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PART II

FINANCIAL PRIVACY AND THE TENDENCY OF GOVERNMENT TO IGNORE OR CHANGE THE LAW.
NO, IT DOESNíT MATTER WHOíS LOOKING.


Know this - U.S. Courts have ruled that a person investing outside the United States abandons virtually all constitutional protection as regards the disclosure of information relating to such investment or their confiscation. Such investors "assume the risk" of depositing their money in a foreign country. Since "traditional domestic investigating methods" are relatively ineffective abroad, the public interest in combating international crime justifies a lesser standard of protection In re. Air Crash in Bali, Indonesia on April 22, 1974, 684 F.2d 1301 (9th Circuit 1952)

Even a foreign person residing in a foreign nation has no legitimate expectation that U.S. law enforcement will not forcibly enter his home or office, seize his property, kidnap and/or torture him, and forcibly repatriate him to the United States. This is the case even if such actions violate that foreign personís domestic law and/or U.S. treaty obligations. Anything goes with Uncle Sam!

OSKAR SCHINDLERíS LIST

The stakes are the ultimate: life or death. Donít say it doesnít happen because it has. The movie Schindlerís List provides a sobering reminder. After conquering Poland in the lightning strike of 1939, the Nazis required all Jews to register with the authorities. Most did. The Nazis then re-located them to ghettos in each city, seized their property and sent them to death camps. Jews who obeyed the Nazi laws lost everything, including thier lives.

The only survivors were those who left Nazi jurisdiction or who violated the Nazi laws, didnít register and illegally hid their wealth in offshore financial centers so it couldnít be confiscated - or that tiny minority who entered into oral contracts with persons such as Oskar Schindler, not relying on the Nazi laws to enforce these contracts, but on the good faith and credit of people like him.

The Schindlerís List yardstick is this: Will this technique or structure protect wealth from a despotic government? This approach demands personal and financial privacy, a requirement which poses a virtually insurmountable problem for U.S. residents (U.S. persons) seeking asset protection in privacy. U.S. Common Law defines no expectation of financial privacy and/or protecting assets from government may constitute money laundering for U.S. persons!

Now, what follows is for informational purposes ONLY (read disclaimer); the author does not endorse any asset protection scheme that requires conduct that could in any way be defined as criminal. Its brevity is unintentional; for persons who do not wish any longer to do business with the state, options are limited. None are perfect; some may be closed down!

CASH

It remains possible to conduct private financial transactions in cash. It is however a crime to use cash to avoid FinCEN. Two significant exceptions to cash reporting apply. The General Instructions for IRS Currency Transaction Reporting Form 8300 for trades and businesses, "Exception" states (NOTE the term "trades or business" is defined broadly):

"Cash is not required to be reported if it is received... in a transaction that occurs entirely outside the United States... (or) in a transaction that is NOT in the course of a personís trade or business"

For the full text of the General Instructions, obtain a Form 8300

As well, IRS Publication 1544 "Reporting Cash Payment of Over $10,000 (Received in a Trade or Business)" provides an example of the second excepted transaction:

"If own a jewelry store and sell your automobile for more than $10,000 in cash, you would not submit a Form 8300 for that transaction"

Therefore cash transactions of any size between partners not engaging in a "trade or business" appear non-reportable

FUNDING

Moving money internationally leaves a "paper trail" and is NOT private. All well and goof - once funds are abroad, or if they remain abroad, they may be reclaimed in much greater privacy.

On the Customs Form 4790 "Report of International Transportation of Currency or Monetary Instruments" in the Who Must File section it states:

"... A transfer of funds through normal banking procedures (itís referring of course to incoming as well as outflowing transaxtions across a U.S. border), which does not involve the physical transportation of currency or monetary instruments, is not required to be reported"

Remember again that all non-cash U.S. dollar transactions, wherever they occur in the world, clear through the Federal Reserve. Therefore foreign investments denominated in currencies other than the U.S. dollar avoid United States in rem jurisdiction. Advantage? Such jurisdiction may be exercised as dollar-denominated transactions clear or against property deemed to have facilitated such transactions.

