How to Make Financial Transactions as Anonymous as Possible
Privacy is hard to come by in the digital era, and that's even true when it comes to finances. Any time you make a purchase or send a payment, your transaction is recorded along with other data about you.
However, there are ways to decrease the information you share with transactions, and you don't need to go off the grid and stick to cash-only establishments, either. It is possible to enjoy some privacy if you have the right accounts set up.
Keep reading for some ideas that could help people who want to increase their privacy.
Strategies for Keeping Assets and Payments Private
When it comes to increasing your privacy, there are a few options you can try.
If you have significant assets, then family offices might be a good option for you. Family offices are a type of firm that manages the wealth of ultra-wealthy individuals or families. These firms are less regulated than some other types of trusts, and that means the names of people involved will be less publicly available.
Outsourcing to an experienced firm requires the least amount of involvement on your part, but you’ll need to do some research to ensure that you’re working with trustworthy people.
Create an Entity
Another approach is to create an entity that owns your assets. For example, a trust can hold many different types of assets, including stocks and cash, but also automobiles, real estate, and business interests. Trusts can also use those assets to make payments, and your name won't be directly linked to the trust's payments.
As with family offices, someone will have to know that you are linked to the entity, but you can choose who those people (or organizations) are. For example, a bank would need to know who you are if you want to make deposits and withdrawals using the entity's account.
You can also select others, such as an attorney that you trust, to manage the entity and assets for you. This trusted person can conduct all of the entity's transactions, which will increase your level of privacy. However, you must be willing to trust this person with both your identity and your assets.
Once you hire representatives, those individuals won't be anonymous. For example, in a trust, the name of the fiduciary (the person designated to manage the account) will be on file for the trust at the Internal Revenue Service.
Trusts and other entities are subject to state laws that can vary significantly. It's best to consult an attorney who specializes in trust law in your state so you can ensure that you're acting legally.
Cryptocurrencies like Bitcoin are highly volatile, and there are a lot of risks to holding cryptocurrencies, but they can also be used to help keep transactions private. However, using cryptocurrencies in and of itself won't keep your transactions private. It depends on the wallet in which you store your cryptocurrency, and how you arrange for another person to pay or receive your cryptocurrency.
Cryptocurrencies like Bitcoin are a relatively new experiment in digital currency. While they may provide you with greater anonymity in your transactions, it's important to fully understand the risks and complications that come with holding cryptocurrencies before relying on them for transactions.
Why Would Someone Want Privacy?
There are several reasons why you might want to keep your accounts private.
Donations and Payments
Some people feel that public exposure sours the charitable aspect of giving. These people may choose to keep donations anonymous. You might also prefer to make some kinds of payments without others seeing where you spend your money—whether you’re buying things for yourself or paying expenses for somebody else.
Keep a Low Profile
If you have significant assets, you might not want to broadcast that fact. It could make yourself a target for lawsuits, or you could find yourself fending off con-artists and old "friends" looking for financial help. Some people have complicated relationships with extended family, and they would prefer to keep their finances to themself. Finally, while extraordinarily rare, kidnapping and ransom situations do occur.
Perhaps you’re less concerned about your privacy and more concerned about somebody else’s. If you want your assets to pass to a person or organization without the whole world knowing about it (and avoid probate), you need to make arrangements ahead of time.
Is Complete Anonymity Possible?
There are practical challenges to complete anonymity, and it will almost always be impossible to remain 100% anonymous. Most transactions involve two parties agreeing to an exchange of goods or services for money, and it's difficult for that agreement to be made if one of the parties has no idea who they're dealing with. If you buy something online, for example, you have to provide a delivery address. Security cameras will capture your image as you walk through the grocery store.
Keeping your information private requires a continuous, conscious effort. By putting in the work, you will likely be able to keep your name out of the spotlight, but it's difficult to be completely invisible.