February, 2001- Various Topics
In this issue:
- Biometrics is Alive and Well
- The Way Things Ought To Be - And Can
- This Month's Promotion
1.Biometrics Popularity Grows In Airports and With Travelers
Editors NoteI think the authors of this article mistakenly interviewed sheep instead of humans when doing their surveys.
Washington, DC. No longer is there any debate as to whether or not biometric technologies will someday become commonplace. The depth and breadth with which these identification processes have penetrated a mainstream, everyday application is no more visible than in the global airport, airline, and travel industries. In fact, air travel is one of the only public applications where a variety of biometric technologies have been deployed on a worldwide scale.
Biometric technologies electronically identify a person based on physical or behavioral characteristics, like the pattern in the iris, a fingerprint, or even vocal patterns. Here are some of the ways in which these innovative, security- and convenience-enhancing systems are being used: Facial Recognition. This biometric process identifies individuals by the patterns and structure of the face, using proprietary software algorithms and digital camera technology.
Facial recognition is also being integrated into passport and travel document control stations to analyze these media for forgery and tampering. The process allows for passport photos to be compared against a designated watch list of known criminals or terrorists, and quickly alert authorities of any matches. Pilot projects with several foreign governments are currently underway. The FAA is testing facial recognition in conjunction with a major U.S. airline to develop an automated boarding system for frequent travellers. The proposal is to enrol the airline's frequent flyers into a private database so that in lieu of boarding passes, a camera at the gate will automatically "capture" faces of people boarding and match those images against the facial template files in the database.
Fingerprint Minutiae:Today's commercial fingerprinting techniques are electronic in nature, no longer requiring the messy and inconvenient ink and paper method still featured in many police dramas. The pattern of a fingerprint is captured by a reader and analyzed, identifying an enrolled person in seconds. Electronic fingerprint imaging methods have been quite effective in securing access to restricted areas of airports and facilitating quick and accurate identification of travellers visiting foreign countries. For example, such an electronic fingerprinting system is being used to secure entry and delivery into the universal air cargo area at Chicago's O'Hare International Airport (Illinois, USA). Combined with a smart card that also holds manifest information, the fingerprint system identifies drivers and their corresponding trucks and cargo.
Hand Geometry:These biometric systems recognize people by the shape and mass of the human hand. Hand readers compare the three-dimensional shape of the hand and take only seconds to verify a person's identity. The USA's fifth largest airport, San Francisco International Airport, has been using hand geometry-based systems to authenticate airport employees for almost 10 years. The combination card and biometric readers are located at all points of entry to the airport operations area, including elevators that lead to secure areas of the terminal buildings. United Airlines uses hand geometry and card readers at its entrance into the airport operations area, as well as at the entrance to its per-flight briefing building Iris Recognition. This biometric identification process works by analysing the unique and personally distinct patterns of the iris using sophisticated software algorithms and a camera.
The first U.S. installation of iris recognition for airport security was at the Charlotte/Douglas International Airport (North Carolina, USA). This program is expected to revolutionize airport and airline employee identification and provide substantially higher security. The first phase of the system included an access control station for U.S. Airways pilots and flight attendants, and a separate station for airport employees and other airline personnel. The Canadian Airports Council sought a means to automate border crossing while providing positive identification of visitors and citizens. The Canadian-sponsored EPPS project (Expedited Passenger Processing System) combines two biometrics with an optical memory card to automate border crossing for frequent travelers. Iris recognition was selected as the primary biometric for day-to-day identifications and use within the EPPS kiosks. In the past, such immigration activities relied on fingerprint identification. In keeping with that tradition fingerprints will also be collected, but used only as a secondary identification method.
Signature Dynamics:Signature dynamics authenticate a person through his/her written signature, which is captured using a "smart" pen. The device is used on paper and secures electronic transactions. A biometric vendor based in The Netherlands is currently preparing to target the airline industry to implement a signature verification system to help reduce time spent at ticket counters.
Studies show that biometric-based identification systems could reduce the numbers of frequent travellers who stand in lines by as much as 30-40%. The resulting reduced cost of space is passed down to the airlines, which in turn results in lower fares and higher margins. Frequent travellers spend less time in lines and more time for business, shopping and pleasure. They also benefit from a higher level of security that is gained through convenient and effective identification processes that cannot be compromised.
Governments, get accurate, fast identification of those who mean harm, and redirect their resources to more productive security and law enforcement activities. Responses from travellers and employees involved in biometric-based pilot projects and actual installations could be summed up by a simple statement: "Why haven't we been using a system like this all along?"
Editors Note:Do you see how it works? First it's a pilot program, then it's used on employees, then on a volunteer basis. The next step is mandatory compliance for the entire population.
