Wealth International, Limited (trustprofessionals.com) : Where There's W.I.L., There's A Way

W.I.L. Offshore News Digest :: March 2009, Part 2

This Week’s Entries :

WHY DOMINICA AS YOUR OFFSHORE HAVEN

Dominica is a small Caribbean nation best known for its extraordinary beauty and for having one of the few remaining credible second passport/economic citizenship programs. Here are the basics on the second passport program. The application process in laborious but routine. Mysteriously, the cost is not mentioned in this piece. It is: (1) US$75,000 for an individual, whether single or married; (2) US$100,000 for a family of applicant, spouse and two children under 18. Additional children add to the cost.

Of all of the offshore nations one could settle on in the world, by far the most intriguing, beautiful and inviting is the Commonwealth of Dominica, located in the eastern Caribbean. Dominica is known as the Nature Island of the Caribbean and it really lives up to that title. This is the island where the Pirates of the Caribbean Parts 2 and 3 were filmed.

Dominica lies at the center of the Caribbean chain of islands, between the French overseas territories of Guadeloupe and Martinique. It is a rugged island noted for its mountains, 365 rivers and numerous waterfalls. It, more than any other island in the Caribbean, has managed to retain its natural beauty. Dominica is home to the second largest boiling lake in the world.

With an area of 298 square miles, 29 miles long by 16 miles wide, it is the 4th largest island in the English speaking Caribbean. It has a population of approximately 69,000, including the last of the Carib population in the Caribbean.

There are two urban centers in Dominica -- the capital of Roseau and the second town of Portsmouth. Roseau is the administrative and commercial center and Portsmouth which is much more scenic and is home to approximately 1,000 students and staff (mostly Americans) of Ross University School of Medicine, a highly ranked offshore medical school owned by DeVry University.

Dominica was discovered by Christopher Columbus in 1493 but most of its early colonial history was spent changing hands between the French and the English. Although the French finally lost control to the English in 1776, their influence is still strong, principally through the French Creole language which most islanders speak, the dominance of the Roman Catholic Church and numerous place names. Dominica became independent in 1978 and is a member of the British Commonwealth. It is also a member of the United Nations, Organization of American States (OAS), the Caribbean Community and a number of other regional and international organizations.

Dominica is a democratic country which follows the Westminster model of Government. Elections are held every 5 years to elect 21 members of Parliament. 9 senators are then appointed and together they sit in a unicameral legislature. The Head of State is a President who is elected by Parliament and holds office for a term of 5 years. His role is essentially ceremonial. The current Prime Minister is the Honourable Roosevelt Skerrit who has been in office since 2004 and the President is His Excellency Dr. Nicholas Liverpool who was elected in 2003.

Dominica enjoys an independent judiciary with its highest court being the Judicial Committee of the Privy Council in London. At the lowest rung of the judiciary is the Magistrate Court which deals with minor civil and criminal matters. Then there is the High Court which handles serious civil and criminal cases. Appeals from both the High Court and the Magistrate Court go to the Court of Appeal. Dominica shares a Court of Appeal with other members of the Organization of Eastern Caribbean States.

That court is a circuit court which sits in each island two or three times a year. Appeals from the Eastern Caribbean Court of Appeal go to the Judicial Committee of the Privy Council. Dominica has an English common law legal system and most of its statute law is based on United Kingdom precedents. There are about 50 practicing lawyers in Dominica.

Dominica has a very modern telecommunication system. Indeed, it holds the position in the Guinness Book of World Records as being the first country in the world to establish a fully digital system.

In Dominica one can establish an International Business Company, a Trust, economic citizenship, second passport and establish an account with an offshore bank. The following provides information for establishing an IBC and Second Passport.

International Business Company (IBC)

If you are looking to incorporate an offshore company, or for shelf companies, International Business Company formation, also known as IBC incorporation in Dominica, a leading offshore tax haven, is low cost and speedy. Since Dominica started offering offshore business incorporation to international companies in August 1996, the ease to incorporate an offshore company in Dominica is truly remarkable.

The reasons for this phenomenal success of offshore company incorporation in Dominica are 2-fold -- the speed of incorporation of an IBC and the low price of forming an international business company, and a plethora of offshore company incorporation and related services are offered. Dominica has with a fast offshore business registration which means that names can be checked and reserved and an IBC can be incorporated in 48 hours or less.

Details on Dominca IBC features follow, among them: (1) total exemption from local taxes including income and capital gains taxes, withholding taxes, transfer taxes and stamp duties; (2) re-domiciliation is permitted either into or from Dominica; (3) an IBC may not carry on any banking, insurance or other financial activities which would make it a financial institution under Dominican Law; (4) an IBC may not carry on business with persons resident or domiciled in Dominica except in limited specified circumstances; and (5) a Dominica IBC may not carry on any business activities in Dominica save those which are required for the purpose of an office and bank accounts (4 and 5 are typical for IBCs in general).

Dominica’s Second Passport Program

An application for economic citizenship requires that a great deal of confidence ... by the applicant in the advocate/agency handling the application. This is because relatively large sums of money must be paid by the applicant to and through an advocate that he/she does not know. Obviously, it is then imperative to select an advocate, or experienced, reputable, reliable firm who deals with the offshore services industry in Dominica. A few questions one would normally ask about such a program are answered here:

What Is Dominica’s Second Passport/Economic Citizenship Program?

Dominica's second passport program, also called the Economic Citizenship program, allows a person who is not a citizen of Dominica to become such a citizen, merely by paying a fee to the Government of Dominica. Caribbean Offshore Services Corporation [the sponsor of this article] has a long history of successfully processing such application, and offers convenient services to international applicants looking to obtain a second passport or dual citizenship in an offshore jurisdiction. The services of Caribbean Offshore Services Corporation have resulted in the acquisition of second passports by hundreds of persons from all over the world.

How Does One Qualify For A Second Passport?

To qualify for a second passport from Dominica the applicants must be of good character and must have the financial means to meet the cost. If these two requirements are satisfied then the other conditions are mere formalities.

Why Do I Need A Second Passport?

The main attractions of a second passport or second citizenship are 3-fold. First, a person acquiring Dominican second citizenship through the second passport program has virtually the same rights as a person born in Dominica. Second, a second passport from Dominica enables the holder to gain visa free entry into a large number of countries. Third, because Dominica has a good reputation internationally, holding a Dominican passport does not attract undue travel problems or attention.

In addition a Dominica's passport/citizenship includes the benefits of: What are the features of the Second Passport Program and what is the cost of obtaining a second passport?

The Dominican Government has created two options for obtaining Dominica citizenship under the second passport program: the Family Option and the Single Option. Fees vary and the advocate agency can provide such details to you.

The application process takes about 2-3 months. Much of the time is taken up by the background checks on the client. These are undertaken by internationally renowned private investigation agencies on behalf of the Government.

The applicant or, in the case of a family, the head of the household, is required to attend an interview in Dominica. Note however that if an applicant does not wish to, or cannot visit Dominica, the interview may be conducted outside of Dominica but the applicant must pay the cost of travel and accommodation of the Government officials who are required to conduct the interview.

How to Obtain Economic Citizenship and/or a Second Passport

All applicants for Dominica's second passport must be made through a promoter or agent approved through the Government of Dominica.

The following is your Check List of the documents which must be provided: Must an applicant speak English to qualify?

No. If an applicant cannot speak English, then at the interview a translator can be used. Where the documents of an applicant are in a foreign language, notarized translations must be submitted.

One of the major attractions of Dominica's Second Passport Program is that the applicants do not have to reside in Dominica to qualify. Neither do they have to reside in Dominica after they have obtained citizenship.

Does the Government of Dominica notify the government of the applicant's country of his/her application for Dominica citizenship?

No. Applications are treated with the strictest confidentiality. No other Government or Government authority is informed that an application is being or has been made.

Dominica is not only the more intriguing one-of-a-kind nations on earth, it also offers a truly solid, reputable and fail-safe system for establishing a second passport and IBC. During this time of world financial upheaval and ongoing crisis, the necessity for a second passport and/or IBC may become critical ... keep Dominica in mind as a truly secure haven for your offshore needs.

RETIRING ON $500 A MONTH: HOW TO AFFORD A BETTER LIFE IN THE SUN

Retiring cheaply to Thailand, Cambodia or the Philippines.

If you want to live really cheaply the author of this article suggests you consider South East Asia. This is a tropical area so those who hate heat and humidity need not apply. For only $500 a month perhaps one's tolerance for such a climate might increase!

