Today, June 2nd, is Tax Freedom Day in the UK. Tax Freedom Day is the day on which we stop working for the Chancellor and start working for ourselves. So if the average person works from the first of January each year, it will be June before they have earned enough to pay their taxes.

Every major country has its Tax Freedom Day, usually calculated by free marketeers who are still resident there and thoroughly annoyed at having to pay so much tax. Tax Freedom Day is defined by Wikipedia as “the first day of the year in which a nation as a whole has theoretically earned enough income to fund its annual tax burden.”  All taxes are included in the calculations, not just income tax. In recent years governments have introduced many so-called stealth taxes.

One thing that is not included in the calculation, however, is the ultimate stealth tax – inflation! And devaluation (The many Brits who own second homes abroad will certainly know what I am talking about here! No economics training required!)

Fortunately, all this only concerns me in passing. Although I was born a Brit, I’m no longer in the UK. Haven’t been for years. Like all UK non-residents, I am not obliged to file a tax return unless I happen to have income in the UK. The same deal applies to citizens of every other country in the world, with one big exception: the USA.

US citizens are required to file tax returns with the IRS wherever they happen to live in the world. Even Americans, however, get the benefit of a complete exemption on the first $85,000 of earned income each year. Not bad for starters. So even Americans can – by using offshore corporate structures, trusts, foundations and the like – pretty much avoid all taxes legally by moving offshore.

There are lots of reasons in this day and age to go offshore which have nothing to do with taxes. I am very fond of telling socialists I meet that most of my clients these days go offshore for reasons that have nothing to do with taxes.  They end up having to agree with me, because they too are sick of big corporations and governments taking away our freedom, privacy and civil rights.

When you make that move to become an expat and start to receive your income through an offshore company, you simplify your life so much. No need to waste time keeping records of expenses and tax deductions. The simplicity of working for money, then keeping it, no questions asked, feels like an incredible burden being lifted off your shoulders. If you haven’t tried it yet, you really should! You will enjoy it.

The good thing, though, is that the news is out. You can opt out of unfair taxation. The number of people who are opting out of the tax system altogether, simply by going to live – at least part time – in a country where they can legally carry on their lives and businesses without paying tax. Examples of these countries would be Panama and Belize, amongst others. You can read more about both Panama and Belize, as well as other personal tax-free residence havens, by browsing this very site.

Meantime, would you like to hear some secrets? Would you like to know how to use offshore banks to protect your assets from greedy governments, you could do no better than starting here at my blog. If you feel I could help you individually, remember I do free consultations for members of The Q Wealth Report. There’s a lot more stuff going free too if you are interested in reading more about this topic… like our FREE Offshore Banking and Asset Protection E-Mail Course in association with Q Wealth Report. Have fun – and if you’re in the UK, at least you can breathe a sigh of relief! Come join us offshore soon though.

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Fiat Currency and Fiat Money Explained…  By Peter Macfarlane

You’ve probably heard experts on this site and elsewhere talking about Fiat Money… Fiat Currency. But what does it really mean?

No, it has nothing to do with Italian motor cars! The only Italian connection is the Latin language, from which the word fiat – meaning command, decree or order – is derived. My Chambers dictionary defines fiat currency as follows:

Money (paper or coin) made legal tender and assigned a value by government decree, with a commodity value lower than its face value, not convertible into any other specie of equivalent value, and generally with a lower purchasing power than nominally equivalent specie…

In other words, it is a currency whose usefulness results not from any intrinsic value or guarantee that it can be converted into gold or another hard asset, but instead from a government’s order (fiat) that it should be accepted as a means of payment.

In the case of the US dollar, for example, the currency is not backed by gold, nor by anything else for that matter – other  than the world’s confidence in the US economy.

Now imagine if your business had a client – let’s call him Sam – who had always appeared wealthy and had been a reliable payer over time. So you always extended him all the credit he wanted. But little by little, you see he is getting further and further into debt, and you start hearing rumors elsewhere that things are not going to well for Sam, economically speaking.  You will grow increasingly concerned, right?

At some point, you are going to start putting limits on Sam’s credit line. And that’s what is happening in the rest of the world these days to the ‘full faith and credit of the US government’ which is what backs the US dollar.

