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After watching The laundromat, I think it's big news. Although I will always be curious why countries are letting those small, insignificant islands and countr

by jokoon 7y ago

After watching The laundromat, I think it's big news. Although I will always be curious why countries are letting those small, insignificant islands and countries manage all this wealth, and why they're trusted to do it. This can't be secure or safe. I'm curious about the diplomacy and the political implications of this. What if their office get robbed? What if the island gets attacked? What if one of those shady bank defaults? What if one of the people who manage it suddenly die? I mean apparently there is a long list of why it's risky, and I don't understand how this is even legal at all. How do you wire all this money to such a small place, and how can they trust so few people to hide so much money? I have so many questions.

jbob2000 7y ago
The money isn't being kept there for safety, it's being kept there for anonymity and easy access. These countries don't ask any questions when you show up and ask to withdraw a million dollars. Maybe you're withdrawing that money to buy a yacht, maybe you're withdrawing it to buy drugs, maybe you're withdrawing it to pay for a seat on Epstein Air. Banks in developed countries ask questions, these banks in these countries ask 0 questions.
- amoshi 7y ago
  Yep, and the moment someone starts asking questions or being "uncooperative" they are dealt with - as was Amine Halawi in [0]. [0] https://theintercept.com/2019/10/26/jho-low-1mbd-comoros-offshore-bank/ https://theintercept.com/2019/10/26/jho-low-1mbd-comoros-off...
Aperocky 7y ago
You'd think it's the small island and countries managing those bank, but it's not. The banks are from the rich and for the rich, the country is just a ruse.
- Scoundreller 7y ago
  Exactly. Any big bank in the world has.... suspicious... operations in these places and will let you bank through them as if it's an account you have at home.
deleted 7y ago
[deleted]
Accujack 7y ago
>why countries are letting those small, insignificant islands and countries manage all this wealth Enlightened self interest. Those "insignificant" islands are generally speaking countries. By showing respect for the rule of law even in situations where they could easily overwhelm with force or economic power smaller nations, the larger ones reinforce that the law matters. The larger countries use as a defense the idea that something is an "internal matter", IE it's no one else's business. If they bully their way into other smaller countries' business, then they open themselves up to the same interference. Might does not make one right. Law does.
- tw04 7y ago
  That's a pretty noble, if naive reason. "Rule of law" stops where economic interests begin and always has. Rule of law didn't stop the invasion of Iraq. Rule of law hasn't stopped the countless CIA backed coups in South America. Rule of law didn't stop funding/promoting the Arab spring. Larger countries constantly bully smaller ones and will continue to do so anytime it's economically convenient. The reason Grand Cayman exists is because the people with money that control global politics want it to exist. That's the beginning and end of the story. There's a reason the Panama Papers went away quietly despite the assassination of the human who exposed it...
  - zozbot234 7y ago
    > Rule of law didn't stop the invasion of Iraq. Rule of law hasn't stopped the countless CIA backed coups in South America. Rule of law didn't stop funding/promoting the Arab spring. These places were all considered "rogue states" at some point, i.e. places that openly neglected the very same rule of law which protects others. Being a 'rogue' state may leave you open to being bullied, but that's hardly inconsistent with rule of law being very important.
    - yourbandsucks 7y ago
      "Rule of law" doesn't mean picking and choosing whom it applies to. Saddam was our best buddy when he was using mustard gas in Khuzestan against the right people. International politics is rule by power rather than rule of law. The person you're replying to got it right.
CaymanCruiser 7y ago
Using a throwaway for obvious reasons. I have a fair bit of insight into this industry, both from friends, acquaintances, and family who use a variety of offshore structures to manage their wealth and from my own dealings (the company I founded and currently manage is offshored for tax and legal purposes). What people don’t realise is that aside from a couple outliers offshore jurisdictions aren’t that shady at all and the major ones are usually under the protection and sometimes outright control of much larger and much more influential jurisdictions, with the United Kingdom being the leader here. If tax avoidance was as simple as just starting a business in a zero or low tax jurisdictions we would see a lot more of this kind of business being done in Africa (with the notable exception of Seychelles today) than the Caribbean overseas territories, but mature legal frameworks and more importantly reliable governments are incredibly important to both small time players who may stash some cash offshore as savings and large multinationals. If anything shady (civil unrest, wealth confiscation etc.) were to go down in the British Virgin Islands for example the United Kingdom has a nuclear option (as BVI is for all intents and purposes a Crown colony) to unseat the sitting government and bring order, which is incredibly valuable as an insurance policy. Yes, it is possible to incorporate offshore corporations in less-reputable jurisdictions like Vanuatu or Seychelles, but doing business with these vehicles is next to impossible because no reputable bank in Singapore, Hong Kong, or Switzerland is going to want to have you as a customer if they don’t already know you due to compliance reasons. Without a bank account your ability to funnel and store money in these opaque conduits becomes rather difficult and there really isn’t any point any longer. Of course, there are small shady banks in certain jurisdictions (notably those that aren’t under