Author: Nicholas Pullen and Henry Morgan

Article:
There are more offshore banking havens than you can shake a
stick at. Nicholas Pullen tells you how to separate the wheat
from the chaff, and make sure the haven you choose is really a
safe-house for your money.

There are definite and strong advantages to placing some of your
hard-earned money in offshore bank accounts:

First of all you get protection against your government. Nobody
knows what a government will do next, anything is possible. But,
unlike funds held in your home country, wealth stashed offshore
is greatly protected against any negative actions your
government might take, or legislation it might introduce,
tomorrow.

Secondly, you get protection from predators and parasites.
Offshore wealth is shielded from the attentions of asset
hunters. Avaricious litigants, thieves, fraudsters, conmen,
blackmailers (disgruntled ex-business partners and ex- spouses)
who all seek to pinpoint, target and eventually attack
individuals with visible wealth. These sharks have weapons at
their disposal, and they use them. They routinely run asset
searches to identify just who has what worth targeting. But
offshore assets are safe. Asset searches won't uncover offshore
assets, these remain totally invisible and safe from attack.

Thirdly, with an offshore bank account you are insured against
the unknown events tomorrow might hold. You never know when you
might be mighty glad of offshore cash reserves. If circumstances
at home make it impossible or unwise for you to stay, or
impossible to access your domestic funds, your offshore funds
provide you with a financial lifeboat.

"Not all banking havens are suitable, safe, or secure."

Finally, you can rest secure in the knowledge that you have a
secret nest-egg. You can build and grow a private stash of cash
beyond the gaze of anybody in your home country.

The first thing you need do, to enjoy the benefits of an
offshore bank account, is to select a good offshore banking
haven where you can open your accounts. This is easier said than
achieved. You aren't short of choice, from the Bahamas to
Vanuatu, Cyprus to the British Virgin Islands, Switzerland to
the Cayman Islands. Countries the world over are in the market
for, and only too happy to accept, as much foreign capital as
they can get their hands on.

However, you must bear in mind that not all banking havens are
suitable, safe, or secure. Some are excellent. Others are
ticking time bombs. If you open an account in the wrong country,
it can prove very costly in more ways than one.

What you need to do is to find out how particular banking havens
measure up before you lodge any of your cash or assets there.
This will require you to perform some research and
investigation. This is well worth doing, and thoroughly.
Mistakes avoided at this early stage save time, trouble and
money further down the road.

I suggest you measure the quality of any haven which interests
you by subjecting it to my Ten-Point Suitability Test. Satisfy
yourself on all points crucial to your particular requirements.

1. Location, Location, Location? Where is the haven located? Do
you want to visit your cash regularly? If so, is it convenient
or practical to have it stashed in a banking haven thousands of
miles away from where you live?

Can you access your haven by air - directly or indirectly? Is it
a problem getting entry to your haven? Will you need to queue
for an entry visa every time you want to visit?

Also, be aware that making regular, visible (visa records are a
paper trail) trips to a known banking haven is like waving a red
flag at any government snoop who might be taking an interest in
your affairs and movements.

Give some consideration to time differences. Can you manage your
financial affairs efficiently if it's midnight in your haven
during business hours at home? Are you happy to wait up until
the early hours to speak to financial managers?

2. Do You Speak The Language? Effective, smooth-running
financial management depends on fluent communication. Do bankers
and professionals in your haven speak English or some other
language with which you're familiar? You may need to discuss
complex financial matters in technical detail. It could cost you
dear if things are confused or compromised by language barriers.

3. How Easy Is It To Stay In Touch? Are there sufficient and
reliable telephone and fax lines? Are email facilities
available? Is airmail delivered quickly? How efficient is
surface mail delivery?

If your banking haven is deficient in these areas, it may become
difficult to maintain regular and instant contact with your
advisors and account managers. Is this acceptable?

4. Is The Tax Situation Right For You? Ensure your haven
provides the exact tax treatment you need. Mistakes can prove
expensive. Some havens impose withholding tax" on foreign-held
bank accounts. Are you satisfied that this is fair exchange for
the benefits your account will deliver.

5. How About The Legal System? Are the laws in your prospective
haven based on English common law? Is the judiciary of a high
standard? Is it independent? Is the Court system effective? Are
there rules to resolve conflicts of law? Are the banking
regulations stiff? Or is there ample opportunity for a
fly-by-night merchant to slip through the nets?

Are banking services registered with regulatory organisations
that uphold professional standards and procedures?

Satisfy yourself that the haven has local laws and legal
practices which provide adequate protection of your funds and
investor rights.

