Mapping The Witch-Hunt Of The World's Offshore Bank Account Holders

A cache of 2.5 million files of cash transfers, incorporation dates, and links between companies and individuals has cracked open the secrets of more than 120,000 offshore companies and trusts. The secret records obtained by the International Consortium of Investigative Journalists (ICIJ) lay bare the names behind covert companies used by people from American doctors to Russian executives and international arms dealers in more than 170 countries (as shown in the map below). One wonders how and why this sudden (and timely) leak of documents occurred (which just happened to turn up at a source's house). If we were a tinfoil-hat-wearing conspiracy theorist we might suspect that this is a staged coup to create a witch-hunt against all offshore capital (legitimate or illegitimate) - and an attempt, as with Cyprus, to push money out of banks and into circulation (pushing the velocity up) as all other monetary policy 'tricks' have failed. While 'offshore' is synonymous with 'tax cheat', there is nothing illegal in moving assets offshore. In fact, as Simon Black notes, given that there is going to come a time, likely soon, that retirement savings will be targeted; diversifying abroad is one of the sanest things you can do to protect yourself against the real criminals.


Where are all the people that have offshore capital?


and an example of the kind of offshore network that is undertaken...


Key Findings from ICIJ:

  • Government officials and their families and associates in Azerbaijan, Russia, Canada, Pakistan, the Philippines, Thailand, Mongolia and other countries have embraced the use of covert companies and bank accounts.
  • The mega-rich use complex offshore structures to own mansions, yachts, art masterpieces and other assets, gaining tax advantages and anonymity not available to average people.
  • Many of the world’s top’s banks – including UBS, Clariden and Deutsche Bank – have aggressively worked to provide their customers with secrecy-cloaked companies in the British Virgin Islands and other offshore hideaways.
  • A well-paid industry of accountants, middlemen and other operatives has helped offshore patrons shroud their identities and business interests, providing shelter in many cases to money laundering or other misconduct.
  • Ponzi schemers and other large-scale fraudsters routinely use offshore havens to pull off their shell games and move their ill-gotten gains.

The impact of offshore capital...

The vast flow of offshore money — legal and illegal, personal and corporate — can roil economies and pit nations against each other. Europe’s continuing financial crisis has been fueled by a Greek fiscal disaster exacerbated by offshore tax cheating and by a banking meltdown in the tiny tax haven of Cyprus, where local banks’ assets have been inflated by waves of cash from Russia.


Anti-corruption campaigners argue that offshore secrecy undermines law and order and forces average citizens to pay higher taxes to make up for revenues that vanish offshore. Studies have estimated that cross-border flows of global proceeds of financial crimes total between $1 trillion and $1.6 trillion a year.

Legal And Illegal...

The files obtained by ICIJ shine a light on the day-to-day tactics that offshore services firms and their clients use to keep offshore companies, trusts and their owners under cover.


ICIJ’s 15-month investigation found that, alongside perfectly legal transactions, the secrecy and lax oversight offered by the offshore world allows fraud, tax dodging and political corruption to thrive.


And Simon Black's less inflammatory take on this debacle:

Secret. Dirty. Sham. Shadowy. Illicit. Fake. Covert. Questionable. These are typically the words used to describe the world of offshore asset protection in mainstream media.


The classic presumption is that if you go offshore-- foreign bank account, overseas safety deposit box, foreign trust, foreign corporation, etc.-- then you MUST be doing something wrong.


This is an absurd conclusion and only highlights how brainwashed most people have become.


The world has become a gigantic financial nudist colony, full of government agents who pry ever more deeper into our nether regions looking for loose change betwixt the sofa cushions. Yet people are all too willing to comply. And anyone who shows up with a bath towel is branded a criminal or financial terrorist.


Clearly there are people who use offshore jurisdictions to hide graft or fraudulent activities. But this is not unique to the offshore world.


The #1 tax haven in the world, in fact, is none other than the United States of America. More ill-gotten wealth is hidden in Wall Street banks through Delaware corporations than any other place on the planet.


Yet the attention is always focused on places like the British Virgin Islands, Channel Islands, Liechtenstein, Switzerland, Cook Islands, Panama, Seychelles, Hong Kong, etc.


Just yesterday, the farcically named Center for Public Integrity released a fifteen month study based on 'leaked' documents from various international financial centers. The data shined a spotlight on the financial dealings of nearly 130,000 individuals in jurisdictions around the world.


The group's assessment is anything but flattering: "This investigation lifts the curtain on the offshore system and provides a transparent look into the secret world of tax havens and the individuals and companies that use and benefit from them."


Just think about the implications. They're essentially saying that nobody has the right to financial privacy... and that deriving 'benefit' is somehow evil and wrong.


Fact is, moving money and assets offshore is not illegal. It's perfectly legal, as long as you pay tax on the income and make the appropriate disclosures.


And despite the media hype, this is not something that's just for the criminal terrorist class. As a matter of fact, going offshore is one of the best tactics to protect yourself against the criminal terrorist class... and by that, I mean central bankers and politicians.


Insolvent governments throughout history have ALWAYS resorted to a very limited playbook.  Capital controls, wage and price controls, direct confiscation of assets... these tactics are nearly foregone conclusions in heavily indebted countries.


Just look at what happened in Cyprus. Look at what's happening in Argentina. The evidence is overwhelmingly obvious. Pretending that 'it can't happen here' is dangerous thinking.


There is going to come a time, likely soon, that retirement savings will be targeted. Capital controls are already in the works, cheered along by economic 'luminaries' like Paul Krugman. Central bankers will continue to steal the purchasing power of our hard-earned savings. It's happening.


Moving a portion of your assets abroad isn't criminal. It's not crazy. If properly disclosed, it's one of the sanest things you can do to protect yourself against the real criminals.