The US dollar is subject to the order of the US  government , which in turn has delegated running the currency to the various  Federal Reserve banks making up the Federal Reserve System (do you remember how on older dollar bills, you could see which of the Federal Reserve Banks emitted that specific bill – but newer bills just say ‘United States Federal Reserve System’?) The Federal Reserve Banks are private corporations owned and run by a secretive group of bankers.  (You’ll find more at my Offshore Banking and Asset Protection blog if you want to explore this – I won’t go into it more here, although it’s a fascinating topic…)

Around the world, fiat currency is owned by its creators, the Central Banks. The Federal Reserve, the Bank of England, the European Central Bank and so on. It may be encumbered by its creators. That means they may, and most likely will, use it as security to borrow more money.

What’s the opposite to Fiat Currency? Gold bullion, of course. Gold Bullion is owned by its holder, YOU. The last thing any government wants to see is a return to money consisting only of gold and silver coins. Why? Because no government can control the world supply and demand of gold bullion. Governments are scared of losing control of the financial system because – well – money is power! Have you ever heard of the Golden Rule? It’s simple. He who has the gold, makes the rules!

Fiat Money is effectively a giant ponzi scheme. Just like ponzi schemes such as Madoff’s or Stanford’s, you can make good money from them, provided you take your profits and pull out at the right time. If you have your money in dollars and pull out at the right time, you might make great real purchasing power gains. But you are doing so at the expense of others who get in after you.

The above article was originally written for The Gold Report: How to Buy and Hide Physical Gold Bullion Offshore by Peter Macfarlane. Also check this page for more interesting articles on  Gold and Silver Investments.

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Many of my clients already have a secure e-mail address on an offshore server. Although secure e-mail is only one aspect of communications privacy, it’s an important aspect when it comes to e-mailing each other back and forth about delicate and confidential matters of the type we handle on a daily basis.

I’ve therefore added a new permanent page to this site explaining how you, as a Q Wealth reader, can get a free, easy-to-use secure e-mail address, that you can use to communicate with me and your other offshore friends – including a number of offshore providers and banks using PGP and other forms of encrypted e-mail.

Click here to learn how to get your Free Recommended Secure E-Mail Address

Let me stress that this is not your average wannabee encrypted e-mail service that for all we know might be a honeypot set up by the authorities. This is a highly professional solution that actually usually costs a lot of money. It is run by technicians who are personal friends of mine. We have invested thousands of dollars setting up this solution so our clients’ offshore communications may remain private.

Please feel free to make use of this free secure offshore e-mail service. Also, if you would like my PGP key, just drop me an e-mail. PGP is highly recommended to as the universal standard encryption program. If you don’t yet use PGP, you will find free, simple, step-by-step instructions for using PGP provided with your free secure e-mail address.

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Are you thinking about Panama as an offshore tax haven? Or maybe for an e-commerce business? It certainly has a lot to offer. Banking, Corporations, Private Interest Foundations, and more. Although Panama has been targeted by the OECD and the G20, I don’t frankly expect much to happen. Panamanians, like most Latin Americans, are good at promising things and then putting them off until “manana” (tomorrow)!

This could be great, or it could be not so good. It really depends on the way you look at it. For privacy and confidentiality it’s certainly good. On the other hand, if you are used to doing business the North American or European way, you might find Panama too laid back.

I’ve just finished a completely new e-book on this subject: “Eight Important Things You Should Know Before You do Business in Panama.” I’m offering it absolutely free for a limited time, in association with Q Wealth Report. As we say on the page at Q Wealth where you can claim your Free Panama Offshore Report:

So how do you know where to get started? Whom can you trust? Panama seems to be full of lawyers, company formation agents and even realtors eager to sell you Corporations and Foundations, with little practical information on how to use them. How do you tell the good lawyers from the bad? What can you really do with the bunch of papers in Spanish that you will receive? And is Panama right for you, when compared to other offshore tax haven jurisdictions?

It’s a serious matter. If you are thinking of investing your offshore nest-egg in a Panama bank, or entrusting your financial and personal asset protection strategy to a Panama lawyer or law firm, you need to read this report first. Considering it’s free, there’s no reason why you wouldn’t sign up for it right now, I presume? It may not be free for much longer!

Here are just a few of the things you will learn in this FREE PANAMA REPORT:

• A very important question that most foreigners should ask their Panama lawyer but don’t – and how dealing with lawyers in Panama is NOTHING like dealing with lawyers back home

• Why nominee directors really have more control of your company than promoters of offshore services will tell you… why this is not good… and a simple but effective way to protect yourself from this nominee director risk.
  

