Every business has a seedy side. Not even the church business is spared. In the financial world, I’ve always found the world of offshore asset-protection-trusts (APT) to be one of the most seedy places. There are many legitimate financial planning reasons for asset protection, such as protecting a kid’s inheritance from bad marriages, etc. The legitimate reasons can be handled in several U.S. states onshore — no need to go offshore. However, APTs can also be used to hide assets from creditors or the IRS, which is illegal. Those APTs go offshore. (Many shady investments are also done offshore.) The worst scam of all is when the “trust” officer convinces the client to take the assets out of the client’s name and put them into the name of the APT, where the client loses complete control. Don’t do it!
About ten years ago, President Obama ordered a task force of the FBI, Treasury, IRS & Customs to crack down on offshore APTs, and it has enjoyed considerable success. I used to read about offshore APT abuses fairly regularly but not any more. Indeed, I see offshore “trust” officers are now chasing UTMA (Uniform Transfer to Minors Act) and especially UGMA (Uniform Gift to Minors Act) accounts. This is a good sign, because accounts are seldom large enough to chase. They’re chasing whatever they can get!
The main reason for the success of this task force is more efficient coordination between agencies. Almost as important, the task force has effectively implemented the same technology that destroys our privacy. For once, it worked for good.
Interestingly, one official joked their success is still largely due to old-fashioned “tips”. It seems people will always find offshore accounts to be sexy and cannot resist bragging to their friends. Lessons learned: Don’t brag . . . and don’t use your computer.