South East Asia

Some people regard Third World and Developing World countries with fear or even derision. Granted they do not have the same lifestyle, things happen more slowly in some countries, often not at all. Problems that locals shrug off, like power outages, or water shortages could drive you nuts. Yet if you are prepared to adapt you will find there is a uniqueness of culture, warm weather and warm people.

Places where $500 a month can afford you a nice retirement are becoming harder to find. South East Asia allows you to tick the retirement-with-ease boxes. Granted it is an adventure and you will certainly never live like a king. But then, do you really live like one now!

In Thailand, Cambodia and the Philippines there is great potential. Where, for instance, can you find a dramatic isolated island and stay there for around $9 a day, including food? And where is it possible live near a beach that rarely sees foreigners these days? Or, where can you find a resort for $6 a day? All these places actually exist. Granted they are far from high-end places, and they certainly do not have glossy brochure advertising. Yet you can go to these places and you can avoid the cold and damp of the fall and that long hard winter.

These three places are tropical countries. Consequently they get quite hot in the summer. However, there are a couple of places mentioned that have cool winters. Not snow and hail and that bone-numbing feeling. These go down to just about 10 Celsius, around 50 Fahrenheit.

Living in underdeveloped countries things can surprise you. It could be the lack of facilities for disabled people, or the slums, the traffic chaos and a myriad other things that will color your first encounter. However, before you go, do your research well.

Leave nothing to chance.

Being seriously disabled in these countries is not an option on $500 a month. You will also need some insurance if you are a senior and you are prone to certain issues. Yet you could stretch to getting a person to help you out in some countries. Also if you are going to have a spouse, two can live as cheaply as one in Asia, as long as one partner is not Western. Whole families live on less than $500, but it means cutting back on things you insist on having -- air-conditioning, mostly western foods, supermarket shopping, living in fancy ends of town, big houses and a car.

Some will say you cannot live anywhere on that money, but they have a higher incomes and higher expectations. Go in with none, be happy with what you get and work from there. With the right attitude on spending, it is possible to find a place and still live a good life, even near a tropical beach. You just have to leave the mental and material trappings of the West behind.

By doing that, perhaps for the first time in history, the average Joe can live almost anywhere he/she chooses. So count your blessings because you have the power to move to some very interesting places, even with just $500 a month coming in.

Contacts

Before you go it would be good to get a few local contacts. Here are two sites which have those potentials.

Global Freeloaders lets you stay free in many places around the world for a day or two whilst organizing your thoughts. Free to join and free to participate. Members give you a free bed or room and in return you can agree to, or totally ignore, requests from other members for accommodation in your place. They have 6 members in Cambodia, 165 in Thailand and 285 in the Philippines.

The Hospitality Club is another place where you could stay free for a night. There are many round the world that will give advice and may even put you up for a night or two. It is free to join and no other hidden fees. They have 17 members in Cambodia 750 in Thailand and 743 in the Philippines.

Americans Citizens Abroad, and other nationalities, will like this site. Good advice and news, great links.

Ex-pat sites should be checked out too. These know what is going on and will give you invaluable information. The Daddy of all ex-pat links.

Thailand

Many people's idea of Thailand is a rural life, water buffaloes in rice paddies, temple-dancing maidens and smiling people. Others notice a quickly developing world where technology and financial aspects are enthusiastically embraced. In reality both are correct. Thailand is a balancing act. It holds on to traditions in a world economy and an all-embracing blanket of overpowering Western culture. They take pride in festivals and try and create an atmosphere of Thai-ness. They also borrow ideas, but adapt everything to their way and liking.

Everyone or thing eventually gravitates to the main city of Bangkok. It offers a cornucopia of choice not possible elsewhere else in the country. It goes some way to explain why a large proportion of people living in Bangkok originate from the countryside, mainly from the area known as Isan, in the north east.

For our purposes, though, the capital it is too expensive. We need to go into country towns and cities to survive on $500 a month. In these country districts there are smaller cities where you can get similar things that Bangkok offers. These are quieter places where the word skyscraper is unknown and where your money goes a lot further and people get to know you.

Being poor is a way of life here. They have cell phones but struggle on 6 dollars a day. You could not live that low because in Asian countries they have extended families and beg and borrow off each other, or make do and mend all the time. People live mainly on rice and are adept at scrimping and saving where you will struggle. It is still very cheap, however, even for you. Cheap food is available from stalls and markets, supermarket food halls and small restaurants. A small meal for one plus a Pepsi at a small place would set you back about 50 Baht -- just about $1.50.

Accommodation

Living in areas outside of the capital is pretty good for retirees of all classes, for rich and for some poorer ones. Here prices of accommodation begin to tumble down to a respectable level. Unfortunately, most seaside living in Thailand is now expensive. The same in many countries. There are a couple of places listed here that are worth considering. If you do not like them then head for the hills.

The rest of the article provides details for living cheaply in Thailand. Cambodia and the Philippines will be covered next month, the author promises.

SUBSTANCE ABUSE IN EXPATRIATE LIFE

Substance abuse by expats and their dependents contributes to assignment failure. Convincing people to seek help can be a challenge.

The existence of substance abuse among expats is hardly surprising, given the stresses from the huge changes in lifestyle and culture involved, no matter how welcome. Robin Pascoe, an expert on expat issues, wants effected people to know there are resources available. "It is a matter of identification and a willingness to do something about the problem as it presents, and not allow it to fester," in the sensible words of a quoted therapist.

You will not find global companies shouting this news from the hilltops, but it is hardly a secret: There is always an employee or family member abroad on assignment who regularly has too much to drink at a party, consumes his or her first gin and tonic long before the sun sets, or is addicted to prescription drugs easily purchased over the counter or to recreational drugs readily on offer.

But expats or their dependents with alcohol or drug dependencies are working their hardest to conceal their problem. "Substance abuse is still a shame-based issue and not a popular subject in polite company," says Connie Moser, an expatriate writer living in the Netherlands.

Moser has been researching the problem among expatriates for years to provide more resources on the subject to expats -- and especially young teenagers -- living in the more liberal-minded Holland where coffee shops openly sell drugs and the legal drinking age, 15, is considerably lower than North America.

"People tend to avoid revealing that there is a problem either personally or with a family member," says Moser. "Somehow, it is seen as a failure."

Substance abuse has contributed to failures in international assignments. This is not surprising given the lifestyle and the many changes inherent in expatriate life: multiple moves, excessive work demands, traveling partners creating "single" moms coping alone in a foreign country, loneliness, loss of self-worth, homesickness, stress, and peer pressure to name a few.

"All of those factors and more can lead to coping mechanisms such as self-medication through overindulgence in alcohol, prescription medication, or recreational drugs," believes Moser who cautions that both adults and teens need to be aware of the threats to health and the social and economic consequences of their actions.

Are expats more at risk for addictions? Experts in the field say the prevalence of substance abuse in the expat community would be equal to that found in any general population.

"One of the most significant predictors of alcoholism is occupation. Since expats -- who are company directors, engineers, diplomats, and in general people who live or travel abroad -- are dislocated from their homes, family and other support networks, this places them more at risk," says Dr. Margaret McCann, a director at Castle Craig Hospital , a residential treatment hospital in Scotland for alcohol and drug dependency. "The frequent entertaining of clients, colleagues and other expatriates in the absence of stabilizing influences, which at home exert a restraining influence, will play a part," she says.

"However it is helpful to view addiction as the result of a number of interactive forces such as environmental and cultural influences and the inherent addictive properties of drugs and alcohol. But there are other factors that exist in the individual, such as family history. We do know definitely now that vulnerability to alcoholism is in part genetically determined. So if there was a history of alcoholism in the family and one is now exposed to these inclement environmental pressures, than one could consider oneself in a more at-risk situation."

Adds Tom Bruce, deputy head therapist at Castle Craig Hospital: "Substance abuse in the life of expats is as treatable as it is for those living in the same country all their lives. It is a matter of identification and a willingness to do something about the problem as it presents, and not allow it to fester."

Convincing people to seek help, given the strong denial or secrecy surrounding these problems, can be a challenge. However, resources for treatment are growing as companies begin to recognize and respond to the need.

Cigna International, the global health care insurer and provider, recently launched a new global Employee Assistance Programme (EAP). It has also undertaken a pilot programme for an American company (which remains anonymous for now) which will follow the entire posting cycle, from candidate selection through to repatriation to get more information on the incidence of mental health challenges, according to Cigna's international medical director Dr Lyndon Laminack.

