The irony. Canada was the country of choice. Remember the flight of economic migrants to Canada and other countries during the fearful days of China’s takeover of Hong Kong? Their capital influx was very much welcomed to prop up a less than stellar economy. But the tide had been changing for some time – has this been biting the Canadian economy? Perhaps. But then, I’d take some of their cash rather than none at all. If government policy is seen cracking down on overseas investments, then it’s just not too hard to see large chunks of cash fleeing and never to return.
Minister for Internal Revenue Jean-Pierre Blackburn said, “The amount Canadians have invested in countries that could potentially be used as tax havens amounted to C$146 billion in 2009, up from C$88 billion in 2003.” Is this another G20 Bank Secrecy bashing or fishing expedition?
And in the same breath adds a qualifier that “Safeguarding cash in those places is not illegal but makes it easier to avoid declaring income for tax purposes.” Yes, it’s not illegal. It wasn’t illegal then, why is it supposed to be now? It was quite clear that investing overseas is very much a welcomed activity especially when the home market tanks and investors get screwed out of their hard earned savings. I wonder if protectionism is rearing it’s ugly head. Canada should be very careful not to create a Bank Secrecy backlash they cannot recover from on the world stage.
Lately, UBS, Swiss Banks, Leichstenstein, Cayman Islands has been mentioned and the Netherlands Antilles is the only jurisdiction which has a tax treaty with Canada. I wonder why it has taken so long?
Let’s face it. North America is far from the ideal investment continent with tiny or negative growth prospects. While other developing countries offer far greater returns prospects. As an added bonus, these jurisdictions also offer very low taxation – like Hong Kong. Large financial centers can have capital that moves very quickly and efficiently. And protectionism can be in the way of services, not just goods…cash is a commodity and banking is a service.
I’d much rather see a more comprehensive reduction in financial burdens on the population and much better stimulation of the economy than having to go after so called tax cheats. The returns thus far of C$25Million seem hardly worthwhile considering the amount of time and effort required to procure that money. Well, come to think of it, governments spend far more for negative returns…so this might not be too bad of a venture after all. But Minister, do you ever consider the negative impact this might have on how Canada might be viewed on the world stage? Afterall, the past economic boom has been also in large part involving the immigration influx. It affects real estate, it affects the banking sector, it affects world trade, it affects world relations. I sincerely hope that is not being affected negatively, all for the sake of the arbitrary “G20 rules”.
Just imagine, Canada goes crazy and starts to be seen to be clamping down on hard earned savings…and if the savings are large…is it too hard to imagine a new class of Economic Immigrants? Put another way. People will likely flock to their destination of choice. After all, a large retiring population seeking a modern country with great medical resources, and endless business opportunities might just be the ticket out of a cold and tax unfriendly country. I’d hate to see “snow-birds” become permanent migrants to a warm and friendly place.
Canada appears to have it’s own version of the G20 mandated Offshore Banking crackdown. But is it now a Tax Evasion issue instead?
Revenue Canada has accused some employees at the RBC Dominion (Royal Bank of Canada’s trading division) of helping clients set up accounts in Swiss and Leichtenstein offshore accounts to evade taxes. Is this simply European Banking Secrecy bashing or a clear Tax Evasion issue?
Canada Revenue Agency
Now, Revenue Canada or CRA is investigating if other employees have done the same thing in other parts of Canada too.
In a Canadian Broadcasting Corporation report, it appeared that German authorities had shared information obtained from a disgruntled employee (purchased for $7million) with Canadian authorities. 106 Canadian were investigated in a project code named Project Jade.
Other accusations included an employee of RBC Dominion of setting up a foundation specifically to evade taxes and also travelling with a client to Leitenstein.
CRA Audit Bonanza
The CRA has made it pay off, already collecting $3 million in back taxes with an expected $17 million more. Was this worth the expense and trouble it took? You be the judge. CRA is careful to apply the Tax Evasion laws in their investigations.
This activity will probably send warning signals to anyone who may be considering tax evasive activities and make them come clean. But on the other hand, how many will simply not bother and leave Canada altogether? Canadian taxation is already one of the highest in the world and it’s not falling anytime soon. This is a very tax hungry country with extremely high rates of taxes. Compare Hongkong with their 17% income tax rates.
But I still wonder about others who may actually be legitimate in their dealings and getting caught up in this G20 created storm of beating up on Tax Havens and their banking secrecy. I sincerely hope they get their man but certainly not at the expense of civil liberties and the innocent by-stander.
