| There are more offshore banking havens than you | | | | Satisfy yourself that the haven has local laws and |
| can shake astick at. Nicholas Pullen tells you how to | | | | legalpractices which provide adequate protection of |
| separate thewheat from the chaff, and make sure | | | | your fundsand investor rights. |
| the haven you choose isreally a safe-house for your | | | | 6. Is Your Haven Financially Stable? |
| money. | | | | Check your prospective haven's financial stability, |
| There are definite and strong advantages to placing | | | | bycalculating what percentage of its Gross Domestic |
| some ofyour hard-earned money in offshore bank | | | | Product isrepresented by foreign aid. Foreign aid is as |
| accounts: | | | | high as 70% of |
| First of all you get protection against your | | | | Gross Domestic Product in some havens. The Cook |
| government. | | | | Islands, |
| Nobody knows what a government will do next, | | | | Nauru and Vanuatu being recent examples of this. |
| anything ispossible. But, unlike funds held in your | | | | A haven's confidence in its liquidity can be judged, |
| home country,wealth stashed offshore is greatly | | | | atleast to some degree, by its willingness to put in |
| protected against anynegative actions your | | | | placesolid depositor protection. Enquire of |
| government might take, or legislationit might | | | | financialinstitutions in the haven whether or not |
| introduce, tomorrow. | | | | depositorprotection exists. |
| Secondly, you get protection from predators and | | | | 7. Is The Haven Free Of Trouble? Will It Stay That |
| parasites. | | | | Way? |
| Offshore wealth is shielded from the attentions of | | | | Does the haven have a trouble-free history and a |
| assethunters. Avaricious litigants, thieves, fraudsters, | | | | secureculture? A country which has experienced only |
| conmen,blackmailers (disgruntled ex-business partners | | | | moderatepolitical, economic and social change, and |
| and ex-spouses) who all seek to pinpoint, target and | | | | where politicaland social violence is uncommon, is a |
| eventuallyattack individuals with visible wealth. These | | | | trouble-free country. |
| sharks haveweapons at their disposal, and they use | | | | A stable past is a good predictor of a stable future. |
| them. They routinelyrun asset searches to identify | | | | On the other hand, countries with a history of civil |
| just who has what worthtargeting. But offshore | | | | war,military coups and civil unrest are definitely not |
| assets are safe. Asset searcheswon't uncover | | | | right forbanking purposes. Cash held in a banana |
| offshore assets, these remain totallyinvisible and safe | | | | republic is high-risk. Future flash points in volatile |
| from attack. | | | | regions can renderyour cash lost or worthless. |
| Thirdly, with an offshore bank account you are | | | | Look at the human rights record of the haven's |
| insuredagainst the unknown events tomorrow might | | | | government. Agovernment with high regard for its |
| hold. You neverknow when you might be mighty glad | | | | domestic population islikely to regard you equally |
| of offshore cashreserves. If circumstances at home | | | | highly. A government whichtreats citizens like cattle |
| make it impossible orunwise for you to stay, or | | | | to be reared, milked andslaughtered is likely to come |
| impossible to access yourdomestic funds, your | | | | to view you in the same casualmanner. In such a |
| offshore funds provide you with afinancial lifeboat. | | | | climate private wealth may suddenly |
| "Not all banking havens are suitable, safe, or secure." | | | | becomegovernment property. |
| Finally, you can rest secure in the knowledge that | | | | Check if there's a strong socialist political faction in |
| you havea secret nest-egg. You can build and grow a | | | | thehaven. Overtly socialist governments can't be |
| private stash ofcash beyond the gaze of anybody in | | | | trusted tolook after your nest-egg. Political upheaval, |
| your home country. | | | | newideologies and attendant legislation can change a |
| The first thing you need do, to enjoy the benefits of | | | | haven'sattractiveness overnight. Ensure there's little |
| anoffshore bank account, is to select a good | | | | likelihoodof an ultra left-wing political party sliding into |
| offshore bankinghaven where you can open your | | | | power inthe foreseeable future. |
| accounts. This is easier saidthan achieved. You aren't | | | | Is the haven free from racial tensions and other |
| short of choice, from the Bahamasto Vanuatu, | | | | socialproblems? These can trigger crisis which may |
| Cyprus to the British Virgin Islands, | | | | affectdeposited funds. |
| Switzerland to the Cayman Islands. Countries the | | | | What about the prospect of foreign invasions and |
| world overare in the market for, and only too happy | | | | war? Theseare slight for an isolated country. But |
| to accept, asmuch foreign capital as they can get | | | | keep an eye on thetreatment your haven receives in |
| their hands on. | | | | the international press. |
| However, you must bear in mind that not all banking | | | | Areas and regions seldom become hot spots |
| havensare suitable, safe, or secure. Some are | | | | overnight. Look atrecent political developments and |
| excellent. Othersare ticking time bombs. If you open | | | | events in the haven toestablish if there is any |
| an account in the wrongcountry, it can prove very | | | | potential trouble. |
| costly in more ways than one. | | | | "A stable past is a good predictor of a stable future." |
| What you need to do is to find out how particular | | | | Consider local attitudes. Is there wide local support |
| bankinghavens measure up before you lodge any of | | | | forthe financial services and banking industries? Does |
| your cash orassets there. This will require you to | | | | thelocal population appreciate that international |
| perform some researchand investigation. This is well | | | | bankingoperations are effectively supporting the |
