Simon Black and Fitzroy McLean

Things are getting uncomfortable for individuals and corporations looking to deposit their money in tax havens around the world. Just recently, Congress introduced the so-called “Stop Tax Haven Abuse Act,” which is designed to do away with the privacy afforded by doing business or investing outside the U.S. and to eliminate or reduce tax benefits available offshore.

We are patriots. We have proudly served in our country’s military, have extended a helping hand to its public sector, and have plowed our entrepreneurial enterprise into its once fertile soil. We love America, but these days, America does not love us back. It takes without giving and squelches free enterprise. These days, America is no longer the land of the free, especially when it comes to the market.

Just look at the headlines, seemingly ripped from the pages of Atlas Shrugged: Unconscionably large bank bailouts. Punishing regulations and tax requirements. An arctic business climate. Government money bombs. Riots and protests. Slowing trade. Protectionist rhetoric. Demonized corporate executives. Even pirates hijacking cargo ships. One can guess what will happen next.

We predict the next several years will usher in larger, more obtrusive governments, resulting in a decline of personal liberty and financial privacy. The world will become increasingly polarized between two groups: those who consider government intervention a great idea, and the rest of us who happen to be sane.

As such, you can bet your last falling dollar on some absolute certainties: bank nationalization is a given, at least de facto if not de jure; taxes are going up on those of us with any money left; the Fed’s money blitzkriegs will spark a blaze of inflation; and financial privacy will be a thing of the past in the United States.

The obvious and necessary solution is to position one’s finances outside of the United States, and to do so now, while the narrow and finite window of opportunity is still open.

To be clear, evading (or even avoiding) taxes at this point is not a wise move, given the size and scope of the ever-growing IRS. But there are significant advantages to expatriating your capital now:

For starters, you will actually have control of your own money. Yes, in certain instances you’ll be obliged to tell the IRS exactly where it is and what you’re doing with it, but no government agency will have the authority to reach into your overseas pocket and freeze or expropriate (read: steal) on a whim just so Team Obama can give it away to pay for someone else’s McMansion.  Plus, when exchange controls are implemented and Americans are forbidden from wiring money overseas, your capital will already be secured in another jurisdiction, where you will be free to do what you want with it.

Secondly, you will no longer have to assume the risk of insolvent banks or go through the hassle of petitioning the government to get your FDIC insurance bailout. Many overseas banks are far better capitalized than those in the United States, and some of them are in jurisdictions with constitutionally protected banking privacy.

Lastly, and probably most importantly, moving money overseas gives you a last chance at diversifying out of the dollar, which, in a very short period of time, will barely be worth the paper on which it’s printed.

Bank and Brokerage Accounts

Opening a foreign bank or brokerage account is easier said than done; the United States government severely restricts where and under what terms you can open a bank account, invest in a fund, or engage in other economic activities that facilitate the protection of and access to your assets. As the signatory on an overseas account, you are required by law to inform the federal government on Treasury form TDF 90.22 by the end of June each year. Ostensibly, this has been done in the name of fighting money laundering, but it has the effect of severely restricting your freedom of financial movement.

Many foreign banks simply won’t work with you… don’t worry, it’s nothing personal. Uncle Sam has been beating them down since the Reagan years, and between Qualified Intermediary rules, tax treaties, and the USA PATRIOT Act, Sammy gives himself a lot of regulation to bury the opposition with.

There are some jurisdictions that are still excellent banking centers; Switzerland may have rolled over, but Panama, Uruguay, Singapore, and the United Arab Emirates have thus far ignored the call for “greater transparency” (read: government access to private finance).

Some individual banks, like Credicorp and Global Bank in Panama, or Banco Itau in Uruguay will not work with U.S. citizens anymore, but there is still opportunity with the hundreds of remaining banks in these jurisdictions.

Similarly, opening a foreign brokerage account is a shrewd move, not only to move your money overseas but also to have greater access to financial markets. Remember when world markets tanked on Martin Luther King Day 2008? If you were a U.S.-based investor and wanted to sell, sell, sell, you had to wait a full 24 hours until the markets opened after the holiday on Tuesday morning. If you had been invested with global depository shares through a foreign brokerage, you could have saved yourself several points and gotten out in time.

