The 4 Best Asset Havens in the World - Fleet Street Publications

Fab Four
The 4 Best Asset Havens
in the World
Compiled by Robert E. Bauman, JD
Edited by Gavin Fourie

Fab Four - The 4 Best Asset Havens in the World
Special Report: Fab Four, The 4 Best Asset Havens in the World is issued and approved by Fleet Street Publications (Pty) Ltd.
Copyright © 2012 Fleet Street Publications Pty (Ltd). All rights reserved.
Note that FSP Invest, a division of Fleet Street Publications (Pty) Ltd, is a research house and not a registered broker or financial advisor. The information contained
in our correspondence, programs and publications does not take into account the investment objectives, financial situation and particular needs of any particular
person and is not to be construed as personalised investment advice in terms of the Financial Advisory and Intermediary Services (FAIS) Act of 2002. Although we
may answer general customer service questions, we are not licensed under securities laws to address your particular investment situation. Any investments or trades
mentioned in our publications should be made only after consulting with your investment advisor or intermediary service.
All FSP Invest’s publications are protected by copyright. Copying or disseminating any information published by FSP Invest, electronic or otherwise, is strictly
prohibited. No part of this report may be reproduced by any means without written permission from the publisher.
Please take note: We research our recommendations and articles thoroughly, but disclaim all liability for any inaccuracies or omissions found in our publications.
Should you have any queries or uncertainties, please contact Fleet Street Publications (Pty) Ltd on: Customer Services 0861 114 365.
Registered office: Fleet Street Publications, Northlands Deco Park, Showrooms Stands 76-83, Units 6-8, Avant-Garde Avenue, Newmarket Street, North Riding.
Registered in SA, Reg No. 1999/019170/07. Vat No. 4430185282.

Fab Four - The 4 Best Asset Havens in the World
Introduction
Fab Four:
The 4 Best Asset Havens in the World
FSP Invest has created this special report in response to member inquiries asking us for our opinion on what
are the best offshore havens.
That is a difficult question to answer – because the correct response depends on the unique needs of each
individual.
Combining our 14 years of experience, knowledge and contacts… We’ve done the “what’s the best haven”
research for you — and based on these facts and our suggestions you can decide what best suits you.
You may want to save this report for future reference.
Throughout this report we repeatedly use the terms “tax haven” and “asset haven.”
Those terms identify jurisdictions that have enacted favourable legislation to attract foreign investments and
business. These laws usually impose no taxes on profits from foreign investments or at the very least, tax
profits at a low rate.
These haven laws also may make it difficult for creditors to collect foreign judgments arising from certain types
of contracts, such as a life insurance policy or annuity, or against certain legal structures, such as a trust or
private interest foundation.
The continued attacks on “tax havens” by tax hungry, welfare state tax collectors has caused some common
terms to change. Most of the offshore places once known as “tax havens” now prefer to be called “offshore
financial centres” or some other more neutral term.
To evaluate each haven, we use five criteria, all equally weighted:
• government and political stability
• favourable laws and judicial system
• available legal entities
• financial privacy/banking secrecy
• taxes
While we do list a first place “winning” jurisdiction on page 6 (It’s OK to peek!), the truth is, the “best”
offshore haven, is the one that meets your own individual needs.
Almost no jurisdiction can offer every investor or business all of the exact services they may require. Offshore
jurisdictions, like businesses, have learned to specialise to meet the needs of specific constituencies to which
they cater.
For instance, if you’re considering reducing professional malpractice insurance costs with an offshore captive
insurance company, Bermuda is a top jurisdiction to consider, with the Cayman Islands a close second.
However, Bermuda is less suitable for private banking. Its banks charge high fees and there is no bank secrecy
statute.
Conversely, Austria is one of the world’s leading jurisdictions for private banking. However, if you are looking
for top-notch company formation and administrative professional services, Austria doesn’t have an extensive
selection from which to choose.
In choosing an offshore haven, you should also conduct your own thorough analysis of its political and
3

Fab Four - The 4 Best Asset Havens in the World
economic stability, its legal and judicial environment and its political history.
However, in almost every case, it’s more important to choose the right offshore professional service provider
rather than the supposed right offshore jurisdiction.
Indeed, our selection of choice havens has been significantly affected by our ability to find qualified financial
service companies within each jurisdiction — proven and reliable professionals who can offer FSP Invest
readers the best products and services they deserve.
How to Choose An Offshore Haven
To begin with, you should understand that each “offshore” haven is unique.
A country that provides the best banking regulations won’t necessarily be the best place for incorporating a
business, just as the best jurisdiction for privacy won’t necessarily be the best for an offshore trust. Yet, there
are general guidelines for choosing an asset haven that apply across the board.
The following eight issues are the most important considerations:
1. Is the Haven a Completely Independent Sovereign Nation?
Or is it a territory, dependency or colony of a larger country? While the government of a dependency or
territory may enact favourable legislation to attract foreign investment, such legislation will be hostage to the
political and economic environment prevailing in the mother country.
2. Does the Haven Respect Privacy?
And is privacy built into its law? Under what circumstances can creditors or the government obtain
information about your wealth, or even seize it? It’s worth noting that a sue-happy lawyer or identity thief,
armed with nothing more sophisticated than a personal computer, can in a few minutes unearth a great deal
of financial information about whatever local assets you own as a prelude to plunder. This is the reason why
strong privacy laws are a must in any haven that you might consider.
Some countries have a tradition of secrecy but no legal requirements enforcing it. Others have laws that allow
the local government access to information while pretending that the government is sworn to secrecy.
Others have bank-secrecy laws but frequently ignore them, or have laws filled with exceptions. Ideally, secrecy
should be built into the legal code and violations of privacy should be prosecuted with civil or criminal
sanctions. From the standpoint of the tradition and legal basis for banking secrecy, the four countries that
stand out are Austria, Liechtenstein, Luxembourg and Switzerland.
3. How Long has the Haven been An Offshore Financial Centre?
A country like Switzerland with centuries of traditional respect and protection of privacy, or like Luxembourg
with decades of stability, are unlikely to change for transient reasons. The longer and stronger the traditions of
law and privacy, and the more stable the economy, the better chance that those traditions will be continued.
4. Do the Citizens Support the Haven’s Offshore Status?
In some havens, the local citizens aren’t the primary beneficiaries of banking secrecy. Since taxes are low to
non-existent and local legal eagles haven’t evolved into predators, this means local residents have little interest
in privacy laws or bank secrecy.
5. Is the Haven Important to Your Government?
The United Arab Emirates, for example, enjoys the favour of almost all global governments because it’s a
“friendly” nation in an unstable region.
4

