Why We Do Not Use Panama and the Other Offshore

Why We Do Not Use Panama and the Other Offshore Tax Havens Anymore

Introduction - We are no longer opening Panama corporations, foundations or bank accounts. We are also not using any of the tax havens for our clients banking anymore. This is because the offshore banking legal environment is changing rapidly. Hong Kong, Singapore, Switzerland, Lichtenstein, Luxembourg, Austria, Andorra, Jersey, Gibraltar, Isle of Mann, Cayman Islands, and ALL the other jurisdictions have agreed to enter, or have said they are in the process of entering, into TIEA (Tax Information Exchange Agreements) This concept involves signing cookie cutter treaties with 82 nations in the OECD (Office of Economic Cooperation and Development). This is not just affecting the USA. Even before the treaty was signed, in mid-June 2009, Hong Kong had its police issue a warning declaring that placing money in banks to avoid taxes is a criminal action. This is very serious, unlike anything ever seen during past crackdowns. As a matter of fact the OECD now considers all countries and jurisdictions cooperative.

The Tax Information Exchange Agreements - The OECD protocols allows for information sharing in cases of -suspected- tax evasion. We are not talking crimes here--no proof of a crime is required. In fact, nothing specifies what would be probable cause to gain this information and each request is individual. It appears to be discretionary or, in other words, any excuse or cause can be a reason. Conceivably, a country could submit thousands of requests per week for privacy-violating information. The government could then ask their bank to reveal who the beneficiary owner and signatory are on the account as well as all bank statements for last few months or even further back. This is information sharing, not freezing of accounts. They are now working on asset forfeiture as a secondary step to the tax information sharing agreements.


The banks will, as a rule, will not reveal the request for information to the client. This is considered -tipping- and can be a crime in some countries, like we see in Hong Kong. If, upon receipt of the information, the government responds back to the country where the bank is located, saying that there was a case of tax evasion, then the subsequent offense would be money laundering. As a result, the bank account could be frozen to allow the -victim- country to collect their losses through the courts in the respective countries.

What Hong Kong Did (June 2009) - This is a summary of the memo the Hong Kong Banking Superintendent sent to the CEO of all their banks this past week. This occurred before the new treaty, which Hong Kong vehemently intends to sign, has even been signed:

In a letter addressed to the CEOs of all Hong Kong licensed banks, Karen Kemp, the director of Banking Policy for Hong Kong, said that accepting money that is being secreted to accomplish tax evasion, even from a foreign jurisdiction, is a crime. The Hong Kong banks are expressly directed not to assist any entity avoid any kind or degree of taxation from any jurisdiction in the world. If a Hong Kong bank does so they may be found guilty of money laundering. Further, they would be in danger of losing their banking license because now they would not be found to be a fit and proper bank according to the standards of Hong Kong legislation.

The letter goes on to warn that money laundering is a predicate offense. The Hong Kong banks are not allowed to warn their clients that their bank accounts are being investigated. If the bank so warned the client, the banker may be found guilty of an offense called -tipping off- which can carry a prison sentence.

What the Swiss Did - The Swiss reached an agreement with the USA concerning sharing of tax information. The exact terms of the treaty are being kept a secret. Wonder why. Is it retroactive? The general terms call for an exchange of information on tax matters in individual cases where a specific and justified request has been made. What the heck constitutes justified request is a good question especially since the Americans have agreed to it. While the Swiss Parliament must ratify the treaty it looks like it is going through, especially since the Swiss have already ratified similar treaties with five other countries this year so far and many more are in the works.

What Luxembourg Did - Luxembourg has signed OECD model agreements with Denmark, France, Bahrain, India, and the USA. They are working their way through signing treaties with all 82 of the OECD nations. It takes some time to get all 81 treaties (a country need not sign a treaty with itself thus the figure 81) done but now the OECD is pushing for speed and threatening with sanctions for those countries not moving fast enough.

As you can see, these reforms are being taken very seriously. We could list all the 82 OECD (Office of Economic Cooperation and Development) nations and the treaties they are signing but it would be redundant. They are all signing the treaties. There will be no holdouts. All the big tax havens are participating this time. It is a new ballgame.