indirect British control) that will take you on as a client, but then you run into the risk of them running away with your money or defaulting. The money itself isn’t really managed by or from these island nations/colonies either, and in the cases where there are nominee directors the beneficial owner will usually have a power of attorney as well as an undated resignation letter from the nominee director which effectively gives them wherever they are total control of the company. What is interesting is that crypto is changing all of this due it being completely outside the severely regulated financial sector, opening up a ton of opportunity for small island nations to compete on tax efficiency without being subject to the quite frankly draconian rules that usually places them on US/EU/OECD blacklists which can create severe consequences for the economies of said nations through sanctions. Very interesting times indeed, and I think we will see more and more companies (particularly tech companies) being offshored than before in the next few years.
rolltiide 7y ago
The Cayman Islands has robust financial regulations and is a financial center. It is also reliant on the UK for military assistance, and as you can see the bank records for this particular institution are digital. You are grouping everything together with misplaced isolationist paranoia.
- walrus01 7y ago
  The Cayman Islands is a vassal state of the global one percent as a tax shelter. Let's call it what it really is. It's not a global financial center the way NYC or Hong Kong or Tokyo are. It's a sand bar with a bunch of post office box company registries and some banks. I hear there is also good snorkeling.
  - rolltiide 7y ago
    Their legislative branch is extremely competent at evaluating and passing competitive laws for business and banking, their executive branch is extremely competent at providing the administrative services and modern digital facilities for international business and banking, and their judicial branch is extremely competent at resolving disputes. The government's budget is also balanced without passive taxation of this sector. Most jurisdictions, whether they are other island nations or a state in the US are not competent in any of these regards and this has utility on this planet. It would be an understatement for me to just point out how much I don't care how uncompetitive other nations are in this regard, and I also don't care about the challenges for them to become competitive.
    - magashna 7y ago
      If my sole purpose was to be good at X things, I'd be good at them.
      - rolltiide 7y ago
        Somebody tell the British Virgin Islands, St. Kitts & Nevis and the Seychelles They seem to have missed the memo :D I feel like if I had said the Caymans was incompetent I feel the replies whether from you or others would have said “well of course they are” but anyway their regulators and public servants are often US educated at prestigious universities
gxqoz 7y ago
A recent piece in The Guardian argues that South Dakota and other US states are actually becoming the go-to place to store anonymously your illicit cash and make sure that your heirs can inherit it without taxes forever: https://www.theguardian.com/world/2019/nov/14/the-great-american-tax-haven-why-the-super-rich-love-south-dakota-trust-laws https://www.theguardian.com/world/2019/nov/14/the-great-amer... Partly because the US has compelled other countries to provide more transparency without joining that transparency organization itself. "Congress responded with the Financial Assets Tax Compliance Act (Fatca), forcing foreign financial institutions to tell the US government about any American-owned assets on their books. Department of Justice investigations were savage: UBS paid a $780m fine, and its rival Credit Suisse paid $2.6bn, while Wegelin, Switzerland’s oldest bank, collapsed altogether under the strain. The amount of US-owned money in the country plunged, with Credit Suisse losing 85% of its American customers. The rest of the world, inspired by this example, created a global agreement called the Common Reporting Standard (CRS). Under CRS, countries agreed to exchange information on the assets of each other’s citizens kept in each other’s banks. The tax-evading appeal of places like Jersey, the Bahamas and Liechtenstein evaporated almost immediately, since you could no longer hide your wealth there. How was a rich person to protect his wealth from the government in this scary new transparent world? Fortunately, there was a loophole. CRS had been created by lots of countries together, and they all committed to telling each other their financial secrets. But the US was not part of CRS, and its own system – Fatca – only gathers information from foreign countries; it does not send information back to them. This loophole was unintentional, but vast: keep your money in Switzerland, and the world knows about it; put it in the US and, if you were clever about it, no one need ever find out. The US was on its way to becoming a truly world-class tax haven."
- mcphage 7y ago
  > This loophole was unintentional That seems a pretty hard pill to swallow.
  - edoceo 7y ago
    Laws can have bugs too
situationista 7y ago
Note that in his write-up of how the hack was accomplished (someone pasted a link in another comment) the hacker specifically mentions his attack was on Cayman National Bank of the Isle of Man. From cursory research it appears to be based there, not in the Cayman Islands.
- gertrunde 7y ago
  The isle of Man is an odd place, curiously not part of the UK, linked to a lot of financial shenanigans. e.g. A disproportionate number of private jets are imported into Europe via The Isle of Man for tax reasons. (Link: https://www.theguardian.com/uk-news/2019/apr/05/isle-of-man-tax-breaks-for-jet-owners-rose-to-100m-last-year-vat https://www.theguardian.com/uk-news/2019/apr/05/isle-of-man-...)
- orpheansodality 7y ago
  * her -- she refers to herself as a girl multiple times in the writeup edit: or possibly they/them -- I'm seeing conflicting info circulating around
  - fastball 7y ago
    https://mobile.twitter.com/DDoSecrets/status/1196216685038129153 https://mobile.twitter.com/DDoSecrets/status/119621668503812...