Some Basic Private Banking Requirements to Create Your Own Bank
An integral part of banking to create your own bank is to have a system of private banking services preferably all within the operating control or influences of that financial institution because this is especially critical when you need to build your financial assets. You’ll need to be able to invest internationally to get the best that your money can offer you. You’ll also need a really good money manager and an investment management system in place.
An Offshore Malaysian Tropical Island Resort
Think of it as offshore investment and banking as opposed to tax havens. This is really about maximising your financial returns, protecting your asset values and ease of financial transactions worldwide especially if you travel.
Think about it…In these days of international travel, and cash transfer restrictions, it can be hell to try investing in global opportunities (Have you ever tried carrying more than about $10,000 while traveling? It can be fraught with restrictions and questions by the customs…). And when in a certain part of the world you find a great piece of real estate or perhaps a business that’s just too good to pass up…and you have no way of getting hold of the required downpayment.
Something that happened to me;
I had transfered a sum of currency to a local bank’s main branch in another country which also has great financial resources to purchase a condo with a fantastic price…but the money took 30 days to arrive (just a couple of years ago, this would have been an easy overnight transfer)…well after the deal had slipped away and my trip over there was over. Of course the fine print made the bank immune from prosecution. Yet, this was my own money deposited at the bank and transfered in the same currency.
Checking Today’s Private Bankers Out
Yesterday’s interviews with several Private Banks’ Bankers says it all. They typically are masters of their own piece of allocated work. In fact, none of them are very savvy in terms of being a full service banker by themselves. It seems, only the top guys…the senior VPs and perhaps the CEO or a Managing Director has all the marbles.
The employees by and large remain employees…even those with over 10 years of banking experience. They get very good at what they do in their little cubicle or office and that’s that. In fact, they are so good at offering packages, they often forget the entire scope of what their banks offer worldwide.
Here’s the story:
I played the role of a returning customer (which was true in most of the cases – I’ve tried many banks’ services in the past) and queried some banks about International Private Banking - I got largely blank stares. So I had to delve into what I required as a client…not a mere customer.
Note:I made some requirements which are fairly typical of a financially independent person (not necessarily ‘filthy’ rich) who travels and has family on the other side of the planet. Mature Private Bankers will tell you these are a fairly large cross section of the private banking population with very useful disposable cash. They make up the most valuable customer base a bank can have.
1) I enquired about a bank that can set up an account here in Canada or USA and then an account over in the other side of the globe – or in any other country they may have a branch.
- This is critical when you want to be able to take advantage of that country’s investments…for example, China right now. Or perhaps a simple business trip and you need not go through the hassle of transfering that much cash.
2) The Bank services include all manner of investment management – no, not just buying and selling local stocks, bonds and mutual funds, but actually will operate a system of global investment like access to the forex, the futures and also the foreign equities like the Chinese markets for example. And how about the very favourable Gold or precious metals futures?
- Where you bank is unlikely to offer these investment services to take advantage of where it’s prfitable immediately. You want a bank that can do so immediately without administrative “problems”.
3) An easy way to transfer your own money via wire transfer or better yet, being made available through the bank’s global pool of deposits/funds like the HSBC has.
- Therefore you’re not really transfering any money, merely using your own anywhere in the world. Imagine the peace of mind and the hassle from “the banking police” (at your banker’s mercy) being averted.
4) A money and investment manager to take care of your investments according to your needs. And I mean a well trained team that can and will manage your foreign investments and options, and other equities, not merely dealing with the local equities.
- This allows you to invest most forms of investment vehicles or hedge your assets. You’re not stuck with using a single market – remember the terrible losses not long ago?
5) The stable and great relationship building that bankers on the job for many years have with their clients. The vast majority of retail banks run their so called “private bank division” like a high priced offshoot of their retail side banking with much higher margins involved.
- It frustrates the hell out of me that each time I visit a bank intending to do a minor portfolio shuffle that should have taken only 10 minutes cost me the better part of an hour as the “new” guy tries to shuffle my papers trying to figure out who the heck is this guy that just popped in to his bank. All that before a few simple adjustments on the computer. Most banks still have no clue about the part of private banking that really means “Know Your Client”.
6) The bank and bank branches have international acceptance and a good reputation for fiscal expediency. This will expedite your foreign transactions. Well worth considering as a must have.
- Imagine having a bank that is thought of as possibly insolvent or known to launder money…would any other bank want to deal with such a financial institution?