What About Panama - Panama is a nation of 3.2 million people and only has a handful of banks with a billion dollars in deposits. Most of the banks are much smaller. Hong Kong probably has 500 times more money on deposit than Panama, and they agreed to exchange tax information, as did Singapore another large tax haven with massive quality banks. There are single banks in Hong Kong and Singapore that each have more deposits than all the banks in Panama combined.

Panama and any other country have no chance of going this alone. They must give in or face the black list and wires in and out of Panama can be cut off bankrupting the country. They recently suffered from a real estate crash. Construction jobs were lost. A change in their banking laws will lead to massive unemployment. The banking industry dwarfs the 9,000 jobs the Panama Canal provides. When the tax laws change then there will be capital flight from the banks. The conclusions of this you can speculate on yourself.

What About Other Countries - The game has changed. There is no longer such a thing as a superior jurisdiction where one can have privacy and maintain bank secrecy for non-criminal behavior. The big players are not stupid and they will protest to get a level playing field. The net result will be a blacklist and then a canceling of correspondent banking relationships for any country not signing the treaties in a timely fashion. All the big offshore players (Hong Kong, Singapore, Switzerland) have agreed to share tax information and are in process of signing the new treaty. If a country protests and does not sign it, they gain a huge advantage over these big countries in terms attracting clients and that will be answered with retaliatory actions like blacklisting which will crush the non-cooperative nation. There is no more shopping for a good jurisdiction, like in the old days. The only available solution is an International Trust Agreement, explained below.

What Happens When A Country Signs the New Tax Treaty - The banks will then become diligent in watching for newly closed accounts and large sums being removed because these banks have a good chance of becoming insolvent as capital diminishes. Plus, the bank workers do want to keep their jobs for as long as possible. What you can expect to see is what is going on in Hong Kong. Basically, account closures and sudden removals of large amounts of money will be looked upon as suspicious transactions and the accounts will be frozen pending an investigation to see if the person is closing account or removing funds for tax evasion. This means court cases will be piling up in these countries as clients sue to get their money out. These investigations keep the funds in the bank and the process can easily take one or two years to resolve. The idea here is to not wait until the law goes through; by then it's too late. Move your money out now before it becomes a suspicious transaction. Do not close the bank account. Just leave a very small balance there and wait for the bank to close it for inactivity or low balance. There is no chance for any of the smaller jurisdictions to continue not sharing the information for taxes based only on suspicion. If they do not comply they will be driven out of global banking. They are not talking about the privacy invasion. They are not saying that if some government gets your banking information it can wind up in a court file or in the public domain and then you are exposed to all. The governments do not care about you and your bank secrecy.

Bank Failures in the Tax Havens - This is inevitable. When the treaties are signed there is going to be capital flight. People will mistakenly think other jurisdictions are safer. They will resort to trust account banking. They will buy and hold gold, real estate etc. They will do other thing with their money but out of the banks a lot of the money is going. This can push the offshore tax haven banks into insolvency easily As soon as one depositor demands his money and the bank does not give it to them in a reasonable amount of time (few days maximum) that person has the right to file a complaint with the banking superintendent and push the bank into liquidation. Liquidation is where the banks assets are sold and a proportionate amount of the assets are paid to each depositor. Usually the recovered amount is less than 50%, 30% would be a good liquidation. Worst I remember is nothing, a big Latvia Bank went some years ago and the recovery was 2%. Liquidations are very scary. The lawyers and accountants bilk as much money as they can out of these. People that have loans with the bank settle these loans out for 1/10th or less, because they know the liquidation needs money fast. During the liquidation it becomes apparent that some of the banks loans have no real collateral worth anything. The amount of money spent in legal fees to find this out can be massive. The real estate owned by the bank gets sold for a lot under its fair market value. In a word it is a royal fleecing of the depositors under cover of law. There are liquidation lawyers and accountants who get rich off of these liquidations. Disgusting really when you watch them unfold professionally.