    - jokowueu 7y ago
      :|
- arminiusreturns 7y ago
  For those interested in this subject, I can't recommend the documentary "The Spider's Web: Britain's Second Empire" [1] highly enough. The guy who behind it not only did an excellent job, but did it for a tiny fraction of what a bigger studio would have spent for a much more inferior end result. [1]https://www.youtube.com/watch?v=np_ylvc8Zj8 https://www.youtube.com/watch?v=np_ylvc8Zj8
sbarre 7y ago
There is a great book you should read called Treasure Islands[0]. It's equal parts fascinating and infuriating, and makes you realize the system has never been set up fairly. Rich people have always had their own financial systems that are outside of, and one step ahead of, the regulations and rules the rest of us are subject to. [0]: https://www.goodreads.com/book/show/10197857-treasure-islands https://www.goodreads.com/book/show/10197857-treasure-island...
- balls187 7y ago
  Reminds me of a quote from the film The Usual Suspects-- "The greatest trick the Devil ever pulled was convincing the world he didn't exist." The system remains that way in part because a large number of people are duped into believing it is in their best interest to keep the system in place, despite the minuscule probability of actually benefiting from it.
  - sbarre 7y ago
    The book shows that a lot of the people who sustain that system (by writing the laws we are all subject to, but leaving convenient loopholes in them) do actually benefit quite a bit.
lemmox 7y ago
Many tax havens are actually quite stable and have very reliable banking systems. Canada encourages "snow washing" with Limited Partnerships. Canada's banks are quite good and the corporate legislation allows a degree of anonymity. This structure has no obligation to file taxes in Canada. The partners in the structure have to pay taxes however if the partner is not a Canadian entity that obligation is in some other jurisdiction. https://projects.thestar.com/panama-papers/canada-is-the-worlds-newest-tax-haven/ https://projects.thestar.com/panama-papers/canada-is-the-wor...
- poxrud 7y ago
  But Canada shares banking data with the IRS. https://www.cbc.ca/news/politics/fatca-tax-us-canada-1.5353942 https://www.cbc.ca/news/politics/fatca-tax-us-canada-1.53539...
  - corodra 7y ago
    Uh-huh, and no one lies on their taxes either. While, I know it's funny to joke that Canadians say sorry and are super nice. I think that's a racist stereotype. Canadians are typically dicks. Especially the Quebecois. So to pretend that they magically share all information with foreign governments... sure. And Deustche Bank is innocent of banking fraud too.
  - unreal37 7y ago
    Only for Americans.
  - lemmox 7y ago
    Yes, Canadian tax residents have serious obligations, as do US citizens (no matter where they live)! LPs on the other hand, do not _if_ there is no economic activity in Canada and there's a tax treaty at play with the founding partner jurisdiction. Canada doesn't have the authority to tax foreign owned businesses unless they participate in the Canadian economy. Eg: Your international entities can route money through a Canadian LP that is owned by your Barbados corporation. In this scenario there's no Canadian tax obligation and the money trail becomes harder to follow due to Canada's privacy laws (your company name might not be on your LP documentation). Your company does, of course, have to settle up the tax obligation with Barbados.
coliveira 7y ago
> I don't understand how this is even legal at all. A lot of the process is not legal. That's why it is a scandal when they find this kind of information. But the existence of this type of service is practically guaranteed for the same reason: a lot of the money in these accounts was acquired in shady, if not totally ilegal ways. Even if countries make it completely illegal, there will be a lot of clients for offshore accounts. You can think of this as a modern version of pirates hiding their illegal treasures in some Caribbean island.
corodra 7y ago
>What if their office get robbed? What if the island gets attacked? Switzerland, WW2. There is safety in holding EVERYONE's money. Because the moment you try it, you enrage many, many, many people who have things that go boom. You can fuck with someone's politics, their car or even their wife. But once you fuck with someone's money, it's a whole new ball game. > I don't understand how this is even legal at all Bank fees are higher. The different "islands" that do this, really don't have a choice. WTF else are they going to do as income generation? There's only so many happy endings you can give in a day spa. It's also easier to "invest" and hide the money in tourist based enterprises on said islands. It totally makes sense to hire an interior designer for $10k an hour. >how can they trust so few people to hide so much money Because people don't like getting into car accidents. When you're "trusted" with something on that level, suddenly people make sure you either don't have or do have car accidents that magically attract stray bullets. >I mean apparently there is a long list of why it's risky, and I don't understand how this is even legal at all. Homie, avocado farmers in Mexico get kidnapped and executed because avocados are cash crops. Shit, look up "avocado stolen" or even "avocado semitruck stolen". No such thing as making bank and not having risk. Some of those truck drivers in the USA get killed. If you're going to get targeted for making money, might as well go all out.
- girvo 7y ago
  Related: https://www.google.com.au/amp/s/qz.com/663152/a-10-million-nut-heist-is-a-window-into-the-shady-lucrative-world-of-large-scale-food-theft/amp/ https://www.google.com.au/amp/s/qz.com/663152/a-10-million-n... Yep, even nuts get stolen!
  - corodra 7y ago
