Offshore News Digest for Week of October 7, 2002

ANOTHER ROUND OF EUROPEAN UNION SWISS BASHING

The EU welfare states are livid at the possibility that some of their citizens may avoid taxes by using Swiss bank and investment accounts.

The Economist briefing on EU/Swiss Bank Secrecy here.

UK Chancellor Brown steps up fight on tax dodgers.

Some EU states trying to prevent tax deal.

Bolkestein calls EU savings tax plan critics “friends of tax cheats”.

Swiss Info.org: EU steps up pressure.

BAHAMAS COURT OPENS NEW LAWS, IRS TREATY TO BE REVIEWED

NASSAU: Constitutionality of offshore financial laws and the TIEA with the US, all may be reviewed by the courts.

More Bahamas troubles; Lloyds Bank leaves after 50 years.

Annual Moody’s report optimistic for Bahamas future.

New Bahamas government 5 year plan discussed.

ISLE OF MAN SIGNS TAX TREATY WITH UNITED STATES

DOUGLAS: Tax information exchange agreement allows only specific case requests, no fishing expeditions.

Get text of treaty (PDF download) here.

Manx government statement (PDF download) here.

Manx leader knocks tax haven report as too gloomy.

GIBRALTAR APPEALS TO UNITED NATIONS

NEW YORK: Chief Minister asks UN help to maintain Rock sovereignty.

DIRTY MONEY TAINTS UKRAINE

KIEV: FATF sanctions threatened; no anti-money laundering laws.

FINANCIAL ACTION TASK FORCE MEETS THIS WEEK

PARIS: Question whether a new blacklist will be issued.

LUXEMBOURG GETS HIGH RATINGS

Only EU country with a higher per capita income than the US.

BEST WORLD CITIES FOR EXPAT LIVING

Melbourne, Vancouver ranked world’s best cities for expatriates. Australia did well in the survey, with Perth ranking third on the list and Sydney, Brisbane and Adelaide appearing in the top ten. Other cities in the top ten included Vienna, Toronto, Geneva and Zurich.

U.S. BANK LOBBY WEAKENS SHELL BANK RULES

USA Patriot Act rules on shell banks less stringent.

US businesses of all kinds entangled in USA Patriot rules.

BRITISH SEE ANTI-DIRTY CASH RULES AS MONSTROUS

Financial services industry awash in new regulations.

International Monetary Fund gets into the anti-dirty cash act.

O.E.C.D. EYES REINSURERS

Shaky reinsurance business draws international scrutiny.

MILLIONAIRES LOVE THEIR BOAT

Luxury liner circles globe with rich residents aboard.

I.R.S. ALLOWS TAX SHELTER SETTLEMENTS

Participants in three named tax shelters given chance to settle.

OFFSHORE BANK SCAM GETS FOUR YEARS IN PRISON

$74 million scammed with promise of 120% return on investment.

U.S. COURT ORDERS TRUST SCAM STOPPED

A Florida businessman has been ordered to stop setting up bogus trusts for his clients that helped them evade income taxes. The court also ordered him to stop preparing federal income tax returns and to refrain from engaging in other tax-evasion activities. According to the U.S. Justice Department, the promoter charged customers up to $5,995 for a trust package, and would then prepare tax returns for the trusts and claim deductions for his customer’s personal living expenses such as food, clothing and mortgage payments.

BASIC TAX SHELTER: YOUR OWN BUSINESS

The #1 way to reduce your taxes is to convert your personal expenditures into allowable deductions. Turn yourself into a business owner and cut your taxes. It’s almost that simple. Establishing a “profit motive” is the key - and that is presumed if you earn any net income in any three out of five business years. Your hobby can be a business. Which expenses qualify as business deductions.

OFFSHORE EXPATS’ PAY CUTS

World economy reflected in lower expatriation pay packages.

LATEST ON POTENTIAL WAR WITH IRAQ

President Bush Outlines Iraqi Threat here.

Rep. Ron Paul: The process by which we have entered wars since the formal declarations of war against Germany and Japan in 1941, and the inconclusive results of each war since that time, are obviously related to Congress’s abdication of its responsibility regarding war, given to it by Article I Section 8 of the Constitution. They are doing it again with Iraq, and the odds are that the results will be as murky as before.

Cato Institute: President Bush’s speech failed to bolster his administration’s weak case for a very risky change from the existing and effective U.S. policy of deterring and containing Saddam Hussein.

Heritage Foundation: Bush’s Strong Case Against Iraq.

Prudent investors should “war proof” investments. Defense stocks, energy, and gold proposed as assets that will do well is the event of a conflict.

SWISS SHOCKED & DISMAYED AT E.U. ATTACKS

The Swiss are furious as EU commissioner attacks their alleged “lack of help on tax evasion”.

EU sanctions threat against Swiss link here.

Swiss won’t comply with EU tax demands unless US does.