The World is Your Oyster
These days, to get the very best from your money takes more than a little effort. You need to sit down and figure out what you want. Check out this site posts first and a future e-book or course to help you decide what you should do. Every jurisdiction in your area will have differences. In the US there are Federal and State banking and investment laws to consider. In Canada or the UK or Singapore or China there are banking and investment laws to consider.
But then when you do have all these services at your disposal, the world truly is your oyster. You can “travel” via the information highway and many banking functions which used to require a trip or two with tons of documentation half way around the world and then back…When accomplished, you can safely travel across the globe and have your piece of mind that your financial resources are cared for, well protected and well within easy reach.
Now, how about a holiday in a warm sunny tropical shoreline on your own villa or sailboat while winter rages on anyone?
The term Tax Haven over the past several decades has come to mean sheltering your income from the taxes of the country in which you live. But, there is a caveat where the cash is not actually in your hands, but in the hands of another entity or jursdiction.
This was once the domain and playground of the super wealthy. But as years went by, more players got invovlved and many other small countries also started playing the game. The tax hungry countries from the overtaxed citizens also decided to get into the game. What was forseen was a total erosion of the tax base. And that’s the result of the very harsh and threatening G20 with the OECD spear heading the assault on all these tax havens. Recently, even the giant financial centres have become targets and have been forced to knuckle under the big bully might of the G20.
The biggest bust of all to force the Swiss to back off on their sovereign banking secrecy came when busted UBS in the US. Now, with the new tax treaty, U.S. tax authorities will be able to request information on Americans suspected of concealing Swiss bank accounts, the Swiss Finance Ministry said.
The treaty forbids so-called ‘fishing expeditions,’ meaning U.S. authorities have to provide specific details on the person they are seeking further information about and can’t simply ask for wholesale lists of Americans with Swiss accounts, the ministry said.
Since March, Switzerland has signed 11 tax information exchange agreements, one short of the number required by OECD for it to be removed from a ‘gray list’ of uncooperative tax havens.
Here are what have been happening related to the Swiss UBS fallout.
* Switzerland has also signed agreements with Denmark, Luxembourg, France, Norway, Austria, Britain, Mexico, Finland, Faeroe Islands and Spain and the government has authorized the signing of a 12th with Qatar…according to the OECD guidelines…read more.
* Robert McKenzie says one of his clients told him he forgot he had $32 million stashed in a foreign bank account. While it may seem preposterous to lose track of that much money, the client is now coming forward to declare the cash to the Internal Revenue Service…read more.
* Chen (the former Taiwanese President)was sentenced to life in prison by the Taipei District Court earlier this month after being found guilty of embezzling $3.15 million during his 2000-08 presidency from a special presidential fund, receiving bribes worth at least $9 million, and laundering some of the money through Swiss bank accounts…read more.
* Toronto — Thirty-six Canadian clients of Swiss bank UBS have come forward to disclose unpaid taxes, and investigations so far have found $7-million in unreported income, the Canada Revenue Agency said Thursday. The voluntary disclosures follow a high-profile investigation of UBS in the United States, where the bank admitted to using Switzerland’s bank secrecy laws to help wealthy Americans evade taxes…read more.
Really the End of Tax Havens?
Is this the total meltdown of tax havens and offshore banking? The tax haven as being practiced for decades is dead…that’s true. But I for one am of the opinion that it has just morphed to become a very different animal. There will be geniuses of finance who will always find ways around such issues. So, perhaps instead of tax havens, perhaps they will be called offshore banking and private banking wealth management instead.
There has been much debate and now that UBS has suffered the most debasing fate in the eyes of the Swiss, having to turn over the information of 4,500 of their clients to the IRS (USA).
Bank Secrecy
Could this really be the end of Bank Secrecy or offshore banking? Or the beginnings of a Backlash to add to the financial woes of the Bank Secrecy’s Article 26?
Lately there have been rumblings of Swiss Banks actually advising their clients from buying any US securities and also to divest them if they still have those. This is the backlash beginning as I had feared would occur.
Just like the extremism that has happened in the US customs of their treatment foreign visitors contributing to the huge drop in US tourism over the years since 911, expect the foreign investment of US securities to be choked off. Not only are the OECD rules of Article 26 being applied overly forcefully, but added to that the SEC rules being used to stretch that control across the US border too.
Imagine this: you buy XXXX US securities and make some good dime. Then you find Uncle Sam demanding who that was and wants to tax you. But…you don’t even live in the US…And it doesn’t take much imagination if the IRS came knocking on your institution’s door demanding everything to know about about that dead beat who did not pay his dues. If you think this may never happen, just think what the G20 and the IRS has already done through very strong arm methods.