    Anything and everything has a "dark side". That's why these, "Gasp! Oh my goodness, I can't believe there are such vile people in this world" comments piss me off. It's a clear sign of willful ignorance and naivety. The same goes with, "I can't believe people have offshore accounts. Those terrible rich people. Adam Neumann is so terrible for setting up in his contract to get a 1.7b bailout." Bitch, what would you do in their position? Don't lie. You'd probably ask why Adam didn't go for the even $2b. There isn't a single person in this HN thread who, if they made enough to get taxed 35%+ of their income, wouldn't tax shelter the shit out of their money. I already know they lie their ass off on their taxes. Why not take a dependent or two away from your taxes, just so you can pay a more moral share of the tax burden? Claiming moral righteousness due to inability is just shoving your head in the sand. Thanks for the article by the way. Got to admit, those folks have a great heist story. "We stole $10m worth of deez nutz!" Ever wonder if someone does a heist and the press shorts the value, do those guys want to correct them? "Excuse me, we stole $12.4m worth of nuts. We are professionals after all, thank you very much." Not going to lie, it would piss me off if I ever did an art heist and the news says, "$10 million dollar painting stolen..." Mofo, you forgot a zero! You're making me look bad!
sumedh 7y ago
> why countries are letting those small, insignificant islands and countries manage all this wealth Some of the tax havens like Jersey, Isle of Man are British territories, Curacao is territory of Netherlands. The big countries know what goes on on their little islands they just choose to ignore it for obvious reasons. Treasure Islands is a great book if you want to learn more about this.
a3n 7y ago
Because the people who run "countries" use these services.
conanbatt 7y ago
Most people don't know the US is the preferred tax haven of the world.
- newguy1234 7y ago
  We aren't a tax haven. We are a wealth haven. People buy assets here like real estate. They are more concerned with the strong privacy rules and strong protections for property. In terms of actually earning money, that is better left to tax havens or special economic zones.
xibalba 7y ago
Most of these assets, although "located" in obscure places, are actually warehoused right back here in the US of A. Their status as being "held" outside the US is mostly a fiction existing on paper which allows for privacy and tax avoidance.
pprplt 7y ago
> Although I will always be curious why countries are letting those small, insignificant islands and countries manage all this wealth Those small, insignificant islands and countries are current or former british or european colonies. And considering they are primarily located in the caribbean, the chances of them being successfully attacked is zero - good luck going up against the might of the US Navy. > How do you wire all this money to such a small place Whether it's $10 or $1000000, it's just a number (a few bytes) on transfer or just a few more digits on a check. > and how can they trust so few people to hide so much money? It's easier to trust a few rather than the many.
- mycall 7y ago
  > the chances of them being successfully attacked is zero Mother nature can successfully attack whole islands.
jenxkfjeo0 7y ago
You’re curious about them from the perspective of a normal citizen Politicians don’t know and have no desire to know, if you can’t tell by their willfully ignoring official political processes (regardless of whether one agrees with the motivation or not, to simply say you’re going to ignore it as folks like Sen. Graham have is nuts). If they did they could be held accountable. Plausible deniability is a key legal position. So politically zero fucks are given. I mean we know more than one President was pals with a man the elite knew to be a statutory rapist. They don’t give a shit about human lives themselves. You think they give a shit about ephemeral shit like money when they don’t worry about that? The financial system has us mining bitcoin: ephemeral bullshit other people live big on. How this forum can be so smart and so clueless is beyond me.
StuffedParrot 7y ago
> Although I will always be curious why countries are letting those small, insignificant islands and countries manage all this wealth, and why they're trusted to do it. Probably because the people who run the state are also people who take advantage of these tax loopholes. I don't believe the US even needs foreign countries to hide taxes this well, we have better mechanisms in e.g. South Dakota.
noobermin 7y ago
Hanlon's razor. Also, a Michelle Obama quote[0]. [0] https://www.newsweek.com/michelle-obama-tells-secret-i-have-been-every-powerful-table-you-can-think-1242695 https://www.newsweek.com/michelle-obama-tells-secret-i-have-...
pas 7y ago
Big growing economies benefit from tax havens, because they get capital more easily, because the profits can be extracted at a low cost from other countries. https://news.ycombinator.com/item?id=21571339 https://news.ycombinator.com/item?id=21571339 And naturally, as others noted, the security is quite good.
zaro 7y ago
> Although I will always be curious why countries are letting those small, insignificant islands and countries manage all this wealth This is easy, after all hiding cash is needed by everybody. And when it comes to finance , there are no countries only financial interest. Of course nothing bad will happen to these financial heavens, because they are protected by the richest and most powerful people and organisations. "The Spider's Web: Britain's Second Empire"[1] gives a good overview of how this started. [1] https://www.youtube.com/watch?v=np_ylvc8Zj8 https://www.youtube.com/watch?v=np_ylvc8Zj8
lawlessone 7y ago
>Although I will always be curious why countries are letting those small, insignificant islands and countries manage all this wealth, British Overseas Territory
_Codemonkeyism 7y ago
Do you think the money is on those small islands? Or on Guernsey? Or the British Channel Islands? No, the money is in New York and London at the usual banks who earn money on fees and can work with the deposits. The banks on those islands don't have a data center, or a bank vault. They only legally have the money on paper, but "their" money is in the banks in NYC (Caribbean) and London (former Empire). Interesting read "Treasure Islands: Tax Havens and the Men who Stole the World", Nicholas Shaxson