Employers are now feeling they have the duty of care to offer more support," says Dr Laminack. "Post-9/11 we have had more questions from our customers and not necessarily about terrorism, but about mental health challenges which I believe are underreported," he said in a recent interview.

Not everyone agrees that EAPs are the way to address substance abuse, despite the fact that the forerunner to EAPs was called "occupational alcoholism programs."

"The name change from occupational alcoholism to EAP in 1973 was undertaken to both de-stigmatize the program and to increase referrals through a less threatening broad brush approach," reported EAP specialist Ken Burgess to a 2001 counseling conference held in Taiwan.

Burgess, who is Managing Director of Solutions, a Latin American employee assistance consultancy, pointed out that EAPs may not be the proper model of support for employees with substance abuse.

"Expatriates and their families are even more protective of their privacy than are employees and families in the United States. From my own experience I have found expatriates to be extremely reluctant to reach out on their own and very reluctant to use EAP until their problems become completely unmanageable," he reported.

Preferring to call his services "family support" which includes a process for pre-screening candidates for overseas assignments which can head off trouble in areas such as substance abuse, Burgess nevertheless noted in his report: "It is absolutely essential to understand that expatriates and their family members will only call your service when they feel completely safe to do so."

Regardless of how it may be termed, acknowledgement that substance abuse is a real problem is critical, according to Connie Moser.

"Substance abuse is only the beginning, for it all too often leads to domestic abuse which in turn leads to divorce which means families are at risk," she says.

"People must start speaking out and not be afraid to talk about these issues. Once a dialogue is initiated, people are more likely to respond, to admit that help is needed and to seek assistance."

U.S. SENATOR LEVIN LAUNCHES NEW ANTI-TAX HAVEN SALVO

Senator Carl Levin has logged another entry in his long line of anti-offshore bills. Levin histrionically asserting that "tax havens are engaged in economic warfare against the United States, and honest, hardworking Americans." If what Levin claims is true, we can understand his upset. Force and economic warfare on the non-political class are supposed to be the provinces of government alone. No competition allowed.

The bill contains the usual creation and management of a Nixonian offshore enemies list, and an expanded laundry list of measures which impose more taxes and onerous reporting requirements on offshore entities which involve U.S. parties in any manner. With Obama's election and more Democrats in Congress, this bill will probably actually pass in some form or other.

Some of the proposed measures are aimed directly at squeezing more taxes out of publically held corporations who include foreign subsidiaries in their holding company configuration. There will surely be a major fight over those.

Gifts from offshore trusts to onshore persons have been under suspicion and scrutiny for a long time now. This bill appears to outright declare any "gifts" to be taxable income. Loans of valuable hard assets such as real estate, art, and jewelry to onshore persons will also be taxed. As more details emerge we will undoubted have plenty to report and comment on.

U.S. Senator Carl Levin, the long-time enemy of offshore territories, has once again declared war against the tax haven with the introduction of a strengthened "Stop Tax Haven Abuse Act" and, with the backing of the President and a Democrat majority, this time he might succeed.

Stating that "tax havens are engaged in economic warfare against the United States, and honest, hardworking Americans," Levin was joined by three Democratic Senators, including Sheldon Whitehouse, Claire McCaskill and Bill Nelson in introducing comprehensive new legislation which aims to recover an estimated $100 billion in tax revenues supposedly lost by the United States each year as a result of "tax haven abuse" by U.S. corporations and individuals. A companion bill was introduced in the U.S. House of Representatives by over 40 members led by Rep. Lloyd Doggett, (D-Texas) and Rep. Rosa DeLauro, (D-Connecticut).

"Offshore tax haven and tax shelter abuses are undermining the integrity of our tax system and increasing the tax burden on middle income families," said Levin, chairman of the Senate Permanent Subcommittee on Investigations, in one of his now familiar verbal barbs. "We cannot tolerate $100 billion in offshore tax abuses burning a hole through our budget each year. We can fight back against secrecy jurisdictions and shut down offshore tax abuses if we have the political will. This bill provides a powerful set of new tools to clamp down on offshore tax and tax shelter abuses."

Levin introduced a similar bill in February 2007, supported by then-Senator Barack Obama, but with a slimmer Democrat majority in Congress, and with a Republican administration, the political will to make the legislation succeed was not as strong. However, over the past 12 months the deepening financial crisis and allegations of offshore tax evasion by wealthy individuals around the world have once again brought the issues of banking secrecy and "unfair" tax competition to the fore. Coupled with the fact that Obama, who has publicly pledged a fresh offshore crackdown, is now in the White House, the legislation may have a better chance of succeeding this time around.

The new Stop Tax Haven Abuse Act is a fortified version of the bill introduced into Congress two years ago with the addition of three new provisions that would: treat foreign corporations managed and controlled in the U.S. as domestic corporations for income tax purposes; repeal tax laws that enable foreign entities to avoid U.S. taxes on stock dividends paid by U.S. companies; and expand the tax return reporting requirements for passive foreign investment corporations (PFICs) to include U.S. persons who do not own a PFIC, but have formed, sent assets to, received assets from, or benefited from a PFIC.

In other measures, the 84-page bill would:

TAX HAVENS PLEDGE TO EASE SECRECY LAWS

In response to the relentless pressure from the organization of tax and spend countries, e.g., see post immediately above, the offshore havens are dropping their privacy protection rules. The havens have long cooperated on criminal investigations involving drug running, terrorism, and the like. They have generally drawn the line somewhere along the tax evasion spectrum, and in particular have resisted the wholesale turning over of names and account details of clients from a given country -- "fishing trips" -- upon the request of that country's government.

Now two of the stalwart privacy defenders, Andorra and Liechtenstein, have "pledged" to relax their rules, with details yet to be determined. The pro-state, pro-tax groups such as the Tax Justice Network make it clear they will be looking at the details closely. As will we here at W.I.L. For instance, "Liechtenstein offered to conclude bilateral treaty agreements with partner countries that would allow mutual legal assistance for investigations of both tax fraud and tax evasion." What does that mean exactly? Everyone will see soon enough.

The European principalities of Andorra and Liechtenstein pledged to relax their bank-secrecy laws, yielding to international pressure on tax havens to stop shielding the holdings of the rich.

The moves raise the stakes for big tax-haven centers such as Switzerland to take similar steps before the coming meeting of the Group of 20 developed and emerging nations in London. Offshore tax evasion is expected to be a topic at the April 2 summit.

The global financial crisis has encouraged cash-strapped governments to crack down on the offshore industry, which helps wealthy clients evade billions of dollars a year in taxes. The downturn has also exposed alleged financial frauds that flourished under lightly regulated jurisdictions such as Antigua and Barbuda, a tiny Caribbean nation that hosts scandal-plagued Stanford International Bank.

Liechtenstein said Thursday (March 12) that it will comply with international standards for tax and data sharing established by the Organization for Economic Cooperation and Development.

Andorra, a banking stronghold tucked between France and Spain in the Pyrenees mountains, also said Thursday it will relax bank-secrecy laws by November in hopes of being removed from a 2005 OECD blacklist. "Andorra is committed to changing its laws to ensure bank transparency and to allow legal assistance according to OECD standards," Prime Minister Albert Pintat said in an interview.

The OECD blacklist comprises Liechtenstein, Andorra and Monaco. In recent months, France and Germany asked the OECD to compile an expanded roster of countries that do not adequately share bank information with foreign tax authorities. That roster, which will be shared with G-20 countries, currently names about 30 nations, including Switzerland, Luxembourg, Austria, Singapore, Hong Kong, Andorra and Monaco, among others.

The OECD has no regulatory or policing powers but carries political weight in Western capitals. In a recent report, the OECD listed estimates for the assets held by the offshore banking industry as high as $11.5 trillion. Together, Andorra and Liechtenstein account for about 1% of that total.

The developments come two days after the Obama administration endorsed legislation in the U.S. Congress to crack down on countries that refuse to cooperate in multinational tax and securities-fraud inquiries. "We fully support the legislation," Treasury Secretary Timothy Geithner told the House Ways and Means Committee on Tuesday.

Rep. Lloyd Doggett of Texas and Sen. Carl Levin of Michigan, both Democrats, have submitted bills that require the Treasury Department to publish a list of "Offshore Secrecy Jurisdictions" subject to "special measures" including trade sanctions. The draft list includes Liechtenstein, Switzerland, and other countries in Europe and the Caribbean. The list is similar to the OECD's list of uncooperative tax havens.

