This article sets out to provide the answers to these questions and clear up some of the popular misconceptions about the Geneva Free Ports. In short, to help you understand why we decided they were the best possible place to vault your precious metals.

The story behind the Geneva Free Ports

Even today, there are still plenty of misconceptions about the Geneva Free Ports. For some people it retains the dubious reputation gained due to a number of tabloid headlines and scandals in the past.

The truth is somewhat more mundane. They were originally built for the sole purpose of storing a wide range of goods prior to export. Tax-exempt and located in the centre of Europe the Free Ports rapidly became a trusted partner for exporters and, over time, began to store even the most valuable and precious goods.

As a result, the Free Ports progressively improved their security arrangements to justify the confidence they were given; buildings with optimal earthquake resistance, tamper proof locks, steel reinforced doors – every care was taken to ensure they offered the most secure storage possible. Ironically, it was these very precautions that encouraged criminal activities, totally contrary to the values of the Free Ports, such as tax evasion and the storage of stolen art. Discretion is not the same as secrecy: it was never intended that the premises should be used in this way. But certain unscrupulous owners took advantage of the tax free zone for illegal business.

M North: 10,400 m² dedicated to storing art works

Geneva Free Ports today

In order to reduce the spread of this kind of risk, the Geneva Free Ports have implemented a series of new security measures since 2014: in the short-term, a systematic verification of the archaeological objects stored and their owners will be put in place, and access to the premises will be limited. As early as 2005, the Free Ports had an obligation to verify the ownership and provenance of all cultural assets, and since 2009 every owner has had to complete a detailed inventory register (photos, owner’s identity, description, etc).

It also goes without saying that the Free Ports collaborate closely with the political and judicial institutions to prove their transparency; in addition, 87% of the site is owned by the Swiss state.

Finally, the Free Ports offer two types of storage: Swiss (50% of the goods) and free port (the remaining 50%). Free port storage is under the permanent supervision of the Federal Customs Administration, that has a right of access to the premises at any time. This has already occurred with AuCOFFRE’s and VeraCash’s free port storage. The benefit of this type of storage is the temporary suspension of customs duties and taxes.

If VeraCash (and AuCOFFRE since 2012) made the decision to vault precious metals with the Geneva Free Ports, it is because protecting its members from any potential loss in the event of bankruptcy is paramount. Placed outside the banking system thanks to Swiss political and economic neutrality, VeraCash members’ precious metals are therefore immune to that possibility.

Geneva Free Ports in figures

• Goods are stored on two sites: the vaults in La Praille and the Genève-Cointrin airport
• Large premises: the Free Ports’ warehouses cover some 150,000 square metres (almost half of which is dedicated to works of art).
• A history that goes back 128 years: the company operating the Geneva Free Ports was officially founded in 1889.
• The largest museum in the world: storing over a million works of art.

Tangible gold and silver

Being vaulted in premises in another country in no way alters the fact that the gold and silver are the property of VeraCash members. Under no circumstances can these precious metals be considered the property of VeraCash itself; and this means that even if the worst was to happen, and the company collapses, all the vaulted assets would be redistributed to the members.

You might be interested to know that VeraCash and AuCOFFRE combined would rank 79th in the world as a country, if they were a central bank.

Is it legal to vault precious metals in Switzerland?

It is completely legal to securely store gold and silver in Switzerland, because precious metals are classed as movable assets. Being vaulted in the Geneva Free Ports provides the advantage of VAT exemption for VeraCash members. Therefore, owning gold in a Swiss vault has nothing in common with having a Swiss bank account: especially since an undeclared Swiss bank account can cost you up to € 1,500 per year.

The few square meters of storage used by VeraCash and AuCOFFRE to securely vault your gold are subject to very strict controls by the supervisory authorities. Not only are the vaults audited once a year by an external company on behalf of VeraCash (ALS Global), but they can also be subject to an impromptu inspection by an official auditor or by the French and Swiss customs, to verify that the goods declared by VeraCash indeed match those physically present in the vaults. A duty of transparency which both the company and the Free Ports are more than happy to respect.

