Section 15

Banking Offshore

Distance from your bank is a matter of adjusting to the idea of being far away from where your money is kept, at an institution you have never personally visited, in a country about which you may know very little. The extent of your knowledge of this bank seems vastly limited by this fact, contributing to possible feelings of discomfort.

Remember however, that daily visits by thousands of depositors across America did little to prevent massive bank and savings and loan failures. The fact that depositors could see the impressive building and talk with personnel, establishing a comfort level in the mind of the customer, had little to do with the solvency, ethics or practices of those banks. Most of those depositors probably never knew the financial strength of the bank where they placed their hard earned money, or asked to see the latest financial statement, but instead chose to trust in the government to be a watchdog over these institutions, assuring themselves that in the remote chance of failure, the institution is a member of the FDIC or FSLIC and that their funds were safe. There are many disheartened Americans!

Today, the impressive gold decal in the window of your U.S. bank guarantees the safety of your money, not by a guarantee agency of the government, but by the "full faith and credit of the United States Government," why, because those agencies in whom we placed vast and blind trust were themselves insolvent and incapable of thwarting the tide of failing institutions in America and who in any case were never able to guarantee all of the deposits of their members in this country.

Having a basic understanding of the country where your bank is located is useful, but more important is the need to know the financial strength of your chosen bank. And, as we have learned in America, size has little bearing on its success or the safety of your money.

Although you normally will not visit your offshore bank and you may never get to see the actual facade, tellers and other customers, there are other indicators for determining their validity. On the other hand, distance is an advantage. It is a deterrent to unwanted intrusions, hard to locate, nearly impossible to get information from and time consuming and expensive to legally pursue. Most tax havens do not tolerate fishing expeditions.

Tax haven banks are quite accustomed to working with foreign customers and are generally very cordial and helpful. Servicing foreign clients is important to these bankers. In light of the distance factor, these professionals compensate for this by providing a wide range of services, business etiquette, and excellent communication skills. It is most likely that within short order, you will become comfortable with your new bank and quickly adapt to their favorable practices. Only by actual firsthand experience can you appreciate the service you will receive as opposed to the less than professional banking service and treatment Americans commonly experience. But as with anything of importance, doing your homework through advance preparation separates the wise from the gullible.

Language is generally not a major factor when banking offshore. Most international bankers expect to conduct business in English, however some banks, such as those in Switzerland, provide multi-lingual communications. In non-English speaking foreign countries where the majority of the business comes from within their own country or where most of the depositors are of one given nationality, it is likely they will not be able to translate into English. Only in this extreme case will there be a problem with language. Although language can be a noticeable difference for Americans banking abroad, it does not have to make banking restrictive.

Half of all tax havens today are common law countries. In previous years they were British Crown Colonies or dependencies prior to gaining their status as independent sovereignties. Common law tax havens are favorable countries for conducting offshore business and banking. Inherent in common law is confidentiality in financial matters. Even without specific secrecy laws, such countries, including England for instance, uphold this noble practice of respect for other people's privacy in money matters. There are exceptions, such as the lack of financial privacy in the United States. And today, Swiss banking has little to offer depositors over English banking in regard to practices of confidentiality.

Common law also has centuries of case law to rely upon. And only in these countries can trusts be safely established and administered.

It is no wonder that many tax havens take their banking seriously. Being descendants of the British empire they show special regard for the confidential affairs of those who engage their services, many of whom are often English subjects escaping outlandish taxes in the motherland. Patrons of tax havens are more homogenized today as these exotic locales gain worldwide popularity with citizens of other high tax jurisdictions and those seeking to avoid other forms of oppression by their government. Tax haven users have much in common. The success of any tax haven is to satisfy the special needs of this disenfranchised breed.