Tax & Financial Consulting Services
The PATRIOT Act - Six Years Later: Three Offshore Strategies to Combat the Assault on Your Wealth and Privacy
By Robert E. Bauman JD
Just six weeks after the September 11, 2001, terrorist attacks on New York and Washington, what can charitably be called a panicked U.S. Congress approved the so-called "USA PATRIOT Act."
The Act's name itself is a public relations acronym. It stands for the "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act," a.k.a. Public Law No. 107-56. The Act was passed with little debate by senators and congressmen, most of whom did not even read the bill.
They couldn't read it - no final printed copies of the bill were available when the vote was taken. However, copies of the U.S. Constitution were available and still are today.
Like Nothing Before
This unprecedented PATRIOT Act has been the subject of furious debate and numerous court cases, some reaching the U.S. Supreme Court. In the six years since it became law, more than 300 cities and towns and the states of Maine, Vermont, Alaska and Hawaii passed resolutions asking the U.S. Congress to reconsider this radical law and to make changes to better safeguard our liberties.
So far, Congress, whether controlled by Republicans or Democrats, has not only failed to curb the Act's excesses. They've managed to make them worse.
In effect, the fearful politicians that govern us have decided that we are all terrorist suspects; that the federal police have free reign to watch, investigate and control us as they see fit. On this sixth anniversary of the radical departure from the traditional rule of law, I'll examine some of the most objectionable parts of the Act, especially as it pertains to your wealth.
"THE FEARFUL POLITICIANS THAT GOVERN US HAVE DECIDED THAT WE ARE ALL TERRORIST SUSPECTS; THAT THE FEDERAL POLICE HAVE FREE REIGN TOWATCH, INVESTIGATE AND CONTROL US AS THEY SEE FIT."
The Greatest Single Assault on Financial Privacy
The section of the PATRIOT Act, (125 of 362 pages), which pertains to U.S. banking and finance, is the greatest single governmental assault on personal and financial privacy in American history.
Implementing rules issued under the Act now permeate every part of the U.S. financial system.The net result of all this is that American banks and financial institutions, indeed all American businesses, now by law are required to spy on their clients and "know their customers" and report any "suspicious activity" to the government.
The cost of administering these rules runs to billions of dollars annually. Of course, we, as consumers and customers, pay these bills in increased charges and fees. And the government would be hard put to find one terrorist these financial provisions have thwarted.
Understand that this Act is still sold as being an "anti-terrorist" law. In fact, the Act's police powers have been and are being used broadly to investigate and prosecute all types of crimes, many having nothing to do with terrorism. In 2004, two federal judges secretly ruled that the Act could be used to investigate any criminal or other pending charges, even if unrelated to terrorism.
Coupled with existing anti-money laundering laws adopted during the failed "war on drugs" craze, the Act vastly increased federal investigative and prosecutorial powers over our personal and financial lives. It is not an exaggeration to say that privacy in America is now dead, if the government wants you to know everything and anything about you.
Three Strategies to Shield Your Cash from the Act
The fact that the PATRIOT Act's police powers operate mainly within the United States means you should arrange your investments, cash, assets, record keeping and financial information in a way that maximizes your privacy.
That means to protect your personal and financial privacy, your structures must be located outside the United States. Here are three major moves to consider:
1. Move some or most of your assets outside the United States into offshore jurisdictions that guarantee privacy by law. Foreign insurance contracts, annuities, foreign real estate and offshore precious metals holdings all are examples of legally non-reportable investments that, even under the PATRIOT Act, are very difficult for the U.S. government to seize.
2. Consider the creation of one or more offshore legal entities, such as an asset protection trust or private family foundation. Depending on the country in which you establish your entity, your name, as the owner of the trust or foundation, is not a matter of public record and can be kept confidential under local law. An offshore entity can also provide you asset protection against frozen accounts or attempts at asset forfeiture.
3. Choose a hospitable offshore country as your base of business operations and possibly, as your new or second home. In tax haven and/or maximum privacy nations such as Panama, Austria, Switzerland, Liechtenstein, Monaco, Andorra, Belize and the Cook Islands, information is not surrendered automatically in response to demands by foreign governments or lawsuits
A former member of the U.S. House of Representatives from Maryland, Robert Bauman now is a senior writer and legal counsel for The Sovereign Society
Gary Gray, RFC
Tax & Financial Consultant
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"Remember, What you don't know sometimes can hurt you."