by jokoon 7y ago

jbob2000 7y ago

The money isn't being kept there for safety, it's being kept there for anonymity and easy access. These countries don't ask any questions when you show up and ask to withdraw a million dollars. Maybe you're withdrawing that money to buy a yacht, maybe you're withdrawing it to buy drugs, maybe you're withdrawing it to pay for a seat on Epstein Air. Banks in developed countries ask questions, these banks in these countries ask 0 questions.

amoshi 7y ago
Yep, and the moment someone starts asking questions or being "uncooperative" they are dealt with - as was Amine Halawi in [0]. [0] https://theintercept.com/2019/10/26/jho-low-1mbd-comoros-offshore-bank/ https://theintercept.com/2019/10/26/jho-low-1mbd-comoros-off...

Aperocky 7y ago

You'd think it's the small island and countries managing those bank, but it's not. The banks are from the rich and for the rich, the country is just a ruse.

Scoundreller 7y ago
Exactly. Any big bank in the world has.... suspicious... operations in these places and will let you bank through them as if it's an account you have at home.

deleted 7y ago

[deleted]

Accujack 7y ago

>why countries are letting those small, insignificant islands and countries manage all this wealth Enlightened self interest. Those "insignificant" islands are generally speaking countries. By showing respect for the rule of law even in situations where they could easily overwhelm with force or economic power smaller nations, the larger ones reinforce that the law matters. The larger countries use as a defense the idea that something is an "internal matter", IE it's no one else's business. If they bully their way into other smaller countries' business, then they open themselves up to the same interference. Might does not make one right. Law does.

tw04 7y ago
That's a pretty noble, if naive reason. "Rule of law" stops where economic interests begin and always has. Rule of law didn't stop the invasion of Iraq. Rule of law hasn't stopped the countless CIA backed coups in South America. Rule of law didn't stop funding/promoting the Arab spring. Larger countries constantly bully smaller ones and will continue to do so anytime it's economically convenient. The reason Grand Cayman exists is because the people with money that control global politics want it to exist. That's the beginning and end of the story. There's a reason the Panama Papers went away quietly despite the assassination of the human who exposed it...
- zozbot234 7y ago
  > Rule of law didn't stop the invasion of Iraq. Rule of law hasn't stopped the countless CIA backed coups in South America. Rule of law didn't stop funding/promoting the Arab spring. These places were all considered "rogue states" at some point, i.e. places that openly neglected the very same rule of law which protects others. Being a 'rogue' state may leave you open to being bullied, but that's hardly inconsistent with rule of law being very important.
  - yourbandsucks 7y ago
    "Rule of law" doesn't mean picking and choosing whom it applies to. Saddam was our best buddy when he was using mustard gas in Khuzestan against the right people. International politics is rule by power rather than rule of law. The person you're replying to got it right.

CaymanCruiser 7y ago

Using a throwaway for obvious reasons. I have a fair bit of insight into this industry, both from friends, acquaintances, and family who use a variety of offshore structures to manage their wealth and from my own dealings (the company I founded and currently manage is offshored for tax and legal purposes). What people don’t realise is that aside from a couple outliers offshore jurisdictions aren’t that shady at all and the major ones are usually under the protection and sometimes outright control of much larger and much more influential jurisdictions, with the United Kingdom being the leader here. If tax avoidance was as simple as just starting a business in a zero or low tax jurisdictions we would see a lot more of this kind of business being done in Africa (with the notable exception of Seychelles today) than the Caribbean overseas territories, but mature legal frameworks and more importantly reliable governments are incredibly important to both small time players who may stash some cash offshore as savings and large multinationals. If anything shady (civil unrest, wealth confiscation etc.) were to go down in the British Virgin Islands for example the United Kingdom has a nuclear option (as BVI is for all intents and purposes a Crown colony) to unseat the sitting government and bring order, which is incredibly valuable as an insurance policy. Yes, it is possible to incorporate offshore corporations in less-reputable jurisdictions like Vanuatu or Seychelles, but doing business with these vehicles is next to impossible because no reputable bank in Singapore, Hong Kong, or Switzerland is going to want to have you as a customer if they don’t already know you due to compliance reasons. Without a bank account your ability to funnel and store money in these opaque conduits becomes rather difficult and there really isn’t any point any longer. Of course, there are small shady banks in certain jurisdictions (notably those that aren’t under indirect British control) that will take you on as a client, but then you run into the risk of them running away with your money or defaulting. The money itself isn’t really managed by or from these island nations/colonies either, and in the cases where there are nominee directors the beneficial owner will usually have a power of attorney as well as an undated resignation letter from the nominee director which effectively gives them wherever they are total control of the company. What is interesting is that crypto is changing all of this due it being completely outside the severely regulated financial sector, opening up a ton of opportunity for small island nations to compete on tax efficiency without being subject to the quite frankly draconian rules that usually places them on US/EU/OECD blacklists which can create severe consequences for the economies of said nations through sanctions. Very interesting times indeed, and I think we will see more and more companies (particularly tech companies) being offshored than before in the next few years.

