. Bank or Cashier checks are usually fine but take 2-4
weeks to clear. Offshore banks will never extend credit while waiting
for a check to clear.
Regular Personal or Corporate Checks
– Welcome. If these are made out payable to a person or corporation
they are not negotiable instruments and can be used freely. Offshore
banks generally will accept them and hold them until they clear, 2-4
weeks. If you start depositing checks that bounce by the third one they
will not accept them anymore. The banks will never take third party
checks, checks by fax, phone or drafts.
Western Union – Banks will not take western union funds for deposit.
E-Gold – Banks will not take virtual currencies like e-gold for deposit.
Stocks
– There are ways to transfer stocks to an offshore stockbroker.
Offshore banks are rarely also stockbrokers. So you would be dealing
with an offshore stockbroker, not the bank directly.
-Aurelia Masterson, http://www.panamalaw.org
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