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Offshore Services: Offshore Privacy and Bank Secrecy in Practice Offshore Services: Offshore Privacy and Bank Secrecy in Practice

Yesterday's offshore services:
Stale but still for sale

What you might not know:
Offshore privacy and bank secrecy in practice

What they tell you, and why you might buy it
What you might not know: Transferring funds offshore
What you might not know: Offshore privacy and bank secrecy in practice
What you might not know: Nominee services and privacy protection
Getting what's right for you
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(Part 3 of 5)

Offshore privacy can no longer be taken for granted. The meaning of "offshore" is shifting as countries dismantle their bank secrecy and non-disclosure legislation.

with Peter Widder

Provided you do manage to transfer your funds offshore in complete privacy, can you be sure that they will remain so?

Many offshore providers do not care too much about giving proper advice as to the suitability of offshore banks and jurisdictions. Rather, they will suggest opening accounts with whichever handful of banks they have relationships with, wherever these may be. St. Peter's Port, Guernsey and St. John's, Antigua are both "offshore", and that's all that apparently seems to matter.

Beware. Nowadays, "offshore" no longer always means private.

Beware. Nowadays, "offshore" no longer always means "private". Getting involved with the wrong jurisdiction -- or the wrong bank -- is not uncommon, and hasty choices based upon poor advice may be the source of long-term problems.

The choice of offshore banking jurisdiction deserves extreme care. From a privacy point of view, an ideal banking haven will provide the three following factors in equal measure:

1. Legally enshrined, and/or culture of, bank secrecy
2. Stability of the jurisdiction and your chosen bank
3. Low profile, so as not to raise undue suspicion

Finding such financial nirvanas has become more challenging than it once was.

Banks in the Bahamas, along with a whole raft of well-known, traditional offshore havens, will now willingly divulge information upon request. Others may be hooked by onshore authorities involved in so-called "fishing trips".

Most would agree a fishing trip sounds a rather agreeable activity -- but perhaps not so for the fish that get caught. In the context of offshore banking, a "fishing trip" refers to a deceitful information-gathering exercise by onshore authorities. The purpose of an "offshore fishing trip" is to deliver a broad spectrum of apparently immaterial and non-specific questions, all in the hope that one or two of the answers will be sufficient to mount a prosecution back home.

Credit cards linked to high-profile offshore banking havens have equally been used to track down people who supposedly spend more than might be reasonably expected from their income -- the conjecture being that anyone with money offshore must have something to hide.

In 2000, tax authorities in the United States (IRS) were granted access by a Miami court to thousands of MasterCard and American Express credit card accounts held by U.S. taxpayers in three offshore banking havens. The IRS claimed that they were looking for high-value purchases, airline tickets and so on, in order to establish who was living beyond their means.

Before committing yourself to a particular offshore jurisdiction, seek hard confirmations from your offshore provider regarding not only the existence of sufficient legislative provisions, but also if and how established business practices protect confidential information.

You should further question the record of the jurisdiction as regards its resistance to multi-lateral information exchange protocols. Put more simply, are they following the new wave of anti-privacy thinking or resisting it?


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