I repeat this warning - The mere transfer to or through a U.S. bank of the "alleged" proceeds of a crime or of property deemed to facilitate or have facilitated a crime may subject the entire transfer to confiscation. This is true even if neither sender nor recipient are subject to U.S. jurisdiction, and the seized funds represent the proceeds of activity outside United States jurisdiction. United States v. Daccaret, 6.F.3d 37 (2nd Circuit 1993).

The same methods (as those used to fund foreign investments) can also be used to reclaim them. Overseas travel expenses to or from any point in the U.S., and all accounts payable, can also be funded with offshore monies in relative privacy using a debit card, preferably one issued on a corporate account, drawn on a non-U.S. financial instituiton.

CERTAIN NON-REPORTABLE FOREIGN INVESTMENTS

U.S. law requires U.S. persons holding more than $10,000 in one or more (but if you have more than 25 such accounts itís non-reportable) "foreign financial accounts" to report their presence on Schedule B line 11(a) of the Federal Income Tax Return AND to file a separate information return to Treasury. Again, "willful non-compliance" may result in criminal prosecution.

Treasury Form TD F 90-22.1 (the "Foreign Bank Account Reporting Form") is submitted to a Treasury Department intelligence center in Detroit and its data conveyed to FinCEN. Criteria for Who Must File and a Report and what precisely terms like "a financial interest," "signature authority," "other authority," "bank account," "securities account," and "other financial account" mean are carefully defined... However, note that checking Ďyesí on Line 11(a) and completing the Form TD F 90-22.1 always raises an unavoidable red flag, as a person has identified himself as engaging in international financial transactions. The Head of the IRS International Compliance Office has stated that tax returns indicating foreign transactions are always reviewed to determine if they warrant further investigation. In a lawsuit where tax returns are subpeonaed the disclosure of offshore investements may also arouse interest.

However, there are several types of holdings and investments that appear to be excluded from reporting if they are purchased without opening a "bank, securities, or other financial account," or using such an account to maintain custody. They include real estate (obviously) safekeeping and safety deposit box arrangements of a certain kind, insurance policies, and securities, together with certain valuables such as jewelry and numismatic coins and accounts receivable.

Foreign insurance contracts do not appear to be reportable. However U.S. persons purchasing (not foreign corporations, note) foreign insurance contracts, such as annuities, must make a one time filing of IRS Form 720 and pay the 1% Excise Tax, on the premium. Income accumulating with a life-insurance contract is non-reportable and tax deferred. This status will not last.

Note that insurance contracts are regulated contracts issued by regulated institutions. In Common Law jurisdictions these contracts are thus subject to confiscation under MLATís, other treaties or Crown prerogative. Contrast this with Civil Law countries where confiscation can only occur after a criminal conviction unless otherwise permitted by treaty.

Securities, if purchased directly from a foreign issuer, without opening an account do not appear reportable - and would likely remain so providing a foreign bank or brokerage account is not used to maintain custody (more on the custodial role of banks and brokerage houses later). Of course, thereís no intermediary on whom government can enforce a confiscation order. Bearer securities are private; Non-dividend paying bearer shares and zero-coupon bonds avoid having to present coupons to receive dividends or interest payments.

Taxation of Gains - for persons subject to U.S. taxation, income or gain from securities is taxable but may be deferrable - the nature of the gain determines deferral. U.S. taxpayers are not required to report unrealized gains on securities.

Understand the different (particularly when it comes to some of the services offered by The Harris Organization) tax treatment afforded foreign investments under U.S. law. Letís consider the (a) accounts (b) shares and (c) mutual funds offered by a foreign bank. A more favorable U.S. tax regime applies to shares (registered or bearer) issued by a foreign bank than to shares of mutual funds managed by that bank. This difference becomes relevant only when and if the shares are sold or deemed sold - so purchasing shares of the bank or its mutual funds provides much, much greater privacy that opening an account with the bank!

