Offshore Bank Account Archives - Premier Offshore Company Services

Tag Archive for: Offshore Bank Account

Risks Associated with Buying an Offshore Bank in Puerto Rico

06/05/2023/in Articles, Bank License, International Bank License, Offshore Bank License/by Christian Reeves

In this post, I am looking at the risks of buying an international bank in Puerto Rico. I am focused on offshore banks in Puerto Rico because that’s my expertise. But, these risks apply to the purchase of any small bank, especially offshore banks without FDIC.

Compliance Risks

The Puerto Rico Office of the Commissioner of Financial Institutions (OCIFI) is responsible for regulating banks in Puerto Rico. OCIFI has a number of regulations that banks must comply with, including those related to anti-money laundering, consumer protection, and capital requirements. Failure to comply with OCIFI regulations can result in significant penalties, including fines and the loss of the bank’s license.

Loan Book Risks

When acquiring a bank, it is important to carefully assess the quality of the loan book. A poorly performing loan book can lead to significant losses for the acquirer. It is important to review the loan book for any potential problems, such as high levels of non-performing loans or loans that are made to risky borrowers.

Regulatory Pitfalls

There are a number of regulatory pitfalls that can trip up an acquirer. For example, OCIFI regulations require that the acquirer have a sound business plan for the acquired bank. The acquirer must also have the financial resources to support the acquired bank. Failure to meet these requirements can result in the acquisition being blocked by OCIFI.

Conclusion

The acquisition of a bank in Puerto Rico can be a profitable venture, but it is important to be aware of the risks involved. There are a number of compliance, loan book, and regulatory pitfalls that can trip up an acquirer. By carefully assessing the risks involved and taking steps to mitigate them, an acquirer can increase the chances of success in a Puerto Rico bank acquisition.

Here are some additional tips for acquirers of banks in Puerto Rico:

Conduct thorough due diligence on the target bank. This includes reviewing the bank’s financial statements, loan portfolio, and regulatory history.
Get legal and regulatory advice from experienced professionals. This will help to ensure that the acquisition is completed in compliance with all applicable laws and regulations.
Be prepared to invest in the acquired bank. This may include making capital infusions, hiring new staff, and implementing new systems and processes.

By following these tips, acquirers can increase their chances of success in a Puerto Rico bank acquisition. For more information, please contact me at info@premieroffshore.com.

International Bank Accounts for a Cryptocurrency Exchange

01/08/2018/0 Comments/in Articles, Banking Offshore, Bitcoin, Cryptocurrency, Initial Coin Offering, Offshore Bank Accounts/by Christian Reeves

International banking is the most challenging issue when setting up a cryptocurrency exchange. If you’re in a highly regulated environment, such as the US or UK, and have a lot of startup cash, then you’ll get a bank account. If you’re in a less regulated environment, best of luck to you. In this post, I’ll look at international bank accounts for cryptocurrency exchanges.

There are two types of international bank accounts for a cryptocurrency exchange:

a correspondent bank account, and
client accounts with or without a POA.

A correspondent account is one where the bank allows you to hold client funds and send and receive wires on behalf of those clients. The bank does due diligence on you, the exchange, but not much on your clients.

Client accounts are bank accounts opened by each and every client of the exchange. Then the exchange opens an account and is allowed to transfer interbank between its account and accounts registered to its customers.

Correspondent accounts are becoming extremely difficult for offshore cryptocurrency exchanges to get. Unless the bank can get comfortable with your KYC and AML procedures, and that you won’t accept deposits from any undesirables, they won’t open a correspondent account for you.

When a cryptocurrency exchange has received its license from US and UK regulators, banks are more willing to take a risk. Even then, they often hedge this risk by holding a large deposit in case of fines.

When the cryptocurrency exchange is from a lesser jurisdiction, such as Panama or a Caribbean country, their banking options will be limited. You’ll be forced to open with a local bank or search out a correspondent partner and put up millions in capital.

The other option for a startup exchange is to ask every customer to open a bank account at your selected international bank. This way, the bank does due diligence on your customers and the risk in a correspondent account is eliminated.