Furthermore, buying Vera Valors (the tokens exclusively issued by VeraCash) offers an advantage in terms of taxation: for every transaction below € 5,000, there is nothing to declare. Above that amount, profits are taxed at 34.5%, with a 5% allowance from the second year onwards. Finally, after 22 years of ownership, profits become totally tax exempt. If you are subject to French wealth tax (ISF), certain changes are expected to come into force at the beginning of 2018: in a couple of months, you will no longer be required to declare how much you own in the form of gold, silver or diamonds, following the new law passed by Emmanuel Macron.

Finally, VeraCash is firmly in favour of discretion and keeps all its members’ data and information confidential, only disclosing it to the legal and judicial authorities in the event of an explicit request from the police or tax authorities. Any abuse of the service offered can result in a permanent suspension of the member’s access. For further information, please visit our page dedicated to data protection.

Concerning the VeraCarte Mastercard® payment card, you can find all the information you need in a previous article: notably in the paragraph dedicated to the constraints and regulations that govern our partnership with PFS, the organisation that certifies the legitimacy of VeraCash and VeraCarte vis-à-vis international banking requirements.

Why can’t I store my precious metals bought through VeraCash at home myself?

Normally, when you buy precious metals you might expect to be able to store them at home; but this is hardly the most sensible thing to do with such valuable assets.

Unfortunately, saying too much to friends and family can be risky; envy makes relationships difficult and even, in the worst cases, can result in theft. As statistics all too often prove, this type of theft is frequently committed by “friends” or close family members.

And if you are burgled, few insurance policies cover this sort of loss and rarely reimburse that type of asset (even if it had been declared to the insurer).

For each user of the VeraCash platform and every gold, silver and diamond buyer, our company is committed to securely storing these precious materials in the Geneva Free Ports, free of charge and unlimited in both quantity and time. No fee will be charged for using the vaults, as long as you remain an active member of the community.

Finally, safely behind the shield of Swiss political and economic neutrality, your gold, silver and diamonds are protected from bankruptcy and can never be seized by the state.

Episode 1. How does VeraCash work? Why are you an Agent for a payment institution? Is a payment institution a bank? The same questions come up over and again. So we decided it was time to explain the how, why and wherefore of our links with our partner and our Mastercard payment card.

VeraCarte revolutionises payments by gold

What exactly to we expect from a means of payment today? To be able to pay quickly and easily, at any time of the day or night, without losing money and without paying a commission when changing currency… This is exactly what you can do with the VeraCarte, as with many other means of payment today. The account used to fund your card combines the advantages of gold – which backs the card – and those of a payment card that turns your gold into cash.

The VeraCarte removes international borders for transactions. It can be used worldwide wherever Mastercard© is accepted. In other words, you can use it in 35.9 million acceptance points, in over 210 countries and 1.5 million ATMs. Not only that, but because it is outside the financial system, it also allows you to make payments overseas with the lowest possible exchange rate charges, from the cash machine to the payment terminal.

VeraCash now also offers all its customers a virtual IBAN, making it easier to credit their VeraCash account. Just like the VeraCarte, this new product is offered by our partner PFS.

Payment institution or PFS agent?

Only officially recognised payment institutions are authorised to issue a means of payment such as the VeraCarte Mastercard, or to process financial transactions. Since VeraCash is not a payment institution, the company operates as a direct agent for the English company Prepaid Financial Services (PFS). Agent reference number: 6337638.

Why this partnership? The first reason is simply that given our size today we are not currently able to become a payment institution. The procedure would be too expensive and requires considerable means both in terms of staff and technical capacity, notably in order to comply with banking regulations. Our core business is the purchase and sale of gold, not operating a payment card.

The second reason is one of flexibility. Continuing innovation means that VeraCash needs to optimise its costs and its human and technical resources, to ensure the long-term future of its activity. This flexibility is best achieved through strategic partnerships. As a result, we can change our payment institution tomorrow (as we can change any other supplier) or add a new one to extend our means of payment beyond Europe.

Anecdote: our first payment institution was the French company “Aqoba”, unfortunately declared bankrupt in 2014. As soon as this happened, we very rapidly changed to a reliable partner, PFS, meaning that our service continued and remained completely transparent for our customers, for whom this change had very little impact. Gold not being a commodity handled by the payment institution, the capacity to buy or resell gold for their VeraCarte account remained intact even if the VeraCarte itself could not be used for a fortnight. Proof, if any were needed, of our rapidity, flexibility and capacity to adapt, should a problem arise at this level.