Fab Four - The 4 Best Asset Havens in the World
6. Does the Haven Wave a “Red Flag?”
Public dealings with high-profile havens may raise a red flag in tax collector’s offices around the world.
The Cayman Islands, Switzerland and Liechtenstein are examples. Panama and Austria are a step below that
level. Bermuda is lower still, though it doesn’t offer the secrecy the others do. But then, any tax haven often
upsets tax collectors in high-tax nations.
7. How Efficient and Convenient are the Professional Services?
Are competent personnel available to serve your needs? How well do they speak English? How easy is it to
visit the place? What’s the time difference between you and where you may want to do business offshore?
Nothing substitutes for personal contact with the people who you entrust with your assets. It’s best to visit
your money periodically, and so much the better if it’s in a place that you enjoy visiting.
8. What Taxes are Levied on the Haven’s Users?
The first requirement of a haven is to offer capital preservation.
Nonetheless, to include a haven country that scores heavily in capital preservation but also has high corporate,
estate or other taxes, is to ignore an important consideration. True financial security must include the
maximum possible tax avoidance allowed by law, the greatest possible financial privacy, the highest level of
asset protection and access to the most profitable investments available.
Bottom line: You must select your haven nations according to the relative safety and privacy such places
guarantee by law.
Offshore jurisdictions, like businesses, have been forced to specialise to meet the needs of specific
constituencies to which they cater. The “best” offshore haven is the one that meets your own individual needs.
Almost no jurisdiction can offer every investor or business each of the services they might need. So let’s meet
the top four in the world.
The World’s Best Asset Havens
In preparing this FSP Invest special report of the world’s top asset havens, we reviewed the laws, political
stability, economic climate, tax situation, and the overall standing of dozens of different jurisdictions.
We narrowed our choices down to four leading jurisdictions:
1 Switzerland
2 Panama
3 Liechtenstein
4 Hong Kong
Plus, we’ve listed some havens as “honourable mentions.” As we noted earlier, to evaluate each jurisdiction, we
reviewed five factors:
• Government/political stability: How long has the current system of government been in place? Is the
jurisdiction politically stable?
• Favourable laws, judicial system: How long a tradition has the haven had? Does its legal and judicial
system have a reputation for “fair play” with regard to foreign investors?
• Available legal entities: Does the jurisdiction have a large enough variety of legal entities to satisfy the
average person seeking an estate planning or business solution?
5

Fab Four - The 4 Best Asset Havens in the World
• Financial privacy/banking secrecy: Does the jurisdiction have financial secrecy laws? How strictly are
they applied? What exceptions to secrecy exist?
• Taxes: Does the haven impose taxes on foreign investors? How easily can these taxes be avoided legally?
Are there tax treaties or tax information exchange agreements in effect?
Our winner in terms of these five factors is Switzerland.
Switzerland: Still the World’s Best Money Haven
In spite of the many compromises the Swiss have been forced to make under world pressures, Switzerland
today still stands as the world’s best all-around offshore banking and asset protection haven.
A Reputation to Uphold
A global survey of private banks published by PricewaterhouseCoopers (PWC), found that the major
attraction for a bank’s new customers is its reputation. Certainly, Switzerland’s solid financial reputation is
central to the claim that this mountainous nation serves as “banker to the world.”
For 250 years, as European empires and nations rose and fell, Swiss topography and determination have
combined to defend this Alpine fortress, while maintaining more or less strict neutrality towards other nations.
In 1945, after the 20th century’s second “war to end all wars,” Swiss voters overwhelmingly rejected
membership in the United Nations. It was not until 2002 that a bare majority backed U.N. membership. In
1992 and 2001 national polls, Swiss voters also rejected membership in the European Union, rightly fearing
EU bureaucratic interference with Swiss privacy and banking laws. More than one national ballot has rejected
a specific proposal to ease or repeal Swiss bank secrecy laws.
After each of these national plebiscites, and during world recessions, even greater amounts of foreign cash
flowed into Swiss banks, confirming the widespread notion that Switzerland is the place to safeguard cash and
other personal assets.
It is estimated that currently Swiss banks manage at least one-third of all assets held offshore by the world’s
wealthy. As a safe haven for cash, Switzerland has become something of a modern cliché.
Less Privacy Redefines the Swiss Financial System
In a major policy change, in 2009 Switzerland agreed to abide by Article 26 of the “Organization for
Economic and Community Development Model Tax Convention (OECD)” allowing exchange of tax
information about foreigners with Swiss accounts.
Financial Privacy Still Lives
Despite these privacy setbacks, the Swiss financial system, still has plenty going for it. Unless there is a strong
suspicion of criminal wrongdoing, under Swiss law it’s still a crime for bankers to violate the secrecy of their
clients.
Until 2009, unless ordered to by a court to do so, Swiss banks uniformly refused to give client records to
foreign tax authorities.
Under the OECD standard accepted in 2009, banks will now do so when ordered to by the government, but
under limited conditions and only by applying the terms of tax information exchange treaties that Switzerland
has renegotiated with other countries.
6

Fab Four - The 4 Best Asset Havens in the World
In January 2009, pursuant to its agreement to follow OECD tax information sharing rules, Switzerland and
South Africa, signed a new tax information sharing agreement (TIEA).
Swiss officials insisted that individual tax details would only be exchanged “in individual cases where a specific,
concrete and justified request has been made”. They ruled out “fishing expeditions” by foreign tax collectors.
But for the usual anti-privacy, anti-tax haven crowd who habitually bash any offshore financial activity,
Switzerland has always been a special target. They hate the Swiss Bank Secrecy Law because they believe that
the privacy rights of the individual must be subordinated to government, that all offshore accounts are used
for tax evasion.
Truth be told, Switzerland has resisted, valiantly, pressures that other, less resolute nations, could never have
withstood. Much of that owes to the nature and independence of the modern day descendants of the original
Helvetian tribes — and their inherited financial DNA.
But another, more important reason, is that Switzerland controls trillions of dollars, euros, Swiss francs — more
than one third of all the world’s assets — and money does more than talk. Quietly and successfully, that kind
of wealth can and does resist the likes of EU bureaucrats.
Very Special Swiss Franc
One of Switzerland’s financial strengths is its currency, the Swiss franc. Generally the franc has reflected the
state of Swiss banking: strong, valuable and unaffected by inflation and stylish monetary fads.
Since 1971, the Swiss franc has appreciated nearly 250% against the U.S. dollar. Owners of Swiss franc
denominated assets have profited handsomely as a result. That profit came despite traditionally low Swiss
interest rates and the bothersome 35% withholding tax on bank interest.
In recent years, the value of the franc has fluctuated against the U.S. dollar, strengthening in the early 1990s,
weakening from 1995-2001, and strengthening once again recently as the dollar has declined in value.
Rob Vrijhof, a leading Zurich investment manager, points out that “many of the attacks on Swiss bank secrecy
in the name of ‘justice’ are, in truth, attempts to eliminate cross border competition. And to impose an
international tax cartel or to undermine Switzerland’s recognised status as a world financial centre that easily
competes with the City in London and with Wall Street.”
The 1934 Bank Secrecy Law
The rise of Hitler and Nazi Germany in the early 1930s prompted the famous 1934 Swiss bank secrecy law
that remains in force today. That law was an effort to stop Nazi agents from bribing bank employees for
information about the accounts of German citizens and expatriates. The law protects foreign depositors from
unwarranted intrusions into their bank privacy, although now it has been tempered in many important ways.
Swiss banks are prohibited from responding to inquiries about an individual account, whether from attorneys,
credit rating services or foreign governments. The law punishes violations of bank secrecy with fines up to
CHF50,000 and six months in prison.
Since 1994, a central office in Bern has been devoted exclusively to fighting organised crime. Mandatory
“know your customer” guidelines are used by Swiss banks to investigate potential clients. Banks are particularly
attentive to prospective clients that try to open an account with more than CHF25,000 in cash or its
equivalent in foreign currency.
In 1998, stricter money-laundering law took effect that transformed the face of Swiss banking in a fundamental
way. Previously, bankers had the option of reporting suspicious transactions to police authorities. Now, under
7

