Introduction: Banker X provides us with this interview anonymously so that he can speak frankly about the inner workings of the Swiss financial system. As someone who has held high posts in both the private and public banking fields throughout several decades, Banker X is in a great position to compare and contrast several kinds of Swiss banking models through several eras. We are certain our readership will find his comments enlightening and certainly food for thought. Additionally, some of the grammar and phraseology within the interview has been adjusted as English is not Banker X's primary language, though he speaks it well.
Daily Bell: It's nice to have you back.
Banker X: It is a pleasure to sit down with you again.
Daily Bell: What's going on in the world today, moneywise?
Banker X: As you've pointed out, we're probably on the cusp of a new era. The old system is breaking down but a new one has yet to be formed.
Daily Bell: Who will create the new money system?
Banker X: Good question. Obviously, certain governments would like to do so.
Daily Bell: What about those standing behind governments?
Banker X: The secret powers? Perhaps so. But the issue is not so much "who" as "what." As in what kind of system is being planned. There is no doubt that for many involved the preference is for a basket of currencies plus gold. The resultant "bancor" as Keynes called it, may be issued out of the IMF, though only if they can get power sharing worked out.
Daily Bell: Yes, right now the US has a veto and it's hard to see them giving it up.
Banker X: This is a big issue, and it is one that's standing in the way of what powerful people want accomplished. There's no obvious solution either, and one wonders how well this whole issue was thought through.
Daily Bell: You mean the issue of global economic crisis? We believe it may have been in a sense planned to create a global currency and deeper global governance.
Banker X: There is no doubt that central banking manifests itself in periodic crises. Those in power obviously know this and no doubt anticipated a crisis. As your paper has pointed out, those at the top of the EU were aware that a crisis was coming and hoped to further consolidate power as a result.
Daily Bell: We've suggested they miscalculated and that the Internet itself is making it a good deal more difficult for these plans to unfold.
Banker X: For whatever reason, they are having considerable difficulties. But whether the EU succeeds or fails, as it is now constituted, the impetus for something new will probably remain. The old system has been decimated and rising countries such as the BRICS don't trust the dollar anymore. Putin is furious about it and just denounced Bernanke. The question then becomes whether the BRICS and other countries, perhaps in the Middle East or Africa or even South America, will go off on their own and create something new or whether that kind of effort will remain circumscribed.
Daily Bell: You mean circumscribed by the current international agencies.
Banker X: These are the product of the Western powers-that-be and are generally resented abroad. But they are very powerful as well and have been in place a long time. I don't see anybody upsetting the World Bank or IMF, but I do see the possibility of other rising power structures.
Daily Bell: Sound like we're living through a chaotic time.
Banker X: That may be so. It's one reason my business and businesses like it are flourishing. We're seeing increased interest because of this financial turmoil and potential complications. We're not only speaking of classical banking either. There are other elements as well, other kinds of considerations.
Daily Bell: By that do you mean perhaps real estate or gold?
Banker X: I would say many of our clients are giving these assets a good deal of consideration. What's going on in Europe, Britain and America is increasingly questionable. From the point of view of a client who is fairly well off and has alternatives, the wider world is a consideration. Whether its Asia, Central & South America or even Africa, there are a growing number of people who are considering alternative residences. Also, there are a number of countries that are easing various restrictions to take advantage of this trend … countries that offer low tax and no tax packages to immigrants seeking the safety of a hip-pocket residency. There are a number of ramifications to such decisions.
Daily Bell: Are people taking tangible assets out of the country?
Banker X: There are several points of view. If a country as powerful as the US decides to confiscate gold, then its reach will probably be long indeed. If it wants countries to freeze assets abroad, they probably will, some of them anyway. But the idea of third-party storage of assets – especially gold – is still a compelling because they are in fact OUT – they have migrated on their own, leaving their proprietor behind. And if one wishes to travel in times of crisis to their hip-pocket residence, the difficulties of taking their assets along has already been resolved. The assets (gold primarily) have already been removed and can be accessed at will. There is much to be said for keeping assets on hand – and that may be a better purpose for silver, at least domestically speaking – but also for having some assets distributed abroad. Simple enough.
Daily Bell: Right. Regional diversification, right. You can say that goes for real estate, investments or assets of all sorts.