Over the past few decades offshore havens have gradually lifted at least some of the secrecy surrounding their banking industries. For instance, most now cooperate with foreign authorities in tracking down the proceeds of illegal activity such as drug trafficking. And since the September 11, 2001, terrorist attacks, they have acceded to some greater measures of counterterror surveillance. But they have been reluctant to undermine their much larger business of helping foreigners shield their income and assets from tax authorities. Because their own laws do not proscribe tax evasion, they have argued, they are under no obligation to assist foreign tax officials.

Thus, some foreign governments remained skeptical about Thursday's announcements. "We do not care what Liechtenstein or Andorra say; it is action that counts," said German government spokeswoman Jeanette Schwamberger. "We cannot accept blind spots" in the international banking system. Stephen Timms, financial secretary to the U.K. Treasury, said in a statement it was "further evidence that tax secrecy is becoming entirely unacceptable," but said it needed to be followed by "concrete steps."

The island of Jersey signed an agreement with the U.K. this week aimed at fighting tax evasion. Belgium, one of three European Union countries that still retain stiff bank-secrecy protections, has said it will move to automate the exchange of tax information.

Bank-secrecy laws in neighboring Luxembourg became an issue after the exposure of Bernard Madoff's Ponzi scheme when funds based there were caught up in the affair. The nation is still defending its banking secrecy but recently met with Austria and Switzerland to discuss a response to international pressure.

Switzerland, the world's biggest offshore-banking haven with about $2 trillion of foreign assets under management, is under pressure from a U.S. tax-fraud investigation into services offered by UBS to hundreds of wealthy U.S. clients. Last month, UBS agreed to pay a fine of $780 million and disclose the identity of some clients.

On Friday, an expert commission on bank secrecy established only last week will offer recommendations to the Swiss cabinet on how best to respond to the gathering pressure. Soon thereafter, Swiss President and Finance Minister Hans-Rudolf Merz is expected to address possible changes to Switzerland's banking-secrecy rules, according to Roland Meier, a finance ministry spokesman.

"Switzerland has to take action," Mr. Meier said. "The international pressure is tremendous."

Any action by the Swiss is likely to echo across the $7 trillion wealth-management industry, unleashing a flurry of cross-border fund transfers as the wealthy look to preserve secrecy.

John Christensen, director of the International Secretariat of the Tax Justice Network, a U.K.-based nonprofit organization, says the erosion of bank secrecy in Europe could benefit banking centers further afield, with Singapore, Hong Kong and Dubai standing to gain the most.

Singapore is coming under increased scrutiny after emerging as a private-banking center in recent years with about $300 billion under management.

EU negotiators have turned up the heat on Singapore to give up names of European citizens who open accounts in the country or withhold a tax payable to the EU -- much like an agreement between Brussels and Switzerland that went into force in 2005, according to a person involved in the negotiations.

Among Thursday's proposed changes, Liechtenstein offered to conclude bilateral treaty agreements with partner countries that would allow mutual legal assistance for investigations of both tax fraud and tax evasion. At present, tax evasion is not a criminal offense in Liechtenstein.

Earlier this week, LGT Group, Liechtenstein's biggest bank which is owned by the royal family, agreed to sell its controversial trust business.

LGT came under pressure and criticism last year after German intelligence agents acquired a list of hundreds of foreign customers of LGT who were suspected of large-scale tax evasion. They included members of Germany's business elite such as Klaus Zumwinkel, the former head of Deutsche Post AG. He recently pleaded guilty to tax-evasion charges.

SWITZERLAND, LUXEMBOURG, AUSTRIA DEFEND BANK SECRECY

This came out before the article immediately above, where Andorra and Liechtenstein publically announced they would be cooperating with the OECD on tax matters to some greater degree than in the past. Three of the other major European "tax haven" financial centers had their own public announcement, in effect asking "Can't we just be friends?" The trouble is that friendship here consists of "Do what we say and nobody gets hurt."

Debating principles with thugs is pointless at one level, but we suppose it is part of fighting the good fight.

Luxembourg, Austria and Switzerland vowed on Sunday (March 8) to protect their banking secrecy and speak with one voice to influence how the G20 group of nations crack down on tax havens.

The G20 holds a summit in April and tackling tax havens is on its agenda but the three small countries with their long-cherished bank secrecy rules are not members of the group.

"The discussions that are taking place right now, unfortunately take place in organizations where our countries are not members, in particular the G20," Luxembourg's Treasury and Budget Minister, Luc Frieden, told a joint news conference with his Swiss and Austrian counterparts.

"We think it is unacceptable that among our European and American friends, we have not had the possibility to have a debate together," Frieden said.

The Organization of Economic Cooperation and Development which represents richer countries, has a blacklist of countries that will not fully cooperate in tax evasion probes and includes Andorra, Monaco and Liechtenstein in Europe.

EU finance ministers have also asked the European Commission to look at ways of dealing with "uncooperative" tax jurisdictions and how they could be censured.

"We demand to be part of the discussions where the criteria for the list of so-called uncooperative countries will be fixed," Frieden said.

Switzerland, Austria and Luxembourg want to be "integrated" into the debate on tax havens "to find ways to maintain banking secrecy while at the same time we are open to a dialogue on how to find ways to improve collaboration on tax offenses," he said.

Germany and France have pushed for Switzerland to be added to the blacklist but Czech foreign minister Karel Schwarzenberg, backed Switzerland's bank secrecy rules on Sunday [ID:nL8651566].

Austria's Finance Minister, Josef Proell, said banking secrecy was not the source of the financial crisis.

"We will also be mindful of some EU member states pushing against the boundaries, or even beyond, some of the fundamental principles of the EU freedom of establishment and the free movement of capital," Proell said.

Switzerland came under fire after allowing Swiss bank UBS to disclose the identity of about 300 of its U.S. clients to avert criminal charges that Swiss regulators said would put its existence at risk and hurt the economy.

Swiss President Hans-Rudolf Merz, who is also finance minister, said the creation of "blacklists" must be avoided when those such as Switzerland are not party to the talks.

"It is the aim of the Swiss government to avoid the automatic exchange of information because that would mean giving up banking secrecy," Merz told the news conference.

Separately EU Tax Commissioner Laszlo Kovacs has proposed that no EU country can use local bank secrecy laws to turn down a request for information exchange from other member states.

"We should not discuss the savings tax directive and the directive on information exchange separately but in a package ... there can not be rash political decisions above our heads with great repercussions on the parties concerned," Proell said.

ALLEN STANFORD FALLS OFF FORBES BILLIONAIRES LIST

Having your assets seized and frozen can be harmful to your net worth.

Not surprisingly, 2008 was hard on the net worth of the financial elite. A worldwide across the board crash in asset values will do that. Noteable descents include Warren Buffett's net worth declining by $25 billion to $37 billion -- a 40% decrease. Even Buffett got caught off guard by the popping of the credit bubble.

Also noteworthy were the declines in the fortunes of the Ponzi schemers, legal and otherwise. Allen Stanford's Caribbean-based financial empire appears to have consisted of ficitious assets to a major extent. Once this was exposed a cross-border effort resulted in the freezing of much of Stanford's personal real assets, which had presumably come out of the pockets of his erstwhile clients.

Such a penalty has not yet been visited upon the Wall Street mob members who paid themselves huge bonuses out of fictitious earnings based on the fictitious asset values of various credit instruments that sprung up, Brigadoon-style, in the misty credit bubble landscape. That mob had the benefit of a government franchise.

Then there are the company builders who financed their operations using large amounts of leverage. They were not Ponzi schemers per se, but relied on the general Ponzi scheme which is the world fiat money-based financial system continuing long enough for them to get out in time. Perhaps they did not conciously realize that they were making this bet, but they were. Ex-billionaire Ramesh Chandra, founder of a debt-heavy India property developer is one such casualty, his net worth having been $9.6 billion a year ago.

Accused Ponzi schemer, Sir Richard Allen Stanford, is no longer in the company of the world's richest.

Stanford was among the biggest billionaire losers of 2008, falling off the latest Forbes billionaires list. Last year Stanford was coasting on the Forbes 400 list, "an elite listing of America's 400 wealthiest individuals," according to the magazine.

His net worth at the time was at least $2.0 billion and Sir Allen, then 57, was ranked at #239. One year later, Stanford has had his assets seized and frozen by the U.S., Antigua and Venezuela governments and has been accused by the U.S. Securities and Exchange Commission of perpetrating a ponzi fraud in excess of US$8 billion. The S.E.C. has charged Stanford, two of his top aides and three of his companies with operating a long-running fraud involving high-yield certificates of deposit. He is also accused of misappropriating $1.6 billion in investor funds.