Fab Four - The 4 Best Asset Havens in the World
pressure from world governments pursuing corruption, drug cartels, and organised crime, Switzerland requires
banks to report suspicious transactions. Failure to report is a crime.
Bankers can now go to prison for keeping secret the names and records of suspect clients. In another era, not
so long ago, they faced imprisonment for failing to keep such secrets (no matter who the client was).
World-Class Banking System
Although Swiss banking privacy is legendary, secrecy isn’t the most important reason for Switzerland’s success.
Of far greater significance are the country’s political, financial and economic stability and strength. Most of
the world’s largest companies and hundreds of thousands of honest, law-abiding foreigners bank with the
Swiss.
Indeed, Swiss banks manage over two trillion Swiss francs, approximately R16.5 trillion for their foreign clients
alone! Even the international intermediary banking institution, the Bank for International Settlements, is
located in Switzerland.
As we noted, Switzerland is home to several hundred banks ranging from small private and regional banks to
the two giants, UBS and Credit Suisse. These major Swiss banks have branch offices in most of the world’s
financial centres, from New York to Panama.
Far better for your banking needs are the many smaller Swiss private banks that treat clients as individuals
rather than numbers.
Swiss banks are unequalled as a base for global investing. Opening a Swiss bank account can be the first
move in developing a strategy of safety and international diversification. An individual, corporation, trust,
foundation, pension plan or any other legal entity can open an account.
Swiss banks combine traditional banking with international brokerage and financial management.
To guard against inflation or devaluation, Swiss bank accounts can be denominated in the currency you
choose —Swiss francs, U.S. dollars or any major currency. An account opened in one currency can be switched
to another denomination when the time is right for short-term profits or long-term gains and safety.
You can invest in certificates of deposit, U.S. and other national stocks, bonds, mutual funds, and
commodities. You can buy, store and sell gold, silver, and other precious metals or buy insurance and
annuities. Swiss banks can act as your agent to buy and hold other types of assets. Of course, Swiss banks also
issue international credit and ATM bank cards.
To some extent, “know your customer” rules have complicated the process of opening a bank account in
Switzerland, and proof of identity and references are required. But Swiss bank employees also work with you to
ease the transition. For example, bank officers speak several languages, with English as a must. Swiss banks are
equipped for fax, wire, email or telex and instructions are carried out immediately. Or you can just phone your
own personal banker who handles your account.
The biggest downside to banking in Switzerland is the high minimum deposits necessary at most banks.
While only a few years ago, many banks were content with initial deposits of only a few thousand dollars,
Switzerland’s popularity among foreign investors, along with the cost of administering “know your customer”
laws, has led to sharp increases in deposit minimums, which now average at least R2 million and in many cases
require R8 million.
An option for smaller bank accounts can be found in banks run by the various Swiss “cantons,” as the largely
self-governing provinces are called. These banks offer full services, have relatively low-minimum deposits and
each cantonal government insures the deposits.
8

Fab Four - The 4 Best Asset Havens in the World
Strict Control, High Quality
Swiss banks have attained their unique position because of financial expertise, honesty, international
capabilities and the high percentage and quality of their reserves, much of it in gold and Swiss francs. The
Swiss financial industry is tightly regulated, with banks strictly supervised by the Federal Banking Commission
(FBC).
Swiss law imposes stiff liquidity and capital requirements on banks. The complicated official liquidity formula
results in some private banks maintaining liquidity at or near 100%, unheard of in other national banking
systems. Every month, Swiss banks with securities investments must write the value of their holdings to market
price or actual cost, whichever is lower. That assures no Swiss banks will have unrealised paper losses as often
happens in other countries.
Swiss banks are also subject to two regular audits. The first audit is to ensure compliance with the Swiss
corporation law. The second is the banking audit, conducted by one of 17 audit firms specially approved by
the FBC. These exacting audits provide the primary guarantee for Swiss bank depositors.
Supervision and regulation of Swiss banking surpasses any other nation and the banks have comprehensive
insurance to cover deposits, transfers, theft or abnormal losses. The Swiss reputation also rests on the fact that
banks traditionally hold substantial unreported, hidden reserves.
Fiduciary Investment Account
One popular Swiss account for foreign investors is the fiduciary account. A Swiss bank investment manager
oversees the account, but all of your investments are placed outside Switzerland, as directed by you, the
account holder. Funds that pass through the account are therefore not subject to Swiss taxes.
The two types of accounts are the fiduciary investment account and the fiduciary loan account. With the
investment account, the bank places your funds as loans to foreign banks in the form of fixed-term deposits.
In the loan account, you would designate the commercial borrower. Although the bank assumes no risk, it
provides an important service by conducting a thorough investigation of the prospective borrower’s credit
credentials. Many international companies use fiduciary loans to finance subsidiaries.
Discretionary Accounts
With more than 250 years in the international portfolio management business, Swiss banks are among world
leaders in investment management. Experienced money managers constantly analyze world markets, choosing
investments with the greatest potential and minimum risk.
Swiss banks offer a broad selection of investment plans diversified by industry, country, international or
emerging markets. Outside financial managers can be employed to invest deposited funds and bank loans can
be arranged for investment purposes.
These accounts are best managed by a private Swiss bank or alternatively, a Swiss portfolio manager. The Swiss
invented what has come to be called “private banking.” They honed private banking to a fine edge centuries
before other “cookie cutter” banks the world over attempted to duplicate the concept.
With a private bank, you get personal contact and individual service.
Swiss Alternative: Insurance
Switzerland is also a world-renowned centre for insurance and reinsurance. Many Swiss insurance companies
9