Banker X: In this day and age, the old strategies don't apply. Gold itself has risen in purchasing power from US$350 to nearly US$1,600 an ounce. Silver has moved from US$4 an ounce to US$35 an ounce. Meanwhile, stock markets have not kept up, except in places like, say, China.
Daily Bell: We have doubts about China.
Banker X: Probably so. They have been trying to print their way to prosperity. Price inflation is surely going to follow the massive amount of monetary inflation they have embarked on – it is inevitable. They have fully imported the West's central banking fiat money system and, with the same arrogance exhibited by Western money powers, they believe they can centrally manage their money supply better than the invisible hand of the marketplace. China has created some seriously tough waters to have to navigate, or so it appears.
Daily Bell: We don't have so many doubts about the future of gold and silver.
Banker X: Traditionally in troubled times gold and silver have served as stores of value. Gold is especially good because the value is considerably higher making it a very portable way to relocate significant wealth and storage is not a problem – especialy here in Switzerland.
Daily Bell: What about gemstones and diamonds?
Banker X: Good as well, but they are not money and their value is very subjective. But gold and silver are universally liquid. There is no subjectivity involved in determining the market value of bullion – it is what its weight is, pure and simple. And gold has the advantage of compactness.
Daily Bell: The same approach might be taken to real estate – in terms of diversification anyway.
Banker X: Very true. There are plenty of people preparing for the worst, but they are doing so within the context of their own country and perhaps their own region. This does nothing to address the fundamental point regarding the issues that they are trying to prepare for.
Daily Bell: International diversification again.
Banker X: If you are concerned about the social fabric shredding, about civilization breaking down, the idea that you are building some sort of bunker ten miles or a hundred miles away from where you live seems to me to be not entirely effective.
Daily Bell: You may want to diversify out of the country?
Banker X: That would be the idea. And there are many affordable options in regions that offer great lifestyles. People just need to take off the blinders and open their eyes and they will quickly find there are wonderful options that would be far from painful, should one ever choose to actually move to the hip-pocket residence. But most people are too scared to think outside the box they grew up in. And that is exactly what the powers-that-be bank on, so to speak.
The key is to find a jurisdiction that is affordable for you, offers the kind of lifestyle you either have today or would like to have, and then to employ human action and put the plan in motion. And even if by some miracle Bernanke, Obama, et al. are able to steer the American economy away from the disastrous shores it seems destined to crash into, you still have a nice location to go and enjoy for family vacations, etc.
Daily Bell: What about banking? If you choose another country, should your banking be close by.
Banker X: In this era, with current and future technologies, I would think the two don't necessarily go together. You can bank anywhere in the world if you have the means. And you can live almost anywhere as well these days. However, it is usually prudent to have a local bank account in the country in which you seek to be a resident. Many countries will require it, as capital coming in to purchase the real estate may need to be verified for its "cleanliness" at the local level. No big deal, just part of today's overly cautious worldwide banking industry. Additionally, it makes paying for routine things much easier if you have some local banking established.
Having said that, many of the established Swiss private banks have affiliate banking relationships in many of the regions that are of greater interest to people seeking a second residence. This affords people the ability of maintaining the majority of your asserts in Switzerland, where there exists a much greater degree of comfort with respect to banking efficiency, while at the same time having a cohesive means of transferring "down" capital to the local account established in the country of residency.
Daily Bell: Why do people go offshore as regards banking – leaving aside potential social break down?
Banker X: There are a lot of reasons. The first is lawsuits. If a person is running a business or a professional, it may be highly unlikely they will be involved in a lawsuit, but it does happen. People do want to protect themselves so they place funds offshore – usually in a foundation or an offshore trust. It is still visible money, and these clients do have to pay taxes, but when it comes to lawsuits, a lawyer working privately or for a government will have a much harder time, if successful at all, at piercing the structure and getting at that money. This assumes the client has had the proper advice on setting up an asset-protection structure, of which there are several excellent provisioners of such services who work in a legally compliant manner so that the client is not breaking any domestic laws.
Another reason clients seek offshore banking services is to diversify and be able to buy efficiently whatever assets they want. They don't have the rules and regulations that you would find in Canada and the US, for example, which are designed to keep the domestic capital in domestic assets. Wall Street and Bay Street would like everyone to just keep on trusting in the establishment brokers and their domestic products. The world is a big place and there is much more opportunity for those that wish to look.
Offshore you can get anything you want. The waters are open, so to speak.