The news comes as Stanford reportedly refuses to cooperate in the government's probe, according to court filings. "I hereby assert my privilege against self-incrimination under the Fifth Amendment to the United States Constitution and decline to testify or provide an accounting, and will continue to decline to testify, provide an accounting or produce any documents related to the matters set forth in the Commission's complaint," Stanford said in a document dated March 9 that was filed in U.S. District Court in Dallas.

Stanford Chief Financial Officer James Davis, who is also accused of the fraud, has said he would not cooperate with the government's civil investigation.

Small technical note here: Article V of the U.S. Consitution reads "... nor shall be compelled in any criminal case to be a witness against himself ..." (emphasis added).

Total number of billionaires fell from 1,125 to 793 in 2008.

Meanwhile, even some of the world's wealthiest are feeling the pinch of the global economic meltdown with the 2009 Forbes list showing fewer billionaires on the planet.

This year, the total number of billionaires fell to 793 from 1,125, marking the first time since 2003 that the number of billionaires worldwide has dropped from one year to the next.

However, despite losing $18 billion over the past 12 months, former Microsoft guru Bill Gates reclaimed the top spot as the world's richest person with a net worth of $40 billion while Warren Buffett slipped to #2 with $37 billion, after losing $25 billion in the past year due to the decline in value of Berkshire Hathaway stock.

Mexican telecom titan Carlos Slim Helu lost $25 billion, and comes in at #3.

Some 355 billionaires fell off the list this year, including former AIG chief executive Maurice "Hank" Greenberg, former Citigroup CEO Sandy Weill, and Facebook founder Mark Zuckerberg. The biggest loser in dollars was Anil Ambani, chairman of India's Reliance Communications Ltd, whose net worth slid $31.9 billion to $10.1 billion.

Among the now ex-billionaires, the biggest is Ramesh Chandra, the founder of debt-laden India property developer Unitech Ltd. His net worth was $9.6 billion a year ago, ranking 86th worldwide. Also falling off was Belize-born, Chinese businessman, Also Huang Maoru, who was last year ranked at 843 with $1.4 billion.

ISLE OF MAN LINK TO ANTIGUA CORRUPTION INQUIRY

The government of Antigua has begun criminal inquiries into large payments discovered in Isle of Man bank accounts controlled by Antiguan politicians.

Disclosure of these Caribbean corruption inquiries comes at an unwelcome time for the Isle of Man, described by the chancellor, Alastair Darling, as "a tax haven sitting in the Irish Sea." The island is under review by the UK government, which subsidises its low-tax regime.

According to documents seen by the Guardian, HSBC bank, in the Isle of Man, accepted $3.2 million (£2.3 million) on behalf of Asot Michael, once chief of staff to the former Antigua prime minister Lester Bird.

The Bank of Bermuda refused to handle a similar account and filed a "suspicious activity report" before the further account was opened on the Isle of Man, according to investigators' reports.

Another $1.4 million in total was paid into HSBC Manx accounts belonging to a former Antiguan high commissioner in London, Sir Ronald Sanders.

The cash under investigation came via an Israeli businessman, Bruce Rappaport, who is alleged to have diverted Antiguan funds into his own pocket while making payments to local politicians.

The Manx role in the Caribbean island's affairs is laid out in a report following a prolonged investigation by a Canadian forensic accountant, Robert Lindquist. He was called in by the new Antiguan prime minister, Spencer Baldwin, in 2004 to investigate "questionable payments" by Bird's regime, ousted in a general election.

A civil lawsuit against Bird and his chief of staff accused them of corruption. A new general election is due tomorrow. Coincidentally or not, the Baldwin government announced that police had now been called in, and that Rappaport had agreed to hand back $12 million in settlement of the civil lawsuit against him. There had been a "gigantic conspiracy" to rob local taxpayers, the Antiguan attorney general said last month. He said Antigua had been making inflated payments of $400,000 a month, supposedly to pay off a debt to a firm which built a desalination plant on the island. But paperwork unearthed revealed that only $200,000 a month was actually due. The extra cash was routed through a company controlled by Rappaport, and money was passed on to a Panama offshore entity called Bellwood.

Sanders, the former high commissioner, denied getting kickbacks. "I don't know what kickbacks there could be," he said. "I worked for Rappaport for a long time, and he paid me." His lawyers said: "He firmly denies that there has been any impropriety on his part in this matter."

Bird said that he had committed no crime and was the victim of a "witchhunt." Michael, his former chief of staff, has also denied wrongdoing, saying: "It is a red herring across the campaign trail."

HSBC said ... that it would publicly neither confirm nor deny information about individual Manx accounts. "HSBC has robust anti-money laundering policies and clearly defined policies and procedures concerning politically exposed persons," it said. "Where HSBC identifies any concerns it reports as required to the relevant authorities."

STILL SENDING NAKED EMAIL? GET YOUR PROTECTION HERE

Buckle your seatbelt, encrypt your bits.

We at W.I.L. have been encouraging people to encrypt their email communications with us, and everyone else on sensitive matters, from Day 1. It is admittedly a bit of a pain. Those who just like to use their computers and not think about how it all happens will have to do more learning than they are used to. And then you have to get those with whom you exchange emails to get with the program as well, otherwise adopting the whole routine is pointless.

We long ago posted our own introduction to encypting email using Pretty Good Privacy, "Secure Email Communication with PGP". Below is another introduction, which involves using the free, open source altervative to PGP called Gnu Privacy Guard, or GPG, and supporting programs. Conveniently, the free Mozilla email client Thunderbird can integrate GPG encryption seemlessly into your standard email routine.

Both the setup and use of PGP/GPG continue to get easier. Those new to the arena still should set aside an hour or two, relax, take a deep breath, and be prepared to work through some confusion. As with so many things, once you actually have figured it all out it suddenly becomes "obvious."

In this age of brazen, warrantless wiretaps and never-ending data breaches, you would think email encryption would be considered de rigueur. Alas, even among the digerati it is rarely given the time of day because encryption is seen as an exotic undertaking that brings more hassle than benefit.

To be sure, incorporating a robust encryption regimen into a routine that involves sending and receiving hundreds of emails each day will not happen by accident. If you have never done it before, there is a modestly steep learning curve that is necessary not only for you, but for all the people you correspond with. No wonder few people bother.

Jon Callas, CTO of encryption software provider PGP, likens encrypting email to wearing a seatbelt, which a few decades ago was so unpopular that many people only did when they were required by law to do so.

"You only need to wear a seatbelt on the day you get in a crash and you only need to encrypt the one email that is going to get lost," he says. "The way that you make sure you encrypt that one mail that needs to be encrypted is the same way you make sure you wear your seatbelt on the one day you get in a crash and that is you do it all the time."

Your writer was forced to confront his own encryption apathy about a year ago, when asked for a public key by a source promising a juicy scoop. Two days later, the key was proffered, but the experience made it clear that the road to encryption Nirvana -- at least for us Windows users -- is paved with solutions that are confusing, incomplete, or impractical.

For those so inclined, PGP sells products such as PGP Desktop Email that Callas says "literally passes the my-75-year-old-mother-can-use" test. Your writer, on the other hand, opted for Gpg4Win, a free Windows implementation of the open source Gnu Privacy Guard (GnuPG). Used with the Enigmail add-on for Mozilla's Thunderbird email client, it offers everything needed to generate, store, and manage digital keys for email encryption.

What follows is a step-by-step tutorial for Windows users. (Linux geeks looking for help should seek out Brenno de Winter's excellent how-to here.)

Step 1: Installing Gpg4Win

Navigate to Gpg4Win's download page and download the latest full version of the program. At time of writing (and indeed since November 2007) that was gpg4win-1.1.3.exe.

Whenever you are installing a piece of software this sensitive, it is a good idea to verify that the program you have just downloaded is the real thing by checking its SHA1 or MD5 checksums. SlavaSoft's HashCalc is one reliable way to do this. Download and install it, and then compare the checksum it computes for gpg4win-1.1.3.exe against the checksums provided here.

Once you have verified the integrity of the EXE file, double click it to install. You will now be presented with a screen of components to install. They include: (I could not find GPGol in my setup, but I did not care since it only works only with Outlook 2003).

The setup also offers documentation that is worth having, though unless you speak German, there is no reason to install the advanced manual. Other than that, be sure to check everything else.