THE CHANNEL ISLANDS (ONE OF THE WORLDíS "PREMIER" TAX AND BANKING HAVENS) FACE TAX REVOLT.

May we see the Channel Islands and the Isle of Man declaring their independence from Britain after 1,000 years? There is now such alarm in these Crown dependencies that the Government could give way to EU pressure to interfere with their sovereignty in tax affairs that the question of independence has been raising in both the Manx and Jersey legislatures.

Their prime cause for concern has been the secret deliberations of the EU committee chaired by the UK treasury minister Dawn Primarolo on "harmful tax competition", identifying nearly 200 local tax measures across Europe which the EU may well demand should be scrapped for creating tax advantages.

So controversial are these proposals that although Mrs. Primarolo is to appear before a Lords select committee to discuss her groupís recent interim report giving the list of measures, the U.K. Treasury has refused to allow peers to see the report.

But when Anthony Cowgill of the British Management Data Foundation obtained one simply by ringing the Council of Ministerís office in Brussels, he was able to circulate their lordships with the document the Government was determined they should not see.

This targets 11 tax-exemptions in the Isle of Man, seven in Guernsey and four in Jersey. Their abolition would strike a devastating blow at the economies of the islands, which are so heavily dependent on the banks and financial services attracted by low tax regimes that these account for 40% of the Manx economy and 60% of Jerseyís (plus 75% of its tax revenue).

The odd thing is that, under Protocol Three of Britainís Accession Treaty, none of these islands are in the EU. But this does not prevent Brussels trying to persuade the UK to put pressure on the islands to accept its right to interfere.

Hence the questions recently raised in the Manx Tynwald and the Jersey States as to whether the islandsí governments are prepared to resist such interference, even to the point of declaring independence. The answers received by David Cannon, a former Manx finance minister, and Deputy Paul Le Claire, a member of the States, have not reassured them.

But what has alarmed them even more is a recent EU finance ministersí report revealing that member states are now committed to ensuring that any Taxation of Savings directive, or witholding tax, would equally apply to their "dependent or associated territories". This in itself would have a devastating impact on the islands. Banks would leave in droves.

Furthermore, says Deputy Le Claire, "it seems to contradict all the assurances we have been given on the witholding tax". He has already won confirmation from the Jersey government that "independence is an option open to the Island if the circumstances should justify this".

"No one on the islands wishes to see an end to our 1,000-year tie to Britain," he says. "But if this is the only way to ensure our survival, the Crown could lose its most loyal subjects".

CLINTON ORDERS "CYBER-SABOTAGE" TO OUST SERB LEADER, SLOBODAN MILOSEVIC - REMEMBER SADDAM HUSSEIN? HEíS STILL THERE.

(reported by Philip Sherwell in Podgorica, Sasa Nicolic in Belgrade and Julius Strauss in Pristina)

President Clinton has ordered NSA computer hackers to break into the Milosevic familyís foreign bank accounts and to drain his apparently hidden fortune as part of yet another clandestine CIA plan to overthrow the Yugoslav president.

Although this controversial operation was opposed by certain senior political and intelligence figures in Washington (we presume they also continue to oppose the planned overthrow of Sadaam Hussein of Iraq), the 6 part package was authorized by Clinton during the week ending June 27.

The CIA is believed to have tracked down accounts in banks in Greece, Cyprus and Russia (traditional allies of Serbia). The NSA would "seek to find a way around the banksí security systems" - fine, except that it already has and regularly cleans out accounts at will in any computerized bank - some private banks have built elaborate cryptological electronic interfaces with any external devices excluded, i.e. no ATMís, secure wire transfers, no Internet banking, and extensive use of correspondent facilities. Of interest is the Pentagonís last year adding cyberspace to land, air and sea as the fourth field of warfare, and its creation of an Information Operations Directorate.