rolltiide 7y ago

The Cayman Islands has robust financial regulations and is a financial center. It is also reliant on the UK for military assistance, and as you can see the bank records for this particular institution are digital. You are grouping everything together with misplaced isolationist paranoia.

walrus01 7y ago
The Cayman Islands is a vassal state of the global one percent as a tax shelter. Let's call it what it really is. It's not a global financial center the way NYC or Hong Kong or Tokyo are. It's a sand bar with a bunch of post office box company registries and some banks. I hear there is also good snorkeling.
- rolltiide 7y ago
  Their legislative branch is extremely competent at evaluating and passing competitive laws for business and banking, their executive branch is extremely competent at providing the administrative services and modern digital facilities for international business and banking, and their judicial branch is extremely competent at resolving disputes. The government's budget is also balanced without passive taxation of this sector. Most jurisdictions, whether they are other island nations or a state in the US are not competent in any of these regards and this has utility on this planet. It would be an understatement for me to just point out how much I don't care how uncompetitive other nations are in this regard, and I also don't care about the challenges for them to become competitive.
  - magashna 7y ago
    If my sole purpose was to be good at X things, I'd be good at them.
    - rolltiide 7y ago
      Somebody tell the British Virgin Islands, St. Kitts & Nevis and the Seychelles They seem to have missed the memo :D I feel like if I had said the Caymans was incompetent I feel the replies whether from you or others would have said “well of course they are” but anyway their regulators and public servants are often US educated at prestigious universities

gxqoz 7y ago

A recent piece in The Guardian argues that South Dakota and other US states are actually becoming the go-to place to store anonymously your illicit cash and make sure that your heirs can inherit it without taxes forever: https://www.theguardian.com/world/2019/nov/14/the-great-american-tax-haven-why-the-super-rich-love-south-dakota-trust-laws https://www.theguardian.com/world/2019/nov/14/the-great-amer... Partly because the US has compelled other countries to provide more transparency without joining that transparency organization itself. "Congress responded with the Financial Assets Tax Compliance Act (Fatca), forcing foreign financial institutions to tell the US government about any American-owned assets on their books. Department of Justice investigations were savage: UBS paid a $780m fine, and its rival Credit Suisse paid $2.6bn, while Wegelin, Switzerland’s oldest bank, collapsed altogether under the strain. The amount of US-owned money in the country plunged, with Credit Suisse losing 85% of its American customers. The rest of the world, inspired by this example, created a global agreement called the Common Reporting Standard (CRS). Under CRS, countries agreed to exchange information on the assets of each other’s citizens kept in each other’s banks. The tax-evading appeal of places like Jersey, the Bahamas and Liechtenstein evaporated almost immediately, since you could no longer hide your wealth there. How was a rich person to protect his wealth from the government in this scary new transparent world? Fortunately, there was a loophole. CRS had been created by lots of countries together, and they all committed to telling each other their financial secrets. But the US was not part of CRS, and its own system – Fatca – only gathers information from foreign countries; it does not send information back to them. This loophole was unintentional, but vast: keep your money in Switzerland, and the world knows about it; put it in the US and, if you were clever about it, no one need ever find out. The US was on its way to becoming a truly world-class tax haven."

mcphage 7y ago
> This loophole was unintentional That seems a pretty hard pill to swallow.
- edoceo 7y ago
  Laws can have bugs too

situationista 7y ago

Note that in his write-up of how the hack was accomplished (someone pasted a link in another comment) the hacker specifically mentions his attack was on Cayman National Bank of the Isle of Man. From cursory research it appears to be based there, not in the Cayman Islands.

gertrunde 7y ago
The isle of Man is an odd place, curiously not part of the UK, linked to a lot of financial shenanigans. e.g. A disproportionate number of private jets are imported into Europe via The Isle of Man for tax reasons. (Link: https://www.theguardian.com/uk-news/2019/apr/05/isle-of-man-tax-breaks-for-jet-owners-rose-to-100m-last-year-vat https://www.theguardian.com/uk-news/2019/apr/05/isle-of-man-...)
orpheansodality 7y ago
* her -- she refers to herself as a girl multiple times in the writeup edit: or possibly they/them -- I'm seeing conflicting info circulating around
- fastball 7y ago
  https://mobile.twitter.com/DDoSecrets/status/1196216685038129153 https://mobile.twitter.com/DDoSecrets/status/119621668503812...
  - jokowueu 7y ago
    :|
arminiusreturns 7y ago
For those interested in this subject, I can't recommend the documentary "The Spider's Web: Britain's Second Empire" [1] highly enough. The guy who behind it not only did an excellent job, but did it for a tiny fraction of what a bigger studio would have spent for a much more inferior end result. [1]https://www.youtube.com/watch?v=np_ylvc8Zj8 https://www.youtube.com/watch?v=np_ylvc8Zj8

sbarre 7y ago

There is a great book you should read called Treasure Islands[0]. It's equal parts fascinating and infuriating, and makes you realize the system has never been set up fairly. Rich people have always had their own financial systems that are outside of, and one step ahead of, the regulations and rules the rest of us are subject to. [0]: https://www.goodreads.com/book/show/10197857-treasure-islands https://www.goodreads.com/book/show/10197857-treasure-island...