We Do Not Use Tax Haven Anymore - We do not put our clients money in the offshore tax havens anymore. We anticipate capital flight from offshore tax haven banks as the world wakes up to find out what you are reading here on this page. This will take some months for the populace at large to wake up. Most will wake up when it is too late and they will then have a lot of trouble getting their money out of the banks in the offshore tax havens. Accounts will be closed for investigation, etc. Smart money will be removed before these tax treaties are finished being signed. Move fast. We are putting our clients money into: Costa Rica, Ecuador, Mexico and Guatemala. None of these countries are considered tax havens except Costa Rica used to be a tax haven some years back but that was a long time ago. If Costa Rica scares you use one of the other countries we offer. These countries will not be experiencing capital flight as the laws change. The banks we use are strong and will survive these new tax laws, probably will not be affected to any noticeable extent. For instance the bank we use in Ecuador has 25 branch offices in the country, it is not an offshore bank. We understand what is coming down the road. The countries we are now using do not tax offshore income. Your money will safe and secure protected by International Trust Agreement banking.

Offshore Tax Haven Banking Crisis Coming - The high tax countries (G-20) are in the process of causing a lot of banking turmoil in many countries considered offshore tax havens. Their tax treaties are bound to cause a lot of capital flight from these tax haven banks in wholesale quantities. This is coming right after a worldwide financial crisis. This will make their corrupt and busted out banks look better by comparison. In other words their banks are so broken they are beyond fixing so as a ploy they will bust out the banks in the offshore tax havens causing many bank failures and liquidations. Their junked out toxic banks will then not look so bad by comparison. The desired effect is okay I will pay the taxes, risk the litigation from the corrupt lawyers, and suck up the lack of privacy and bank in the big high tax country since they are safer. When Al Capone conducted business in a similar manner it was referred to as the -Protection Racket-. Now you know what is going on deal with or not, your choice! Want us to keep you safe, private, secure and strong - welcome.

Stanford Bank Panama - This year Panama had its first bank failure, Stanford Bank. The depositor's funds have been tied up for six months now. The bank is in a voluntary liquidation. Having seen many bank liquidations, I can say that this one is most unusual. For six months now there have been no creditors committees or efforts towards a distribution of assets while they try to sell the bank to another bank. Under the -cooperative- international tax information environment this could prove to be most difficult, although they claim to have a buyer. This isn't certain as their deal with the first buyer fell through, but there's still hope. All in all, this appears to be a bank failure that they are trying to treat as a non-bank failure. Meanwhile, the clients of the bank are at wits end. We'll see what happens.

There should really be a creditors' committee consisting of the largest depositors and they should be deciding whether or not to sell the bank and for how much and to whom. Instead, the government is doing it and nothing is happening. The depositors I think are clueless about the fact they could form a committee and hire a lawyer and go to court and deal with the bank that way with them in control. Well maybe the bank will actually sell and then there will be a happy ending for the depositors. The people hoped that the new administration coming in on July 1, 2009 would bail out the situation. I don't expect them to use whatever little money they have to bail out a bank in a dying banking system now. If a Tax Information Exchange Agreement were signed I would expect this to be only the first of many bank problems for Panama as the capital dwindles away.

Bank Reference Letters A Threat - Many banks will no longer write a bank reference letter due to its recent treatment in some countries as a suspicious transaction. The aforementioned countries are requiring the banks to write a report and submit it to the respective governments when such a letter is requested. Investigators come around as a result asking questions, requesting records etc. They have every incentive not to want to write a -suspicious transaction-; it costs the bank time and money and can lead to them being looked at with a mistrustful eye themselves if too many such suspicious transaction reports are filed. You need to avoid requesting any bank reference letters.

Apostille of Documents - An apostille is a person who certifies the fact that a notary is a notary. Many banks want your identity documents and other documents notarized and then apostilled. The apostilles now are asking what the apostille is for and at times or always reporting apostilled ID documents as suspicious, so we believe. Avoid getting anything apostilled in regards to opening a bank account.

Trust Agreement Banking - The answer is International Trust Agreement Banking. An anonymous corporation is formed, and you get a general power of attorney for this corporation either in blank or made out to you. A bank account is opened for this corporation in Guatemala, Costa Rica or Ecuador. There is an International Trust Agreement between the law firm and yourself. This protects you and gives you the control. This document does not go to the bank, ever. The bank does not know who you are and, of course, has no identity documents on you. In the event of an information request they only even see the law firm member who signs on the bank account. Then, if the government chooses to go further, they would have to come to Guatemala, hire local counsel, and ask for the law firm to reveal who the owner is. A law firm is not a bank and is not covered by the OECD treaties. If there were no hard evidence of a major crime (not taxes) relating directly to this bank account, no information would be released. Suspicion, probable cause, etc., do not work when it comes to a law firm breaking attorney client privilege.