Fab Four - The 4 Best Asset Havens in the World
offer a broad range of financial services that in some cases approach the flexibility of a bank account. Indeed,
many Swiss residents use their insurance company as their only financial institution.
Swiss insurance policies offer other important advantages:
• They generally offer higher interest rates than bank accounts
• Unlike a bank account, they may be configured to offer significant asset protection
• Swiss 35% withholding tax on earned bank interest is not imposed on insurance accounts
Annuity income must be reported as part of taxable annual income. However, income from properly
structured foreign variable annuities and life insurance contracts generally remains tax deferred under South
African tax laws.
Swiss Taxes
Switzerland is not a low-tax country for Swiss residents or companies, although tax rates are lower than in the
EU. But foreign investors can avoid many local taxes by choosing certain types of investments that escape
taxes.
By law, Swiss banks collect a withholding tax of 35% on all interest and dividends paid by Swiss companies,
banks, the government or other Swiss sources. Foreign investors to whom this tax applies may be eligible for
refunds of all or part of the tax under the terms of Switzerland’s network of more than 70 tax treaties.
In addition, there are many legal ways to avoid Swiss taxes by investing in accounts structured for foreign
investors.
These include non-Swiss money market and bond funds, fiduciary precious metal accounts and other
instruments. For instance, Switzerland imposes no taxes on dividends or interest from securities that originate
outside Switzerland. For this reason, many Swiss banks offer investment funds with at least 80% of earnings in
foreign investments or, even better, in money-market funds located in low-tax Luxembourg or Ireland.
Tax Treaties Abound
To reduce the possibility that Swiss citizens or companies might be subject to double taxation, the Swiss
government has entered into a global network of more than 70 tax treaties.
If you claim a tax credit under a tax treaty you must also report the income that was taxed. In addition,
tax treaties have a dual purpose: They exist not only to help individuals and companies investing or doing
business internationally to avoid double taxation, but also to facilitate information exchange between tax
authorities.
Tax-Advantaged Residency in Switzerland
Although it is not generally known, for those who wish to retire in Switzerland, it’s possible to negotiate a
lump sum annual income tax payment (known as a forfait) with cantonal (regional) tax authorities.
The difficulty comes in obtaining a Swiss residency permit, an extremely scarce commodity. But if you’re
wealthy and offer proof of sufficient future income (at least R850,000 per year), you may qualify.
In second place is…
10

Fab Four - The 4 Best Asset Havens in the World
Panama: Privacy & Profits in the World’s Most Useful Asset Haven
Alone among current offshore financial centres (a.k.a. tax havens), the Republic of Panama combines
maximum financial privacy, a long history of judicial enforcement of asset-protection friendly laws, strong antimoney
laundering laws and tax exemptions for foreigners.
But the country isn’t so well known for what it has become in the last three decades. After Miami, it is Latin
America’s second major international banking and business centre, with strong ties to Asia, and Europe.
A New Era
It’s an established fact that Panama has attained world-class tax haven status. Indeed, in many respects —
financial privacy, solid asset protection and freedom from outside political pressures — Panama has moved to
the head of the class.
There are good and historic reasons for Panama’s enviable tax haven standing:
1) A territorial tax system that taxes only earnings from within the country;
2) Constantly modernised asset protection laws, dating from the 1920s;
3) An array of useful statutory legal entities (trusts, corporations, private foundations);
4) A host of qualified offshore professionals and bankers; and
5) Some of the strongest financial privacy laws anywhere;
6) Considering its history, a remarkable degree of political stability in a viable democracy.
That stability was reconfirmed in 2009 with the election for a 5-year term of supermarket tycoon Ricardo
Martinelli as president of the Republic.
Very few presidential candidates in any nation come back from a crushing defeat with only 5.3% of the vote,
to win a landslide victory five years later by over 60%. But that was what he and his conservative coalition
party did in sweeping to victory, bucking a trend of radical left-wing leadership in other parts of Central and
South America.
The new president has worked to bring foreign investors into tourism projects, cruise ports and airports, and
direct more government spending to public infrastructure such as a rapid rail in Panama City, the capital.
However, Panama still struggles to emerge from its status as a third world country, with too much of its
population living in poverty.
It’s in much better shape financially than its Central American neighbours to the north, or Colombia to the
south. Although economic growth has slowed in recent years, Panama still receives more than R16 billion
annually in direct foreign investments.
During much of the decade before 2009, its gross domestic product (GDP) grew at an amazing rate of 8% or
more. For 2012 it’s projected to have 9% growth.
Since the 1990s inflation has barely exceeded 1% per year and the annual inflation has averaged 1.4% for the
past 30 years, much lower than other countries.
Then, there’s the enormous wealth represented by the canal, generating over R8 billion in annual revenues.
While much of this income must be ploughed back into maintenance, profits from the canal represent
Panama’s largest single source of income.
11

Fab Four - The 4 Best Asset Havens in the World
And in a move that eventually will increase the current flow of 14,000 annual ship transits, the Panama Canal
is undergoing a complete modernisation at an estimated cost of R48 billion.
The world famous waterway is getting wider locks that’ll accommodate the largest ships now afloat, such as oil
super tankers. The work, due for completion in 2014, the centenary year of the canal’s opening, is providing a
major boost to Panama’s already growing national economy.
Yes, Panama also has a long history of government corruption, although President Martinelli has cracked
down on this. This past history has not seemed to affect the regulated banking sector.
Privacy, Profits & No Taxes
In many ways, Panama is ideally suited for the offshore investor who wants to enjoy the increasingly rare
privileges of strong, legally guaranteed financial privacy and no taxes, either corporate or personal.
According to Canada’s Fraser Institute, Panama is near the top of the list of the world’s freest economies,
ranked eighth with Australia, Ireland, the Netherlands, and Luxembourg.
Panama has adopted more than 40 laws protecting foreigners’ financial and investment rights, including the
Investments Stability Law (Law No. 54), which guarantees foreign and local investors equal rights.
Panama’s central location makes it a natural base for world business operations. Most importantly, and in spite
of its history, Panama isn’t directly under the thumb of the United States.
And unlike the British overseas territories of Bermuda and the Cayman Islands, it isn’t under the control of
the Foreign Office in London.
Among the current 80-plus banks, the major players are the 58 multinational banks representing 30 countries
that primarily conduct offshore business. In 2010 all Panama banks held an official R600 billion in total
assets, with liquidity impressively high at an average 30%. They had virtually no exposure to the kinds of
investments that undermined the U.S., U.K. and other national banking systems.
Banking alone accounts for about 11% of Panama’s gross national product (GNP). Nearly every one of the
world’s major banks have a full-service branch office in Panama, with representation from Japan, Germany,
Brazil and the United States.
Reasserting Financial Privacy
Panama is one of the world’s oldest tax havens, with legislation establishing tax advantages for corporations
dating back to the 1920s.
A central part of the long tax haven tradition has been statutory guarantees of financial privacy and
confidentiality. Violators can suffer civil and criminal penalties for unauthorized disclosure.
Unless ordered to do so by a court, there’s no general requirement to reveal publicly beneficial trust or
corporate owners to Panama authorities and no required audit reports or financial state-ments. As of 2010
bearer shares were still permitted but indications are that they will soon be banned.
While formerly staunch defenders of financial privacy, such as Switzerland, Liechtenstein and Austria, all have
weakened their former strict bank secrecy, placing concerted pressure on Panama.
The Martinelli government strategy has been to negotiate at least 12 double taxation agreements with
Organization for Economic and Community Development (OECD) member countries, in order to have
Panama removed from the OECD “grey list.”
12