We would suggest looking at Saxo Bank in Denmark.

If you have gold, it would be highly beneficial to get it out of the U.S. – stat. If you do keep it in the U.S., your only truly reliable and private option is to store it yourself in a safe that you bury in your backyard.  Otherwise, move it out of the U.S. now before Team Obama pulls an FDR and takes your gold from you.

At the moment, gold is not considered a monetary instrument by the U.S. Customs and Border Patrol, so there is no legal requirement to declare your bullion upon leaving the United States. Some countries, like Taiwan and Uruguay, require you to declare gold in excess of a certain value to customs officials upon entry.

We recommend Panama, Austria, Switzerland, and the United Arab Emirates as locations to store bullion; one particular favorite is a location called Das Safe (www.dassafe.com) in Vienna where anonymous safes start at 400 euro/year.

Real Estate

It might sound counterintuitive after the subprime debacle, but real estate is a sound option for moving money outside of the United States; there are zero reporting requirements. It’s your business where you own property, and (so far) no one else’s. You can purchase property in a private way by setting up a corporate structure to hold the assets so that they’re not in your name (Panama is an excellent jurisdiction to set this up), and although there are many places with depressed real estate markets, there are also many with good growth potential: in Latin America, we would recommend Panama, Colombia, Uruguay, and Chile. In Europe: Slovakia, Albania, and Poland. In the rest of the world: Lebanon, Hainan Island (China), the Philippines, Cambodia, and New Zealand.

Time is of the essence – start looking for your safe haven now.

Regards,
Simon Black and Fitzroy McLean

April 3, 2009

Simon Black and Fitzroy McLean
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  • http://www.whiskeyandgunpowder.com Gary Gibson

    In response to the article by Samantha Buker a couple days ago, a Shooter writes:

    Pardon me if I am incorrect, but didn’t FASB install the current version of mark-to-market only a couple of years ago? I believe we did quite well without it for, let’s say, about 80 years from the Great Depression. Why should we let some mortgage deadbeats bring down the entire banking system? More to the point, if the installation of mark-to-market was recent, doesn’t it suggest the possibility that the entire financial crisis has been a contrived event? Instead of more rants about quantitative models, I’d like to hear some serious analysis on that. Steve Forbes is claiming that mark-to-market and the removal of the uptick rule are together responsible for the recession turning into a crisis.

    Hmmm… Good point. I asked Sam and here’s what she said:

    The market also did quite well without the trading of derivatives.

    And Yes, I’m ranting because, based on what Congress did to Herz, we see that the “mortgage deadbeats” are still holding the reins.

    Mark to market, if you read Herz’s testimony, was a relatively recent event…and it did allow for more forced transparency of what the banks were holding asset-wise.

    The savvy investor, like Dan Amoss, reads between the SEC lines and finds these flaws BECAUSE of mark to market.

    Hence, when the weak were caught in their dirty undies…the market hung them out to dry.

    And another Shooter writes in with words of encouragement: “If people think things are bad now; all I can say is: CHEER UP — IT’LL GET WORSE!”

    Have a great weekend.

    Regards,
    Gary Gibson
    Managing Editor, Whiskey & Gunpowder

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  • Freedom

    You are wrong, america IS land of the free, most just are not aware what the FREE means. Here in america everything is free, and you don’t have to work for it. we have so many social programs for those who choose not to work. so this is america land of the FREE, ever dial 211, they can hook you up with all the benefits, call it and you’s see, oh, even the call is FREEEEEEEE!

  • http://www.googlemoneytree.me/ Freedom

    You are wrong, america IS land of the free, most just are not aware what the FREE means. Here in america everything is free, and you don’t have to work for it. we have so many social programs for those who choose not to work. so this is america land of the FREE, ever dial 211, they can hook you up with all the benefits, call it and you’s see, oh, even the call is FREEEEEEEE!
    BTW I love your blog!

