From: jamesd@netcom.com (James A. Donald)
Date: Thu, 17 Nov 94 23:32:26 PST
To: cypherpunks@toad.com
Subject: How to do foreign transactions.
Message-ID: <199411180732.XAA01550@netcom7.netcom.com>
MIME-Version: 1.0
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First and foremost:
 
A chain is as strong as its weakest link.
 
So you do not use a consultant who works in the country
where you are making your money.
 
Repeating this for anyone slow witted.   If you are making
money in the USA, and wish to perform transactions outside
the USA that you would prefer to remain private  YOU DO
NOT TRANSACT THROUGH A USA CONSULTANT.  DO NOT USE A USA
BASED CONSULTANT!
 
The American IRS, and other bodies hostile to privacy,
regularly go after such consultants, accuse them of real
or imaginary crimes, threaten them with jail and sometimes
with a rubber hose, and force them to sing like canaries.
 
Worse still, a great many of them continue right on in the
financial consultancy business while continuing to sing
like canaries.
 
So first and foremost you do not use a consultant that is
subject to the violence of those that you most fear.
 
Use a friend or a relative who is in a foreign country.
Blood is thicker than water, relatives are better.  No
suitable relatives?  Subscribe to foreign financial
newspapers, and read the ads, subscribe to some of the
newsletters advertised or reviewed in those newspapers.
 
You might wish to subscribe to 
 
     AGI
     PO Box 4010 
     6304 Zug
     Switzerland.
 
This advertises stockbrokers, banks, and mutual funds all
over the world that accept international transactions.
 
That is a suggestion, not a recommendation.  Do your own
homework, and check your family tree for relatives
dispersed around the world.
 
OK, what comes second.
 
Well second, third, fourth and fifth, same as above, do
not use a consultant who is subject to the violence of
those you most fear.
 
Somewhere way down the list ...
 
About thirty seventh down the list: All financial
institutions that are beyond the violence of those you fear
the most, are good.
 
All of them!
 
All of them!
 
Even in countries quite hostile to privacy, they do not
turn over financial information en masse to a foreign
power, even when that foreign power is the USA.
 
Say you fear the USA the most, and you have a bank account
in another country.  Say you have a bank account in
Australia, a country with high taxes, absolutely no banking
privacy, a country that routinely and regularly grovels to
the USA. Even so, the ones you fear still have to find out
that the account exists, information that they discover in
the USA and *then* they have to ask their opposite number
in Australia, "Hey, I did a favor for you, can you do a
favor for me, pretty please with sugar on top?"
 
If the enemy already have that kind of information on your
financial doings, and they are keen enough on getting you
that they are willing to do things that are special and
out of the ordinary, then your goose is cooked anyway,
regardless of whether your account is Australia or
Liechtenstein.   So who gives a tinkers dam?
 
What points one to thirty seven boil down to is quite
simple.  The key question about any financial institution
is:  Can the revenuers kick down the door and pistol whip
the operator if he fails to make everything in his computer
totally and completely available to the revenuers?
 
It really is that simple.  If you are afraid of USA
revenuers, then the difference between a USA bank, and a
USA financial privacy consultant is so slight that it is
not even worth thinking about.   The difference between a
Swiss bank and an Australian bank is small.   The big
difference is the difference between a USA entity and a 
foreign entity.
 
Ignore all the mysterious arcane legalistic complexities
uttered by the self proclaimed financial experts.  It
really is not very complicated at all.  Simply apply the
pistol whip question.
 
Nothing else counts for very much.
 
If a financial institution fails the pistol whip test, then
its computers have a line to the IRS echoing everything
that happens.  If they do not have such a line now, they
will very soon.
 
If it passes the pistol whip test, then there is no line
to the IRS.  The IRS might be able to get information if
they ask nicely about a particular person, but they will
have to ask nicely and they cannot simply say:  "Dump
everything you have to our computers and make sure it is in
a form that our computers like, and if something makes our
computers hiccup, you're gonna sweat."
 