2. The Way Things Ought To Be - And Can
Editors Note:Doug has obviously been taking lessons from Privacy World Living Offshore in Paradise by Doug Porter Would you be willing to live in a tropical paradise if you also could give up paying income tax? Right now I live on the slopes of a dormant volcano in Costa Rica. And my income tax "obligation"? Zero. The climate is the kind I simply didn't believe existed until I experienced it. Outside of the cities, the beauty is so deep and strong that each day fills your spirit with power. Any morning when you wake up you can decide whether to drive to the Atlantic or Pacific beaches, and be there in time for a swim before lunch. If you love mountains as I do, you can live in the cool, fresh winds with panoramas thousands of feet below. It's a life most people dream about and never live. And I'm going to show you how you can get it now, this year, without waiting. You don't have to be rich, or a genius, or even very adventurous. But, you do have to be willing to think and act for yourself.
The Keys to ParadiseTo set up your life so you can live and work just about anywhere isn't that hard -- after you know how. Since my partner and I have actually done it, we know exactly what it takes. Some things may seem obvious, such as starting a business on the Internet. Others would take months -- at best -- to dig out. We know, because we spent the months. Most people don't know what an International Corporation is, much less how to set one up. International banking sounds like something only for the very wealthy. Exemption from income tax is great, but tax evasion tends to annoy the last remaining superpower. Even things like ordinary mail, phone calls, and faxes can get complicated on a global basis. And perhaps most important of all, exactly how do you get paid when you're off in another country? We worked through it all. It's right here. And as you'll see, you can get it for yourself. You can choose this dream life.
Your International Business CorporationIf you have a business in the US, you drown in useless paperwork and the IRS works hard to find an excuse to take whatever you make. You have to fill out quarterly -- or monthly -- tax reports for the Feds, state and often other local governments. You have to get this done within 30 days after the period ends with no leeway, or the pain and costs mount fast. The regulatory requirements are hard to believe by international standards and are getting worse every year. Your company books are set up largely for the IRS instead of for managing your business efficiently. You may well need an attorney and probably do need an accountant. If you've ever run a business in the US, think about how much of your life you've wasted on all this nonsense.
Unless you're particularly masochistic, you need an International Business Corporation, or IBC. This is just a regular company incorporated in a country that caters to people who like freedom. There are millions of IBCs already established around the world, and many reputable services which will take you through every step of setting one up from the comfort of your armchair. It's much easier and about the same cost as incorporating in the US. The basic rules are:
- The host country won't tax you, and
- You can't sell to anyone in the host country
If you are bringing much money out of the US you may also need a trust to help keep the IRS at bay. The trust then owns the IBC. This can also increase your privacy. Most companies that set up IBCs will be happy to set up a trust for you as well. Unless you plan to ignore the IRS for the rest of your life and don't care much about getting back into the US, in general you should start your new company with funds that you can document have already had taxes paid on them.
How to Set Up an International Bank AccountContrary to rumour -- or perhaps propaganda -- there's nothing illegal or even remotely unethical about keeping your money outside the US. Bankers in the States get furious at the suggestion that they should compete with other countries. They may imply you are unpatriotic at best. You can soon ignore them. The US Government has tried to set up as many roadblocks as possible to keep you from achieving financial freedom. Most are unimportant, but you will need to get a personal reference from your current bank. There's even a US Government approved form for this that many international banks use. Getting this reference is crucial unless you intend to physically visit your new bank, and even then they usually require it. When you ask for a reference be ready for your existing bank to treat you as a child pornography smuggler with a side business of blowing up churches. This is sometimes the most difficult step of getting free. There is a lot of pressure on bankers to be cautious about giving any kind of reference, even one that simply says you are reputable enough to open another account. You may find it worthwhile to search for a friendly banker and open an account with that bank. Or take your banker to lunch a few weeks before you ask.
Although many large banks promote themselves as "international", the international banks you want are often called Offshore banks. The primary focus of the Offshore industry is legal tax avoidance, not tax evasion. These banks also usually protect your privacy. If privacy is a concern -- and it should be -- it's a good idea to avoid banks with branches either in the US or in countries with close ties to the US, such as England. Swiss banks no longer have the level of privacy that once made them world famous. There are many excellent choices in places such as the Caribbean nations, Panama, and Singapore. In addition to personal bank references for anyone who can sign on the account, your new bank will want documents from the service that incorporated your IBC. These will include copies of the company's Articles and appointments of directors. You will also need copies of personal identification, such as your passport. Every bit of this has to be notarized. Some banks will require a personal visit. Ask the bank for details before you set up your IBC. Carefully check the bank's reputation. International banks are almost never backed by a government, so if they're mismanaged -- or just not honest -- your money can disappear. Most of them are very conservatively managed and take far fewer risks than US banks do.