6. Is Your Haven Financially Stable? Check your prospective
haven's financial stability, by calculating what percentage of
its Gross Domestic Product is represented by foreign aid.
Foreign aid is as high as 70% of Gross Domestic Product in some
havens. The Cook Islands, Nauru and Vanuatu being recent
examples of this.

A haven's confidence in its liquidity can be judged, at least to
some degree, by its willingness to put in place solid depositor
protection. Enquire of financial institutions in the haven
whether or not depositor protection exists.

7. Is The Haven Free Of Trouble? Will It Stay That Way? Does the
haven have a trouble-free history and a secure culture? A
country which has experienced only moderate political, economic
and social change, and where political and social violence is
uncommon, is a trouble-free country. A stable past is a good
predictor of a stable future.

On the other hand, countries with a history of civil war,
military coups and civil unrest are definitely not right for
banking purposes. Cash held in a banana republic is high- risk.
Future flash points in volatile regions can render your cash
lost or worthless.

Look at the human rights record of the haven's government. A
government with high regard for its domestic population is
likely to regard you equally highly. A government which treats
citizens like cattle to be reared, milked and slaughtered is
likely to come to view you in the same casual manner. In such a
climate private wealth may suddenly become government property.

Check if there's a strong socialist political faction in the
haven. Overtly socialist governments can't be trusted to look
after your nest-egg. Political upheaval, new ideologies and
attendant legislation can change a haven's attractiveness
overnight. Ensure there's little likelihood of an ultra
left-wing political party sliding into power in the foreseeable
future.

Is the haven free from racial tensions and other social
problems? These can trigger crisis which may affect deposited
funds.

What about the prospect of foreign invasions and war? These are
slight for an isolated country. But keep an eye on the treatment
your haven receives in the international press. Areas and
regions seldom become hot spots overnight. Look at recent
political developments and events in the haven to establish if
there is any potential trouble.

"A stable past is a good predictor of a stable future."

Consider local attitudes. Is there wide local support for the
financial services and banking industries? Does the local
population appreciate that international banking operations are
effectively supporting the country's economy? Or does the
presence of foreign capital breed resentment? Is there a
foreign-bashing agenda?

Be sure to keep abreast of events and the socio-political
climate in your haven. Subscribe to newsletters covering such
developments. Read the local press. The writing is often,
literally, on local walls in the form of graffiti, for months
before anything actually happens which might affect your bank
accounts.

8. Does Your Haven Provide A Back Door For Your Government? Make
sure your banking haven doesn't provide your government with a
back door into your accounts. For example, some traditional tax
havens are existing or former British colonies, such as Bermuda,
Cayman Islands, the Channel Islands, and the UK government is
exerting pressure on authorities there to release information
relating to UK account holders.

British citizens should find out if their prospective banking
haven has tax treaties in place with the UK. If so, be aware
that the treaty allows for the free sharing of information
between the authorities in the two countries.

9. Does It Offer Enough Freedom For Capital? Are you free to
take money in and out of the haven? If there are severe
restrictions, the haven is no use to you. Even if there are no
exchange controls in operation now, check that the haven doesn't
have a history of exchange controls. You don't want your cash
trapped in a country which is effectively stemming flight
capital.

Make sure you have adequate guarantees that you'll be able to do
what you need to before opening accounts in the haven. For
example, are there restrictions on converting foreign currency
into local currency and visa versa? Are reports filed on each
occasion? Ask financial institutions in the haven.

10. Does The Haven Offer Sufficient Privacy? Seek out banking
havens which recognise and actively promote solid banking
privacy. Many havens claim to do so only on an informal basis.
Under pressure bank managers and financial advisors may
sacrifice you to the sharks. Does your haven, and/or the
institutions operating there, have a history of rolling over
when exposed to external pressures?

Check whether banking privacy is tradition or actual binding
legislation. Check whether a professional in a particular haven
is breaking the law if he passes data relating to you and your
financial affairs to a third party. Be aware that
" confidentiality" laws allow local government access to your
account details (although they can't pass the data on to a third
party).

Solid banking privacy legislation is the best protection for
your cash. A strong, secure haven will have banking privacy
legislation which carries stiff penalties (financial and
custodial) for any professional who breaches them and passes
data on to third parties.

Beginning Your Research A very good place on the Internet to
begin your investigations of suitable tax havens is
http://www.escapeartist.com axhavens axhavens.htm. The Offshore
Journal is a useful e-publication which frequently reports on
relevant events and changes in banking havens around the world.
Subscriptions cost £15 per year. Subscribe at
http://www.rpifs.com.

About the author:
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