Excerpts below are taken from the Sovereign Society…
[In 2000, the OECD completely revamped Article 26 (the much hated or loved Bank Secrecy Guidelines depending on which side of the fence you are on ) to expand the scope of information exchange between the "Soveriegn Nations" and the big brothers - G20.
These new Bank secrecy laws, dual criminality requirements, and domestic tax interest requirements could no longer be invoked to prevent information exchange. These provisions have gradually made their way into the international network of tax treaties.
There are still limits to Article 26. The OECD model only requires treaty signatories to exchange information on request. That is, the country requesting information must know that your assets or accounts are in a particular jurisdiction—and likely, in a particular institution—before it can request information.
Experts like the Sovereign Society warns that offshore bank secrecy laws will not protect you from having your account information turned over to your domestic tax authorities. If you have unreported offshore accounts, you need to deal with the problem now—not later. A good start would be a call to an attorney specializing in criminal tax defense.]
Taking it to the Bank: A China Profitable Power Trend.
China’s Health Care Reform presents A huge buy opportunity for any supplier, manufacturer of servicer to the Chinese Health Care system.
On Monday July 6, China took another step towards its health care reform goals. The Chinese government advised all local (provincial and other legal governing bodies) governments to boost funding in its health care system totaling $1.5 billion in subsidies. In a statement by the Ministry of Finance the Chinese Government aims to help alleviate the people’s financial burden. During April this year, the Chinese government revealed its $125 billion health care reform plan.
After a countrywide comprehensive study, the Chinese powers that be realized that in order to encourage the Chinese people to spend more to further boost domestic consumption, a truly concerted effort was required to create a social safety net. After some number crunching, a plan was produced to improve the country’s health care system and infrastructure over the next three years with a massive cash injection of $125 Billion.
So as part of the health care reform plan:
* basic medical insurance will be provided,
* medical facilities will be upgraded,
* a catalog of medicines will be covered by public insurance,
* rural regions health care will be improved and new clinics,
* hospitals and health service centers will be constructed.
This is definitely a huge step in the right direction to improve China’s health care system. It will take many years to restructure China’s medical industry, so it’s a PLANNED long-term trend that’s presenting investment opportunities in the health care sector.
There will be top financial performers for the company or companies that benefit most from this massive reform. However you see it, it is in the long term investment that will see the most benefit. As it is, there are already early risers in the Chinese stock market since the April announcement.
Is it too late to get in on the forthcoming financial bonanza? Not at all. There will be without doubt some regional and international players eager to get in on the new playing field. Look out for what you are comfortable with and make your investment.
Of importance to consider is that while the west’s medical industry is facing one of its worst downward trends, the Chinese Medical Industry is getting a huge boost. The trend is like a teeter totter or see-saw in effect. It’s my preference to go for the rising Chinese side right now…read more about China’s Health Care Reform.
Private Banking in Monaco is still a Unique experience.
The Private Banking industry in Monaco is very much like no other. Every single one of the banks have their employees trained in catering to your every little need. Transforming your Private Banking experience into one of a friendly visit to a “Bank Spa” if there ever was such a term (not my words but that of a foreign national mentioned quite happily).
Of course, they have the necessary financial experts managing your wealth of deposits for you.
Despite the latest round of G20 “enforcement” (read as France’s determination to peg back their own nationals using the Monaco Private Banking laws and not pay French taxes), the Banking establishment has literally transformed itself. Monaco is officially no longer named as a Tax Haven.
But they have ratcheted up the Banking Experience up several notches surpassing I feel, even the scrupilous and excellent Swiss Banks. Eat your heart out retail bankers!
They cater bank account holders and keep their service to a very high standard. But their main Banking business caters primarily to very high net-worth individuals – VHNWI, especially foreign principals and corporations.
Here’s a little more information about doing business and banking in Monaco. Read more below…
With 40 banking establishments, 70 windows, 3 representative offices and 7 financial companies, the banking sector constitutes a large part of Monaco’s financial activity.
Deposits into Monegasque accounts exceed 75 billion French francs and half come from non-residents.
The Monegasque government actively combats money-laundering and numbered bank accounts are illegal. However, bank confidentiality is one of the main principals of Monegasque banking.
Monegasque banking establishments are not only capable of managing international assets, but also offer comprehensive services to companies in the Principality (including helping companies to obtain financial ressources from a special government fund).
