We are going to discuss the movement of funds from your own country or another country to an offshore bank presumably in an offshore tax haven. We are not going to discuss any illegal scenarios.
Why do People Move Money and Assets Offshore – Many of you will first think taxes? Well you are wrong. How many dictatorships are there in the world right now? Quite a few. There are ruled by kings who are in office for life. They can confiscate funds at will from anyone in the kingdom. How many military coup governments are running countries? Quite a few and they too can grab money from anyone in their jurisdiction at will. How many countries practice religious persecution? Many with even death penalty for infractions. Confiscation of wealth is a popular penalty involving religious persecution. How many countries practice political persecution? Many. How many countries have criminal gangs and organizations that are almost as powerful or as powerful as the government in power? Quite a few and they often get into the bank records in their country to see who to rob, kidnap, extort or otherwise victimize.
Then we can get into countries with out of control civil litigation systems where lawyers can strip you of all your assets in an unfair system that is out of control. Then we get into countries where kidnapping is prevalent and we could keep going on and on. There are numerous reasons for moving funds offshore where they can be safe other than tax implications. High tax governments want you to think that offshore banking and asset protection is only about tax avoidance but as you can plainly see it protects people from a lot of evils the high tax governments can care less about protecting people from.
Taking Cash Out of the Bank – Well this is the first thing that comes to mind with most people. Let me take the cash out and then transport it and deposit it into the offshore bank account. This perfectly guarantees that there is no trail to follow. Will this work? Sure and moving cash by itself is not intrinsically illegal as long as you report it correctly but there are some pitfalls to watch out for.
First of all many but not all governments want you to declare when departing their country with any amount of cash or negotiable instruments over $10,000. They word these forms as to be unclear if it is $10,000 per person or family. Usually per person, but do inquire. You can always have family members take separate flights to avoid get snagged by vague interpretative errors regarding the way the law was written. Do minors count – usually not. Today with all the inspection machines and other screening devices it is best to fill out the declaration form if required to do so, when departing lest you have the funds confiscated and face arrest. You may have to supply a source of funds statement, which is to say where the funds were derived from. In some police states it is really best not to move cash out since you may face a lot of questioning. This also depends on the amount. If you say you are going to a country to gamble at a resort and have $35,000 cash that is one thing. If you say that you are going to buy a hotel for cash and have $5,000,000 that’s is going to be another story altogether. Other factors are where you are going, who you are, where your passport is from, what profiles the country ahs on you etc.
In some countries removing large amounts of funds will trigger responses. The bank will tell you they have to order in the cash and that will take one or two days by armored car. Then they file suspicious transaction reports with the government to see if they want to confiscate your funds or arrest you or something. If it is $40,000 and you said you were buying a boat or car from a private party for cash that might not attract too much attention. If you tried the same thing with $900,000 it would not be plausible and thus more suspicious. If the figure was $3,500,000 even more suspicious. See how it works. In some countries large cash movements are common and the banks do not pay much attention to it.
Bringing Cash into the Offshore Country – Ok once again not illegal if you do the required declarations in almost every country in the world. Be prepared to explain the source of the funds. Panama is a bad country to bring cash into – ill advised. It is best to use a chartered plane, not airlines for substantial cash movements. If there is a substantial amount of money security is too difficult with a commercial airline. People can rob a duffle bag or briefcase in airline terminal. They pass it on to an accomplice who deposits the briefcase or duffle bag inside of another container and maybe it gets passed to yet another accomplice who then leaves the terminal quickly with your money and gets into a waiting car. Sure the police may be able to piece a lot of this together in several hours from the cameras but by then your money is long gone forever. Private airstrips and chartered jets are much easier environments to maintain security in. Large duffle bags can be placed inside the passenger compartment without having to go into the baggage compartment of a commercial airliner where there is about zero security.
Another option is to use Brinks the armored car service or one of their competitors to transport the cash for you on one of their jets. They will insure the cash for up to $5,000,000. Extra insurance can usually be obtained. They will require you to do all the due diligence documents for the departure country (if required) and arrival country.
In any event once the funds arrive in the offshore destination country declarations including source of funds statements need to be filed. Then security needs to be arranged with armored car transport directly to the bank. If you feel armored cars are not private enough a caravan of several SUV vehicles with armed bodyguards can be arranged. This would make it harder for one to know which bank the funds went to. Airport people cannot always be relied upon to be honest so the security precautions are necessary to transport funds safely to the bank for deposit.
Depositing Cash in the Offshore Bank – This is 100% not suggested in Panama. Anything over $10,000 will be refused. There are other countries like Guatemala where cash transactions are much more an accepted way of doing business. The bank will want some source of funds information and so forth. The bank should be prepared beforehand for the deposit so they are ready to receive it and the appropriate accounts are open and ready for the deposits. Another alternative is to put the funds into a bank vault. Sometimes this can be done at a government owned and operated bank or a private bank. If it is a large amount your money may be kept segregated in its own area in the bank. The bank does not put the money into the banking system per se; instead it is kept in the vault. You get issued a document showing the funds are in the vault, the amount, the date and whom they belong do. It can be called a depository receipt, a SKR (Safe Keeping Receipt) or just a receipt in general for the funds showing the ownership, date and amount. You can have a law firm open an International Trust Agreement and have the receipt in their name for you protecting you through the trust agreement. Later on the funds can be withdrawn, removed to another institution in the same or another country or deposited into an account(s) in the bank. Expect to pay points for this service.
Cash – Cash is a complicated method of losing the money trail but highly effective at the same time. Cash provides you with the most control and privacy and thus it is disliked by many oppressive anti-privacy governments. To de disliked is not the same thing as illegal.
Travelers Checks – These if not filled out made payable to a specific person or corporation are considered negotiable or bearer instruments and subject to the same controls as cash. If you make the traveler check payable to a person or corporation the government employees at the airports may not understand that it is no longer a negotiable instrument since they are usually not well trained in law. Best to treat travelers checks same as cash. While it is difficult to trace traveler’s checks it can be done. Not all that secure but it does take the trail away from your bank account that is sending the money, so to speak.
Bank Checks & Money Orders – If they are made payable to a person or corporation then these are not negotiable instruments and not subject to the controls imposed on cash. Offshore banks often will not take a money order for deposit – too much fraud. Bank or Cashier checks are usually fine but take 2-4 weeks to clear. Offshore banks will never extend credit while waiting for a check to clear.
Regular Personal or Corporate Checks – Welcome. If these are made out payable to a person or corporation they are not negotiable instruments and can be used freely. Offshore banks generally will accept them and hold them until they clear, 2-4 weeks. If you start depositing checks that bounce by the third one they will not accept them anymore. The banks will never take third party checks, checks by fax, phone or drafts.
Western Union – Banks will not take western union funds for deposit.
E-Gold – Banks will not take virtual currencies like e-gold for deposit.
Stocks – There are ways to transfer stocks to an offshore stockbroker. Offshore banks are rarely also stockbrokers. So you would be dealing with an offshore stockbroker, not the bank directly.
By: Aurelia Masterson
Photo credit: The National Archives UK via Visualhunt.com / No known copyright restrictions
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