• Is it really possible to open bank accounts by mail in Panama banks?

• Things you should and should not say when you visit your Panama offshore bank

• A very important fact you should know about Bearer Shares before you decide whether you really want one of those anonymous Bearer Share corporations.
  

• Minimum opening deposits in Panama banks. Which banks have low minimums? Which banks have high minimums?
  

• Which banks in Panama specifically are the best and worst for foreigners? Which will and will not accept US citizens as account holders?
  

• Gold bullion (gold coins, gold bars etc) is the ultimate in solid money to protect your assets from inflation. Can you buy it in Panama? Is it a good deal?
  

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You certainly won’t have missed all the noise in the media lately about offshore tax havens and bank accounts. With all the bailouts going on (I say ‘all’ because I at least don’t even attempt to keep track of them anymore, and I’m sure many more are on the way) governments are on the warpath against anyone trying to deprive them of money. Never mind that no intelligent person would voluntarily give up a part of their hard-earned income to support these ludicrous bailouts…

Heads of state from the G20 nations will be meeting in London at the beginning of April, and some, lead by the French president and the German Chancellor, have already declared war on tax havens like Liechtenstein, Andorra and San Marino.

We’ve recently heard that the OECD has prepared another blacklist of unco-operative nations, to include Switzerland and Luxembourg.

All of us in the offshore world will be watching the G20 process shortly. That’s why I am pleased to publish below our first guest post by Martin Hutchinson, a contributing editor of Money Morning. I fully agree with what Martin has to say below. As Martin argues below, tax havens perform a vital “safety-valve” function in preventing governments from ratcheting up taxes too far.

By Martin Hutchinson
Contributing Editor
Money Morning

When the finance ministers of the G20 group of leading world economies – including the so-called “BRIC” (Brazil, Russia, India, China) group of emerging-market nations – meet in London this weekend, you can bet that there will be only one topic: To figure out what the hell their governments should do about the global economic crisis.

Presumably, if any really good ideas emerge, the London Summit of the G20 Heads of Government, can try to implement them in two weeks’ time.

Larry Summers, the former U.S. Treasury Secretary and head of President Barack Obama’s National Economic Council, certainly has a strong suggestion: He thinks the Europeans and other countries haven’t done enough “stimulus.” While the U.S. government has passed a stimulus spending plan that adds $787 billion to the federal deficit over the next two years – boosting it to 12% of U.S. gross domestic product (GDP) in 2009, and only a little less in 2010 – Summers contends that few other countries have been as bold.

Actually, that’s not quite true. China’s fiscal stimulus of $585 billion is bigger than the United States in terms of that country’s GDP, while Japan, Britain and India have both allowed their fiscal deficits to expand beyond 10% of GDP. However if you believe China’s numbers, its budget deficit still will only be around 6% to 7% of GDP, while France and Germany are pikers, passing only modest stimulus plans and holding their deficits to around 5%-6% of GDP, in spite of the deep recession.

At the start of this week, the World Bank pointed out the flaw in Summers’ idea, estimating that the developing countries will have a financial shortfall of at least $268 billion – and possibly as much as $700 billion – in 2009. Capital inflows to those markets are expected to shrink drastically, falling to $165 billion, from their prior level of $467 billion. Rich countries – with their massive stimulus-fueled deficits – will require huge amounts of financing, a reality that will starve much of the developing world of badly needed funding, while also “crowding out” the rich countries’ private sectors.

Naturally, the World Bank proposes that it should be given the task of filling the developing world’s financing gaps – but since it would have to borrow the money to do so, that would only exacerbate the stress on the financing markets, and would almost certainly cause severe damage to private sector borrowers in rich countries.

If the G20 comes to any agreement on stimulus plans, those plans must be tailored carefully to each country’s projected budget deficit. Indeed, U.S. Treasury Secretary Timothy F. Geithner has suggested that a stimulus target of 2% of GDP in each of the next two years be adopted globally – which would require the United States to find about $230 billion of “un-stimulus” as the recent $787 billion package overshoots that mark.

Countries like China and Germany, which have budgets that are nearly balanced, may be able to indulge in additional stimulus plans. However, countries like India, Britain and the United States, with 2009 budget deficits of more than 10% of GDP, should rein in their rapacious public sectors in order to free up financing capacity for both their private sectors and for the world’s developing countries.