Not a few intelligence officials fear this move against the first Serbian familyís wealth could backfire on the U.S. by making its computer systems a target for hackers in other parts of the world who sell their immense skills to Washingtonís enemies. Tangible evidence of this is found in a headline article published in the U.Kís most prestigious financial paper, "Sunday Business" (the Sunday edition of The Financial Times of London) in the February 28, 1999 issue. In no other newspaper or magazine was this astonishing event reported. Below is the article by Mark Watts, Chief News Reporter, reproduced verbatim:

POLITICAL BACKLASH FROM ILLEGAL CYBER-TERRORISM

There are also political concerns about the implications for what is left to the countries of their national sovereignty. Greece is a NATO ally, Russia is suspicious of the United States and Cyprus is tense with Turkey a NATO member. The Hacker Plan is perhaps the boldest element in the 6 point campaign "authorised" by Clinton, in the tired interests of national security.

The other 5 parts of the plan just revealed are routine:

(1) Funneling cash through the State Department and the CIA to opponent politicians

(2) Cash to newspapers and radio stations opposed to the Belgrade leadership

(3) Contacting Yugoslav military commanders thought to back a change of leadership

(4) Pamphleteering across Serbia "promising" funds to rebuild the country NATO forces destroyed if Milosevic is ousted.

(5) Propaganda campaign to persuade the civilians that his grip on power is slipping.

Fractious opposition is a challenge to be overcome though! As always, the key to Serbia is in the hands of a few tycoons, the economic elite to whom the Serbian leader has given the task of saving the country from total collapse. Like his aggressors, Milosevic believes in fomenting conflict whenever his hold on power has been threatened. Few in the Balkans doubt that he would resort to the same tactic again. This time the tiny Republic of Montenegro?

POLITICAL BACKWASH FROM ILLEGAL CYBER-TERRORISM

There are also political concerns about the implications for what is left to the countries of their national sovereignty. Greece is a NATO ally, Russia is suspicious of the United States and Cyprus is tense with Turkey a NATO member. The Hacker Plan is perhaps the boldest element in the 6 point campaign "authorised" by Clinton, in the tired interests of national security.

The other 5 parts of the plan just revealed are routine:

(1) Funneling cash through the State Department and the CIA to opponent politicians

(2) Cash to newspapers and radio stations opposed to the Belgrade leadership

(3) Contacting Yugoslav military commanders thought to back a change of leadership

(4) Pamphleteering across Serbia "promising" funds to rebuild the country NATO forces destroyed if Milosevic is ousted.

(5) Propaganda campaign to persuade the civilians that his grip on power is slipping.

Fractious opposition is a challenge to be overcome though! As always, the key to Serbia is in the hands of a few tycoons, the economic elite to whom the Serbian leader has given the task of saving the country from total collapse. Like his aggressors, Milosevic believes in fomenting conflict whenever his hold on power has been threatened. Few in the Balkans doubt that he would resort to the same tactic again. This time the tiny Republic of Montenegro?

THE ABOLITION OF PRIVATE MAIL SERVICE IN THE U.S.
(Since June 26, no longer available anywhere)

Big Brother wants to check your mail and since June 26 has passed, your postal privacy is AT RISK. Mail drops are private mailing addresses sometimes under assumed names. Now that electronic communications are impossible to use without the possibility of a government snoop tapping in, Big Brother has reached out to end secure written communications passing through U.S. mail. In accordance with U.S. Postal Service Domestic Manual Sections D042 and F026 Application for Delivery of Mail Form 1583 through an Agent have to filed, and accompanied by two forms of identification, one photo. After November 1, 1999 unless a Postal Mail Box (PMB) has been applied for, the Postal Service wonít deliver any mail - a 6 month period allowing postal inspectors to monitor and examine mail is provided for after cancellation.

Continued in part three of ten

Part: one | two | three | four | five | six | seven | eight | nine | ten


Wisdom and Freedom produced by WORLD NEWSSTAND
Copyright © 1999. ALL RIGHTS RESERVED.
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