I repeat:  The key question is "Can they kick down the door
and pistol whip the guy who owns the computers?"  All other
questions, such as what does the law say, and what legal
system the institution operates under, are comparatively
insignificant.
 
Now obviously some banks are better than others.  For most
people this is not an important difference, but there is a
difference.
 
Now if you are a big time drug dealer living in exile,
yeah, you had better worry about the fine detail of a
nations banking secrecy laws.  In that case the difference
between Switzerland and Liechtenstein might be important
to you.
 
But fussing over the details of a countries banking laws
is like worrying about sources of randomness in session
keys.  It is not likely to make the slightest difference
in practice.
 
Of all the banks that have some degree of secrecy, Swiss
banks are the best, not that they have the strongest
secrecy, but because they are real banks, they are not
just post office boxes, and the same laws apply to
everyone. Your money is safe in Switzerland not because
they are trying to lure foreign hot money -- in fact they
are trying to exclude foreign hot money.  You almost have
to sneak your money into Switzerland in the same way you
sneak it out of the US.  Your money is safe in Switzerland
because Swiss property is safe in Switzerland.   In
Switzerland you are protected by Swiss liberty, not by
foreign privilege.
 
For your enemies to get information about your Swiss bank
account, they are going to have to know what you have been
up to.  And, knowing what you are up to, they are not going
to merely have to ask a favor, as they would in most
countries. They are going to have to go before a foreign
court.  They are going to have to jump through legalistic
hoops that they did not write in a court that they cannot
control.  They will have to deal with powerful people on
those peoples home ground.  They are profoundly reluctant
to do this. It makes them feel weak and helpless.  Unless
they know you are up to something *and* they have serious
hots for you, they are not going to do it.
 
So unless you are a foreign dictator that the US might
wish to overthrow, or unless you got the IRS chief's
daughter pregnant and skipped town,  you really do not
need to give a dam.
 
And if you attract their attention, and seriously upset
them, then nothing is safe.  They will obtain the key to
that Liechtenstein safety deposit box by bribery, illegal
methods, and by threatening people with massive baseless
lawsuits.  (This happened to one famous tax resister.   The
King of Liechtenstein will tell them to go eat shit, but a
lawyer in Liechtenstein will roll over like a puppy dog.) 
Or they will lock you up in solitary, with your only source
of conversation being thirty hour chat sessions with IRS
agents with bright lights shining in your eyes, until you
are willing to confess that you killed Kennedy and you were
Jack the Ripper and you damn well give them the key.
 
Which brings to point thirty eight, the least and
slightest of the matters you should keep in mind.
 
Obviously some institutions and some countries are more
vulnerable to persuasion and pressure by foreigners than
others.  I am told the King of Liechtenstein is strongly
resistant.  Doubtless this is true.  But if there are two
financial institutions, and one is a major Swiss bank, and
one is actually a lawyer operating a mail drop, guess which
one rolls over first, even if the lawyer is located in
Liechtenstein.  One needs to consider both the reputation
of the country and the reputation of the institution.
 
(You might also consider that, on the other hand, the
hole-in-the-wall lawyer in Liechtenstein can give you
facilities that achieve much the same thing as a fiduciary
account at a price you can afford, whereas a big Swiss bank
would not give you a fiduciary account unless you had
serious money.  Yet again you might consider that
something like a fiduciary account is ridiculous overkill
for most people)
 
But I repeat, compared to the vast difference between
someone they can pistol whip, and someone they cannot
pistol whip, the difference between two people, neither of
whom can be pistol whipped, is very slight.  It really does
not matter that much.  Just get your money out of gunshot.
Legal technicalities would only matter if the government
gave a shit about legal technicalities.
 
Once your money is out of gunshot, it really does not make
a very big difference where you put it.  Go for decent
rates of return, and ignore too-clever-by-half secrecy
schemes.
 
-- 
 ---------------------------------------------------------------------
We have the right to defend ourselves and our
property, because of the kind of animals that we     James A. Donald
are.  True law derives from this right, not from     jamesd@acm.org
the arbitrary power of the omnipotent state.