Dateline: Kuala Lumpur, Malaysia
If you were raised in the western world, chances are you were raised to respect “the rule of law”.
Taught that good trumps over evil and that government regulations exist for a reason: namely, to protect the “common good” against some shadowy evildoers.
Of course, freedom seekers know that laws are only as good as their application. After all, lax application is what leads to governments getting away with murder.
One thing that many of seeking freedom are in constant search of is privacy.
In an era of NSA snooping, your every email being read, and your every move able to be tracked, privacy and even secrecy are important things to look out for.
You can’t let your local government bureaucrats convince you that seeking privacy from their madness is some kind of indication you’re a hardened criminal.
Of course, many seek out offshore strategies like those we talk about here for the express purpose of protecting their privacy.
However, as with so many things in the offshore world, if you apply the wrong strategies, or even if you apply the correct strategies poorly, you could end up with no boost to your privacy at all.
You may even end up worse off than you were when you started.
Imagine you’re on the other end of some super spy like James Bond and you think your sophisticated locks will keep him out… until they don’t. That’s a bit how the lack of privacy in some offshore jurisdictions works.
You set up shop one place for an alleged benefit that is nothing more than a mirage.
When it comes to bank secrecy and corporate secrecy, the jurisdiction you choose to bank, incorporate, or invest in matters.
All too often, I hear from people who incorporated in Seychelles merely because it was “the cheapest”, or in Belize because they heard it had “great privacy” or “didn’t require records to be kept”.
Besides the fact that some of these claims are simply rumor, the reality is that the right places to go offshore differ for each person.
But if you want privacy, there are three main countries that specialize in that (you may be surprised):
Not surprisingly, these countries also rank in the top 20 of the countries with most personal freedom, all of them placing ahead of the United States.
For as many problems as Europe may have, these stronger European economies do one thing right: they protect your privacy.
In these countries, privacy is part of the culture.
A few years back, Google’s self-driven cars had to shut down their collection of data for Google Maps Street View over privacy concerns, including the fact that the cars were tapping into unsecured wireless networks as they drove down the road.
Austrians were furious at the idea that their right to privacy was being invaded and the government shut the project down.
Even when the government reversed course one year later, Google had seen enough of the icy welcome in Austria and announced it would not return to the market.
And the same goes for Switzerland, where Google has been challenged by the Swiss government. In these countries, privacy is rooted deep in the culture.
Whenever someone tries to go around flouting data on other people, the culture takes offense. It’s not their way of doing things. The Swiss may see themselves as sophisticated and of good taste, but ostentatious they are not.
That same spirit of secrecy applies to banking. It’s no secret, pardon the pun, that Swiss banks have a long and storied record with bank secrecy.
While numbered bank accounts no longer exist anywhere, the Swiss have “cleaned up their act” a bit, but the idea of keeping important information to themselves lives on.
It’s hard to say that such a spirit lives in other offshore jurisdictions.
Which is why you have to be so careful when going offshore. It’s one thing for a country to put out business-friendly corporate laws written by high-priced consultants in Europe.
It’s another for everyone in that country to actually play along.
Think about it. While I don’t necessarily believe government is good so long as it is transparent, corruption in these wealthy western European countries is pretty low.
As the world’s wealthiest nation per capita, the Swiss don’t have much tolerance for corruption.
While Swiss banks have taken a beating at the hands of the US government, Swiss bankers still maintain a sense of pride in keeping their clients’ information secret.
It’s not their fault you were born in a nanny state. Renounce your European or US citizenship and they’ll welcome you with open arms.
Austrians may be even more in favor of the “for your eyes only” approach, having spent years fighting the European Union against cutting back on their secrecy laws.
Secrecy is part of the Austrian culture, and they are damn proud of it.
Now, apply that same principle on some Caribbean island somewhere. These countries have no real history of any kind of privacy, nor do the residents hold it sacred.
Unlike the Swiss and the Austrians, a banker in St. Lucia wasn’t raised with the notion of privacy and minding your own business above all else.
Many Caribbean banks are staffed with nothing but ninnies in clown outfits. Service can be downright dreadful and the actual banking services you get are rarely good. Fees can be high, too.
These bankers often have limited experience, and certainly have no experience in the almost artistic world of European banking.
Their banks tend to be small and lack top-notch security systems you would expect in your home country. If a Caribbean banker wanted to steal your data, he could do so a lot more easily than an Austrian banker.
And considering Austrian bankers tend to be true professionals earning good salaries, I’d feel a lot safer with my money in the Austrian bank than on some rock somewhere.
That’s not to say that the Caribbean is bad, but Europe definitely offers a lot more benefits.
You can have all the bank secrecy laws you want, but if they aren’t enforced, it doesn’t matter. Some of the newer tax havens have come up with laws that sound like they have a lot of bite to them, but in reality would never be enforced.
To the contrary, you can bet an Austrian banker caught with his hand in the cookie jar would have a real problem.
As I always say, it comes down to culture.
Islands that lack any kind of real privacy culture and merely use the offshore industry as a way to bring in a few bucks aren’t as likely to look out for you.
If you wish to bank in the Caribbean, you’d be best going to a place like the Cayman Islands where government and business have raised the cost of doing business high enough that the riffraff and sketchy characters are kept at bay. Bermuda has also done a good deal to operate at a higher level than the so-called bastions of secrecy to its south.
As with anything else in life, moving assets offshore requires a large amount of planning rather than the throw-a-dart approach many people approach it with.
You really do have to “go where you’re treated best”; banks in Belize aren’t great but liquidity is a positive feature. Meanwhile, Belize corporations have a bad reputation. The opposite is somewhat true of the Seychelles, though.
If you’re looking for a certain benefit, it’s best to do thorough due diligence to make sure you’re actually getting it in a practical sense. Words on paper mean nothing.
Learn how to crack the code and legally pay zero tax while traveling the world.
Watch our Nomad Capitalist Crash Course.
Latest posts by Andrew Henderson (see all)
- Will the FATCA Filing Requirement Ever Be Repealed? - May 22, 2019
- The Best Cities for Single Nomads - May 20, 2019
- How to Open a Bank Account in Malta - May 19, 2019