  • johnk

    Jesus, an important caveat to this is DO YOUR HOMEWORK on ANY bank you select. Any bank that will flout U.S. regs may be a due diligence nightmare. Be careful with your money. It could end up in a Bank Crozier type bogus situation where your funds will be at great risk. That point should have been made very clear in the article.

  • aeolus

    Yes patriots will wrap themselves in the flag and pledge allegiance to the flag. But they don’t want to pay taxes. If you don’t want to carry your fair share, leave.

  • http://www.puebloverde.org Tom Peifer

    With all due respect to the conclusions drawn in the article, there is much more at stake than having a safe stash of bullion bars–or the surviving viable paper currency.

    As many analysts have pointed out, we are faced with a convergence of “consequences” which will make just getting by a difficult proposition. The ‘armed to the teeth’, solo-cowboy in the bunker option is, in my considered opinion, far less viable to simply moving to an area which retains a high degree of self sufficiency and is reasonably far from population centers. You don’t have to produce everything yourself and your most valuable commodity is your connection with the locals.

    I thank the stars that I made the move 15 years ago.

  • Michael

    This article was linked to a peak oil website. Why, I don’t know.

    It’s just libertarian drivel.

    Go move to China if you don’t want your precious self taxed.

  • http://enoughalready.con/ Anonymous Coward

    “The world will become increasingly polarized between two groups: those who consider government intervention a great idea, and the rest of us who happen to be sane.”

    1. Corrected edition: “The world will become increasingly polarized between 6.5 billion groups: those who like to save their own skin.”

    2. Sanity is way overrated.

    3. The government can intervene all it wants and can, provided it does not print new cash. In fact, for sanity to return, 80 cents out of every dollar in circulation must be destroyed without trace. This will anyway happen one way or another. Might as well get the government to do the dirty job.

  • http://unspy.wordpress.com mark

    aeolus , you wrote:
    >> Yes patriots will wrap themselves in the flag and pledge allegiance to the flag.
    >> But they don’t want to pay taxes. If you don’t want to carry your fair share, leave.

    Do you know where the IRS income tax revenue goes?
    If you learned that 100% goes to the Federal Reserve
    to pay interest on the debt…. would that surprise you?

    Then, if you were to learn that this money creation
    system and income tax collection service were both
    setup in the same year 1913…. would that surprise you?

    The more you learn about these two institutions, and
    the more you learn about how unconstitutional both
    of them are. Soon it become harder and harder to ignore
    the duty of a patriot is to oppose and protest both of them.

    The same bankers who are looting this country on
    Wall Street, are the same crooks who employee the IRS
    to steal money out of your paycheck before you even
    have a change to cash it. You think you are going you
    patriotic duty when in reality you’re just paying protection
    money to the International banking mafia who don’t care
    about this country. In fact, this same bunch of criminals
    are now pushing a new global government, this is what
    you tax money is helping to produce! In short, by paying
    taxes you help destroy the sovereignty of your own nation.

    You may not believe this at this time, but what if careful
    study of the facts lead you to this conclusion, would you
    still feel as you do now?

  • Seth

    Atlas Shrugged? Are you kidding? Apparently not, considering the logical disconnect between 90% of what you wrote. It’s sad to see that armchair libertarians still think Ayn Rand had something to contribute to modern political thought; she was and is vacuous and twisted. We should all be very careful when someone writes a treatise on politics and personal responsibility, cloaked in the garb of fiction, and devoid of any attempt at rectifying the claims with reality (i.e. scientific research–where’s Rand’s data to back up her claims?). You could find a much more engaging theory of why our current reality is as it is by reading C. Wright Mills’ “The Power Elite” (1957). This one is actually backed up by new theory and lots of empirical verification.

