January 2001 Selected News Clips

THE CAMPAIGN AGAINST OFFSHORE.

2000 was the year of the G-7 nations’ offshore alphabet soup attack on haven nations; FSF, FATF, OECD, US, UK. Here is what it all meant.

OFFSHORE E-COMMERCE GROWS.

And this was the year the Internet launched thousands of offshore businesses - banking, IBCs, trusts, mutual funds, gambling -- along with fraud and more government regulation.

RUSSIAN TAX POLICE

MOSCOW. In ex-KGBer Putin's post-Soviet Russia, where tax evasion has become an art form, a new generation of very young, elite tax enforcers is learning to do more than inspect account records.

O.E.C.D. CARIBBEAN MEETING BIASED

BRIDGETOWN, Barbados. Representatives of the OECD and Caribbean offshore haven nations meet Monday here to talk "tax competition." But local participants say the agenda is "very much weighted" towards the OECD.

G-7’s “INTERNATIONAL THUGGERY”

That is what noted American economist Walter WILLIAMS calls the OECD-FATF attack on tax and asset havens worldwide. A good summary of growing opposition.

BAHAMAS SAD REPORT

NASSAU. A status report on an offshore financial haven in serious decline, plus efforts to stop the islands' slide into financial oblivion.

U.S. TREASURY “SUBPART F” STUDY

The U.S. Treasury Dept. releases a disturbing report on Subpart F tax treatment of offshore passive income earned by foreign subsidiaries. Echoing phony OECD demands for "tax harmonization," the study claims "the best policy...is for governments to impose equal taxation on domestic and foreign investment income" - which would, of course, destroy tax havens as competition.

U.S. COURTS UPHOLDS OFFSHORE TRUSTS

NEW YORK. The 2nd Circuit US Court of Appeals in a bankruptcy case refused the SEC’s demand that assets in a Nevis based $5 million offshore trust be repatriated.

U.K. TORIES EXPOSE E.U. SUPER STATE

LONDON. Britain's Conservative Party claims proof EU officials plan to submerging national identities in a European super state.

U.K. PURSUES AL-FAYED BERMUDA TRUST

HAMILTON. UK Inland Revenue is investigating a Bermuda trust of Mohammed al-Fayed, billionaire Egyptian businessman and chairman of Harrods department store in London. IBCs in Panama and the British Virgin Islands are also involved.

BAHAMAS BANKS ARE I.R.S. AGENTS

NASSAU. The US IRS has approved Bahamian banks to act as "qualified intermediaries" collecting taxes for Washington. Why are they happy?

And the Bahamas are about to impose US-style "suspicious activity reporting" on all financial institutions located there.

WILD WEST OFFSHORE HAVEN

The American Banker reports that MONTANA is still angling to become an "offshore tax haven." The Montana Banking Board is considering a South

Pacific island nation’s application to open a depository bank in Helena for foreigners who wish to hide their assets. It's the first application for a depository since the state’s 1997 passage of a law permitting "offshore banks" and its approval would create the first such institution in the US. But how safe would any assets within the US really be?

WHY NO VIRTUAL CASH?

Logically, electronic payment should replace cash but many obstacles remain, including big banks, who do not want to lose control of their clients.

OFFSHORE FOR AMATEURS

Here is a sprightly little column attempting to explain “going offshore” for those who know nothing.

HISTORY LOOKS AT THE NSA

As anyone who watched Enemy of the State knows, the National Security Agency is a rapacious beast with an appetite for data surpassed only by its disregard for Americans' privacy.

Or is the opposite true, and the ex-No Such Agency staffed by ardent civil libertarians?

To the NSA, of course, its devilish reputation is merely an unfortunate Hollywood fiction. Its director, Lt. Gen. Michael Hayden, has taken every opportunity to say so, most recently on a History Channel documentary that aired for the first time Monday evening.

"It's absolutely critical that (Americans) don't fear the power that we have," Hayden said on the show.

He dismissed concerns about eavesdropping over-eagerness and all but said the NSA, far from being one of the most feared agencies, has become one of the most handicapped.