Preconceived ideas and false information on the web…

1) Using a payment institution in order to offer a card backed by gold means a return to the banking system.

FALSE.

The Mastercard is purely a means of payment; it is VeraCash that is responsible for the gold transactions and that guarantees the secure storage of the gold in the vaults of the Geneva Free Ports.
The client’s ability to buy or sell gold remains intact even if they are unable to use their VeraCarte for a few days. Moreover, our customers have access to other means to use their gold: the mobile app to exchange grams of gold between individuals (this will soon be possible with professionals as well) and transfers to their bank account if they need liquid assets.

2) Only a payment institution is able to buy/sell gold as proposed by VeraCash.

FALSE.

Gold is not classified as a financial product. It can be freely bought, sold and stored in France. We rely on the Customs to keep the “Police register” and the Autorité des Marchés Financiers (AMF – Financial Market Authority) because we operate as an intermediary in various commodities.

3) A payment card backed by gold is extremely costly for the customer.

FALSE.

Although VeraCash pays a commission to its partner PFS for each transaction made with the card, the company does not pass this cost on to its customers, which makes it a particularly inexpensive prepaid card to use. Even better, it is more competitive than a traditional bank card when used abroad! Finally, there is no subscription charge to obtain the card, this is now totally free.

4) The payment institution manages the physical inventory.

FALSE.

Our payment institution has no access to our physical stocks of precious materials. This is simply because the core business for VeraCash is managing physical stocks of gold, silver and diamonds on behalf of its customers. The payment institution only communicates with the VeraCash server to ensure that the balance available on the customer’s account is sufficient to cover the requested card payment.

100% compliant with banking regulations

Strict regulations apply in each country, at European and international level, whenever a financial transaction is carried out.

PFS is an English payment institution and is therefore subject to the English financial payments authority: the FCA (Financial Conduct Authority) registered under the number 900036.

In France, the banking sector is regulated by the ACPR (Autorité de Contrôle Prudentiel et de Résolution – Prudential Supervision and Resolution Authority). PFS benefits from the European passport, which means it is allowed to operate in all the European SEPA zone countries, including France, and is therefore recognized as such by the ACPR. VeraCash thus operates its “VeraCarte payment card” activities totally legally.

Finally, PFS is accredited by both Mastercard and VISA to issue payment cards within the SEPA zone.

And the future?

VeraCash does not exclude the possibility of becoming a payment institution itself, once the company becomes large enough and has a sufficiently high volume of transactions.

VeraCash has carried out an initial comparison between the VeraCash card and a payment card. Conclusion: the VeraCash card is approximately 3% cheaper than a conventional bank card.

Commission 1 + exchange rate + commission 2…

Do you really know the commission rates applied by your bank for your currency transactions outside the euro zone?

The amount of the commission varies from one bank to another, but can have a serious impact on your purchasing power when you travel abroad.

These commissions are in addition to the currency exchange rate chosen by the bank and that is rarely clearly explained to the customer. The further the exchange rate used is from the official “spot” exchange rate the more unfavourable it is, meaning that in reality an additional commission has been applied.

Not only does VeraCash take no commission on transactions in non-euro currencies but in addition, the euro to foreign currency conversion rate is very close to the “spot” conversion rate.

11% difference on a bill in Switzerland!

Here is a comparison of the costs:

Travelling outside the euro zone? Join our study

Planning to travel outside the European single currency area?

Take part in our large-scale study set up to assess the cost of using the VeraCash card abroad compared to using classic bank cards: we need as much data as possible! We will be offering 5 VRC to all participants and will share the results with our members.

1. Pay 50% of the bill with your VeraCash card.
2. Pay the other 50% of the bill with a standard bank card.
3. Go to XE.com to calculate the “spot” conversion rate for the currency of the
4. country at the time of the transaction.
5. Take a screenshot as shown below.
6. Email us the amounts of the receipts charged to your accounts, the screenshot of the conversion rate and your username.

We will credit your 5 VeraCash in the days that follow receipt of the complete information. 

Over to you!