As Summers has noticed, in a world where economies are interlinked, stimulus in a foreign country is as valuable in restarting the global economy as domestic stimulus. The corollary of that is that stimulus packages should be very limited in countries whose budget deficits are already large and the crowding-out danger to the private sector is correspondingly severe.

U.S. Federal Reserve Chairman Ben Bernanke has suggested that much tighter financial regulation is needed, and French President Nicolas Sarkozy has also proposed an international banking regulatory regime, with particular attention paid to tax havens. The problem with these suggestions is that it isn’t at all clear that tighter regulation would have led to a different (better) outcome. (After all, regulators missed the $65 billion Bernard Madoff fraud).

Furthermore, little or none of the financial system’s problems seem to have stemmed from so-called “tax havens.” France has a problem with such havens, because it wants to overtax its citizens. In a world of $1.75 trillion budget deficits, Americans may start to see that tax havens perform a vital “safety-valve” function in preventing governments from ratcheting up taxes too far.

An international financial regulatory system would be impossibly cumbersome; it would inevitably be populated by the kind of overstuffed international bureaucrats who are intensively hostile to the free market system as a whole.

In Britain, the new and highly complex regulatory system set up by legislation in 1986 and 1998 – designed and staffed by civil servants – proved far less competent at regulating banks than the previous, much-simpler system run by central bankers at the Bank of England. Crooks and incompetents flourished in the London of recent years, in a way they did not before 1986 – at a staggering cost to the British taxpayer, who has been forced to guarantee more than $900 billion of debt in only two banks in a $2.5 trillion economy. An international regulatory system would be hostile to new businesses and to capitalism as a whole, and relatively easy for crooks to evade.

While international regulation and international stimulus are bad ideas for the G20 to pursue, there is a worthy objective: International free trade.

Exports from East Asia were down by more than a third in January, and even solid Germany’s exports fell by 21%. Protectionism – in tariffs, in regulations and in “Buy America” provisions – is almost irresistible to economically semi-literate politicians in a global downturn of this kind. The forces of free trade, essential to restarting global growth, are in comparison politically feeble.

It will not be enough to adopt a resolution condemning protectionism. The G20 did that at its last meeting in November, and several countries then adopted minor, but still significant, protectionist measures immediately after the meeting. As with riding a bicycle, it is impossible to remain stationary in the trade area: If a country isn’t making forward progress toward trade agreements, it means by definition that it’s increasingly backsliding to protectionism.

Hence, the G20 meeting must make a renewed commitment to completing the Doha Development Round of multilateral trade negotiations, stalled almost since its inception in 2001. To do that, the United States and European Union must sharply cut their subsidies to agriculture – politically very difficult, but economically enormously beneficial, especially for reducing budget deficits.

In a downturn this severe, economics at the G20 meeting should take priority over politics.

Sadly, this is unlikely to happen.

Peter Macfarlane’s note: When it comes to either banking or the international financial markets, Money Morning Contributing Editor Martin Hutchinson,  brings to the table the kind of high-level expertise that our readers have come to expect. In February 2000, for instance, when he was working as an advisor to the Republic of Macedonia, Hutchinson figured out how to restore the life savings of 800,000 Macedonians who had been stripped of nearly $1 billion by the breakup of Yugoslavia and the Kosovo War.

If you would like to find out more about the work of Money Morning, visit now to claim  your free game plan for protecting your family from the coming “bailout bombshell”

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Gnomes on the ground in Zurich and Geneva are expressing shock and dismay about what is going on in the world of Swiss banking. Meantime, I’ve had several e-mails and calls in from people asking for quick solutions because UBS is closing their accounts and they don’t know what to do with their money!

The first thing to do is remain cool, calm and collected. Things are probably not as bad as they seem. Don’t do anything hasty, because decisions made under pressure may not be the best. It is possibly to calmly move your account over to other European private banks, and my firm is already helping a few people with that.

“We are committed to moving forward with the summons enforcement process. This action sends a strong signal to taxpayers hiding their money offshore. The IRS will be aggressive in pursuing people who shirk their obligations under the tax law. These people owe it to their fellow citizens to pay their fair share of taxes,” said IRS Commissioner Doug Shulman, in a Department of Justice Press Release. That is exactly what is going on here. Releases to the media intended to send strong signals to get Americans running scared.

