Secrecy in the Present World
May 17, 2016
Banking secrecy is a guarantee to you that people cannot find out the state of your financial affairs out of a simple interest.
Certain jurisdictions keep the information confidential even to the government. Switzerland, Lebanon, and the Philippines belong to such hubs having been operating undisturbed for a number of years. However, with the financial crimes spread nowadays, banking secrecy has eroded and almost vanished in lots of jurisdictions.
At present, the chances are high that most of the world’s money laundering operations take place in the United States, Germany and the UK. Still, those jurisdictions are harassing other countries, who maintain a high level of privacy and cause problems for the worldwide money laundering fighting.
To get the proper level of confidentiality with the bank account abroad, look for the jurisdiction, which is not in the scope of AEOI, TIEA, or some other information-sharing regulations.
The Standard For Automatic Exchange of Financial Information states that the information about the trusts’ accounts belonging to the trustees should be reported to the country of residence of the latter. However, it’s usually a tax haven having no connection to the settlor or beneficiaries.
Still, under certain circumstances, the information has to be reported to the dominion of residence of the settlor, beneficiary and so on. It is, as a rule, linked to some income-generating activities which bring benefit to the shareholders.
However, trusts are in fact almost impenetrable, those ones, which do not have bank accounts, are still extremely confidential. You can avoid AEOI if your trust is incorporated in the jurisdiction following the regulations, by having bank accounts in a non-AEOI hub or creating such a structure, in which the beneficiaries will not be subject to reportable events.
In case your legal entity does not hold any bank account, all the details as to the beneficiaries, directors, corporate finances, and some others are not disclosed.
The data about private companies can be obtained through such information exchange mechanisms, as Tax Information Exchange Agreement. The most reputable hubs, like BVI, for instance, are now considering creating registries of companies beneficiaries, confidential to the public yet known for the government. It means the lesser level of corporate confidentiality.
Culture of Secrecy and Privacy
Certain cultures have privacy as a deeply rooted social norm, think of Switzerland, Germany, Austria, Netherlands, Sweden, Norway, Finland, and Iceland. Europeans are mostly brought up to mind their own business and keep things to themselves, the same can be seen in America as well. However, the data protection in the United States is much calmer than in Europe.
In the countries of the former USSR, the secrecy from the governments is still impossible, but the nations actually do little to meet the standards of international cooperation.
However, secrecy is not anymore guaranteed everywhere, especially the secrecy of bank account abroad. For instance, the Swiss offshore banking system has privacy deeply rooted in their social principles for hundreds of years and absolute banking confidentiality for almost 100 years as well. Most tax havens fail to boast the same deeply rooted value of secrecy, so it’s the factor to be carefully considered.
Service Providers Secrecy
It often happens to be the overlooked link in the chain. Unfortunately, service providers do not use e-mail encryption technologies, any out-of-bounds solutions or at least message encryption like PGP/GPG. For the clients’ convenience, email messages, as well as documents, are stored in normal text and on unencrypted servers. Thus, IT security is not of high importance to this industry.
In case you fail to critically consider all the aspects of secrecy nowadays, you may get easily confused.
Banking secrecy vanishes in recent days and may soon stop to be an effective measure to hide means from governments.
Certain hubs try to avoid AEOI regulations, but it’s unlikely that things like it will ever be canceled.
At present you can still achieve banking secrecy, using jurisdictions which are not engaged in AEOI or some other mechanisms of information sharing. You can also structure your funds in a proper manner.
Trusts, companies, and foundations remain as secretive as they were earlier. Financial institutions are now the link in which is most likely to fail in your secrecy chain.
Meet your enemy in the face and do the planning accordingly.