Fab Four - The 4 Best Asset Havens in the World
Panama has adopted some significant reforms in its banking system to minimise corruption and ensure that
banking secrecy can be lifted in criminal investigations.
In 2000, Panama’s Congress unanimously approved a strong anti-money laundering law that covers all crimes
and brings all financial institutions under the supervision of a government banking agency.
The Yankee Dollar
While “dollarisation” is debated as a novel concept elsewhere in Latin America, the U.S. dollar has been
Panama’s official paper currency since 1904.
Panama has no central bank to print money and as Juan Luis Moreno-Villalaz, an economic adviser to
Panama’s Ministry of Economy and Finance recently noted: “In Panama… There has never been a systemic
banking crisis; indeed, in several instances international banks have acted as the system’s lender of last resort.
The Panamanian system provides low interest rates, around 9% on mortgages and commercial loans. Credit is
ample, with 30-year mortgages readily available. These are unusual conditions for a developing country and are
largely achieved because there is no exchange rate risk, a low risk of financial crises and ample flow of funds
from abroad.”
And with the US dollar still the world’s reserve currency, Panama’s safe from a currency collapse anytime soon.
Welcome Bankers
Panama grew as an international financial centre after the enactment of Decree No.c238 of July 1970, a liberal
banking law that also abolished all currency controls. The law exempts offshore business in Panama from
income tax and from taxes on interest earned in domestic savings accounts and offshore transactions. In 1999,
a comprehensive new Banking Law was enacted that accelerated Panama’s growth as a leading world offshore
finance centre.
The 1999 law uses the guidelines of the Basel Committee on Banking Supervision, requiring all banks with
unrestricted domestic or international commercial banking license to maintain capital equivalent to at least 8%
of total assets. Government investigative powers and tighter general controls were increased, bringing Panama
in line with regulatory standards found in European and North American banking centres.
Although confidentiality is reaffirmed in the new law, a prima facie case of illicit financial conduct can launch
an investigation of possible criminal conduct. The law also permits foreign bank regulators to make inspection
visits to any of these foreign bank branches in Panama.
Panama’s growing financial sector also includes an active stock exchange, captive insurance, and reinsurance
companies and financial and leasing companies.
Another major business and financial attraction at the Atlantic end of the Canal is the booming Colon Free
Zone (www.colonfreezone.com), a major tax-free transhipment facility, the second largest free-trade zone in the
world, after Hong Kong.
IBCs and Foundations
Panama has liberal laws favouring trusts, international business companies and holding companies. In 1995,
it enacted Law No. 25, a new private foundation statute modelled after the popular Stiftung or family wealth
protection and estate planning vehicle long used in Liechtenstein.
That law allows the tax-free family foundation to be used for investment, tax sheltering, commercial business
and private activity, with the founder retaining lifetime control. Foundation assets aren’t counted as part of the
founder’s estate for death tax purposes, and Panama does not recognise the often-restrictive inheritance laws of
other nations.
13

Fab Four - The 4 Best Asset Havens in the World
Some argue that the Panamanian private foundation law is only a relatively untested clone of the Liechtenstein
law. While it’s true that the Panamanian law is much newer, the costs of operating a foundation in Panama are
lower than they’re in Liechtenstein.
Panama’s international business company (IBC) Law 32 of 1927, is modelled after the U.S. state of Delaware’s
corporation friendly statutes. There are about 350,000 IBCs registered in Panama. A Panamanian IBC can
maintain its own corporate bank account and credit cards for global management of investments, mutual
funds, precious metals, real estate, and trade.
Tax-free corporate income can be spent for business purposes worldwide. And using the Panama IBC allows
avoidance of home-country zoning, labour, manufacturing, warranty, environmental and other restrictions.
Leading Retirement Haven
Despite its relatively advanced industrial and financial infrastructure, Panama remains an affordable place in
which to live. A live-in maid earns as little as R1,600 a month; first-run movies cost R40.
Unlike much of Central America, Panama boasts a first-class healthcare system, with low costs. A doctor’s
office visit costs about R200.
Because of Panama’s geographical diversity, there’s considerable climatic variation. Panama City, the historical
and financial centre, has a year-round tropical climate. Yet, only a few hundred kilometres away are subtropical
forests, with cascading waterfalls, mountainsides covered with flowers and spring-like weather year-round.
There are also many relatively low priced buys on condos and other real estate, particularly in Panama City
and the surrounding areas.
The government makes retirement in Panama easy, and laws provide important tax advantages for foreigners
who wish to become residents. The only significant requirements are good health and a verifiable monthly
income of at least R4,000. There are no local taxes on foreign income and you can import your household
goods tax-free.
In third place…
14
Liechtenstein: World’s Oldest & Most Exclusive Tax Haven
The Principality of Liechtenstein is one of FSP Invest’s four top recommended offshore tax, asset protection
and banking havens. As with each choice, the factors we consider include stability of government, favourable
laws and judiciary, available legal entities, low or no taxes, and maximum financial privacy.
Until 2009 the principality passed on all points with high marks. But today this has changed as we’ll explain
in a moment.
With asset protection laws dating from the 1920s, a host of excellent legal entities designed for wealth
preservation, and partial bank secrecy guaranteed by law, this tiny principality stands out, but there have been
some major changes in recent times.
In the not-so-distant past, one had to be a stamp collector to know the Principality of Liechtenstein even
existed.
In those days, the nation’s major export was exquisitely produced postage stamps, highly prized by collectors.
Until the 1960s, the tiny principality, wedged between Switzerland and Austria, subsisted on income from
tourism, postage stamp sales, and the export of false teeth.
But in the last 60 years, its lack of taxes and attempt to preserve maximum financial privacy propelled
Liechtenstein to top ranking among the world’s wealthiest nations — and made it a major target for anti-tax
haven critics.

