WASHINGTON - Two Native American entrepreneurs are trying to transform a remote town on a northwest Montana Indian reservation into an international tax haven, similar to the Cayman Islands or the Isle of Man.
Glacier International Depository Ltd. has received a charter from the Blackfeet Tribal Business Council giving it permission to operate a "foreign capital depository" in Browning, Mont.
Browning, a town of fewer than 2,000, is on the 1.5 million-acre Blackfeet reservation.
A brochure advertising the venture says Glacier International offers depositors "unique financial privacy created under the Blackfeet Foreign Capital Depository Act of 1999." Organizers said the institution will accept cash and precious metals on deposit from non-U.S. citizens, letting them benefit from the political stability of the United States while enjoying the tax freedom and confidentiality of traditional offshore banking havens.
The brochure lists phone numbers for international representatives in Sydney, London, and Tokyo, and company officials said they have commitments for potential deposits amounting to $2.4 billion.
Company officials said they are limiting accounts to foreign clients for now.
Robert "Smokey" Doore, chairman of Glacier International, said the institution will invest funds at the customer's direction or hold them in an interest-bearing account.
Interest paid on deposits will not be subject to state or federal taxes, said Glacier International president A. Dennis Lambert. Company attorneys, he said, are trying to determine whether profits from investments made by Glacier International on behalf of its depositors may also be exempt from the U.S. capital gains tax.
Depositors will be charged a fee for Glacier International's services, based on the size of their deposit, Mr. Lambert said. The institution has agreed to pass on a portion of its fee income to the Blackfeet tribe.
The legality of the plan hinges on the status of the Blackfeet nation as a sovereign entity and its ability to charter financial institutions that are not subject to state and federal oversight.
Mr. Doore said he has been meeting with federal regulators, specifically the Treasury Department's Financial Crimes Enforcement Network, to ensure that the institution complies with federal anti-money-laundering law. A Fincen spokesman confirmed that Glacier International has submitted a draft of its anti-laundering compliance policy to the agency but would not comment on its status.
What other supervision Glacier International may be subject to, if any, is unclear.
Other banking regulators, including the Federal Reserve Board, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency, have had no contact with the company. (Deposits will not be insured by the FDIC, but Glacier International may buy private insurance.)
Montana banking regulators initially claimed regulatory jurisdiction, but Glacier International challenged it. Mr. Lambert said that, because it is chartered under Indian law and located on a reservation, the company is not subject to state regulation.
State regulators have since backed off. "The state does not regulate them," said Chris Olson, deputy commissioner of the Montana state banking department. "The Blackfeet nation is sovereign."
The Montana Legislature in 1997 passed a law allowing foreign capital depositories to be established in the state, offering similar privacy guarantees. But so far no one has taken advantage of the law.
Four years ago, Blackfeet National Bank in Browning made headlines with its "Retirement CD," a federally insured annuity product. After a long court battle with the insurance industry, the bank withdrew the product.