The other major benefit of an International Trust Agreement is a distress clause. This spells out what you want the law firm to do with your assets and money in the event you fall into verifiable distress. Distress can be divorce, bankruptcy, lawsuits, and other events. You can also state what is verifiable proof that the distress is over, such as a bankruptcy case being closed, a divorce finalized, etc. This can establish plausible deniability for you. You could then say you have no control over the funds and cannot be ordered to return the funds to some jurisdiction. This is a complex area of law and is never just a simple black and white answer, but you can get the general idea. The details will be worked out when we draft the agreement.

This is the ONLY way to protect your assets in these troubled times. There is no country left who will not cooperate with information sharing. We feel this service will be effective for at least five years and probably longer.

To learn more about International Trust Agreement Banking go here: International Trust Agreement Banking

Fees - The anonymous corporation, bank account with the law firm as signatory/beneficial owner, and the International Trust Agreement with distress clause is $6000. The international trust agreement protects you and your assets. The law firm charges 4% of the incoming funds. This is a one-time fee. The law firm does not charge an outgoing fee. The law firm is responsible for your money and need to be compensated for this service.

Visa Card - It is possible to get a visa card that works in ATM machines, online and in person. Visa, MasterCard will not issue cards with no name or just a corporate name. If your name was, say, George Washington the Visa card could be issued as G. Washington.

Bank Secrecy, Signatory and Beneficial Owner - The banks we use have bank secrecy. If there was any request fro information that was civil the banks would throw it in the garbage for shredding. If a request came in from a national government like from a tax treaty or other reason and they gave up any information it would be the law firm as the beneficiary owner and signatory on the account. The law firm would not give your name up. A request for the information would need to go to a court or if the treaty was being used to the correct government official where the bank was located first. The bank would give the corporation and the law firm as the beneficiary owner and signatory. The bank has no idea who you are or if there is even a person such as yourself involved. The bank does not have a copy of the International Trust Agreement. The country requesting the information would need to hire local counsel where the bank was and appear in court in the country where the bank was located to attempt to get the law firm to reveal who the client was. This would get them nowhere. Ultimately, they would need to appear in a Guatemalan court with a Guatemalan law firm representing them, asking the Guatemalan law firm for the records pertaining to whom the natural person(s) was/were behind the corporate bank account the law firm signs on. Without evidence of a major crime associated directly to this bank, account the records would remain sealed with the law firm. It would be most unlikely anyone would even try to get into the records in Guatemala since the chances of success would be so low and the expenses significant. This is largely because attorney client privilege in Guatemala is much stronger than in Europe or North America. Anything civil would, of course, have no chance of penetrating attorney client privilege.

Bank Reference Letters - Of course these are not required in order to protect your privacy and assets. No bank reference letters.

Queries on Your Account - You would be notified of any queries and given an opportunity to remove the funds to another country. A law firm is not a bank. Banks are generally prohibited from telling the client that there has been a query on the account. A bank has to comply with a government request. The bank giving them the law firm is a dead end and they need to ask the law firm who the account holder is. A law firm can elect to fight to protect attorney client privilege, which is very strong in these countries unlike North America and the EU. The law firm is not prohibited from telling the client there is a query on the bank account. If the bank account was directly tied to crimes like kidnapping, murder, child molestation/child pornography, narcotic trafficking, bank account hacking, and other serious crimes, then we would not be able to protect you. On other matters your assets should be safe in the jurisdictions we use for International Trust Account banking. This is the only way to bank safely in these troubled times.

How to Order - If you wish to proceed feel free to contact us. There is not any online order form for this. You need to be in communication with us. We will need to know how much money per month and year we are talking about. We need to know what country the funds are coming from.

The first step would be to send us scans of a notarized copy of your passport and driver license. Next, we would send you wiring instructions for the $6000. Until we receive notarized copies of passport and driver license, we cannot send you any wiring instructions. When funds are received, we will execute an International Trust Agreement and it send to you by email as a file attachment scan. You print, sign and rescan and return it, once again, by email.

Then, we get the corporation formed or use an off-the-shelf corporation for speed. The minimum deposit at the banks we use is $5000. We can go start to finish in 2-3 days using shelf corporations. Questions welcome.

-Aurelia Masterson, Originally posted on: somekeyword