Investing for Survival

 Investing for Survival

Those of us who are sensitive to tax, financial, and regulatory events, both in the U.S. and offshore, see some disturbing developments toward currency and other financial controls. Taken together, these developments may well signal evacuating before exits are blocked.

• The International Monetary Fund (IMF) has just published a report titled Fiscal Monitor: Taxing Times, which suggests governments in developed nations, especially the U.S., should consider new means “to raise revenue from the top of the income distribution,” including the direct confiscation of personal wealth.

• The world learned the new phrase “bail in” (as compared to “bail out”) when the European Union forced the Republic of Cyprus, as part of a bank rescue package, to raid the personal and corporate deposits of account holders to pay for losses. Word soon leaked out that many nations have adopted emergency “bail-in” bank rules, including even Canada and Switzerland.

• In November 2012 the U.S. banking giant JPMorgan Chase summarily told certain of its business-account holders they are no longer permitted to send or receive international wire transfers, and their account activity is limited to $50,000 a month.

• A few months before, HSBC closed a number of accounts held by United Arab Emirate small- and medium-sized enterprises, causing customer anger. Some of HSBC Premier’s U.S. clients now are forced to wait five days before transferring funds to their own international accounts.

The Foreign Account Tax Compliance Act (FATCA) is confusing and misunderstood. While the U.S. government pitches it as a way to catch all those imagined tax cheaters, FATCA is much more than that. By forcing U.S. tax law on every country around the globe, the U.S. government and the U.S. Internal Revenue Service have evoked a reaction leading to restrictive currency and financial controls. FATCA, along with the PATRIOT Act and anti-money laundering laws, has pressured not just individuals, but U.S. banks, as well.

 The Chase and HSBC actions, however unfair, are consistent with the reaction of offshore banks that have dumped thousands of unwanted U.S. account holders as costly liabilities. For years I have warned repeatedly of “soft currency controls.” The U.S. government, especially the IRS, is doing all it can to keep Americans and their money at home, where they can control it. Fortunately, going “offshore” is the effective way to circumvent restrictive laws and regulations—and even expand your wealth. It’s the only way to get around Big Brother.

As the U.S. government flexes its regulatory muscle, offshore investing is one of the last remaining ways for smart investors to legitimately safeguard their wealth. Now more than ever, it’s important to “go offshore” with your money. There are simply too many new global centers of wealth and power to be ignored.

As U.S. clients are being asked to leave traditional offshore private banks because of FATCA’s onerous provisions, they are finding better service and better Offshore investment advice from a boutique group of advisors—independent asset managers (IAMs). These investment managers aren’t tied to a particular bank. Rather, they are tied to their clients—your needs come first. As an added guarantee, these folks have all qualified and registered with the U.S. Securities and Exchange Commission (SEC). This is a big turnaround: Typically, these guys worked for the banks…but now they are ready to work for you.

Robert Vrijhof is President of Weber, Hartmann, Vrijhof & Partners associated with a variety of Swiss and other foreign banks. For more details see Whvp.ch.

Juan Federico Fischer can help you arrange bank accounts in Uruguay. See: Fs.com.uy.Banks

I recommend in Singapore and Hong Kong do not accept accounts directly from individual U.S. persons but instead require an intermediary to submit account applications on their behalf. These banks do require the U.S. account applicant to appear personally at their offices as part of the application process.

Josh Bennett JD, who is also an expert attorney in offshore asset protection and U.S. offshore taxes and reporting requirements can help you.