by Ben Best
By way of disclaimer, I need to state that I have little direct personal experience in offshore financial transactions. The information I present here is a based on superficial research, and thus needs to be confirmed. My main purpose is to raise consciousness about possibilities among cryonicists so as to motivate serious investigation of those possibilities that seem promising. Nothing I have written should be interpreted as meaning that I am advocating illegal activity. I strongly advise against illegal activity.
The term "offshore" was originally applied to banks in the Channel Islands which became known as tax havens in the 1960s. The island of Jersey is still a major center of offshore banking, and many (although not all) tax havens are island nations. Most generally, offshore financial transactions can refer to any financial services obtained in a country in which a person is not a citizen.
There is competition between American states to attract business and wealth through favorable taxation policies and regulatory legislation. A similar competition exists between nations of the world. Many centers have become known as tax havens, in part by having little or no taxation. Tax havens accounting for about 1% of the world's population hold about one quarter of the world's wealth. Lichtenstein has the lowest taxes of any country in Europe, with the exception of Andorra which has no income tax.
Many small countries have become Offshore Financial Centers that compete for world wealth by providing not only a low-tax environment, but also a business-friendly regulatory environment and extensive financial services available to non-residents. For such countries the financial sector is a significant portion of their entire economy. The Cayman Islands is home to 75% of the world's hedge funds because of minimal governmental regulation of investment, Bermuda's insurance and reinsurance market is the third largest in the world, and the British Virgin Islands has the largest number of offshore companies.
Ownership of an offshore bank by cryonicists provides a degree of financial control that is not available otherwise. Offshore banks can operate much less expensively because they are not subject to the same regulatory requirements as domestic banks. Any profits from banking activities are not subject to significant taxation. In many cases banks in Offshore Financial Centers do not need to deposit reserves with a central bank. Currency exchange fees need not be paid to others, and SEC prohibitions against certain types of investments by Americans are not a constraint. Cryonicists in control of their own bank would not be dependent upon the management policies of non-cryonicist owners, and would not be at the mercy of possible bank mismanagement of funds. Many savers lost money held by banks in Iceland and on the Isle of Man in the 2008 banking crisis. Bank ownership by cryonicists allows for direct monitoring of all demands made national and international government agencies.
There are generally two types of banking licenses offered by Offshore Financial Centers: General Bank Licenses and Restrictive Bank Licenses. General Bank Licenses typically allow for providing general services to the public, both internationally and in the local country. Restrictive Bank Licenses limit financial transactions to persons or groups names in the license. Costs and capital requirements for General Bank Licenses tend to be much higher than for Restrictive Bank Licenses, and many Offshore Financial Centers will only issue General Bank Licenses to established bankers. But a bank owned by cryonicists would only need a Restrictive Bank License.
As examples, in St. Vincent a Restrictive Bank License has a minimal capital requirement of US$100,000, application fees of US$1,500 and annual fee of US$2,500. For the Bahamas, the minimal capital requirement is US$100,000 and the license fee is US$30,000. Vanuatu in the Pacific has a paid-in capital requirement of US$150,000 and annual license fee of US$3,000 for a Restrictive Bank License.
Contingent fee litigation is one of the fastest growing businesses in the United States. For this reason there is reputedly more American wealth offshore to protect assets from litigation than for reasons of tax minimization. Assets must be transferred offshore prior to any threatened lawsuit to avoid charges of fraudulent conveyance.
Trusts having a revived cryonicist as beneficiary are a potential means by which cryonicists can provide for transferring wealth to their reanimated selves. Such trusts could as easily be offshore as onshore. Having a bank owned by cryonicists that can act as the trustee can mean having a trustee that recognizes a legally dead person as a valid beneficiary of a trust. Banks can act as trustees in many Offshore Financial Centers, including the Cook Islands, the British Virgin Islands, and the Bahamas.
Alternatives to bank ownership for trustee services include New Zealand Financial Service Providers, which can act as a trustee and has no capital reserve requirement as long as services are not offered to residents of New Zealand. Swedish Credit Unions do not require a banking license. A Panamanian Financial Services Offshore Corporation can offer a variety of financial services other than banking, possibly including trust management.
Persons who are legally dead trust owe no tax on income earned from trusts offshore or onshore. Offshore trusts, however, can potentially be free of any tax on income, whereas in the United States, trust income in excess of $11,350 is subject to federal income tax of $2,937 plus 35% of the amount over $11,350. (See IRS Form 1041-ES). Taxes can be even greater for trusts located in states having state income tax.
Although 23 states plus the District of Columbia have repealed the law against perpetual trusts, more investigation is required to determine what Offshore Financial Centers will allow perpetual trusts, or perpetual entities that can serve the same purpose. The US Generation-Skipping Tax has been a driver for creating dynasty trusts in the United States, and competition between American states for dynasty trusts, in turn, have been been the driving force behind repealing the law against perpetuities. Not having the Generation Skipping Tax in Offshore Financial Centers, has meant that there has been little motivation for those centers to repeal laws against perpetual trusts. Lichtenstein has reportedly done so, however, and other offshore jurisdictions may have also done so. Other perpetual entities, such as foundations or corporations can be created offshore, however, which can serve the same functions as a perpetual trust, such as a Financial Services Corporation in Panama or New Zealand.
Citizens of the United States and most other large countries are expected to be taxed on all income earned worldwide. Since the 1934 Swiss Bank Act, bank secrecy in Switzerland has been perceived not only as a means of hiding foreign wealth and income for tax evasion, but as a means of laundering money obtained by illegal activity. More recently, terrorist financing has become a matter of international concern. In the last decade, intergovernmental organizations have conducted a highly aggressive and successful worldwide campaign against secret financial transactions. The Financial Action Task Force (FATF) against money laundering and terrorist financing has succeeded in achieving considerable worldwide compliance by "tax haven nations" to cooperate in investigating suspicious financial transactions. The Organization for Economic Co-operation and Development (OECD) has achieved considerable international cooperation in its drive for transparency of tax affairs and exchange of information relevant to possible tax evasion. The 2001 USA PATRIOT Act (Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act) gave American government agencies broad powers to obtain information from phone companies, Internet Service Providers, and financial organizations through wiretapping, e-mail, or examination of financial records.
There are many anti-capitalist and anti-globalization activist organizations such as the Tax Justice Network and ATTAC that oppose all international tax competition and techniques for minimizing taxes on the grounds that those with wealth should be responsible for paying most of the costs of government spending. And there are many people both inside and outside the US Justice Department who believe anyone engaging in offshore financial activity is probably a criminal.
Political instability and financially predatory governments are a long-term risk in both Offshore Financial Centers as well as in major nations. Knowledge of political background is helpful both overseas and domestically. The Obama administration is interested in limiting American dynasty trusts to 90 years, effectively restoring the law against perpetuities in the USA. Panama is resistant to pressure from other governments because of the Panama canal, whereas Vanuatu may be vulnerable to conflicts among its various ethnic groups. Effective awareness of public relations may be essential for success. The more diversified the geographical locations, the political environments, and the asset preservation entities, the greater the chance that some will survive in the long-term.
Asset Protection Corporation: www.assetprotectioncorp.com/mc-offshoreinfo.html
Offshore Simple: www.offshoreinfo.com/offshore_banks_details.htm