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IT Security: The Weakest Part of Your Offshore Structure?
By admin | December 4, 2008
Most people who are at all concerned about personal and financial privacy invest a significant amount of time and expense in setting up an offshore corporation, offshore bank and brokerage account and so on. They will make sure their structure is not just legally watertight, but also private and confidential through the use of bearer share accounts, foundations, trusts and so on. Any reputable offshore adviser will give you this information, and it’s a recurrent theme of my articles on offshore banking in The Q Wealth Report.
But – a structure is only as good as its weakest link. And I know from experience and from anecdotal evidence that the weakest link may not be you the client, but your chosen offshore consultant. Most of them have very lousy information security – or in many cases absolutely no attempt at information security.
What I mean by this is that they store your confidential data carelessly. Irresponsibly. Onshore banks, lawyers and accountants usually have better security than their offshore counterparts (the exceptions proving the rule as always…) because onshore governments to their credit do actually impose and enforce certain data security regulations, which are almost unknown offshore.
My committment when I set up offshoe corporations, bank accounts and the like for clients is to 100% information security. For example, for email I use a secure laptop from Rayservers, which is not just protected against viruses, trojans and hacker attacks, but also against physical seizure or copying. I use Cryptohippie VPN to secure against eavesdropping in hotels, on wifi connections while traveling etc. Plus a whole suite of other software so I can communicate securely with clients and partners while I’m on the road.
Did you know that many countries now, like the USA and the UK, search laptops at customs when entering? The UK can even legally require you to give up your key. But, my Rayservers laptop is secure and protects me legally even in the UK, because part of the key is physical which can be destroyed, so then nobody can force me to give up the password. Then again, I make a point of never traveling to the USA or the UK anyway on business or with any business information with me anyway.
When it comes to physical files, where necessary, I always keep them in a neutral jurisdiction. That means that if you are for example a German citizen and you form a Panama Company through my firm, then all records that could possibly link you to that company are stored not in Panama, not in the European Union, but elsewhere (of course I won’t tell you exactly where, as no-one can legally require you to give up information you don’t know) If someone managed to break through the veil of corporate and attorney-client secrecy in Panama, the information they get would be close to zero anyway. Sometimes having physical files in different countries is a little inconvenient, but in my view that minor inconvenience or a few extra courier charges are well worth it.
So above I’ve just identified a very few of my information security procedures for my offshore consulting clients. There are many more, including many I won’t tell anybody, except on a ‘need to know’ basis (ie, if I should be killed, for example, someone else needs to know how to carry on supporting my clients.)
My offshore services are certainly not the cheapest out there. I don’t intend them to be. But I do firmly believe that offshore service providers have a real obligation to treat client confidentiality seriously, and I believe using ‘jurisdictional arbitrage’ is the best way to achieve this. This is something my clients appreciate paying a little extra for I think. At the very least, if you are considering purchasing offshore services elsewhere, with the information above you can ask your offshore consultant a few piercing questions and see how he or she reacts…
Nota Bene: Peter Macfarlane offers a free initial consultation with no obligation on offshore matters to all subscribers of The Q Wealth Report. If you are a subscriber and would like a consultation, please email info@petermacfarlane.net. If you are not a subscriber, kindly sign up online first at Q Wealth Report Please note that Peter is very busy and travels frequently, so sometimes it might take a few weeks to schedule a consultation. Please be patient.
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