UBS Chairman insists Switzerland and Europe can coexist.

EU treats Switzerland like an “Alpine Iraq".

Pressure eases on banking secrecy as EU tax plan unravels.

JERSEY FACING MAJOR CHANGES IN GOVERNMENT

ST. HELIER: Channel island government reforms planned.

ISLE OF MAN SEES U.S. ESCAPE HATCH

DOUGLAS: No capitulation to EU tax directive unless US also agrees.

BVI LEADERS LECTURES U.K. OST MEETING

LONDON: British Virgin Islands Chief Minister insists on “level playing field” for British Overseas Territories.

New UK citizens must pass “Britishness” text.

U.S. NET GAMBLING BAN MAY HIT ANTIGUA HARD

ST. JOHN’S: 800 offshore Internet gaming site workers may lose their jobs and $35 million in wages.

SIX WAYS TO KEEP THE I.R.S. AT BAY

The IRS has decided to focus its limited resources on the tax returns of those who earn more than $100,000. How to minimize your exposure to problems with the IRS? The suggestions look very sensible.

U.S. BANKS FACE PRESSURE FROM ALL SIDES

As check fraud, money laundering and kiting schemes grow more sophisticated, new laws ratchet up the pressure on banks to detect such crimes. Fortunately, new technology may help them do that better than ever.

F.A.T.F. MEETING THIS WEEK

Blacklisters at work again.

BALANCE BETWEEN SECURITY & LIBERTY

The US Supreme Court faces delicate decisions in pending cases. While the Supreme Court may begin to hear challenges to the 9/11 inspired anti-terrorist laws later in its term, it already has on its docket several cases that could reveal how it draws the line between liberty and security. How to ensure that the most serious restrictions on liberty are reserved for those who pose the most serious threats to security?

Few Americans would disagree with the principle that the punishment should fit the crime. But whether the Constitution requires some degree of proportionality is unclear. Current Supreme Court precedents do not clearly require proportionality between crime and punishment, or between searches and seizures. Although the justices have been eager to expand their own power in relation to that of Congress and the president, they have been reluctant to strike down or modify excessively broad laws adopted in haste after especially dramatic or horrific events. Public opinion tends to be emotional and unreliable in trying to balance liberty and security in times of great anxiety. Is it too much to expect the court to do better?

An array of potential landmark cases loom on the 2002-03 horizon of the US Supreme Court, including terrorism-related challenges to civil liberties. Unclear is whether the justices are prepared to take an aggressive stance in key cases. Nowhere is this question more crucial than in terror cases, say court watchers. The justices may, if presented the opportunity, follow the path of earlier courts and avoid a direct confrontation with the executive branch.

Designated “enemy combatants” have been emprisoned for lengthy periods without access to a lawyer and with no charges filed against them. An appeals court is to decide whether the government can jettison the judicial process for anyone it regards as a fighter for the other side in the potentially permanent war on terrorism. Long detentions must not proceed with no testing of the evidence. Such standards are a recipe for tragic errors.

When is supporting terrorists a crime, and when is it merely free speech? Two different cases confront the issue. In one six men are suspected of attending an al-Qaida terrorist camp. In the other a man is suspected of both attending a camp and trying to establish one in the United States.

CANADIAN GOVERNMENT WANTS TO MONITOR EMAIL

MORE ANTI-SWISS BLUSTER, NO ACTION

The European Union has asked Switzerland to alter its strict banking secrecy laws and give its neighbors much more cooperation in catching tax evaders, threatening economic sanctions if the Swiss do not relent. But Switzerland is stubbornly resisting, saying its economic survival is at stake, and the EU’s 15 member nations are divided on how far to push the dispute.

EU official Bolkestein’s intemperate attack on Switzerland.

Swiss accused of allowing European tax evasion.

Switzerland Angered By Bolkestein's Comments.

Luxembourg, Germany Clash Over Swiss Bank Secrecy

ANTI-OFFSHORE AMENDMENT KILLED IN U.S. CONGRESS

Bar against US contracts with offshore corps dead. (Scroll down to clip.)

SWISS CLOSE DOWN FINANCE FIRM

ZURICH: Money laundering probe closes Russian-linked Sovereign Finance Group.

Swiss see new trade opportunities in EU expansion.

HOW YOU CAN SAVE TAXES IN SWITZERLAND

ANDORRAN BANK GETS HIGH MARKS

Stable, secret, no taxes, Credit Andorra gets top ratings.

Oldest Russian bank (founded 1841) plans private banking services.

LIECHTENSTEIN-U.S. MLAT DELAYED

VADUZ: Treaty consideration put off; critics (who should be nominated for the "keen grasp of the obvious" award) see harm to principality.

JERSEY IMPOSES TOUGH “KNOW YOUR CUSTOMER” RULES

EUROPEAN UNION EXTENDS GRASP

10 new nations slated to join existing 15 as Brussels expands. The European Commission has recommended that Poland, Hungary, the Czech Republic, Slovenia, Slovakia, Latvia, Estonia, Lithuania, Malta and Cyprus join the European Union in two years’ time. The devil may be in the details.

A proposed European Public Prosecutor (EPP) would investigate and prepare for court, cases of community fraud which cut across EU state boundaries. The trial stage would be in the hands of national prosecutors - only the evidence-gathering and indictment would be dealt with at the EPP level. The UK is uncomfortable with the compromises needed to integrate a common-law jurisdiction such as theirs with a concept which is very much the creature of the Continental inquisitorial system. Even France has issues. But the proposal has friends, and is not likely to just go away.

EU police raid businesses, grab files, documents.

THE FUTURE OF HONG KONG

Anson Chan speaks to Heritage Foundation.

BAHAMAS OFFICIAL ASSESSES “OFFSHORE HAVEN” STATUS

NASSAU: Minister again pledges review of onerous anti-offshore laws enacted last year; but when will the new government act?

LOWEST LEVEL FOR BERMUDA I.B.C. REGISTRATIONS IN 6 YEARS

Tyco considers reversing its Bermuda offshore re-incorporation!

PUERTO RICAN OFFSHORE TAX BREAK MAY BE REVIVED

Democrat leader may sneak through corporate tax subsidies.

U.S. TREASURY COMMENTS ON OFFSHORE TAX CHANGES

Tax treatment of offshore corporate income to change drastically. In order to comply with a World Trade Organization ruling, the tax benefits afforded by the Foreign Sales Corporation (FSC) and Extraterritorial Income (ETI) Acts will be phased out.

ENDING PHONY TAX “HARMONIZATION” THREAT

Dan Mitchell of the Heritage Foundation exposes the fraudulent high tax nations demand for tax harmony.

WHY THE I.R.S. IS LOSING

Americans are fighting back and the government can’t keep up. It is a beautiful thing.

IMPERIAL WASHINGTON THREATENS YOUR INVESTMENTS

Ron Holland lays it on the line in a Vienna speech. In America today, both our politicians and the legal system have become the major plunderers of our wealth. But big government tyranny is not a new threat to our wealth, property or liberty - this has been going on since 1913 and the creation of the Federal Reserve and the income tax. America has become an empire with troops in over 100 nations, and the effects on our liberty and wealth will in the long run be identical to all earlier empires. This is creating a reason for global diversification that far exceeds every other benefit including investment return, investment opportunity or reduction in risk from diversification or asset protection.

History clearly shows how empires always have political, terrorism and military risks that regular nations do not. Today the American Empire is at extreme risk because although we are the major economic and military power on the earth, our Achilles heel is the extreme risk of our financial infrastructure and investment markets to future terrorist attack. Since 9/11 all the world and our enemies now know our weakness, and we really have no defense against another terrorist attack by extremists on a target like the World Trade Center or our financial system. The real target of the 1991 and 9/11/2001 attacks on the WTC have been Wall Street and the US financial system, rather than just some tall buildings. A properly placed biological, nuclear or chemical weapon detonated in eastern New Jersey, just North of the Newark Airport during the fall or winter could take out all the market backup systems in New Jersey, Manhattan and on Long Island with a West to East wind flow. This will be a total financial catastrophe to every US stock market portfolio if it occurs.

Almost all of the risk of future terrorist attack falls on New York City and our financial infrastructure because, in the eyes of the terrorists, we are their enemy. The risk of a terrorist attack during our planned invasion of Iraq increases as then the attack would probably be blamed on Saddam rather than the Islamic terrorists, thus possibly sparing them from the violent retribution and attacks following their earlier World Trade Center attacks. When to normal risks the additional costs, possible lost liberties and terrorist risk from the American empire and our foreign policy are considered, prudent investors will move more of their funds out of US stock market investments, the dollar and even the jurisdiction of the US. In the words of George Washington: “If we are wise, let us prepare for the worst.”

ISRAEL IS VENTURE CAPITAL LEADER

JERUSALEM: Israel leads world in venture capital per GDP.

NIGERIAN SCAM NOW USES FAKE WEB SITES

MONEY LAUNDERING WITH LIFE INSURANCE

LONDON: Crooks now use life insurance to clean dirty cash.

DOES WAR REALLY PROTECT FREEDOM?

James Bovard asks some hard questions about a possible Iraq war.

F.B.I. USES ILLEGAL WIRETAPS, UNAUTHORIZED SNOOPING

Cato Institute: Preserving Our Liberties While Fighting Terrorism

SECURITY DEMANDS KILLING PRIVACY

With myriad high-tech gadgets aiding the war on terror at home, some groups say they are worried that the United States is beginning to look like something out of George Orwell’s 1984. When measured against privacy concerns, the “burden is on the technologists to demonstrate that their solutions will actually be effective in making us safer,” says ACLU.