The same press release also quotes John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. as saying: “At a time when millions of Americans are losing their jobs, their homes and their health care, it is appalling that more than 50,000 of the wealthiest among us have actively sought to evade their civic and legal duty to pay taxes.” Hmmm… sorry but that doesn’t quite add up. Funny isn’t it how they don’t draw the attention to the billions of dollars being wasted in Iraq, for example. That might be less of an incentive to pay taxes. Neither do they mention that the strategy for bailing out the American economy involves pumping still more billions of dollars into the pockets of bankers and insurance executives. Anyway, time to get down again from my soapbox and start talking practical solutions.

As I said in my article Is Offshore or Swiss Banking Dead?, “The why and the how of offshore banking for security and asset protection is alive and well. In fact, for American and European Union citizens, banking offshore is more important than ever.” In that linked article I went on to explain my reasoning, in case you are interested…

Anyway, here are the practical solutions for UBS and other affected account holders at Swiss banks, that bear repearing (because although we are hearing a lot about UBS, no doubt other Swiss banks are panicking about their American account holders too) I mentioned above that affected account holders should be taking “urgent steps to put things right.” What are those steps?

The fact is there are plenty of ways you can achieve the goals you are seeking, serious asset protection, and full compliance with all applicable laws and regulations still without handing your hard earned dollars over to the government for them to pour down the drain in bailouts and wars. Those are topics we frequently write about in The Q Wealth Report, and you will find some starting points in my Practical Offshore Banking Guide 2009 which is available right now for free download in the Members’ Section. The Practical Offshore Banking Guide includes some offshore banking notes especially for US citizens and residents, and another section especially for European Union residents and citizens.

Q Wealth Report is your resource for offshore asset protection, banking privacy, and wealth creation information. A subscription costs just $87 per year, and if you don’t feel  our service is worth a lot more than that once you have signed up, you are covered by our full no-quibble money back guarantee! Plus, as soon as you sign up you gain instant access to our members section to download a series of free reports including the Practical Offshore Banking Guide 2009 and of course The Gold Report.Thinking of which, the best advice for affected UBS and other Swiss Bank Account holders might just be to ask UBS to deliver them physical gold bullion which can then be shipped out of Switzerland. A good destination might still be Vienna, Austria, where it is possible still to open an anonymous safe deposit facility completely legally, just like in the old days… all details are in The Gold Report, which is also known as How to Buy and Hide Gold Bullion Offshore

P.S. No of course I’m not going to put the juicy how-to information here on a free blog for all to see. If you want the real facts on offshore banking and asset protection, check the links above.

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I don’t know if Friday the 13th followed by Valentine’s Day is the cause of so much excitement in the Offshore World this weekend. No sooner did Q Wealth Report publish my blog entry on the lessons to be learned from the UBS Swiss banking case (in a nutshell the advice was not to do business with offshore banks that have a presence in the USA) than news comes in to reinforce just what I was saying.

“It’s not a Friday afternoon cocktail any more. It’s taking off the gloves. We have a job to do to protect our jurisdiction.” Those are the words of Antigua’s banking regulator talking yesterday about Stanford International Bank. Stanford is an offshore bank owned by the flamboyant Texan billionaire of the same surname, who is also the biggest foreign investor on the island of Antigua. His other business interests in the US and the Caribbean include airlines, hotels and controversial cricket tournaments!

I won’t repeat the news on Stanford because you can read the full story in Business Week’s article Antigua Takes a Look at Stanford Bank. The International Herald Tribune also published a piece that goes into more depth called Scrutiny of Stanford’s bank spreads to Caribbean.

Stanford Group has long targeted American citizens along with wealthy Latin Americans (Venezuelans for example) and is now accused of taking unnecessary risks to pay rates of return above market average on Certificates of Deposit. By the way, Stanford Group also owns a bank in Panama, Stanford Bank S.A. and a second bank in Antigua known as – drumroll! – Bank of Antigua. Not forgetting either Stanford Bank Venezuela, a Venezuelan commercial bank. They also own a coin and bullion dealership. But, like the Marc Harris Organisation ten years ago that I wrote about just a few days ago following a CNBC documentary that visited Panama, Stanford Bank is one of those organizations that my readers and clients don’t usually hear about because I simply didn’t feel comfortable with them. My motto is “you don’t know until you go.” I went – and now I know.