| worth doing, and thoroughly. | | | | country's economy? |
| Mistakes avoided at this early stage save time, | | | | Or does the presence of foreign capital breed |
| trouble andmoney further down the road. | | | | resentment? |
| I suggest you measure the quality of any haven | | | | Is there a foreign-bashing agenda? |
| whichinterests you by subjecting it to my Ten-Point | | | | Be sure to keep abreast of events and the |
| Suitability | | | | socio-politicalclimate in your haven. Subscribe to |
| Test. Satisfy yourself on all points crucial to | | | | newsletters coveringsuch developments. Read the |
| yourparticular requirements. | | | | local press. The writing isoften, literally, on local walls |
| 1. Location, Location, Location? | | | | in the form of graffiti,for months before anything |
| Where is the haven located? Do you want to visit | | | | actually happens which mightaffect your bank |
| your cashregularly? If so, is it convenient or practical | | | | accounts. |
| to have itstashed in a banking haven thousands of | | | | 8. Does Your Haven Provide A Back Door For Your |
| miles away fromwhere you live? | | | | Government? |
| Can you access your haven by air - directly or | | | | Make sure your banking haven doesn't provide your |
| indirectly? | | | | governmentwith a back door into your accounts. For |
| Is it a problem getting entry to your haven? Will you | | | | example, sometraditional tax havens are existing or |
| needto queue for an entry visa every time you want | | | | former Britishcolonies, such as Bermuda, Cayman |
| to visit? | | | | Islands, the Channel |
| Also, be aware that making regular, visible (visa | | | | Islands, and the UK government is exerting pressure |
| recordsare a paper trail) trips to a known banking | | | | onauthorities there to release information relating to |
| haven is likewaving a red flag at any government | | | | UKaccount holders. |
| snoop who might betaking an interest in your affairs | | | | British citizens should find out if their |
| and movements. | | | | prospectivebanking haven has tax treaties in place |
| Give some consideration to time differences. Can you | | | | with the UK. If so,be aware that the treaty allows |
| manageyour financial affairs efficiently if it's midnight | | | | for the free sharing ofinformation between the |
| in yourhaven during business hours at home? Are you | | | | authorities in the two countries. |
| happy to waitup until the early hours to speak to | | | | 9. Does It Offer Enough Freedom For Capital? |
| financial managers? | | | | Are you free to take money in and out of the |
| 2. Do You Speak The Language? | | | | haven? If thereare severe restrictions, the haven is |
| Effective, smooth-running financial management | | | | no use to you. Even ifthere are no exchange controls |
| depends onfluent communication. Do bankers and | | | | in operation now, check thatthe haven doesn't have |
| professionals in yourhaven speak English or some | | | | a history of exchange controls. Youdon't want your |
| other language with which you'refamiliar? You may | | | | cash trapped in a country which iseffectively |
| need to discuss complex financial mattersin technical | | | | stemming flight capital. |
| detail. It could cost you dear if things areconfused or | | | | Make sure you have adequate guarantees that you'll |
| compromised by language barriers. | | | | be ableto do what you need to before opening |
| 3. How Easy Is It To Stay In Touch? | | | | accounts in the haven. |
| Are there sufficient and reliable telephone and fax | | | | For example, are there restrictions on converting |
| lines? | | | | foreigncurrency into local currency and visa versa? |
| Are email facilities available? Is airmail deliveredquickly? | | | | Are reportsfiled on each occasion? Ask financial |
| How efficient is surface mail delivery? | | | | institutions inthe haven. |
| If your banking haven is deficient in these areas, it | | | | 10. Does The Haven Offer Sufficient Privacy? |
| maybecome difficult to maintain regular and instant | | | | Seek out banking havens which recognise and |
| contactwith your advisors and account managers. Is | | | | actively promotesolid banking privacy. Many havens |
| this acceptable? | | | | claim to do so only on aninformal basis. Under |
| 4. Is The Tax Situation Right For You? | | | | pressure bank managers and financialadvisors may |
| Ensure your haven provides the exact tax treatment | | | | sacrifice you to the sharks. Does your haven,and/or |
| you need. | | | | the institutions operating there, have a history |
| Mistakes can prove expensive. Some havens | | | | ofrolling over when exposed to external pressures? |
| imposewithholding tax" on foreign-held bank accounts. | | | | Check whether banking privacy is tradition or actual |
| Are yousatisfied that this is fair exchange for the | | | | bindinglegislation. Check whether a professional in a |
| benefits youraccount will deliver. | | | | particularhaven is breaking the law if he passes data |
| 5. How About The Legal System? | | | | relating to youand your financial affairs to a third |
| Are the laws in your prospective haven based on | | | | party. Be aware that |
| Englishcommon law? Is the judiciary of a high | | | | "confidentiality" laws allow local government access to |
| standard? Is itindependent? Is the Court system | | | | youraccount details (although they can't pass the |
| effective? Are there rulesto resolve conflicts of law? | | | | data on to athird party). |
| Are the banking regulationsstiff? Or is there ample | | | | Solid banking privacy legislation is the best protection |
| opportunity for a fly-by-nightmerchant to slip through | | | | foryour cash. A strong, secure haven will have |
| the nets? | | | | banking privacylegislation which carries stiff penalties |
| Are banking services registered with | | | | (financial andcustodial) for any professional who |
| regulatoryorganisations that uphold professional | | | | breaches them and passesdata on to third parties. |
| standards andprocedures? | | | | |