3 ms·

Unlikely. Most American small businesses and individuals can't set up offshore structures willy nilly (it's too expensive and complex), and FACTA makes it a lot

Unlikely. Most American small businesses and individuals can't set up offshore structures willy nilly (it's too expensive and complex), and FACTA makes it a lot harder for them to even if they want to. Lots of financial institutions hate working with Americans and will avoid it if possible in some places because of FACTA. Keeping money offshore doesn't make sense for the little guy. You're required to report it with significant penalties for non-compliance, and the anti-tax-deferral rules for controlled foreign corporations basically make repatriating just enough money to pay salaries a pointless exercise.

Tycho 5y ago
Crypto is offshore finance for the little guy.
- LurkingPenguin 5y ago
  No it isn't. Once you want to convert to fiat (so you can spend it), you're back in the realm of the regulated financial world. If you're running a small business, chances are you can't a) use your crypto without converting to fiat or b) can't use your crypto without identifying yourself to a regulated financial institution. Since BTC, ETH, etc. are public ledgers, you're basically already giving every government agency in the world the ability to track your balances and transactions without any additional regulation or infrastructure required. Of course, if you're super careful, they might not know it's you yet, but if they really want to, they can find out and make sure you don't sleep very well at night while they wait.
  - pentae 5y ago
    .. Or you could pay in crypto. Or you could convert your crypto to cash in a Wendys parking lot.
    - LurkingPenguin 5y ago
      This might sound good if you're living in the jungles of Belize. But let's be realistic. The average individual and small business owner cannot meet their day-to-day financial obligations by dealing only with unregulated counterparties that transact in crypto. And the vast majority of people do not wish to live a life where they're exchanging USBs for cash using crypto "plugs" they meet in fast food parking lots. Furthermore, in the latter scenario, that cash is eventually going to get deposited back into a regulated institution (to pay credit card bills, etc.). If anything, a person depositing thousands of dollars in cash on a regular basis is going to draw more scrutiny, especially if they're not running a cash business. Which leads to the obvious solution: you're going to buy that Wendy's where you're exchanging your USBs for cash. Congratulations. You're now officially a money launderer!
sershe 5y ago
There are companies in Russia that specialize in providing shell companies to businesses. You can get a "reused" local company, an unique one, a company represented by a real person (no idea if that person is literally a fall guy, or just a legal fiction), probably off-shores too. Sounds like this might become a great startup idea in the US too ;)
- LurkingPenguin 5y ago
  Shell companies don't change anything. You can buy an aged shell, appoint nominee directors, etc. and it doesn't change the law. If anything, these things will only go to prove your intent to launder money and avoid tax if and when you're caught. While that's not to say that aged shells, nominee directors, etc. don't serve a purpose for certain people in certain situations, a lot of this stuff is just designed to enrich the service providers through fees and provides very little meaningful value in terms of privacy and protection. A lot of Russians use offshore structures to protect their assets from the state. Also, Russia has a territorial tax system under which nonresidents are taxed only on their Russian-source income. Many wealthy Russians live overseas, so if you make your money abroad and live abroad, there's nothing inherently illegal about keeping your money abroad if you're a Russian. Basically, the reasons a Russian would go offshore are a bit different from the reasons an average American would. Finally, in cases where a Russian was offshore for shady business, you should recognize that the long arm of the Russian authorities isn't that long. The US, on the other hand, can functionally knee-cap financial institutions anywhere in the world for refusing to do what it wants. As evidence of this, consider that even Chinese banks will comply with US sanctions if they feel there's a risk to their US dollar operations: https://www.bloombergquint.com/global-economics/chinese-banks-move-to-comply-with-u-s-sanctions-on-hong-kong https://www.bloombergquint.com/global-economics/chinese-bank...
  - sershe 5y ago
    The comment was that for the small guy, it's too expensive and complicated to set up these companies. Imagine if there was a cheap service that would allow the small guy to structure his business "just like the big boys". Big companies use complex international structures to dodge taxes and regulations legally. Currently, there are no reasons to do that for a random small business; if there is, there may be demand. Kinda like people register their companies in Delaware even though it doesn't make "logical" sense; just to (legally) get the regulatory advantages. This is speculation, obviously, based on the direction this goes with the account surveillance.