Understand exactly how you will tell the bank to move money from one account to another and to send wire transfers. The bank should accept instructions by phone and fax. Email is great, but rare. PGP still seems almost unknown. Internet banking via the Web is a very strong plus. It is absolutely essential that the bank will issue you a Visa or Mastercard that you can use in ATM machines. This is usually either a secured credit card or a debit card. Well-managed international banks don't risk their money on you. They risk yours. An advantage is you can usually choose your credit line. Just make a security deposit of the appropriate size. An extra advantage of keeping your money offshore is that each year you get to decide how much to pay to the US Government -- if any.
When your account is in a tax haven, that is, a country where there is no income tax, the IRS can't simply take your money the way they do in the US. There's no withholding, and no IRS seizure. If there's any question about whether you are "obligated" to send anything, you are in a superb negotiating position.
Staying in Touch As If You're Next DoorWhat makes all this work is the Internet. With your business in cyberspace instead of on some piece of dirt, you can live and work almost anywhere you like. It's hard to find a country without good Internet connections today. Anytime you are going to be in one place for a few months, get an account with a local ISP, or Internet Service Provider, and use that account to connect to the net. The ISP gives you a local phone number, user name, and password you use to connect to the Internet. You then use the Internet to reach your Web and email services. It doesn't matter how far away on the map the systems providing these services are. With the Internet they're just a click away. When you're actually travelling or have recently arrived, use Internet cafes. There are Internet services, such as JFax, that provide you with your own phone number in your choice of many major cities around the world. Voice and fax calls to your phone number are answered with your customized message, automatically converted to email, and sent on to you no matter where in the world you are. You can also send faxes via email, with all the formatting of your favourite word processor. If you want multiple phone numbers in different locations for multiple "branch offices", just ask. This service generally costs less than $15 a month per number. Before you leave the US get an AT&T Direct calling card. You can use it around the world to call back to the US. In an emergency you can get your email anywhere there's a phone. You'll need to keep an inexpensive Internet dial up account in the US if you want this extra backup access.
You may be surprised at how unimportant snail mail, the new name for traditional paper mail, becomes. But since it's not going away quite yet, you'll need a way to handle it. First, make arrangements in the US with a commercial mailbox service to accept your mail and forward it to wherever you ask. Make certain they will forward mail outside the country. You'll also want a personal mailbox either there or at another service. Try to find one that uses e-mail so you can check the status of your box cheaply. An 800 number for checking your mail helps even when you're outside the US, since you can call it for free via the Internet. When you're stationary, give them an address and they will put all your mail in a large envelope or box and remail it. This service usually costs about $15 a month, plus shipping costs to forward your mail. Most services require a prepaid deposit for the shipping costs. In many countries you can't reliably have mail sent directly to you, so when you are in one place for a month or more contract with a foreign mail courier service. The courier company will give you a US based address, frequently a post office box number, where you can receive mail. The foreign mail courier flies your mail periodically from the US to the country where you're living. By combining the foreign mail courier service with your US based commercial mailbox, you can get your mail in a relatively timely fashion. The only address that you give out to your business and personal correspondents is your US commercial mailbox. You then give the US address you got from the foreign mail courier service to your main commercial mailbox service. The US commercial mailbox service sends mail once a week or as often as you like. It usually takes an extra 7-10 days to receive your mail through this maze, but that's a lot faster than if you have it sent directly to an address in a foreign country. Even better, you actually get your mail.
Before you leave the US set up an Internet banking account. You want one that lets you monitor all transactions via the Web and also write checks online. Generally you'll have to get a personal account rather than a corporate account. That's okay because the IRS believes any company with a US bank account should pay US taxes. You'll use your Internet bank account to make payments to recipients in the US. When your company pays you so you can pay corporate bills, be sure to keep good records in case the IRS tries to claim that the money is income to you.
Move Your Livelihood to the InternetNow you're ready to start your business on the Internet. If you've never run any kind of business, this is the toughest part. There are millions of new entrepreneurs every year. Become one of them. If you don't have a notebook computer yet get one. With it you can run your entire business anywhere there's a phone. Unless your work requires it you don't need one that's particularly fast or powerful. Buy carefully and you can get a good one for as little as $1000. You'll need a top quality Web site. This needs to be far more than a simple Web page. This is your place of business. It is your store if you're selling goods, or where you present your skills if you're selling services. You are not likely to be close enough to persuade people in person. The site must sell them. Don't try to set up your own computer and connect it permanently to the net. Use a Web Hosting service. These services will also help you get your domain, or Internet company address, set up. Don't accept a site using someone else's domain. It's like meeting customers or clients at a desk in the corner of someone else's office. Since this is your primary way of communicating with customers, your Web site has to be reliable and fast. It should still cost less than $100 per month, including domain name services. For people to find your Web site you need to register it with the major Internet directories, called search engines. Today this is by far the most common way people will find you. If they can't find you they can't buy from you. Look for specialized search engines for your field and be sure to include them. Tailor your entry in each search engine to that particular engine. Making sure your site shows up near the top of a potential customer's search is an advanced art. Consider using a Web promotion professional.