balls187 7y ago
Reminds me of a quote from the film The Usual Suspects-- "The greatest trick the Devil ever pulled was convincing the world he didn't exist." The system remains that way in part because a large number of people are duped into believing it is in their best interest to keep the system in place, despite the minuscule probability of actually benefiting from it.
- sbarre 7y ago
  The book shows that a lot of the people who sustain that system (by writing the laws we are all subject to, but leaving convenient loopholes in them) do actually benefit quite a bit.

lemmox 7y ago

Many tax havens are actually quite stable and have very reliable banking systems. Canada encourages "snow washing" with Limited Partnerships. Canada's banks are quite good and the corporate legislation allows a degree of anonymity. This structure has no obligation to file taxes in Canada. The partners in the structure have to pay taxes however if the partner is not a Canadian entity that obligation is in some other jurisdiction. https://projects.thestar.com/panama-papers/canada-is-the-worlds-newest-tax-haven/ https://projects.thestar.com/panama-papers/canada-is-the-wor...

poxrud 7y ago
But Canada shares banking data with the IRS. https://www.cbc.ca/news/politics/fatca-tax-us-canada-1.5353942 https://www.cbc.ca/news/politics/fatca-tax-us-canada-1.53539...
- corodra 7y ago
  Uh-huh, and no one lies on their taxes either. While, I know it's funny to joke that Canadians say sorry and are super nice. I think that's a racist stereotype. Canadians are typically dicks. Especially the Quebecois. So to pretend that they magically share all information with foreign governments... sure. And Deustche Bank is innocent of banking fraud too.
- unreal37 7y ago
  Only for Americans.
- lemmox 7y ago
  Yes, Canadian tax residents have serious obligations, as do US citizens (no matter where they live)! LPs on the other hand, do not _if_ there is no economic activity in Canada and there's a tax treaty at play with the founding partner jurisdiction. Canada doesn't have the authority to tax foreign owned businesses unless they participate in the Canadian economy. Eg: Your international entities can route money through a Canadian LP that is owned by your Barbados corporation. In this scenario there's no Canadian tax obligation and the money trail becomes harder to follow due to Canada's privacy laws (your company name might not be on your LP documentation). Your company does, of course, have to settle up the tax obligation with Barbados.

coliveira 7y ago

> I don't understand how this is even legal at all. A lot of the process is not legal. That's why it is a scandal when they find this kind of information. But the existence of this type of service is practically guaranteed for the same reason: a lot of the money in these accounts was acquired in shady, if not totally ilegal ways. Even if countries make it completely illegal, there will be a lot of clients for offshore accounts. You can think of this as a modern version of pirates hiding their illegal treasures in some Caribbean island.

corodra 7y ago

>What if their office get robbed? What if the island gets attacked? Switzerland, WW2. There is safety in holding EVERYONE's money. Because the moment you try it, you enrage many, many, many people who have things that go boom. You can fuck with someone's politics, their car or even their wife. But once you fuck with someone's money, it's a whole new ball game. > I don't understand how this is even legal at all Bank fees are higher. The different "islands" that do this, really don't have a choice. WTF else are they going to do as income generation? There's only so many happy endings you can give in a day spa. It's also easier to "invest" and hide the money in tourist based enterprises on said islands. It totally makes sense to hire an interior designer for $10k an hour. >how can they trust so few people to hide so much money Because people don't like getting into car accidents. When you're "trusted" with something on that level, suddenly people make sure you either don't have or do have car accidents that magically attract stray bullets. >I mean apparently there is a long list of why it's risky, and I don't understand how this is even legal at all. Homie, avocado farmers in Mexico get kidnapped and executed because avocados are cash crops. Shit, look up "avocado stolen" or even "avocado semitruck stolen". No such thing as making bank and not having risk. Some of those truck drivers in the USA get killed. If you're going to get targeted for making money, might as well go all out.