Tycho 5y ago

Crypto is offshore finance for the little guy.

LurkingPenguin 5y ago
No it isn't. Once you want to convert to fiat (so you can spend it), you're back in the realm of the regulated financial world. If you're running a small business, chances are you can't a) use your crypto without converting to fiat or b) can't use your crypto without identifying yourself to a regulated financial institution. Since BTC, ETH, etc. are public ledgers, you're basically already giving every government agency in the world the ability to track your balances and transactions without any additional regulation or infrastructure required. Of course, if you're super careful, they might not know it's you yet, but if they really want to, they can find out and make sure you don't sleep very well at night while they wait.
- pentae 5y ago
  .. Or you could pay in crypto. Or you could convert your crypto to cash in a Wendys parking lot.
  - LurkingPenguin 5y ago
    This might sound good if you're living in the jungles of Belize. But let's be realistic. The average individual and small business owner cannot meet their day-to-day financial obligations by dealing only with unregulated counterparties that transact in crypto. And the vast majority of people do not wish to live a life where they're exchanging USBs for cash using crypto "plugs" they meet in fast food parking lots. Furthermore, in the latter scenario, that cash is eventually going to get deposited back into a regulated institution (to pay credit card bills, etc.). If anything, a person depositing thousands of dollars in cash on a regular basis is going to draw more scrutiny, especially if they're not running a cash business. Which leads to the obvious solution: you're going to buy that Wendy's where you're exchanging your USBs for cash. Congratulations. You're now officially a money launderer!

sershe 5y ago

There are companies in Russia that specialize in providing shell companies to businesses. You can get a "reused" local company, an unique one, a company represented by a real person (no idea if that person is literally a fall guy, or just a legal fiction), probably off-shores too. Sounds like this might become a great startup idea in the US too ;)

LurkingPenguin 5y ago
Shell companies don't change anything. You can buy an aged shell, appoint nominee directors, etc. and it doesn't change the law. If anything, these things will only go to prove your intent to launder money and avoid tax if and when you're caught. While that's not to say that aged shells, nominee directors, etc. don't serve a purpose for certain people in certain situations, a lot of this stuff is just designed to enrich the service providers through fees and provides very little meaningful value in terms of privacy and protection. A lot of Russians use offshore structures to protect their assets from the state. Also, Russia has a territorial tax system under which nonresidents are taxed only on their Russian-source income. Many wealthy Russians live overseas, so if you make your money abroad and live abroad, there's nothing inherently illegal about keeping your money abroad if you're a Russian. Basically, the reasons a Russian would go offshore are a bit different from the reasons an average American would. Finally, in cases where a Russian was offshore for shady business, you should recognize that the long arm of the Russian authorities isn't that long. The US, on the other hand, can functionally knee-cap financial institutions anywhere in the world for refusing to do what it wants. As evidence of this, consider that even Chinese banks will comply with US sanctions if they feel there's a risk to their US dollar operations: https://www.bloombergquint.com/global-economics/chinese-banks-move-to-comply-with-u-s-sanctions-on-hong-kong https://www.bloombergquint.com/global-economics/chinese-bank...
- sershe 5y ago
  The comment was that for the small guy, it's too expensive and complicated to set up these companies. Imagine if there was a cheap service that would allow the small guy to structure his business "just like the big boys". Big companies use complex international structures to dodge taxes and regulations legally. Currently, there are no reasons to do that for a random small business; if there is, there may be demand. Kinda like people register their companies in Delaware even though it doesn't make "logical" sense; just to (legally) get the regulatory advantages. This is speculation, obviously, based on the direction this goes with the account surveillance.