Canada: Is It Time To Get Out Of Dodge City?

Immigration and citizenship strategies for Americans in a post-September 11th world

On the morning of September 11th, 2001 the veil of complacency was ripped violently from the face of America. Until that time, war and terrorism were events happening in far away lands. The American public could not conceive of such major acts of war on their home territory. Until this time Americans had only to contend with minor irritants - increasing loss of privacy, lawsuits, and excessive taxation. Living in the comfort and abundance of their birthland afforded them the luxury of dealing with these problems another day.

By comparison, most European countries had already experienced the brutal realities of war and terrorism. Present day Europeans need look back no further than a generation to remember the Holocaust, the Dresden firestorm, the Blitz, or the Iron Curtain. Similar to September 11th, these historic events were incomprehensible, but in retrospect, the underlying causes were recognizable.

In the last century change has accelerated exponentially, especial-ly in the practice of war. Several years of escalation occurred before World War I erupted. In World War II, "blitzkrieg" meant that the enemy could score decisive victories within a matter of weeks.

In 2001, within one hour, an army of only a dozen people had struck the vital blow. The lesson to be learned is that to survive and prosper in this New World Order, safeguards and strategies must be in place long before the attacks begin. Do not try to buy fire insurance after the fire has started - your house will surely be burned to the ground before you can even get an insurance broker on the phone.

With this in mind, let us examine some of the key emerging trends of the post September 11th world. Let us then review some practical residence and citizenship strategies to cope with this ever-changing world.

TREND 1: We Will Live In Several Places Throughout Our Lives (Domestic And International).

It is now commonplace for us to have several different careers or jobs during our lifetime. As we progress through our education, career, and retirement life-stages; we will continually change our residence. Such moves will be increasingly international in nature, as the North American standard of living spreads worldwide. Some of us will maintain current homes in several countries as we bridge various stages or as a hedging strategy.

TREND 2: Countries Will Join Together In Local Blocks For Increased Security From Travelling Terrorists.

For the past several years, most of continental Europe has been part of a common visa zone called the "Schengen Treaty Zone". This zone will increase in size and strength. The move to unite Canada and the US into "Fortress North America" has begun. Most developed countries will significantly tighten their borders and forge regional alliances. Therefore, if we wish to travel, work or retire overseas we should secure some type of status in all regional associations. This step will ensure the ability (for ourselves and following genera-tions) to take advantage of the international nature of increased mobility.

TREND 3: We Will Want To Move To Or Carry The Travel Documents Of Low Profile Countries.

We will increasingly want to carry the passport of a low-profile country and may even choose to have a second or primary home in that country. Since September 11th, the perception is that the world is a more dangerous place and that random violence can occur anywhere. Accordingly, no one wants to be identified as "the American in Room 602" or to spend too much time in high-profile target areas.

TREND 4: It Will Be Prudent To Have Several Citizenships And Residences In The Event That One Of Them Acquires Undesirable Attributes.

The most unattractive attribute of US citizenship is its unique (amongst developed countries) use as a basis for worldwide taxation. While it is still possible to legally eliminate this lifetime tax liability, it will certainly be a more complex and involved procedure in the future.

Another undesirable obligation of citizenship is mandatory military service. There are many Americans who do not fondly recall registering for the Vietnam, Korea, and World War II drafts. Those who believe a U.S. mandatory draft would never occur again should read HR 3598 Military Training and Service Act of 2001* which was introduced into the US Congress within 12 weeks of September 11th. Of particular note is the inability to defer or avoid military service. Although service is mandatory for males between 18 and 22, women are also encouraged to volunteer. While this particular bill may not become law, given the projected expanding domestic and international mandate of the US military, it is highly probably that this type of legislation will soon come into effect.


TREND 5: Countries Will Impose Increasingly Invasive Fiscal And Personal Information Reporting Regimes Under The Rubric Of Looking For Terrorists Or Money Launderers.

This trend, which has been underway for the past decade (with the efforts of the OECD and the FATF), has gathered great momentum and justification after September 11th. Previous hesitation by the Bush admini-stration has been swept aside with "the stroke of a pen".

The noose has been tightening for a number of years on Americans who either have unreported overseas accounts or who have simply moved out of the U.S. and stopped filing U.S. tax returns. In 1992, the IRS launched a "non-filer program" in an attempt to catch overseas Americans who stopped or never filed U.S. tax returns. An IRS information return must now be completed in conjunction with the processing of all U.S. tax returns. Some Americans still did not come under the fold, as they already had another passport and simply did not need to renew their U.S. travel document.

However, in 1999, the Qualified Intermediary program ("QI") came into effect. The QI program saw financial institutions entering into direct agreements with the US government, despite being located in financial privacy jurisdictions. The institutions agreed to enter into these agreements in exchange for on-going access to US securities markets for all of their clients. By the end of 2001, over 1000 financial institutions had signed on as Qualified Intermediaries. This group included almost every large stable international financial institution, including most "private" banks.

These QI agreements call for the financial institution to implement client review mechanisms to determine if new or existing clients are US taxpayers (i.e. US citizens, resident aliens, or US tax homeowners). This client review mechanism is also designed to detect clients who have foreign passports indicating a U.S. birthplace. This will bring in the last holdouts of the U.S. non-filers discussed above.

If any client is a US taxpayer, the financial institution submits a report on the client's account to the IRS and withholds and remits the appropriate tax to the US government. The client then has to apply to the IRS for any entitled refund. If the prior existence of the account has not been disclosed on the client's US returns, they will face some vary hard questions from US tax authorities regarding the entire history of their dealings with the QI institution.