    Why is it that CEO’s and large businesses are being “demonized”? Why is the government intervening in markets? The “business” climate has not become “arctic” in the United States; the entire economy has collapsed in the midst of an underconsumption crisis, brought on by the ramparts of monopoly capitalism (Baran and Sweezy, 1966) as it twisted itself into a new being (monopoly finance capitalism–see Foster 2009 for the best elucidation of this phenomenon). The average person in the US has been receiving a stagnant income for over 33 years, while the cost of living has increased–credit expansion ended in the US when petrodollar recycling crashed (due to the collapse in oil prices), and there wasn’t any more credit-funded buying to keep the average American’s consumption habits propped up (the ethics of which is complicated and not in the scope of a brief response to a shitty article on the internet). Those poor “demonized” CEOs were responsible for issuing all that credit, fully knowing that the interest would never be repaid, let alone the principle; and it was allowed due to NO OVERSIGHT from the regulatory bodies that should have kept it from happening in the first place (run by former bankers itself). To cover their asses (both bankers and regulators), exotic financial instruments were created and then all hell broke loose, with everyone being taken in by someone else’s greed (including their own).

    Now, the average American is being asked to cough up bailout after bailout, while simultaneously being forced to deal with a depreciating dollar, inflating raw material (including food) prices, and deflating capital values (homes, cars, etc.)–at the same time as slashing the scope of the social safety net at its greatest time of need.

    How is this not a case of the most powerful capitalists running roughshod over the public (and its treasury) again? W hy do you see this event as “Atlas Shrugged” when it is really “The Great Gatsby II”?

  • Pump

    Don’t you know that the size of the derivatives market is $1.6 quadrillion worldwide? It will not matter then what the government does or where you hide because other countries will also be affected.

  • Richard

    Tom Paine called these type of people “summer soldiers,” in comparison to those at Valley Forge through the winter.

    Anyway, where were these guys when our govt. was in no-win wars overseas? I guess those were all to the good, but if Obama starts refocusing the spending in America on Americans, it’s time to leave. To think that patriotism is only supporting the latest no win unconstitutional war started by the President is ridiculous.

    I guess we’d be better with “foreigners first, Americans last” Republicans.

    yeah, I agree. Let these guys leave, and the sooner the better

  • Bear

    “To be clear, evading (or even avoiding) taxes at this point is not a wise move, given the size and scope of the ever-growing IRS.”

    There’s actually a lot of people who don’t, and there are organized tax resistance groups for conscience objection. One interesting thing they do is put money in an “alternative fund” that gives grants to community and peace groups. If you get a lien on your assets or the IRS withdraws from your bank account, you can remove your money from the fund to cover yourself.

    According to enforcement stats from the IRS’s website, out of the 11,972,000 total delinquencies last year, only 21% had levies served to employers or banks, .005% had assets seized, and .004% were incarcerated.

  • aeolus

    Mark,

    The US is a representative Democracy. We elect our representatives and they are supposed to act in our behalf. So they don’t as they need money to be reelected and they spend a good bit of their time raising it. So guess who calls the tune. .So run for office or join a political party. That’s the American way. If you want to hide your money from taxation in some fashion and still enjoy the benefits that others who do pay taxes, that’s your business. Just don’t give me this bullshit you are patriots.

  • Graeme Simpson

    This is all well & good but you are assuimg these things will not happen overseas, unfortunately things are not good anywhere, we’re in Australia & things are changing at a rapid rate with all sorts of changes flagged for the not too distant future.
    At least if you leave your money in your own country you have some say, move it out to a tax haven country you risk losing any input or worse, losing it completely.
    It’s a time when one needs to think long & hard, remembering sometimes you’re better with the devil you know.
    Cheers & good luck to you all.

  • stephanie

    Seth, the one voice of reason on this entire board. Thank you, thank you, thank you.

  • stephanie
  • Alan Wilkinson

    Queer notions you guys have…you don’t believe in paying taxes so vehemently, and yet expect in a most taken for granted manner all the privileges of “high living standards” which so many others in the wold can’t even dream of. Is that thanklessness or just general lowliness? A mixture of both, I believe.

  • http://www.alttheories.com Dale

    Actually the best way to get your money outside of the US might be by something like c-gold.com but they require you to buy the gold and ship it too them or buy from someone else who does it for you.They do not buy gold for you.I learned about this method after trying to find some way to get a pre payed credit card.
    I tried e-gold long ago and just had trouble with them but it turned out they had the gold inside the US.
    Not just my observation that it looks like the US does not like competing forms of money and the reasons I believe this are to much for me to list here so you should do a search on this.Its a rather interesting thins however.
    Paying in gold electronically is cheaper than wiring money and you only pay exchange fees when you convert to your local currency.I lose about 2% each time I go from Can dollars to US dollars and or another 2% if they spend it back to me and that alone is enough for me to be enthused by it.This exchange rate thing must make a fortune for someone so its no wonder they do not want us going to gold.Really wish it would work on ebay but unfortunately security reasons were given as to why it could not be used.But it would be great being payed in inflation proof money that’s even cheaper to use than pay pal is very appealing.And you got your money and or gold outside of the US too and that’s a bonus thing.
    In the end its main problem is people are not familiar with the idea of being payed electronically in gold or even actual gold for that mater.Since I am buying gold anywise it would be great for me and if I want I could have my gold delivered to me but do not know the details on it except that they will.I will try them out and post the results on my web site.
    Do not risk anything like this if its US located.

  • doxa47

    Hungary will still open an account for you & most banks there won’t disclose it to the US, but you have to be physically there to open an account.

  • Joey

    Seth and Stephanie,

    You people are idiots. I hope you rot. The reason the economy is screwed is because Obama and his kind used coersive force to pervert the economy and force companies to give loans to lazy idiots like you. Every critique of Rand from some non-productive looters like you is just a list of name calling. I just re-read Atlas Shrugged for the third time. She was right. She was right. She was right. And everyone on this blog has an ethical obligation to themselves and each other to avoid the blight of taxes coming in every way they can. If the productive, smart people do not protect their wealth and equity, I am screwed because I will have no one to do business with but you worthless tools.

    Love the work Black and McLean.

  • Mayor Koch

    Gt. story. M. Faber (in Thai.) etc say keep some assets in area 1, reside in area 2, on papers from
    area 3. W + G commen on h.i.r.e. act which requires more reporting for yanks with overseas
    “accounts.” what about houses, antiques, etc. owned directly? Vancouver BC had a housing boom
    now bust. Ontario has some debt problems. But Canada has a strong currency, resources,
    and seems more stable than some in central Amer.

  • Dblk

    Have any of you chuckleheads actually been out of the country?

  • Dblk

    Why are you all blaming Obama?

    Not paying attention to history are you…?

    Your hero Ronnie jacked up the deficit to unparallelled proportions..then George and George Junior followed suit…
    And who’s asked to fix that…?
    Corporate taxes are at a historical low, The repubs are pushing for additional tax cuts on the uber rich while happily breaking the back of Middle America…
    Greed and lax regulation brought about the housing boom, and the bust…
    Wall street screwed us all with the packaging of bad loans…laughing all the way to the bank…
    Wall street makes money on the way up and the way down…

    and you are all so busy blaming the new guy that you don’t even see who’s hand is actually in your pocket…

    Put down the Ayn Rand for awhile and take a look at recent history…
    Or go ahead and remain senselessly cloaked in your misplaced outrage…and drones for the capitalist machine.

    I’d sure like to get my money, and myself out of America…
    But only because of the type of American’s evidenced here.

  • Peter

    Whiskey & Gunpowder….”Fostering Economic and Independent Thought”

    Boy, I sure know a redneck blog when I see one.

    Sorry, cowboys. Americans will NOT let this country be ruled by and for the top 3% of the wealthiest Americans. That isn’t democracy, nor is it responsible fiscal policy.

    American plutocracy fosters greed and total ignorance. I can’t think of any worse place to be in…spiritually or morally, than to be a fat greedy corporate sleaze ball who does everything he can to avoid kicking in to the can to make this country great. The BEST thing I can think of, however, is people of your kind to die off.

    I fear a civil war is coming. Maybe not in our lifetime…but it’s coming.

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