Every day we are at risk of losing our savings, due to a number of threats that are like thunderclouds hanging over the crowd. And these threats leave their roots in the financial crisis of 2008, when, following US markets, half of the world collapsed.
The current state of the modern global banking system is not much better than it was about seven or eight years ago. The US national debt has doubled, and interest rates of 2-4% are like a drop in the ocean. The Federal Deposit Insurance Corporation, which was established to guarantee bank deposits, currently has liabilities exceeding its capacity of 530%. Before the financial crisis, this amount was only 14%.
But the most frightening thing about the American banking system is that today the banks that were too big to collapse at the time of the crisis have become even bigger today. At the same time, a worldwide hunt for offshore capital was announced, which has not yet replenished the treasury of the leading countries of the world.
The deoffshorization process suggests that governments no longer have sources to replenish the treasury. Printing money is no longer possible, too closely watching the printing presses after the financial crisis. There remain wars that stimulate economic development and enrichment at the expense of other taxes, and offshore harbors, where the most successful hide their capital.
But to overcome offshore destinations is not so simple. First of all, there are too many of them. Secondly, weighty legislative amendments must be universally adopted in order to force businesses to return capital to the country.
The automatic exchange of information, all this significantly affects the existing banking sector, but with proper structuring of the business and selection of an offshore account, it is still possible to protect your assets.
Financial shock protection
The biggest shock you can get if you wake up in the morning to find out that your bank, where all your savings are stored, is illiquid, potentially insolvent, or simply its activity is suspended for some other reason.
Of course, you can hope for state deposit insurance. In the EU, this amount is 100 thousand euros. But what if your capital is higher than this amount? Are you ready to lose it? Most likely no.
Sometimes, if you are knowledgeable about banking, you can hear rumors in time that the bank is in the balance of bankruptcy, but as a rule, this information is strictly classified to prevent panic.
In addition to the poor liquidity of the bank, there is a risk of suspension of the activities of a financial institution. And this risk is increasingly common in Europe at the initiative of the United States.
Last spring, the Andorran Banca Privada d’Andorra (BPA) was suddenly suspended. The bank was accused of aiding fraudulent operations and laundering illegally acquired funds through operations for bank customers. As a result, on March 10, 2015, the US Treasury Department (FinCEN) blamed the bank on the basis of Section 311 of the US Law – PATRIOT Act, which resulted in the receipt of a corresponding Notice of Proposed Rates (NPRM). Then within a few hours, the bank’s activities were paralyzed by correspondent banks, and for another 60 days, all banks refused to cooperate with BPA at the direction of the United States.
But BPA is no exception. In Switzerland, there is a whole program of Swiss banks aimed at declassifying confidential accounts owned by US citizens. Those banks that decide to refuse to cooperate can go straight to the “American guillotine”, and there are no guarantees that you will not have an account in this bank.
Swiss banks continue to pay US tax penalties
US tax harvests, fining Swiss banks
To diversify the risks associated with bankruptcy or suspension of the bank’s activities, it is necessary to have not one but several foreign accounts opened in the most secure tax havens.
Protection against illegal expropriation of assets
Illegal expropriation of assets is not only the result of the banking crisis in Cyprus but also the freezing of your funds in your bank account.
Everyone is well acquainted with the banking crisis in Cyprus in 2013, when, as a result of the fall of Laiki Bank and the restructuring of Cyprus Bank, depositors of the first lost deposits exceeding 100 thousand guaranteed by the EU. Yes, they received in exchange for bank shares of different categories, but you cannot buy anything on these papers.
Governments are eager to get maximum access to the financial accounts of all high-income individuals and entrepreneurs. So in the UK starting this year, individuals and small businesses will have access to their digital tax accounts. And from April 2018, they will have to at least quarterly update the data in Her Majesty’s Tax Administration (HMRC), which is their main source of income. In this case, the digital system will be tied to bank accounts, therefore, if necessary, the tax system can easily deduct taxes from the account or freeze it if necessary.
The UK introduces digital tax reporting for individuals and small businesses
This is very convenient for tax authorities, but someone even asked if entrepreneurs are ready to simply open access to their accounts for the authorities. In the end, this is the money of companies and individuals, not the government.
To the petition of businessmen, the government coldly replied that all this was for the good of the system. Howl and the question arises – are you ready to become part of such a system, when your money goes out of your control? Most likely no. And again the question arises, and maybe it is worthwhile to acquire several offshore accounts so that your money remains yours?
Protection from exchange controls
This is the favorite crown of every government; nothing is better to save a “sinking ship” than to introduce currency controls. The last most striking example was shown by Ukraine. Now, for all currency transfers by an individual in the amount of more than $ 150,000 in equivalent to any currency or precious metals, including if the operation is carried out in UAH, the bank will be personally liable. More precisely, not just the payment posting department will be responsible for the payment made, but a specific person designated by the bank. I wonder how many payments Ukrainian banks will now spend on fixed amounts?
National Bank of Ukraine has introduced new restrictions for banks
Examples of the introduction of restrictions on foreign exchange control abound. Cyprus during the crisis was generally paralyzed for more than two weeks.
When people begin to feel the weakness of the country’s economy, he automatically rushes to the bank to pull out his capital. That is what happened in Greece, and even in China, where investors are withdrawing capital from the country with billions. To prevent such actions, governments introduce currency controls.
The first thing that happens is a ban on currency conversion and transfers, in Ukraine, there is now a certain stage of currency control, only the responsibility was thrown not to the state authorities, but to the banks, so that the banks, and not the government, were to blame for everything.
If you decide to withdraw some of your savings to an offshore, where government debt is low or non-existent, the banking system is stable and the political situation in the country is stable, you probably will not regret it.
Opening a foreign bank account is a simple step that you can take to protect your capital without leaving your home. The main thing to act is not too late.