Another major reason people seek offshore services is because they are already doing business offshore and have foreign source income.
Daily Bell: Are there tax advantages?
Banker X: No, not especially. For example, Canadians may utilize Barbados for tax efficenct treatment of foreign earned business income – and many of Canada's largest corporations do, as there is a tax treaty between Barbados and Canada that greatly minimizes the tax burden to Canadians utilizing such a structure. But generally speaking, if you are an American citizen or Canadian resident then you need to declare your offshore holdings and, in most cases, there are no tax advantages to be had.
However, there are structures that do afford people the ability to lower their domestic tax burden, but like anything else, every person's situation is unique and the client really needs to get competent legal advice – both offshore and domestically. The plan should be above board, secure and efficient. There is no reason for someone to go through all the effort of structuring a lifestyle plan only to negligently ignore the domestic reporting requirements. Each person's offshore plan should be deisgned to help them sleep better at night, not worse.
Daily Bell: Privacy advantages?
Banker X: Yes, they are huge. In many offshore venues, it's a one to one situation, client to bank, and bank to client. That is how communication goes. We do not talk to anybody else, only the client.
Access is easy as well. Clients can wire transfer anywhere in the world. People can say, wire $50,000 to their account in Hong Kong bank, or broker, or to a place in Europe, or anywhere they like. Generally speaking, other than some provisions on daily or weekly withdrawl maximums (some banks, some jurisdictions), there are minimal restrictions.
Daily Bell: What's your position on the American IRS?
Banker X: Well they are doing their job. The United States is in desperate need of money, not that it can help their self-imposed fiat-money debt crisis at this point. But the IRS will still continue to villanize countries like Switzerland in an attempt to "scare" people into bringing their assets home. The problem only really exists, as mentioned above, for those who have planned to evade taxes rather than legally mitigate them. The former may indeed not be sleeping so well, but the latter group should be perfectly fine. There is no law against banking internationally. It just isn't encouraged. But as long as clients report their worldwide income, the IRS should be on no concern.
No bank endorses tax evasion, and we are not looking to have the IRS breathing down our necks because of neglience. So, if a corporate compliance department deems a client to have a questionable structure, the client may need to seek additonal legal counsel – domestically in their home country or internationally, or both. Banks today are taking a much more proactive approach to structure analyzation that in the past, they have no choice.
We have been talking a lot here about the IRS, but its important to note that the tax authorities all over the world – notably British, German, Italian and French – have all stepped up their efforts to put pressure on offshore banking jurisdictions. The same diligent approach to structuring tax and asset protection needs applies to all jurisdictions, not just the US.
Daily Bell: Is offshore banking associated with crime and tax evasion?
Banker X: Practically speaking, it used to be more than it is now – although that may not be the perception of many people. I know there is a lot of hoopla about tax evasion, drugs and crime being associated with offshore banking, but quality banks will not knowingly get involved in dealing with that type of business, at least not here in Liechtenstein or Switzerland. Good clean business is what we seek.
Daily Bell: What is the best place?
Banker X: For quality banking services, Switzerland. You just cannot beat these jurisdictions for experience and efficiency in banking. For corporate/trust structuring, well that depends on the client's individual situation. For many American's and Canadians the Bahamas and the Cook Islands are popular, also Belize, but there are several and each has its own advantages.
There are many good locations that work well depending on the client's needs. Most Swiss private banks can help direct clients to quality international tax and asset protection lawyers who, in turn, can put the client in contact with a quality domestic attorney in their home country who is familiar with international structures. It is much better, usually, if a client is working within a vertically integrated team that is familiar with each other. Otherwise the client may incure extremely high additional costs in putting together their plan because all parts of the knowledge chain require due diligence – not just on the client or his/her structure, but also on the advisors involved. If there is not an already existing vertical of relationships … well then the client has to bear the costs of what can be a long and arduous process. Better to work from one end of the structure or the other but to find proficient professionals who really know what they are talking about.
Daily Bell: Is it necessary to visit the bank physically?
Banker X: Not necessarily, although it is a good idea to do so. If you are coming into the bank via a recognized chain of relationships, whereby the bank has confidence in the introducing party, as mentioned above, then it may not necessary. However, the days of just picking up a phone, sending a copy of your passport and a utility bill and then wiring cash – without ever visiting the bank, are long gone. You must be properly structured and have the ability to clearly demonstrate the source of your funds. If it isn't clean money you will not get through the front door, at least not of any reputable bank that wants to stay in business.