Stanford’s head offices are quite a sight to behold for anyone flying in to our out of Antigua (most likely on a plane partly owned by Stanford), taking up virtually the whole Airport Boulevard. And Stanford certainly don’t spare expenses when it comes to trying to impress clients.  I have also visited a couple of other of their offices in Latin America, which are decorated according to the Marriott school of interior design.

However, when I talked to and visited Stanford Bank I found their staff plain arrogant. There I was, walking in as a potential client who could bring a lot of business to them, and they made me feel like they were doing me a favor by taking the time to talk to me.  So I simply decided to pass on that opportunity and steer my consulting clients in the direction of other, more discreet and low profile private banks in more traditional havens in Europe.

Stanford’s US presence, however, was always my major concern – just like with UBS. Wealthy individuals do business with offshore banks for privacy and security. An offshore bank headquartered in the USA cannot offer either of those two things. Unfortunately wealthy Latin Americans, in particular, still tend to look at the US as a bastion of security. Big mistake.

I was not over impressed by the Antiguan banking scene generally. There are some good offshore banks in the Caribbean region, and there are many banks still based in Antigua, but I certainly did not find any worthy of recommending. That’s why you are only reading my opinions of Antigua and Stanford Bank now that you might be interested for other reasons.

If you are interested in my recommendations for secure, conservative offshore banks – whether for private banking services or for international commercial banking services – I can do no better than refer you to my Practical Offshore Banking Guide 2009 that is available for instant download to members of The Q Wealth Report. Q Wealth Report is a small but powerful private membership organization dedicated to asset protection, offshore banking, wealth creation and the search to regain lost financial privacy for sovereign individuals.

And remember that lesson I mentioned at the beginning of this little piece. The ground rule is not to do business with any bank that has offices in either the USA or your home country!

Signing off from somewhere offshore, this is Peter Macfarlane wishing you lots of love on Valentine’s Day!

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You know, I’m almost scared to write about second passports these days. Second passports or citizenships are a totally legitimate tax planning tool, yet they have been demonized in the popular media, as if everyone who wants a second passport is a PT (Potential Terrorist)! But this is oure deception on the part of the powers that be.

If it’s OK for multi-national companies to do business and incorporate in different places, then the same can be said for multi-national individuals. Having a second passport has nothing to do with nationalism or patriotism. It has to do with personal freedom, human rights and that most basic of rights, privacy. Allow me to explain.

How a Second Passport Amplifies Your Freedom

First and foremost a passport is a travel document. And if that document does not allow you to travel freely wherever you choose, say you need to get all kind of visas, register here and there, report on your travels to your home country authorities and so on, then you need to obtain another travel document.

The “Right” Passport Makes You Safer

When traveling in certain countries, you may find your US or UK or other current passport is very unpopular. It can make you a target for terrorists. You might prefer to use an alternative identity document.
You Can Make More Money with a Second Passport
Your current nationality may limit your investment or entrepreneur abilities. In the case of Americans, for example, many investment houses simply won’t do business with US citizens. Other countries are “blacklisted” by other agencies such as the FATF or OECD.

A Second Passport Helps You Reduce Taxes

Taxation is a major motivation for most wealthy people who are seeking a second citizenship. Many countries would like to tax you on your worldwide income. At the same time some other states (where you can obtain a second citizenship) let you keep your hard-earned money with you if the source of income is not related to that particular country. Why not to take this opportunity and save some money that might be better used for the needs of your family.
Live the Offshore Life

You may want to expatriate – that is, to change your current place of residence. Many offshore centres are in desirable places with an attractive, safe and healthy lifestyle – great places to bring up kids, for example – and virtually crime free. Tax havens tend to attract the wealthy, who can live in harmony side-by-side. Because tax havens don’t have social security systems or give out work visas willy-nilly, riff-raff are not attracted to tax havens.
If you are interested in finding out more about international banking, living and second passports, then visit Q Wealth Report, or sign up for the free Q Bytes newsletter using the sidebar on this site.

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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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Keeping your assets in fiat currencies must be about the worst thing to do. Not only can these assets be seized by mere accusation (don’t believe it can’t happen to you – it happened to Iceland!) , but even more worryingly they can and will be devalued indefinitely until they are worth nothing.

Warren Buffett wrote recently in the New York Times:

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Buffett’s conclusion is that you should buy American equities. I don’t disagree with that if you feel comfortable with it – there are always good investors – but I would say it’s not something the average individual investor should do at the moment.

I’ll be writing a lot more in coming weeks on this subject at www.QWealthReport.com

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