girvo 7y ago
Related: https://www.google.com.au/amp/s/qz.com/663152/a-10-million-nut-heist-is-a-window-into-the-shady-lucrative-world-of-large-scale-food-theft/amp/ https://www.google.com.au/amp/s/qz.com/663152/a-10-million-n... Yep, even nuts get stolen!
- corodra 7y ago
  Anything and everything has a "dark side". That's why these, "Gasp! Oh my goodness, I can't believe there are such vile people in this world" comments piss me off. It's a clear sign of willful ignorance and naivety. The same goes with, "I can't believe people have offshore accounts. Those terrible rich people. Adam Neumann is so terrible for setting up in his contract to get a 1.7b bailout." Bitch, what would you do in their position? Don't lie. You'd probably ask why Adam didn't go for the even $2b. There isn't a single person in this HN thread who, if they made enough to get taxed 35%+ of their income, wouldn't tax shelter the shit out of their money. I already know they lie their ass off on their taxes. Why not take a dependent or two away from your taxes, just so you can pay a more moral share of the tax burden? Claiming moral righteousness due to inability is just shoving your head in the sand. Thanks for the article by the way. Got to admit, those folks have a great heist story. "We stole $10m worth of deez nutz!" Ever wonder if someone does a heist and the press shorts the value, do those guys want to correct them? "Excuse me, we stole $12.4m worth of nuts. We are professionals after all, thank you very much." Not going to lie, it would piss me off if I ever did an art heist and the news says, "$10 million dollar painting stolen..." Mofo, you forgot a zero! You're making me look bad!

sumedh 7y ago

> why countries are letting those small, insignificant islands and countries manage all this wealth Some of the tax havens like Jersey, Isle of Man are British territories, Curacao is territory of Netherlands. The big countries know what goes on on their little islands they just choose to ignore it for obvious reasons. Treasure Islands is a great book if you want to learn more about this.

a3n 7y ago

Because the people who run "countries" use these services.

conanbatt 7y ago

Most people don't know the US is the preferred tax haven of the world.

newguy1234 7y ago
We aren't a tax haven. We are a wealth haven. People buy assets here like real estate. They are more concerned with the strong privacy rules and strong protections for property. In terms of actually earning money, that is better left to tax havens or special economic zones.

xibalba 7y ago

Most of these assets, although "located" in obscure places, are actually warehoused right back here in the US of A. Their status as being "held" outside the US is mostly a fiction existing on paper which allows for privacy and tax avoidance.

pprplt 7y ago

> Although I will always be curious why countries are letting those small, insignificant islands and countries manage all this wealth Those small, insignificant islands and countries are current or former british or european colonies. And considering they are primarily located in the caribbean, the chances of them being successfully attacked is zero - good luck going up against the might of the US Navy. > How do you wire all this money to such a small place Whether it's $10 or $1000000, it's just a number (a few bytes) on transfer or just a few more digits on a check. > and how can they trust so few people to hide so much money? It's easier to trust a few rather than the many.

mycall 7y ago
> the chances of them being successfully attacked is zero Mother nature can successfully attack whole islands.

jenxkfjeo0 7y ago

You’re curious about them from the perspective of a normal citizen Politicians don’t know and have no desire to know, if you can’t tell by their willfully ignoring official political processes (regardless of whether one agrees with the motivation or not, to simply say you’re going to ignore it as folks like Sen. Graham have is nuts). If they did they could be held accountable. Plausible deniability is a key legal position. So politically zero fucks are given. I mean we know more than one President was pals with a man the elite knew to be a statutory rapist. They don’t give a shit about human lives themselves. You think they give a shit about ephemeral shit like money when they don’t worry about that? The financial system has us mining bitcoin: ephemeral bullshit other people live big on. How this forum can be so smart and so clueless is beyond me.

StuffedParrot 7y ago

> Although I will always be curious why countries are letting those small, insignificant islands and countries manage all this wealth, and why they're trusted to do it. Probably because the people who run the state are also people who take advantage of these tax loopholes. I don't believe the US even needs foreign countries to hide taxes this well, we have better mechanisms in e.g. South Dakota.

noobermin 7y ago

Hanlon's razor. Also, a Michelle Obama quote[0]. [0] https://www.newsweek.com/michelle-obama-tells-secret-i-have-been-every-powerful-table-you-can-think-1242695 https://www.newsweek.com/michelle-obama-tells-secret-i-have-...

pas 7y ago

Big growing economies benefit from tax havens, because they get capital more easily, because the profits can be extracted at a low cost from other countries. https://news.ycombinator.com/item?id=21571339 https://news.ycombinator.com/item?id=21571339 And naturally, as others noted, the security is quite good.

zaro 7y ago

> Although I will always be curious why countries are letting those small, insignificant islands and countries manage all this wealth This is easy, after all hiding cash is needed by everybody. And when it comes to finance , there are no countries only financial interest. Of course nothing bad will happen to these financial heavens, because they are protected by the richest and most powerful people and organisations. "The Spider's Web: Britain's Second Empire"[1] gives a good overview of how this started. [1] https://www.youtube.com/watch?v=np_ylvc8Zj8 https://www.youtube.com/watch?v=np_ylvc8Zj8

lawlessone 7y ago

>Although I will always be curious why countries are letting those small, insignificant islands and countries manage all this wealth, British Overseas Territory

_Codemonkeyism 7y ago

Do you think the money is on those small islands? Or on Guernsey? Or the British Channel Islands? No, the money is in New York and London at the usual banks who earn money on fees and can work with the deposits. The banks on those islands don't have a data center, or a bank vault. They only legally have the money on paper, but "their" money is in the banks in NYC (Caribbean) and London (former Empire). Interesting read "Treasure Islands: Tax Havens and the Men who Stole the World", Nicholas Shaxson