The lifestyle, security, political stability and the fiscal advantages have made Monaco an attractive location for exacting investors.
For more information on the banking sector and its services, please consult the Banks directory of Monaco. Read more below…
Association Monégasque des Activités Financières (AMAF), Monaco’s banking association, was founded by Sovereign Order more than 50 years ago. Its mission is to :
Act as the professional body for authorized institutions conducting banking or financial activities in the Principality.
Represent the Monegasque banking industry, particularly in relations with public authorities.
Promote a sound development of Monaco’s banking sector.
With 70 members, including banks, finance and portfolio management companies, the association federates all of the market’s financial institutions.
Hardly surprising when business start ups and total businesses are on the decline. But perhaps the 2 main reasons for the business lending gorth was because of the recent massive building boom and now the actual unsustained business growth. Look at the stats below.
Lending by China’s big four state-owned banks usually account for 50% of the total. This situation continued in May. New lending by these banks totaled 171.7 billion yuan in the first 30 days of May, almost 50 billion yuan lower than the total lending in April. However, as lending usually grows much faster at the end of a month, the new lending on May 31 may be quite big.
Credit growth of four big banks is still slow or even negative in the first 20 days of May, and began to accelerate in the last 11 days. In the first 30 days of May, new lending by the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank totaled 46.8 billion yuan, 26.4 billon yuan, 69.8 billion yuan, and 28.7 billion yuan respectively. However, new lending by these four banks in the week before May 30 totaled 26.3 billion yuan, 30.5 billion yuan, 41.6 billion yuan, and 15.2 billion yuan respectively, each accounting for 66% of their total lending in the first 30 days of May. This trend was also very apparent in April.
Personal lending is now oustripping business lending which by itself is not all too worrisome, but growth alone led by consumer spending is not sustainable in the long run. Consumers, being saddled with debt are not a reliable source of stimuli for any economy.
Is it safe to invest your money in China’s relatively new Private Banking industry?
You be the judge, but it seems by common concensus that Chinese individuals must have at least in excess of US $1 million to be eligible – according to the arbitrary banking standards; for their Private Bank Wealth Management portfolio service.
So, can you even afford to get in to play the game? It’s your call. It’s quite a steep price.
Also, remember, the recovery in China is far more stable than in just about any other country at the moment.
This may seem disconcerting to some foreign investors as Citi Bank has already stopped their Private Banking division in favour of the retail banking. However, this is a somewhat unbalanced view as StanChart has actually doubled their Private Bank portfolio.
But China may be an uneven playing field – the advantage to the domestic ones who have internet and online services already set up, not available to all the foreign ones.
Under the influences of international financial crisis, the private banks are heavily stricken regardless of the brand or the assets. However, for the private banking in China, it is an opportunity. China has become the comparatively …
You now hold the paperwork for a Nevada corporation within the time it took you to have a quick holiday in the Sands in Las Vegas.
You did a quick search on the internet and found a quick incorporation lawyer who did it all for you in record time and at a reasonable couple of thousand dollars per year maintenance too.
Then you go back to California (for example) to continue your real estate business.
Right now, you think you’re home free and you’ll pay tons less in income taxes and get rich doing it.
WRONG!!!
I do not know how many laws you’ll be breaking if you fail to file your tax papers in California too. Remember, you most definitely will have to pay taxes in the state in which you reside. Remember, not paying taxes is a most severe felony.
The situation might be different if you reside in Nevada but do business in California. Your taxes may be significantly lowered then.
But please, always get the right expert for your corporate structuring and tax preparation and strategy.
Just listen to what this lawyer, Mr. William Bronchick has to say (no, I’m not affiliated with what he has to sell, just more good information).
The Private Banking industry in Monaco is very much like no other. Every single one of the banks have their employees trained in catering to your every little need. Transforming your Private Banking experience into one of a friendly visit to a “Bank Spa” if there ever was such a term (not my words but that of a foreign national mentioned quite happily).
Hardly surprising when business start ups and total businesses are on the decline. But perhaps the 2 main reasons for the business lending gorth was because of the recent massive building boom and now the actual unsustained business growth. Look at the stats below.
You be the judge, but it seems by common concensus that Chinese individuals must have at least in excess of US $1 million to be eligible – according to the arbitrary banking standards; for their Private Bank Wealth Management portfolio service.
You now hold the paperwork for a Nevada corporation within the time it took you to have a quick holiday in the Sands in Las Vegas.