One reason, long cited by agency officials: Encryption. The show's producers obligingly included stock footage of Saddam Hussein, saying that the dictator-for-life has been spotted chatting on a 900-channel encrypted cell phone.

That's no surprise. The NSA, as Steven Levy documents in his new Crypto book (which the documentary overlooks), has spent the last 30 years trying to suppress data-scrambling technology through export regulations, court battles, and even personal threats.

Instead of exploring that controversial and timely subject that's tied to the ongoing debate over privacy online, "America's Most Secret Agency" instead spends the bulk of an hour on a history of cryptography starting in World War II. Most of the documentary could have aired two decades ago, and no critics are interviewed.

More on this story here.

U.S. TREASURY TARGETS TAX SHELTERS

The Treasury Department has proposed rules to kill financial incentives for lawyers, accountants and investment bankers who promote what the IRS says are abusive domestic corporate tax shelters.

WHY SOME NATIONS ARE RICH

The answer is culture, according to scholars who have come to believe that social attitudes are more important than politics and economics in determining why some societies are richer than others.

DOWNTURN TESTS U.S. BANKS

U.S. banks are bracing themselves for trouble from their old reliables. Stocks and credit ratings of hitherto credit-worthy customers have tumbled, raising the question: how violently will the U.S. banking system be shaken.

EROSION OF BANKING SECRECY IN THE BAHAMAS

The recent news that the Bahamas have had Qualified Jurisdiction status bestowed upon them will be received with mixed emotion by offshore investors based there, and in particular, US investors and individuals with offshore savings. Although the new “approved status” means that withholding tax of 30% on American source income need not be withheld, and reduced rates can be deducted under tax treaties in some cases, the approval of the IRS comes with conditions which could be seen as disadvantageous for customer confidentiality, as these advantages only apply to “properly documented” jurisdictions.

Whilst focussing on the situation in the Bahamas, the intention is not to single them out. Other jurisdictions may be faring better or worse in the ongoing power struggle with the OECD/FATF/G7 countries, but the Bahamas (perhaps because of its popularity with US investors wishing to go offshore) seem to be a good example of the overall trend towards compliance in the offshore world.

For those of you who have been living in an ashram in Katmandu for the past few months (because that is the only way you would have missed it!), Qualified Jurisdiction status requires the implementation of KYC, or “Know Your Customer” procedures; the bank or financial institution must monitor the financial behaviour of its clients, and is obliged to report any “unusual activity” to the authorities.

VERY TRANSPARENT O.E.C.D.

At that Barbados meeting, OECD bureaucrats, who usually scream for "transparency," refused to allow US-based Center for Freedom and Prosperity observers to attend conference sessions as Caribbean nations asked. Is the OECD afraid of something?

And more members of the U.S. Congress are challenging the OECD and its phony campaign against “harmful tax competition”.

CLINTON EXITS UNDER HYPOCRISY CLOUD

WASHINGTON. Clinton leaves the White House as he arrived, in clouds of gaseous hypocrisy. The anti-offshore and anti-money laundering Clinton gang remains silent as Indonesian banking chief James RIADY pleads guilty to illegally funneling offshore funds to Clinton's campaigns.

More on this story here and here and here.

Add to his brazen hypocrisy, Clinton's last minute announcement of proposed rules to keep corrupt foreign money out of US banks.

U.S. POLICE CONTINUE FORFEITURES

In spite of a reform of federal forfeiture laws last year, US police are doing all they can to keep on grabbing property.

Forfeiture Endangers American Rights (FEAR) home page here.

WALL STREET JOURNAL REPORTS BENEFITS OF GOING OFFSHORE

If you missed Mike ALLEN's excellent Wall Street Journal article about going offshore to escape US government regulation, it's available here.

END OF BAHAMAS ERA

NASSAU. A leading law firm here says the government's agreement to exchange tax information with the US "signals the dismantling of the tradition and practice of confidentiality in financial transactions" in The Bahamas.

CLINTON PARDONS U.S. EXPAT

Bill Clinton's last minute clemency included financier Marc Rich, a billionaire commodities trader who has spent the last 15 years in Switzerland as a fugitive from US justice.