Investing for Survival--Finding friendly offshore bankers

Where to Find Offshore Bankers Friendly to Americans

By Bob Bauman

Moving money offshore 

has a host of advantages. 

Down through history, whenever a major war or other calamity has threatened, ever-greater hoards of foreign cash have flowed into Swiss bank accounts because the world knows Switzerland traditionally stands for safety.

In the United States, Big Government advocates want to keep taxpayer cash under control at home—and with the U.S. Internal Revenue Service claiming worldwide powers it’s certainly no longer easy for Americans to open a Swiss or other offshore bank account.

But the list of friendly offshore bankers, even for Americans, is longer than you might think. And accounts in selected offshore financial centers offer everyone what U.S., U.K, French and German banks no longer can guarantee—much stronger asset protection and greatly increased banking privacy.

For Americans, a foreign account also provides a choice of stronger non-dollar currencies, plus a means for direct trading and investing in more profitable foreign equities, precious metals and tax-deferred insurance and annuities.

First, you want your offshore account located in a place that has political and economic stability; one that welcomes foreign investors and where the rule of law is respected. The Swiss banker won’t roll out as warm a welcome to Americans as he once did—but Switzerland is still on a short list of places that every American should consider investigating for banking advantages.

That is so because, even with all the post-UBS tax-evasion scandal fallout, Switzerland still has one of the strongest bank-secrecy laws anywhere, even when dealing with the U.S. government. If anything, all their recent troubles and the attendant publicity have made Swiss bankers more aware of obligations to clients and protective of clients’ rights.

Other banking countries that make my shortlist and should be on yours are: Liechtenstein, Denmark, Austria, Singapore, Hong Kong, Panama and Uruguay.

Each of these country’s banks has a different level of protection and different requirements for clients. While in general banks in each country are wary of U.S. clients because of the demands of high-handed U.S. laws such as the Foreign Account Tax Compliance Act (FATCA), selected banks there often are willing to open trust or corporate accounts controlled by Americans.

But be ready to comply with now-universal “know your customer” rules requiring proof of citizenship and current residence, as well as signing IRS Form W-9 allowing the bank to confirm your taxpayer identifications number (TIN) and notify the IRS of payments to you.

An offshore account is your personal shield.”

Once you’ve chosen a country, it’s important to fully research the financial institutions there. Build a general mental frame of reference to judge individual banks and the services offered.

You can use this basic checklist to narrow it down: a) Use Google News and in-country publications to find mentions about a specific bank, good or bad. Check the website for the country’s official bank supervisory agency for facts and history on each bank;

b) Avoid “banks” with only an Internet presence. Absence of bank officials’ names, no physical address, missing phone numbers are all indications of fraud;

c) Be very wary of any bank that offers unreasonably high interest rates or unrealistic returns. A deal that appears too good to be true is just that;

d) Confirm that the bank meets or exceeds the minimum standards set by the international Basel Accords, the rules that limit a bank’s risk and require minimum capital, shareholder equity, disclosed reserves, and limit-holdings debt and equity instruments.

You might even ask for the names of existing bank clients as references, although these may be difficult to obtain. And make sure the bank answers these questions: For foreign investors, what types of accounts are available and are there any restrictions, especially on Americans?

What taxes, if any, will be withheld from investment income? Are any investments considered part of the bank’s balance sheet and available to bank’s creditors in the event of bank insolvency?

What are the fees for securities transactions and for custody; are there other fees? Are accounts insured by law or otherwise against any loss or if the bank fails and for how much? How do I transact business and with whom; are telephone, fax, and/or e-mail orders accepted?

Is Internet banking available, secure and in English? Does the bank send U.S. clients a year-end statement showing taxable interest paid? If an inquiry about my account is received by the bank from a third party will I be informed and how will it be handled?

The 1934 Swiss Bank Secrecy Law, still in effect, was a direct response to the rise of Hitler and the threat of war. Seventy-eight years later, savvy Argentines are escaping that country’s ruinous policies by banking in neighboring Uruguay, and Putin’s beleaguered Russian business people are pouring billions of rubles into banks in far more friendly Cyprus. History proves my point: an offshore account can serve as your personal shield against oppressive government, stifling regulations and declining currencies.