Fab Four - The 4 Best Asset Havens in the World
This historic Rhine Valley principality grew into a major world tax and asset haven, posting per capita income
levels higher than Germany, France and the United Kingdom.
Tiny Liechtenstein (16 miles long and 3.5 miles wide, population 34,000), nestled in the mountains between
Switzerland and Austria, has existed in its present form since January 23, 1719, when the Holy Roman
Emperor, Charles VI, granted it independent status.
Absolute Monarchy
The government is a constitutional monarchy, with the Prince of Liechtenstein, Hans-Adam II, as head of
state. Formerly, His Highness’s power only extended to sanctioning laws passed by the popularly elected
unicameral (chamber of ) legislature, the Diet. For the most part, the Diet made the laws, negotiated treaties,
approved or vetoed taxes, and supervised government affairs. Proposed legislation was frequently submitted
directly to citizen referendum.
This system changed in 2003, when Hans-Adam II dropped his threat to leave the country after winning
an overwhelming popular vote majority in favour of overhauling the constitution to give the prince greater
powers than any other European monarch enjoys today.
Liechtenstein’s ruling prince now has the right to dismiss governments and approve judicial nominees. The
prince may also veto laws simply by refusing to sign them within a six-month period.
Tempering this authority is the fact that the signature of 1,500 Liechtenstein citizens on a petition is sufficient
to force a referendum on the abolition of the monarchy, or any other change in the law.
In 2004, Prince Hans-Adam II ceded day-to-day rule of the country to his son, Prince Alois, now 43, while he
remains the official head of state. This was seen as first step towards the eventual full succession of power to
Prince Alois.
Leading Financial Centres
Liechtenstein’s economy is well diversified, and it’s one of the most heavily industrialized countries in Europe.
Still, financial services provide some 40% of budget revenues, so anything that tarnishes its reputation is a
major crisis. Its 17 locally owned banks, 81 lawyers and 270 trust companies employ 18% of the workforce,
and its licensed fiduciary companies and lawyers serve as nominees for, or manage, more than 75,000 legal
entities, most of them owned and controlled by non-residents of Liechtenstein.
Indeed, Liechtenstein was one of the first nations in the world to adopt specific offshore asset protection laws,
as far back as the 1920s.
Liechtenstein’s unique role in international circles isn’t so much as a banking centre, but as a tax haven. The
nation acts as a base of operations for international holding companies, private interest foundations, family
foundations, and a unique entity called an Anstalt (Establishment). The banks and a host of specialised trust
companies provide management services for thousands of such entities.
Personal and company tax rates are low, generally under 12% for local residents. Any company domiciled in
Liechtenstein is granted total exemption from income tax if it generates no income from local sources.
Until recently there was a near total absence of any international treaties governing double taxation or
exchange of information, with the one exception of a double tax agreement with neighbouring Austria,
primarily to cover taxes on people who commute across the border for work.
In 2009 Liechtenstein was one of the first acknowledged tax havens to agree to adopt OECD Article 26 tax
information exchange standards that covers alleged foreign income tax evasion. As part of that major change
in policy the principality began negotiating tax information exchange treaties with other nations, including a
15

Fab Four - The 4 Best Asset Havens in the World
major tax information exchange agreement (TIEA) with the United Kingdom that flushed out thousands of
British account holders under a promise of amnesty after taxes due are paid.
Liechtenstein has an information exchange agreement with most developed countries but not with South
Africa. But Liechtenstein has the right to refuse to disclose information with those countries even if a court
order has been obtained.
Liechtenstein is independent, but closely tied to Switzerland. The Swiss franc is the local currency and in
many respects, except for political independence, Liechtenstein’s status is much like that of a province within
Switzerland. Liechtenstein banks are integrated into Switzerland’s banking system and capital markets. Many
cross-border investments clear in or through Swiss banks.
Foreign-owned holding companies are a major presence in Liechtenstein, with most maintaining their accounts
in Swiss banks.
Stolen Names
Until early 2008, the principality managed to escape the self-appointed international busy bodies who make it
their duty to attack tax havens and, most especially, banking secrecy.
It was revealed that the German government illegally bribed a disgruntled former Liechtenstein bank
employee, one Heinrich Kieber, to gain confidential bank information kept on a DVD he had stolen from
LGT Bank in Liechtenstein.
Liechtenstein’s billionaire royal family manages and controls LGT Bank and LGT Group. The nation’s financial
services sector produces 30% of Liechtenstein’s gross domestic product (GDP) and 14.3% of all people
employed work in the financial services sector.
Banking secrecy and the government’s refusal to share financial information, except in criminal cases, had been
one of Liechtenstein’s leading selling points.
LGT Bank and Liechtenstein authorities rightfully advanced the theory that high-tax governments were using
the stolen DVD and misinformation to scare people away from the principality and its banks.
This DVD had information on over 1,600 clients that had accounts with LGT Bank prior to 2002. The tax
hungry German government purchased the DVD containing all the information because they believed it had
information on 600 Germans that had been evading the German tax authority . (The German secret police
agency, the Federal Intelligence Service (BND), paid an illegal R58.4 million bribe to the disgruntled employee
of LGT Bank).
After this highly publicised incident, the high tax governments of the G-20, assisted by the OECD, began a
coordinated year-long “surrender now” phase in their decade long anti-tax haven campaign.
To say the least, the worldwide publicity about the stolen bank list and the pressure from neighbouring
Germany, the G-20 countries and the OECD, hurt the principality’s financial bottom line.
Liechtenstein’s secrecy statutes historically were considered stronger even than those in Switzerland.
Until changes in 2010, banks had to keep private all records of clients’ identities. Secrecy also extended to
trustees, lawyers, accountants and to anyone connected to the banking industry. That’s all changed now.
Money Drain
Liechtenstein’s banking industry suffered a 60% drop in profits in 2009, in part due to the global economic
downturn, but also as billions in deposits fled the country because of questions about its future as a leading
16