In the March/April issue of Offshore Finance U.S.A., several experts reviewed the impact of the recently implemented Uniting and Strengthening of America by Providing Tools Required to Intercept and Obstruct Terrorism Act of 2001 (aka: the "USA Patriot Act"). Of particular note was the experts' unanimous strong warning against dealing with offshore financial institu-tions without US banking correspondent banking relationships (i.e. non-Patriot Act compliant). Given that the strong US dollar is the defacto worldwide currency, this is sound, practical advice.

Finally, the successful wide-sweeping IRS order acquire offshore credit card records has also significantly eroded US taxpayer financial privacy. The combined effect of all these efforts will soon result in complete disclosure (to the US govern-ment) of all US taxpayer holdings in every worthwhile financial institution in the world. While experts debate the effectiveness of these efforts in uncovering terrorist funding sources, there is no doubt that these regimes will continue to uncover many US citizens and residents who have engaged in thinly disguised tax evasion schemes.

The American government is clearly leading the way in the rapid scrutiny of taxpayers' domestic and international finan-cial transactions. Accordingly, other western countries may be anxious to follow the US example or seize this opportunity to attract fleeing US taxpayers.

Given these trends, what practical residence and citizenship strategies should a prudent person consider undertaking?

Before discussing immigration and citizenship strategies for Americans, it is worth clarifying the U.S. government position relating to dual citizenship. Current U.S. government policy states that an individual who is becoming a naturalized U.S. citizen is not required to renounce their existing citizenship. Further-more, an American citizen who is becoming naturalized in a foreign state does not automatically lose their U.S. citizenship. You can use the foreign naturalization as a method of relinquishing U.S. citizenship (as part of a tax expatriation plan) but this must be done very carefully and with an overwhelming demonstration of the intent to lose American citizenship. This has not always been the American government's position, so prior presumed or proven loss of foreign or U.S. citizenship must be re-examined in light of this current policy.

STRATEGY 1: Acquire A Lineage Citizenship To Which You May Have A Legal Claim.

Ireland and Israel are two countries already contemplating limiting their traditional liberal access to lineage claims to their nationality. Other counties, like Holland and Belgium, are reviewing their existing laws relating to previous loss of citizenship through naturalization in foreign countries. Other countries, such as Estonia, Latvia, and Hungary, are expanding their access to their diaspora as they emerge from under the Iron Curtain. If you (or your parent or grandparent) were born in another country, you should examine closely your ability to claim or reclaim that country's citizenship.

STRATEGY 2: Acquire A Second Citizenship And/Or Passport Through An Economic Or Residence-Leading-To-Citizenship Program.

Many large countries offer citizenship to those who acquire residence status and fulfil tax and possibly physical presence requirements over a predetermin-ed naturalization period. Other countries offer citizenship directly by fixing an additional govern-ment fee in lieu of a natural-ization period. Which option or combination is best depends on your personal goals and circumstances.

The proper structuring and implementation of this type of strategy requires the assistance of an experienced advisor. Such an adviser will look at issues such as timing, cost, minimizing the "footprint" of tax and residence obligations through planning structures, escaping US tax regimes, maintaining the ability to travel visa-free to as many countries as possible, and the practical "livability" of such a strategy for all family members. A properly structured and executed residence and/or citizenship plan will greatly affect the lives of your descendants for several generations.

STRATEGY 3: Acquire A Home And Assets Outside Of Your Home Country.

This may involve obtaining a retirement residence permit in a low-profile country or could be in combination with economic citizenship or residence leading to citizenship. This strategy would result in the long-term ability to move to a chosen location on a full or part-time basis. This attribute may become increas-ingly attractive as privacy and tax cuts fall victim to "anti-terrorist" laws. If as part of this strategy, the proper steps are taken to lose the status of U.S. taxpayer, then a plethora of legal private offshore tax and asset protection strategies also become available.

STRATEGY 4: Take Proper Legal Steps To Reduce Tax And Privacy Evasion.

The days of "off-the-shelf" trusts, bearer share IBCs and anony-mous offshore banks accounts with linked credit cards, as the means to reduce your tax burden and regain privacy are gone. The new reality is that, if you chose to remain within jurisdictions like the US, you will have to get used to a decreased level of privacy in your financial dealings.

Furthermore, if you wish to decrease your tax burden, your only option is to retain sophisti-cated tax advisors to help you take advantage of a dwindling number of legal tax avoidance strategies. Quick, cheap undetec-table tax evasion strategies are now useless and dangerous. Implementing legal tax avoidance plans for those who remain US taxpayers will have its own problems. Constantly changing domestic rules result in long-term uncertainty and "change fatigue" as domestic advisors suggest expensive on-going revisions to your "estate plan".

These government actions will become triggering catalysts for increasing numbers of wealthy, ambitious or educated Americans to take the required legal steps to withdraw from the status of being a US taxpayer.

The Irish Potato Famine, the Scottish Highland Clearances, the Russian Pogroms, and World War II were major historical events that drove immigration to the US. September 11th 2001 may be remembered as the time when a group of far-sighted Americans were inspired to review their current lives and implement changes to their residence and citizenship that would greatly enhance the lives of the genera-tions that followed them.

Undertaking these changes in an effective, timely, and cost-efficient manner is the current major challenge for these pioneers and their advisors.

Recognizing the impact and predictable fallout of current events is the first step.

The content of this article is intended as a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions