Sending money offshore:
Avoiding the paper trail

Destination offshore: Discreet money transfer opportunities of international trade

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				Offshore money transfers: "Suspicious" financial transactions?
				Transferring assets in silence: Staying low profile
				Destination offshore: Discreet money transfer opportunities of international trade
				Avoiding the paper trail: Further tips and tricks
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Sophisticated privacy seekers use everyday business transactions to transfer money offshore in private. Why? International commerce offers a wide range of unintended privacy opportunities. Take a closer look.

OFFSHORE-FOX.COM
with Alex Hanson

The late part of the nineties has seen a noticeable development in the activities of commercial intermediaries via a completely new class of clients -- those seeking to transfer funds in silence.

Transfer-pricing privacy

Transfer pricing companies, factors, collection agents, import/export agents and many other types of international businesses not only exhibit established trading histories, but also a nature of business that by definition results in a continuous pattern of high-volume, high amount and often rapid incoming/outgoing payments. The outward and ostensible appearance makes such companies ideal and discreet vehicles through which to direct international funds transfers in order to gain a privacy advantage.

What initially began as a profitable sideline for a handful of transfer-pricing agents has today evolved into a more sophisticated form of a private financial service.

			To answer the specific needs of the privacy market, some offer the possibility of receiving remittances in one jurisdiction, and subsequently making the onward transfer from another entity in a separate jurisdiction altogether.

For example, it is now the case that clients can purchase financial privacy for a set fee and no longer solely on a percentage basis. Some transfer-pricing agents have even begun to offer the possibility of receiving client remittances in one jurisdiction, and subsequently making the onward transfer from another entity in a separate jurisdiction altogether. A number of other tactical strategies are being deployed to answer the specific needs of the privacy market.

Outside of what is sometimes termed as "transfer-pricing privacy", many individuals are choosing to use low-risk foreign exchange trades -- and even certain derivative and arbitrage trades -- for the purpose of placing their funds offshore. A money transfer structured via an appropriately selected brokerage house again allows the regaining of a rudimentary level of financial privacy.

Self-owned intermediary entities

A bolder strategy used by some is to form their own intermediary corporation(s), particularly where the size and/or frequency of the intended transactions warrants the extra cost and administration involved. Some go as far as to obtain a class B bank or an insurer, specifically for the purpose of effecting confidential asset transfers.

Whatever form a self-owned intermediary takes, strict attention must be paid to its structure, ownership, domicile and management if any privacy benefits are to be derived from it.

Corporate agents as a privacy tool

So-called corporate agents also deserve a mention in the context of confidential money transfer strategies. Corporate agents typically take the form of a client-owned onshore corporation that acts as an add-on "front-end", or admin and clearing centre, for the client's primary offshore corporation.

Depending on the beneficial owner's domicile, a corporate agent might be incorporated in say Great Britain or New Zealand solely for the purpose of representing the client's offshore company in return for a small commission.

The concept of corporate agents originally developed in order to provide a more direct access to particular geographical markets, and/or to engage in those trading activities where the direct use of an offshore corporation would be inappropriate. In its simplest form, these arrangements enable a business to operate from a prestigious and convenient onshore location, yet under a near-offshore tax regime -- only the commissions of the corporate agent are taxed onshore, with the majority of the profits accumulating offshore.

These structures have become so widespread and popular that instant, ready-to-trade and often "aged" (established) corporate agents are available for purchase in a variety of jurisdictions via specialised professionals. As special-purpose vehicles whose existence and functioning is well understood within the financial community, they ironically avoid many of the banking problems that other corporations might encounter.

While it was not their original purpose, it is easy enough to see why many now choose to employ such vehicles to help to void the trail connecting their onshore and offshore holdings.

Location is everything: Financial neutrality of intermediary jurisdictions matters

Any intermediary-assisted asset transfer strategy raises issues concerning the neutrality of the intermediary's location. In this context, neutrality means the outward appearance of the proposed intermediary jurisdiction when looked at from the onshore jurisdiction where your money transfer originates.

A good intermediary is a low-key intermediary.

The apparently large numbers of companies willing to receive your business shrinks substantially when you realise that an intermediary corporation based in say Antigua or Panama -- however willing to help you -- is less than ideal if you don't want to be seen as having any dealings with offshore tax havens.

Yes, even using an offshore-based transfer intermediary has its benefits if everything else fails -- at least your local sending bank doesn't learn of the final destination of your funds. But the fact remains that you are still sending money to an obvious offshore tax haven, and so risk having your affairs examined or even being reported.

It is consequential to our discussion that in some European Union nations it is possible to operate tax-free if the corporation is not controlled or owned by residents. As a result, countries such as the United Kingdom, the Netherlands or Denmark -- all popular bases for holding corporations -- host a large numbers of companies whose sole reason for existence is to act as commercial intermediaries of one kind or another.

The issue of the neutrality of the intermediary jurisdiction becomes more complex in cases of self-owned intermediaries. Where a third-party intermediary assists with the completion of funds transfer, your only concern is -- apart from the fees involved, of course -- the suitable location of the intermediary itself from the viewpoint of the originating bank.

When forming a self-owned intermediary, on the other hand, its location has to be chosen with care. Self-owned intermediaries require that you deal with both legs of the financial journey -- the initial remittance received by the intermediary, as well as the subsequent transfer from the intermediary to your chosen offshore haven. To put this another way, you are in need of a jurisdiction and a bank that not only does not cause alarm to the initial remitting bank, but also one where bankers happily send funds on to your chosen offshore haven without a fuss. One without the other defeats the point.

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