Fab Four - The 4 Best Asset Havens in the World
tax haven. Assets under management by the principality’s 15 banks were down 22% to 156.65 billion Swiss
francs (R1.3 trillion) in 2009. These downward trends have continued in 2010.
No doubt at some point the royal Liechtenstein number crunchers concluded that the principality’s strict
financial privacy laws would have to be sacrificed in order to appease the demands of the OECD, the G-7 and
the G-20.
First Over the Side
In 2009, Liechtenstein was the first tax haven to announce it would comply with Article 26 of the OECD
model tax information exchange treaty.
As in Switzerland, this means banks now will provide information in matters of foreign tax evasion when
ordered to do so by the government, but it was claimed, only under limited conditions governed by the terms
of TIEA in individual cases. Liechtenstein then went about signing numerous TIEAs with a growing list of
countries when historically it had refused to make such agreements.
That was good public relations to some degree, but in August 2009 the principality’s government concluded a
“ground breaking agreement” with the tax collectors of the United Kingdom.
Swap Shop
Under this extremely liberal deal, U.K. residents with Liechtenstein bank accounts henceforth will have their
financial details shared with the British government to make sure they’ve paid the right taxes.
This new tax information exchange agreement enables the U.K. and Liechtenstein to “swap information”
on all accounts to ensure the right tax was paid in each country with minimal penalties, a guarantee of no
prosecution in non-criminal cases and an exemption from the threat of “naming and shaming”.
To sweeten the deal the tax disclosure program allows penalties on unpaid tax to be capped at 10% of tax
evaded over the last ten years, a potentially huge savings, providing the taxpayer finally was fully honest with
U.K. tax collectors.
Under Pressure
Liechtenstein devised the UK disclosure deal as a “creative and innovative solution” to the international
outcry sparked by the evasion scandal following the 2007 theft of thousands of names from LGT Bank’s trust
business.
Prince Max von und zu Liechtenstein, (one of thirty some royal princes) who heads LGT bank, the royal
family’s private banking group, insisted there had been no change of heart in Liechtenstein on the importance
of privacy rights, but added: “With hindsight, we could have probably been a little more sensitive to the [tax]
abuse that has taken place.”
That Liechtenstein would abandon its historic bank secrecy to such a major degree is still amazing, even if
understandable because of the international pressure.
Step Right Up, Folks
But what really has shocked foreign observers has been Prince Max campaigning among wealthy British
investors, urging them to come clean over assets hidden abroad, promoting his country’s “unique and
attractive” tax amnesty.
But for his plan to work, (and bring back those lost billions to Liechtenstein’s banks), British non-tax
compliant investors must move their money from Switzerland and other offshore centres to the principality.
17

Fab Four - The 4 Best Asset Havens in the World
I think we can conclude that the royal family that controls Liechtenstein made a calculated decision to
abandon its historic strict bank secrecy, its major attraction, in an effort to staunch the billions haemorrhaging
from its banks. And I believe it may not work.
Still Useful
None of the above in anyway detracts from your using Liechtenstein as an excellent venue for the purchase of
South African tax deferred annuities and life insurance, or even for banking – if you’ve paid your taxes back
home.
Big Bucks Banking
Liechtenstein’s banks have no official minimum deposit requirements, but their stated goal is to attract high
net-worth individuals as clients. Opening a discretionary portfolio management account generally requires a
minimum of R8 million. Trusts and limited companies registered here must pay an annual government fee of
either 0.1% of capital, or R8,000, whichever is higher. Most banks also charge an annual management fee of
0.5% of total assets under their supervision.
If you’re considering opening a bank or investment account with a Swiss or Austrian bank, Liechtenstein is
worth a comparative look. The principality has all the benefits of the other two nations, a strong economy,
rock-solid (Swiss) currency, political stability, and ease of access, plus a few added attractions of its own.
Unlike Switzerland, it has no double-taxation treaties, except with Austria. What’s more, the government
guarantees all bank deposits against loss, regardless of the amount involved. Numbered accounts are available
for large investors.
Even though they have yielded on bank secrecy, Liechtenstein’s certified history of excellent asset protection
and banking make this tiny Alpine redoubt one of our choices for offshore financial activity and estate
planning.
Hong Kong: Gateway to China
Even though it’s controlled by the Communist government in Beijing, as a Special Administrative Region of
the People’s Republic of China, Hong Kong, remains relatively free, a reflection of Beijing’s need for Hong
Kong to serve the role of China’s financial window on the world.
Hong Kong retains a strong set of British common law based statutes governing banking and finance. If you’re
doing business in Asia, this is the place to be.
Far East Haven Endures
In 1996, after 157 years as a British Crown Colony, Hong Kong was unchallenged as the world’s richest per
capita city-state.
Known as a free-market business haven, in 2011 its 7.1 million residents enjoyed a R364,800 per capita GDP,
tied 5th highest in the world. That GDP figure is higher than in America, Germany, Japan, the United
Kingdom, Canada, and Australia.
On July 1, 1997, the United Kingdom surrendered its colonial control of Hong Kong to the sovereignty of the
People Republic of China, and the Communist Party. The peaceful handing over of an established democracy
to a Communist dictatorship was unprecedented in history.
Subsequently uncertainty became a way of life in Hong Kong. That, despite the fact that Communist Chinese
rule has not been as oppressive as feared, and the city’s democratic forces have made good showings in
legislative elections.
18

Fab Four - The 4 Best Asset Havens in the World
But Beijing has systematically clamped down on some existing civil rights, including free press, the right of
assembly, freedom of religion and some aspects of due process under British common law, both civil and
criminal.
The Communist Chinese government in Beijing promised to honour its 1984 commitment to allow Hong
Kong a free, 50-year dual political/economic existence. This was the so-called “one country, two systems”
theory.
This mainland financial situation has served to accentuate and expand the role that Hong Kong has played
with great success since the Communist revolution took control of China in 1949 — that of China’s financial
window and conduit to the rest of world. Hong Kong’s position as the most important international financial
services centre in Asia, specifically, the gateway through which capital is most likely to flow out from China,
appears unassailable.
Hong Kong is situated ideally — legally part of, but also different and somewhat apart from China. In Hong
Kong, you can find what struggling mainland China lacks — the legal, financial and investment expertise and
experience that can provide you with a sensible approach to investing and doing business in China.
And that’s where the profits will be — if you’re prudent and careful in your approach. If you want to deal in
China, unless you have longstanding family or business ties there, you are best served working with a Hong
Kong based partner who has first-hand knowledge of the Chinese market.
It’s The Economy
Hong Kong ranks as the world’s fifth largest banking and foreign exchange centre, seventh largest trading
power and the world’s busiest container port. With low taxes and a trusted legal system, international banking
and business continues to flow in, sure of stability and a reasonably high degree of financial privacy.
Hong Kong is proof that “money talks.”
China has too much invested in free market Hong Kong to destroy by imposing a rigid political ideology.
Today 30% of Hong Kong bank deposits are Chinese. China accounts for 22% of all its foreign trade,
including cross-border trade, 20% of the insurance business and 12% of all construction. More than 2,000
Chinese-controlled entities now do business in Hong Kong, many of them “red-chip” stocks, the leading
mainland investments.
China has long employed Hong Kong as a convenient financial window to the West. It’s their banker,
investment broker, and go-between in what’s now a multi-billion annual trade flow. In the past 15 years, some
R12 trillion of foreign direct investment has flooded into China — 60% of which came from, or through,
Hong Kong.
Despite their wrong-headed attitudes regarding Hong Kong democracy, the leaders of the People’s Republic
of China realise that they’ve an enormous vested interest in Hong Kong’s economic health. They want Hong
Kong to keep running at full steam, but on their own terms.
World-Class Financial Sophistication
In a strange twist of world economic fate, the clampdown by the European Union and the OECD on tax
havens in the West operated to the benefit of other tax havens such as Hong Kong.
An added factor: Wealthy account holders from the Middle East started shifting cash towards Asia and away
from Europe and the United States in the wake of the September 11, 2001 terror attacks.
19