Once completed, you will find a new entry in the All Programs folder of Windows called GnuPG for Windows. Highlighting that item will reveal the modules of Gpg4Win that provide things such key management and email encryption. Here is what it looks like.

Step 2: Generating your key pair

Now it is time to generate the key pair that will be used to encrypt and decrypt messages. (If this is your first time, it is not a bad idea to create a practice key in case you make any mistakes). To do so, open GPA, short for GNU Privacy Assistant. The first time the program is opened, it will open a window prompting you to generate a private key. This is exactly what you want to do, so click "Generate key now."

Most of the prompts are self-explanatory, but a few things are worth bearing in mind. First, be sure to pay close attention to the passphrase you choose. Choices such as "password" and "1234567" are clearly not acceptable. Better is a randomly generated password using a program like Password Safe. Even better still is use of a long phrase that is idiosyncratic enough that only you will know it. Whatever passphrase you use, be sure to remember it. Your key will be useless without it.

GPA will also ask you if you want to back up your private key. This is generally a good idea, because if you lose it, you will be unable to read encrypted messages sent to you. The best idea is to save the key to a USB thumb drive and then stash it in a secure lockbox (along with your passphrase written out). Be sure to enter a file name (e.g., mysecretkey.asc) in the backup dialog box, or GPA will give you a cryptic error message.

When you are done, the key you just created will appear in GPA's keyring editor. Notice that with the Details tab selected, GPA says that the key has both a private and public part.

For people to send you an encrypted email, they will need your public key. You can get this by right-clicking on your key in the GPA keyring editor and choosing Copy. In theory, you should be able to paste the key into the body of an email message and send it to one or more of your contacts. In practice, GPA seems to add an extra carriage return to keys, which makes sending them in the body of an email problematic. To get around this, go to Start > All Programs > Accessories > Notepad, and paste the public key into the body. Then save using a file name such as mypublickey.asc and email it as an attachment to one or more contacts.

Your contacts, assuming they already know how to send encrypted email, now have what they need to send an encrypted email that you -- and you alone -- can decrypt. To make that easy, you will need to install the Enigmail add-on to Thunderbird.

Step 3: Install the Enigmail add-on for Thunderbird

If you plan to receive encrypted emails on a regular basis, you will probably want a seamless way to decrypt them. Plenty of email clients, Thunderbird among them, have ways to do just that. This tutorial assumes you have already installed Thunderbird. If you have not, you can either install it first or skip this step and find some other way to decrypt your messages.

Navigate to this page on the add-ons section of the Mozilla website. Click on the "Download now" link and save the file (at time of writing it was enigmail-0.95.7-tb+sm.xpi) to your desktop.

In Thunderbird, go to Tools > Add-ons and then click the Install button at the bottom left of the popup window. In the "Select an extension to install" window, change the folder to your desktop. In the list of files, highlight the Enigmail file you just downloaded and choose Open. In the resulting Software Installation window, click Install Now. Then restart Thunderbird.

Enigmail should immediately open an OpenPGP Setup Wizard that prompts you to select a key to sign and encrypt email. Highlight the key you just created and select Next.

By now, one of the contacts you emailed earlier should have had time to send you an encrypted message using your public key. When you use Thunderbird to open it, you will be prompted for your passphrase. Enter the passphrase you chose when you generated your key pair. If all goes well, Enigmail will decrypt the message and it will look something like this.

Congratulations. You have just decrypted your first email. For an idea what the same message looks like to anyone without the key, open the same email on a web-based email service or a client that has not been set up to work with your key pair. It will look something like this. Note that subject lines are never encrypted, so remember to never include private information there.

Get more from Enigmail

Enigmail can be used for several other purposes, including adding your contacts' public keys to the keyring. The plug-in should automatically detect emails that include a public key and invoke a pop-up prompting you to add the key. Contacts whose public keys have been added to your keyring are then able to sign messages that prove they were generated with the corresponding private key. Such messages look like this. You can also digitally sign messages you send to others using the OpenPGP button that now appears on Thunderbird's composition window and, if you have got the public key of a recipient, you can also send that person an encrypted email.

Epilogue

With your new-found ability to send and receive encrypted email, you will want to get in the habit of practicing sound crypto hygiene that goes beyond the scope of this article. The Gpg4Win folks offer their own how-to here, and the GNU Privacy Handbook also provides useful information. The Enigmail creators also have helpful information here.

But we would be remiss if we did not offer this one non-negotiable rule: Trust only public keys that you have verified in advance with the sender. One common verification practice is to speak with the other person by phone or in person and compare the key's fingerprint, which the GPA keyring editor displays when a key is highlighted. Once you are satisfied the key is legit, you should sign it. To do that, right click on it in the GPA keyring editor, choose Set Owner Trust, choose the Full radio button and click OK.

In a world of repressive governments and a growing reliance on insecure networks, there is no way anyone can be sure their most sensitive messages are not intercepted by the forces of darkness. But you can make it mathematically improbable that all but the most well-funded snoops could ever make heads or tales of your communications. Of course, only you can make that happen. The ball is in your court.

HOW TO PROTECT YOUR DATA

Basement-dwelling hackers are not the problem anymore. Far more sophisticated crooks abound.

The job of protecting the data on your computer or network becomes harder and harder. The system-cracking players have evolved from the "script kiddies" of yore who were content to let you know how smart they were, and perhaps reveal a sociopathic streak in the process, to professional programmers who want to steal your data as stealthily as possible. Here is an interview with the head of a computer security firm explaining the threats out there.

Security holes in commonly used software -- Windows, of course, Flash, the Java virtual machine, etc. -- are apparently as prevalent as ever. The proliferation of mobile devices introduces a whole new set of holes. And no matter what measures one takes to shore up the system, there is always the problem with users doing stupid things. So security training has to go with guarding the setup.

Think your antivirus software is enough to protect your business from outside threats? Think again.

Data is selling well on the black market, and modern hackers are crafty programmers who can ferret out vulnerabilities in your systems. The recent Confickr worm even took advantage of social-engineering tactics.

Monte Robertson, president and chief executive of Software Security Solutions, explains how smaller companies can keep up with the evolution of security threats.

bMighty: What security threats should small to mid-size businesses be aware of?

Monte Robertson: The latest threats are from professionally trained programmers. It used to be that the hackers were the "geeks in the basement," and all they did was put out code to wipe out hard drives. But today these are highly organized groups that are trained programmers who understand how to write malicious code to compromise systems.

It is a huge market for malicious software that is attracting professionally trained folks. What they are doing is creating malware that is Web-based, and they will take advantage of a number of threats to compromise Web servers and send out e-mails and even take out ads to draw people to Web sites.

There is a threat called Confickr/Downadup where they are taking advantage of social-engineering tactics. You saw it come out for the election, the Super Bowl, for Valentine's Day, where you are told to open a link and it will take you to a Web site that is compromised with malicious code. They are getting better at it, and it is not just the porn sites.

People who do not know to keep their applications on their Web sites patched are taken advantage of. Some people say Confickr has affected 9 million to 15 million machines. The disturbing thing is that a lot of these machines and people are, theoretically, protected by antivirus. What that tells me is that having antivirus or anti-malware is not enough anymore because the Web-based threat and the social-engineering threat are created by smart people.

What are the most effective security practices that smaller companies should consider?

Training has a lot of effect. In terms of Windows machines -- say, Vista -- it has a user-access rights component but even still, that gets compromised. Users who are using machines with local administrator rights are left wide open. You have to use programs that make business work, but if you are using ones with local admin rights, and those users surf the Internet or open e-mails or attachments, that means they have the permission to install any program, whether it is a good program or not. Hackers know that and take advantage, and if you are surfing the Web, you are open to whatever is out there.

It helps to have limited rights because then the potential is reduced to install malicious programs. It becomes a support issue because, say, a salesperson needs the latest gadget, and he has to go to IT and wait for them to install it. What I am suggesting is if companies are using programs that require local admin rights, then encourage companies to come up with software that does not require local admin rights. People are not aware that there are free solutions to protecting their machines. Is it a business decision to allow users admin rights? If so, clamp down on what you can.

There are also steps you can take to reduce risk, such as having policies. You could say, "Do not open e-mails; do not download software," but it needs to be done. People need to know how important the company's data is. Have a security policy that outlines everything from the tools you use to policies you follow -- and that identifies all the layers of security.

