TOP VIEW
Swiss bank accounts, multiple passports and Cayman Islands trusts once placed individual wealth safely beyond the reach of creditors, trial lawyers and even tax authorities. But those days are gone. The federal government, working with other nations and foreign banks, has put an end to many popular offshore shelters. Yet, for investors seeking various degrees of protection from creditors and lawsuits, legal options remain. |
Despite the current legal and political climate, investors persist in embracing various options offshore. The increasing litigiousness of American society and the ballooning punitive judgments awarded to plaintiffs in court cases motivate some. Others react to what they perceive to be a dangerous, unchecked expansion of government power. As part of its highly publicized war on drugs during the 1980s, the Reagan administration expanded the Bank Secrecy Act, giving broad powers to prosecutors to seize the assets of defendants and paw through their financial records during the course of an investigation. Today those powers continue to grow. “It now covers 130 specific crimes that can be linked to money laundering and result in seizure of assets,” says Robert Bauman, a former congressman from Maryland who is now a member of the executive committee of the Sovereign Society, an online clearinghouse where people discuss and protest the financial transparency demanded by U.S. law. “If you pollute a wetland and make a profit from it, you can be convicted of money laundering. In fact, according to the Supreme Court, the crime of money laundering doesn’t even require an overt act.”
Moving money out of nations considered politically or financially undesirable is as old as capital itself. For centuries, both American and global investors have found the United States a safe harbor for their wealth. In the 1980s and 1990s, however, a number of libertarian-minded investors, disenchanted with changes in the landscape of U.S. regulations, began to move some of their money to accounts in Switzerland, Panama, Liechtenstein and other nations. Sensing an opportunity, the governments of some small island nations rewrote their laws to attract offshore investors. Timothy Scrantom, a senior partner of Ten State Street, a Charleston, S.C., law firm specializing in asset protection, helped countries such as Grenada, the Seychelles, Iceland, Fiji, the Dominican Republic and St. Vincent write investor-friendly banking laws. “It was a race to the bottom,” admits Scrantom, who now advises some of these same governments on how to avoid money-laundering schemes.
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