Daily Bell: What are some other advantages to offshore banking?
Banker X: I mentioned earlier, bank secrecy is number one and it goes hand in hand with protection. So if you are a lawyer, an accountant, a professional engineer, an architect, a doctor, or a businessperson with deep pockets – easy to sue – then you should look for asset protection. And the best form of asset protection is a custom designed offshore structure and banking relationship(s). Global asset diversification and felxibility are other primary concerns for most people. Most of the larger Swiss private banks have international trading desks that cover all major and emerging markets. The whole world of possibilities opens up to clients once they step into the offshore world.
Daily Bell: Any disadvantages?
Banker X: In my opinion, the advantages offshore far outweigh the any disadvantages.
Daily Bell: Of course, Switzerland's banking system has been under attack.
Banker X: The Swiss have been at this for hundreds of years, and they've been attacked before and survived. The system is stronger for it and the nation's prosperity is bound up in banking secrecy. No matter what is announced publicly, private banking remains strong, in part because it administers the money of the elites. Without getting into details, I will say that many prominent banks may perform a variety of transactions, some far more secretive others. And often the private services are merely a smokescreen, a cover for the vast transactions taking place elsewhere. Switzerland has an international role to play and its been playing that role for a very long time now.
Daily Bell: You think it's all for show?
Banker X: The top elites are cracking down all over the world regarding money. You can see it if you look. So they had to make a show in Switzerland as well. But for the big private banks and for a number of money services nothing much has changed. Nothing can change. Switzerland is the capital of the money industry. It's where the elites hold their conferences like Davos. And where the Bank for International Settlements is located. Zurich is an international city and once Brussels falls it will become even more prominent. The Swiss did not do any of this. The country was chosen by Western elites for a number of reasons. And chosen long ago.
Daily Bell: Interesting points. How does one locate a person to help with offshore banking?
Banker X: The Internet is full of information on offshore banking. But be careful, do your due diligence and do not get lured into any of these one-size-fits-all programs. There is no "golden arch" under which all can fit.
Perhaps you can take a trip to one of the many asset protection-oriented conferences being held by professionals in this space. That is likely the best way to meet people who assist you without having to expend too much expense or effort.
There are also some very good offshore-related newsletters and publications that can help point you in the right direction. Once again, do you own due diligence.
Daily Bell: And how does one locate a person to help with locating suitable offshore jurisdication for residency?
Banker X: Same thing, check the 'Net and do your due diligence. I will say that one of the fastest growing regions for secondary residences is South America. Many of my clients find island living too restrictive. So countries like Chile, Colombia and Brazil and very attractive locations – to name just a few.
Daily Bell: Thank you for your time, most appreciated.
Banker X: Thank you, it's been a pleasure.
We are grateful as always for Banker X – in all his incarnations. The insights we share are widely known throughout the offshore world. It is a legal and important world, with growing resources. The worse it gets in the West, the more people look abroad. That's human nature.
There is no doubt that conditions are turning increasingly chaotic in the West insofar as money is concerned. Thus his points are well taken. Diversification is far more than what security is on which stock market. It has to do with the dispersal of assets generally and the securing of an affordable and suitable secondary residency option. It all comes down to not putting all your eggs "in one basket."
Obviously by this point one should have some hard money assets – and they should be dispersed. Some at home and perhaps some abroad. That way if you want to leave the country you don't have to drag your assets with you. And that brings up the point of where you are heading.
Just as one wants a diversified portfolio, it may be wise to have a diversified real estate portfolio as well – at least one other place to stay. This may simply be a vacation home, but in times of crisis it can also be a haven for yourself and your immediate family.
Certainly planning for all these eventualities is a somewhat grim and perhaps costly chore. But we started this newspaper to cover the fear-based promotions of the power elite and their outcomes. We have seen nothing to change out mind in terms of what's going on in the world.
In some ways, things are better – as we believe the elites are losing their grasp at least a little. But this brings up the issue of increased chaos as well. We have no doubt the power elite is trying to foment chaos through wars and economic collapse.
On the other hand, some of the upcoming chaos may simply be the result of elite over-reach. Either way, things are bound to get messier, in our opinion. The immediate antidote is diversification of all facets of one's economic life. That's what this interview reinforces. It seems to us a fairly reasonable approach.
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