It takes a lot more than just software to protect users from themselves. Part of the problem is with younger folks -- they just surf fearlessly, because they do not understand how big the threat is and how silent it has become. Hackers used to want everyone to know they were there, but now they want to work in the background, slowly get into networks, because data is worth something on the black market. The bottom line is you need a blended response to a blended threat.

How do small and mid-size business security concerns differ from those of large companies?

They are pretty much identical because everybody connects to the same Internet. It is just that large businesses have a larger surface area, so they cannot be as flexible. In terms of the threat, the malicious code writers are going after low-hanging fruit -- they just want to go after what is easy to get, and that is why some of these threats are Web-based, and they are just going after whomever, whether it is IBM or some small business. The small or mid-size business may not be as big of a target, but they are exposed to the same kind of threats and risk.

What are some of the most common mistakes small and mid-size businesses make when it comes to software security?

One of the main things is updates -- their anti-malware is not kept current, or more important, their operating systems and office products are not kept current. Companies are still using [Windows] XP and not moving past Service Pack 1, but an internal application does not work with Service Pack 1.

Updates are a big piece of it. And that goes for 3rd-party apps like Adobe and Java and QuickBooks. All of these tools are constantly updated because people are finding security holes. While browsers are getting more locked down, hackers are moving past to 3rd-party apps. The risk is that your network gets exposed to that exploit, and you have not protected it. If an exploit happens because you have not patched, your company is at risk.

Mobile devices are not being protected. The perimeter is gone -- people are on the go and want access. That is up and coming -- getting mobile devices protected. And small and mid-size businesses do not have time or resources to stay current. The antivirus software companies are struggling with that kind of stuff. And small and mid-size companies have a tendency to buy the market leaders because it is too complex for them -- they just want their computers to work like a light switch.

What is layered security, and why should smaller companies consider it?

It takes more than software to protect a company. You have to have a security policy that defines everything. It makes you realize everything you need to be concerned about -- who has access to that data? The first layer identifies what is valuable. And then you have policies to back it up. There is a logical progression to layered security. It includes user awareness, updates and update policy.

Down on the list are services like e-mail and Web filtering. The last layer would be the software and tools you use to defend it, but there are all sorts of tools that are people-driven, since they are the problem and the solution. Training is important so people can learn what is critical. There is a lot more to it than buying a firewall or antivirus. It goes all the way from archiving services to wireless networks to how to behave when you are in a hotel. People get outside a company, and they behave different on a laptop. So processes are needed to protect people from themselves and the company.

How can software security impact a company's bottom line?

We have a cost calculator. If your solution slows down your workers, it is important that you find the best-detecting and best-performing solution that does not slow the network down. We take a hard look at that.

HOW THE CITY HURTS YOUR BRAIN ... AND WHAT YOU CAN DO ABOUT IT

Even fleeting exposure to nature improves brain performance.

The instinct to escape the pressures of modern life -- read, life with lots of other people and cars to contend with -- is well grounded. Modern science is measuring what most people have felt all along: Being in an urban, crowded environment is draining. It impairs the brain's capacity to process input and regulate behavior. The effect is nontrivial.

Even if expatrating into a more peaceful way of life is not in the immediate cards, one can still offset the debilitating effects to a degree by exposing oneself to a natural setting. Something as simple as a short rest in a small urban park helps. The tree-huggers were on the something.

The city has always been an engine of intellectual life, from the 18th-century coffeehouses of London, where citizens gathered to discuss chemistry and radical politics, to the Left Bank bars of modern Paris, where Pablo Picasso held forth on modern art. Without the metropolis, we might not have had the great art of Shakespeare or James Joyce. Even Einstein was inspired by commuter trains.

And yet, city life is not easy. The same London cafes that stimulated Ben Franklin also helped spread cholera. Picasso eventually bought an estate in quiet Provence. While the modern city might be a haven for playwrights, poets, and physicists, it is also a deeply unnatural and overwhelming place.

Now scientists have begun to examine how the city affects the brain, and the results are chastening. Just being in an urban environment, they have found, impairs our basic mental processes. After spending a few minutes on a crowded city street, the brain is less able to hold things in memory, and suffers from reduced self-control. While it has long been recognized that city life is exhausting -- that is why Picasso left Paris -- this new research suggests that cities actually dull our thinking, sometimes dramatically so.

"The mind is a limited machine,"says Marc Berman, a psychologist at the University of Michigan and lead author of a new study that measured the cognitive deficits caused by a short urban walk. "And we are beginning to understand the different ways that a city can exceed those limitations."

One of the main forces at work is a stark lack of nature, which is surprisingly beneficial for the brain. Studies have demonstrated, for instance, that hospital patients recover more quickly when they can see trees from their windows, and that women living in public housing are better able to focus when their apartment overlooks a grassy courtyard. Even these fleeting glimpses of nature improve brain performance, it seems, because they provide a mental break from the urban roil.

This research arrives just as humans cross an important milestone: For the first time in history, the majority of people reside in cities. For a species that evolved to live in small, primate tribes on the African savannah, such a migration marks a dramatic shift. Instead of inhabiting wide-open spaces, we are crowded into concrete jungles, surrounded by taxis, traffic, and millions of strangers. In recent years, it has become clear that such unnatural surroundings have important implications for our mental and physical health, and can powerfully alter how we think.

This research is also leading some scientists to dabble in urban design, as they look for ways to make the metropolis less damaging to the brain. The good news is that even slight alterations, such as planting more trees in the inner city or creating urban parks with a greater variety of plants, can significantly reduce the negative side effects of city life. The mind needs nature, and even a little bit can be a big help.

Consider everything your brain has to keep track of as you walk down a busy thoroughfare like Newbury Street. There are the crowded sidewalks full of distracted pedestrians who have to be avoided; the hazardous crosswalks that require the brain to monitor the flow of traffic. (The brain is a wary machine, always looking out for potential threats.) There is the confusing urban grid, which forces people to think continually about where they are going and how to get there.

The reason such seemingly trivial mental tasks leave us depleted is that they exploit one of the crucial weak spots of the brain. A city is so overstuffed with stimuli that we need to constantly redirect our attention so that we are not distracted by irrelevant things, like a flashing neon sign or the cellphone conversation of a nearby passenger on the bus. This sort of controlled perception -- we are telling the mind what to pay attention to -- takes energy and effort. The mind is like a powerful supercomputer, but the act of paying attention consumes much of its processing power.

Natural settings, in contrast, do not require the same amount of cognitive effort. This idea is known as attention restoration theory, or ART, and it was first developed by Stephen Kaplan, a psychologist at the University of Michigan. While it has long been known that human attention is a scarce resource -- focusing in the morning makes it harder to focus in the afternoon -- Kaplan hypothesized that immersion in nature might have a restorative effect.

Imagine a walk around Walden Pond, in Concord [Massachusetts, U.S.A.]. The woods surrounding the pond are filled with pitch pine and hickory trees. Chickadees and red-tailed hawks nest in the branches. Squirrels and rabbits skirmish in the berry bushes. Natural settings are full of objects that automatically capture our attention, yet without triggering a negative emotional response -- unlike, say, a backfiring car. The mental machinery that directs attention can relax deeply, replenishing itself.

"It is not an accident that Central Park is in the middle of Manhattan," says Berman. "They needed to put a park there."

In a study published last month, Berman outfitted undergraduates at the University of Michigan with GPS receivers. Some of the students took a stroll in an arboretum, while others walked around the busy streets of downtown Ann Arbor.

The subjects were then run through a battery of psychological tests. People who had walked through the city were in a worse mood and scored significantly lower on a test of attention and working memory, which involved repeating a series of numbers backwards. In fact, just glancing at a photograph of urban scenes led to measurable impairments, at least when compared with pictures of nature.

"We see the picture of the busy street, and we automatically imagine what it is like to be there," says Berman. "And that is when your ability to pay attention starts to suffer."

Children with attention-deficit disorder have fewer symptoms in natural settings.

This also helps explain why, according to several studies, children with attention-deficit disorder have fewer symptoms in natural settings. When surrounded by trees and animals, they are less likely to have behavioral problems and are better able to focus on a particular task.

Studies have found that even a relatively paltry patch of nature can confer benefits. In the late 1990s, Frances Kuo, director of the Landscape and Human Health Laboratory at the University of Illinois, began interviewing female residents in the Robert Taylor Homes, a massive housing project on the South Side of Chicago.

Kuo and her colleagues compared women randomly assigned to various apartments. Some had a view of nothing but concrete sprawl, the blacktop of parking lots and basketball courts. Others looked out on grassy courtyards filled with trees and flowerbeds. Kuo then measured the two groups on a variety of tasks, from basic tests of attention to surveys that looked at how the women were handling major life challenges. She found that living in an apartment with a view of greenery led to significant improvements in every category.