You'll also need email for your company, of course. Email is fast replacing both paper mail and fax because it is cheaper, faster, more reliable, and more powerful. If your Web hosting service provides the mailboxes and flexibility you need, use it. Otherwise have all your email forwarded to a service that does. If you want to be taken seriously, your email address must be at your own domain, so free Web based email isn't enough. If you don't already know how, learn to use PGP. Separate email services cost $5 to $20 per month, but are usually including with Web hosting.
How to Get PaidUntil we have efficient e-cash on the Internet, when someone buys your product or services from your Web site they will usually pay with a credit card. To accept credit cards you can either establish a formal relationship with one or more credit card processing banks, called a merchant account, or use a third party service that resells your goods or services for a commission. A merchant account is very difficult to get if your business in on the Internet and you are in another country. Getting a merchant account for a US business is usually based on your personal credit, but elsewhere it's not so simple. Don't accept checks unless you have to. After a check finally makes its way to you, you then have to send it to your bank. Since the check is from outside the country where the bank is, the bank will probably hold it "for collection", which means the bank won't give you your money until the bank is very sure the check is not coming back. This can take a long, long time. Checks are for extremely patient people. A wire transfer is a request that one bank send money to a specific account in another bank. This is usually how you'll get money into your corporate account. Sometimes you'll also get money out this way. When you arrange a wire transfer, everything has to be nearly perfect. The bank the money is going to has a name, a number, a city and a country. The destination account has a number and may also have a name associated. There may be intermediate banks where you have to provide special instructions often including more account and routing numbers. All this must be absolutely correct or the money doesn't get there, and often you have trouble getting it back, too. Before you wire transfer a large amount, transfer a small one using the same banks and information. If there are any bumps, everyone will be calmer. The best way to get money out of your corporate account is via your corporate Visa or Mastercard. Of course, you can use your card as a regular charge card, too. You can also walk into many banks and get a cash advance from a card without giving a PIN. Protect the card as carefully as you would cash, since for most purposes that's what it is.
Taxes: Day 31 Costs $30,000Here's the tax secret that makes your financial life a dream: While you live outside the US the IRS says your first $70,000 of income is tax free, and many other countries don't tax income from outside their borders at all. If your family needs more tax free income, remember you get $70,000 for each adult. If you are by nature frugal and end up with surplus cash, you will find your investments accelerate over the years when they're tax free at a pace that will snap a US investor's neck. It's like increasing your rate of return by 30% or more. Think about what that does to your money after compounding for a while. Now compare it to what you'd have in the States. If you doubt the IRS's apparent generosity, that's reasonable. Go see what the world's most efficient thieves themselves say about it. They don't do it out of altruism, but because it's almost impossible for them to collect from anyone living and working outside the US anyway. This way they at least keep track of some potential taxpayers. Compared to other countries, the idea that the US tries to tax income above the first $70,000 is what's really hard to believe. Almost no one else takes anything at all from their citizens when they're living outside the home country. There are two ways to convince the IRS you live outside the US. You can either make sure you have no home at all in the US and a thoroughly documented home somewhere else, or simply stay out of the country that wants to take your money.
The second option, called the physical presence test, is usually much better. The IRS has decided again and again that any excuse is good enough for it to claim you fail the more complex bona fide residence test and that you are still under their thumb. The physical presence test is simple: if you're in the US for 30 days or less in a year, you win. If you choose to stay mostly outside the US, you still have 30 days each year to visit. But be careful: that 31st day may cost you $30,000 or more, depending on your income. Of course you don't have to go back at all. You may find it's just not important to you. If there's anything the US has that other countries don't, I haven't found it. But if you have family or close friends that can't or won't visit you, keep your trips back to a few weeks now and then.
By the way, if you are thinking about renouncing your American citizenship and have more than $600,000 in assets or $250,000 in income when you leave, be very careful. The US Government will claim you did it solely for tax purposes and try to tax you for an additional 10 years. Of course, if your assets are already out of the country they will have a very tough time enforcing it, but they can still harass you and deny you access to the US. You want whether you go back to be your choice, not theirs.