Fab Four - The 4 Best Asset Havens in the World
Asian banks (many of them based in Hong Kong) were sitting on more than R51.2 trillion of reserves in 2011.
Funds have been continuously pouring money into emerging markets and Hong Kong has been a major
beneficiary of this global trend.
No leading Asian banks were caught in the bank near-collapses in 2009, so no bailouts were needed.
One major attraction for offshore business is Hong Kong’s low 17.5% business tax rate. In 2003 the
government increased from 15% to 16% the ceiling for taxes on personal income and unincorporated
businesses. Since then, it’s been raised even higher.
Hong Kong’s status as one of the world’s top trading centre for stocks, bonds, commodities, metals, futures,
currencies, personal and business financial operations has long meant that such transactions could be
conducted there with a high degree of sophistication. That’s still true.
Also, three quarters of the world’s leading banks have a presence in Hong Kong. The city has a three-tiered
banking system with 133 licensed banks, 33 restricted license banks and 33 deposit-taking companies in
business. All totalled, Hong Kong banks hold roughly R8 trillion in deposits.
But Hong Kong’s no longer the free-for-all market of old, where insider trading, self-dealing and other illegal
practices were commonplace. After severely tightening financial laws in recent years, local regulators continue
to press to meet higher world standards. There have been significant reforms in laws governing stocks, bonds,
banking, mutual and hedge funds.
A strict anti-money laundering law is in place and enforced with vigour. But there’s evidence that the
widespread corruption that infects mainland China’s economy is spreading to Hong Kong.
Hong Kong as a Business Base
In Hong Kong, there’s no specific legal recognition of what usually is called an international business
company (IBC) or offshore corporation. The basic Hong Kong corporate legal principle applied to taxes is
territoriality of profits. If profits originate there or are derived from within Hong Kong, then profits are subject
to local tax. Otherwise, they are tax-free, regardless of whether the company is incorporated or registered in
Hong Kong.
Interestingly, IBCs and all other foreign corporations generally may open a Hong Kong bank account without
prior registration under the local business statute. This can save charges for auditing and annual report filing,
and removes the annoyance of having to argue with Hong Kong’s Inland Revenue Department about the
territoriality of the business.
On the other hand, you must be careful not to transact any taxable local business, because doing that without
local registration is against the law. In cases where local business does occur, tax authorities generally are
lenient, usually requiring local registration and payment of unpaid tax. But in some cases, IBCs have been
forced to register as a listed public company at considerable expense.
By law, Hong Kong offshore companies require a local resident company secretary, who usually charges about
R4,000 per year for filing a few documents with the Company Registry. Annual auditing by a CPA starts from
about R4,000 for companies with few transactions, and can easily reach ten times as much for a mid-size and
operational offshore trading company.
Doing Business in Hong Kong
Until recently, Hong Kong’s banking laws did not permit bank regulators to give information about an
20

Fab Four - The 4 Best Asset Havens in the World
individual customer’s affairs to foreign government authorities, except in cases involving fraud. But Hong
Kong has never had specific banking secrecy laws such as many asset and tax haven nations enjoy.
As a matter of local custom, Hong Kong banks have always requested a judicial warrant before disclosing
records to any foreign government. Access is much easier for the local government, but there are no doubletaxation
agreements with countries other than the People’s Republic of China.
Hong Kong now applies the tax information exchange polices of OECD Article 26 and is negotiating TIEAs
with various countries, since China’s treaties do not specifically apply to Hong Kong in many instances.
Anti-money laundering laws and “know your customer” (KYC) rules have made the opening of bank accounts
for IBCs much more difficult. Account applicants must declare to the bank the “true beneficiary” of an IBC
or a trust with supporting documentation. Documentary proof must be shown for all corporate directors and
shareholders of the registering entity and any other entities that share in that ownership.
In What Direction?
If you do intend to make Asia your investment target, keep in mind lessons other foreigners have already
learned “the hard way.”
Pick your Asian business partners (and investments) carefully avoiding the inefficient Chinese state enterprises.
Stick to those with solid basics like marketing, distribution, and service. Guard technology from theft. And
remember, a series of small ventures gets less government attention and red tape than big showcase projects
that often produce demands for graft. Many foreign investors have been burned by crooked bookkeeping, few
shareholder controls, sudden government rule changes, and systemic corruption.
Only recently, as the nation’s economy has become more westernised, has Beijing finally begun to address the
need for laws guaranteeing the right for citizens and foreigners to own and transfer private property.
And keep a sharp eye not on the government’s hype, but on what’s really happening in China.
All this uncertainty means that offshore financial activities by foreign citizens can prosper, but without
immediate assurance of success. Unless the New China is definitely your sphere of intended business activity,
you may want to look elsewhere for your financial haven.
Honourable Mention Jurisdictions
Principality of Andorra
Andorra, nestled in the Pyrenees between Spain and France, is both a residential haven and a banking haven,
but only for the very wealthy. Residence permits are relatively easy to obtain. There are few taxes and only
seven banks, all of which now apply the OECD Article 26 in matters of tax information exchange.
An anti-money laundering law is applied to any suspicious financial activities. Andorra is a great place if you
have lots of money and love winter sports.
Austrian Republic
Austria is an alternative private banking haven to Switzerland and Liechtenstein in central Europe. Its major
offshore attraction used to be its ironclad banking and financial privacy laws, uniquely guaranteed by its
national constitution. But that has been tempered by its adoption of OECD Article 26. Wherever you may
have an IBC, trust or other business located offshore, you can base your banking activities in Austria and take
advantage of reasonable privacy and maximum professionalism.
Principality of Monaco
Monaco is an international home for people of wealth. Of the 32,000 residents, 80% are from other nations
and virtually all of them rich enough to afford to live on some of the priciest real estate in the world. Tax-free
21

Fab Four - The 4 Best Asset Havens in the World
for foreigners, its banks are supervised by the Bank of France. But bank secrecy is the rule, except where crime
may be involved. Many wealthy people base their “family office” here, since wealth management is a major
profession in this principality ruled by the princes of the Grimaldi family for more than 700 years. OECD
Article 26 applies here as well.
Nevis & the Cook Islands
You can easily become a citizen using their economic citizenship program. You’ll need to invest R2 million
and will receive their passport that’ll get you Visa free travel to over 100 countries. There’s also no capital
gains tax or inheritance tax.
In each, the local judicial system protects foreigners who have chosen to use their local legal entities, including
asset protection trusts (APTs), limited liability companies (LLC) and international business companies (IBCs).
These offshore centres include Nevis, one-half of the Caribbean nation of St. Kitts/Nevis and the Cook
Islands in the far south Pacific.
22