"We have constructed a world that is always drawing down from the same mental account," Kuo says. "And then we are surprised when [after spending time in the city] we cannot focus at home."

But the density of city life does not just make it harder to focus: It also interferes with our self-control. In that stroll down Newbury, the brain is also assaulted with temptations -- caramel lattes, iPods, discounted cashmere sweaters, and high-heeled shoes. Resisting these temptations requires us to flex the prefrontal cortex, a nub of brain just behind the eyes. Unfortunately, this is the same brain area that is responsible for directed attention, which means that it has already been depleted from walking around the city. As a result, it is less able to exert self-control, which means we are more likely to splurge on the latte and those shoes we do not really need. While the human brain possesses incredible computational powers, it is surprisingly easy to short-circuit: All it takes is a hectic city street.

Maybe this explains why politicians cannot resist that porkbarrel project they saw in the window.

"I think cities reveal how fragile some of our 'higher' mental functions actually are," Kuo says. "We take these talents for granted, but they really need to be protected."

City life subverts our ability to resist temptation even as it surrounds us with it.

Related research has demonstrated that increased "cognitive load" -- like the mental demands of being in a city -- makes people more likely to choose chocolate cake instead of fruit salad, or indulge in a unhealthy snack. This is the one-two punch of city life: It subverts our ability to resist temptation even as it surrounds us with it, from fast-food outlets to fancy clothing stores. The end result is too many calories and too much credit card debt.

City life can also lead to loss of emotional control. Kuo and her colleagues found less domestic violence in the apartments with views of greenery. These data build on earlier work that demonstrated how aspects of the urban environment, such as crowding and unpredictable noise, can also lead to increased levels of aggression. A tired brain, run down by the stimuli of city life, is more likely to lose its temper.

Long before scientists warned about depleted prefrontal cortices, philosophers and landscape architects were warning about the effects of the undiluted city, and looking for ways to integrate nature into modern life. Ralph Waldo Emerson advised people to "adopt the pace of nature," while the landscape architect Frederick Law Olmsted sought to create vibrant urban parks, such as Central Park in New York and the Emerald Necklace in Boston, that allowed the masses to escape the maelstrom of urban life.

Although Olmsted took pains to design parks with a variety of habitats and botanical settings, most urban greenspaces are much less diverse. This is due in part to the "savannah hypothesis," which argues that people prefer wide-open landscapes that resemble the African landscape in which we evolved. Over time, this hypothesis has led to a proliferation of expansive civic lawns, punctuated by a few trees and playing fields.

However, these savannah-like parks are actually the least beneficial for the brain. In a recent paper, Richard Fuller, an ecologist at the University of Queensland, demonstrated that the psychological benefits of green space are closely linked to the diversity of its plant life. When a city park has a larger variety of trees, subjects that spend time in the park score higher on various measures of psychological well-being, at least when compared with less biodiverse parks.

"We worry a lot about the effects of urbanization on other species," Fuller says. "But we're also affected by it. That's why it's so important to invest in the spaces that provide us with some relief."

When a park is properly designed, it can improve the function of the brain within minutes. As the Berman study demonstrates, just looking at a natural scene can lead to higher scores on tests of attention and memory. While people have searched high and low for ways to improve cognitive performance, from doping themselves with Red Bull to redesigning the layout of offices, it appears that few of these treatments are as effective as simply taking a walk in a natural place.

Given the myriad mental problems that are exacerbated by city life, from an inability to pay attention to a lack of self-control, the question remains: Why do cities continue to grow? And why, even in the electronic age, do they endure as wellsprings of intellectual life?

Recent research by scientists at the Santa Fe Institute used a set of complex mathematical algorithms to demonstrate that the very same urban features that trigger lapses in attention and memory -- the crowded streets, the crushing density of people -- also correlate with measures of innovation, as strangers interact with one another in unpredictable ways. It is the "concentration of social interactions" that is largely responsible for urban creativity, according to the scientists. The density of 18th-century London may have triggered outbreaks of disease, but it also led to intellectual breakthroughs, just as the density of Cambridge -- one of the densest cities in America -- contributes to its success as a creative center. One corollary of this research is that less dense urban areas, like Phoenix, may, over time, generate less innovation.

The key, then, is to find ways to mitigate the psychological damage of the metropolis while still preserving its unique benefits. Kuo, for instance, describes herself as "not a nature person," but has learned to seek out more natural settings: The woods have become a kind of medicine. As a result, she's better able to cope with the stresses of city life, while still enjoying its many pleasures and benefits. Because there always comes a time, as Lou Reed once sang, when a person wants to say: "I'm sick of the trees/take me to the city."

SHORT TAKES

Stanford Fraud Case Is a Black Eye to Antigua Offshore Finance Sector

The Allen Stanford fraud case is another black eye for the image of the Caribbean offshore finance sector, which must improve oversight and regulation to stay competitive in tough times, a regional trade expert said.

Stanford, a Texas financier and sports entrepreneur, was charged [in February] in a U.S. civil case with defrauding thousands of investors in an $8 billion scam involving certificates of deposit sold from his offshore bank in Antigua and Barbuda, where he is the biggest employer and investor.

The case sent shock waves rippling across the Caribbean, where Stanford had wide business interests and connections, and spooked investors from the United States to Latin America and Europe. Several states took control of his banks and firms. The news has caused a run on Sanford's Antigua bank causing the government to take control.

With tourism, investment and remittances all tumbling in the Caribbean amid the global downturn, the region needed to "put its house in order" to maintain investor confidence, said David Jessop, executive director of the Caribbean Council, a UK-based organization that specializes in Caribbean trade policy.

"At a time when confidence is king people are going to be looking perhaps in other directions," Jessop told Reuters in an interview ...

Madoff Case Sparks Calls for Global Court over Finance Fraud

The massive Bernard Madoff fraud has raised issues about jurisdiction. In an example cited here, the question is asked where Madoff clients from Argentina who invested with Madoff through banks or funds in Miami, the Bahamas or elsewhere should sue. Good question.

A multi-national coalition of law firms is asking G-20 nations to form an international financial court for cases like the global scam allegedly run by Bernard Madoff.

Representatives of the 45-member coalition, made up of law firms from 25 nations representing some 10,000 Madoff victims, said Monday (March 9) the proposal is needed to ensure the financial services market trust, transparency and legal certainty that has been threatened by the case.

They have asked for discussion of the proposal at the April 2 London meeting of G-20 finance ministers from industrialized and developing nations.

Javier Cremades, president of the group and a partner at Spain-based Cremades & Calvo-Sotelo, said an international solutions is needed for a complex case that "is a global threat to everyone, including the governments."

Madoff, who may plead guilty to federal charges at a federal court hearing set for Thursday, allegedly victimized investors worldwide by reporting almost uniformly positive returns for decades. The global nature of the alleged scam has investors scrambling for the best legal route to seek recovery.

Citing one example, Cremades said an estimated 3,000 clients from Argentina invested millions of dollars with Madoff through banks or funds in Miami, the Bahamas or elsewhere. Where should they sue?

"There is no answer at all," to questions about the overlapping and potentially conflicting legal jurisdictions, said Cremades.

An international financial court would help cut through the confusion, said Gaytri Kachroo, the coalition's vice president and a law partner at U.S.-based McCarter & English.

Panama Investor Blog

Those seriously interested in investing in or relocating to Panama should take a look at the free resource described here: A blog called Panama Investor which purportedly "tells it like it is."

So you are thinking about Panama? Maybe as a place to invest, live or just spend a few months a year. Well, you need to do your homework and there is no better place than the Internet to find out about Panama. But, you will have to wade through a lot of information in order to get to what you hope is the truth.

That is, unless you consider a free subscription to Sam Taliaferro's Panama Investors blog. Why trust Sam? What makes him such a reliable source? ...

The real reason can be summed up in two simple words, honesty and Integrity. Sam has the honesty to tell it like is, the good, bad and ugly of Panama, and has been doing so for nearly three years with his Panama Investor blog. ... At least once a week Sam sends out an email to his subscribers with the weeks headlines that may include information on the many changing laws regarding immigration, taxes, security, banking, real estate, structuring and many other subjects. ... Sam spends hours each day scanning the many news articles that come out and filters it down to the important information you need to know. Each post provides commentary on why this matters to him and why it should matter to you.