Don’t dismiss the separate accounts option out of hand. Sure, it puts up barriers to customer acquisition. But, separate accounts greatly reduces transaction costs, capital required for the exchange, and allows your customers to get set up offshore. You can have your clients open an account online and play around a bit. Then, when they’re ready to get a real bank account, your exchange could handle the paperwork.

And think about international bank accounts for cryptocurrency exchanges. How much will it cost to send wires? If you don’t have a correspondent account in the US, UK or EU, how will you send wires? Will your customers accept an $80+ wire fee? I doubt it.

If you and your customers are all at the same bank, there’s no charge to transfer between accounts. Customers can instantly move from crypto to FIAT to gold at zero cost.

Quality international banks typically offer physical gold accounts. Some even allow you to borrow against that account. Such a loan could be used to buy crypto, with the gold acting as a hedge.

Finally, operating a cryptocurrency exchange offshore provides you and your clients’ privacy and asset protection. The US IRS is going to war with Coindesk. A good number of US customers would be willing to make the effort to set up an offshore account if it could be linked to a cryptocurrency exchange.

Your customers might decide to form an offshore corporation or trust to hold their international bank account and cryptocurrency account. That would provide additional asset protection and possibly tax benefits.

For example, a US customer could take their IRA offshore and move it into an Offshore IRA LLC. Trades in the IRA account would be tax-free because gains would flow back to the retirement account. Plus, because the IRA is offshore, you could provide a non-recourse loan if you wanted to give them trading leverage.

For larger customers, with $2 million or more, they could set up an international life insurance policy to hold their account. Trades in the account would be tax-deferred or tax-free. Tax-deferred if they canceled the policy and tax-free if they hold the policy until death and transfer to their heirs.

And it’s possible to set up these accounts with a Power of Attorney to the cryptocurrency exchange. This is a new concept in crypto, but something we’ve been doing for years for investment advisory firms.

Each customer opens an international bank account and gives a Power of Attorney to the cryptocurrency exchange. The exchange is thereby allowed to manage and invest the account on behalf of the customer.

This would be especially helpful in a situation where the international cryptocurrency exchange is providing fund management or needed access to the account for a margin call.

As I said above, if you have a major license and capital, we can assist you to secure international correspondent bank accounts for your cryptocurrency exchange. If you’re just getting started, you might offer international bank accounts to your customers as a solution to both yours and their desire to be offshore.

For more information, please contact us at info@premieroffshore.com or (619) 483-1708. We’ll be happy to work with you to structure a cryptocurrency exchange offshore.

Panama is getting out of the offshore banking business

06/23/2017/0 Comments/in Articles, Banking Offshore, International Business, Offshore Bank Accounts, Offshore Banking, Offshore Company, Panama/by Christian Reeves

Panama is making an exit from the offshore banking business. No longer can you open a bank account in Panama and operate it from abroad. Banks now require a physical presence, tax filings, a business license, and an office address in Panama.

Panama has been under a lot of international pressure over the last 2 years. They’ve finally given in and bent to the wishes of the United States. They’ve thrown in the towel on international banking and remote businesses.

The first big hit came in early 2016 when the US government alleged one of the top 5 families in Panama was in fact a money laundering cartel. Uncle Sam swooped in to save the day, shutting down Balboa Bank, and arresting everyone associated with the Waked family.

This action put thousands of Panamanians out of work and Mr. Waked is being held in the US without bail awaiting trial. It looks like his trial will begin in late 2018, though the preliminary date is October of 2017.

Just one month after Waked came the biggest hit to the privacy and protection of Panama – the Panama Papers.

The German newspaper Sueddeutsche Zeitung obtained 11.5 million files stolen from the Panama law firm of Mossack Fonseca and shared them with a group of investigative journalists. This trove of documents became known in the press as the Panama Papers.

The Panama Papers shone a light on many illegal uses of offshore corporations and offshore bank accounts. Vice put it bluntly in April, “The politicians who have taken and made bribes, dodged taxes, and amassed fortunes of unimaginable scale are your politicians.”

Click here for my interview with Vice on who should be afraid of the IRS and Panama Papers.

Fast forward 10 months and the Panama Papers have caused a political firestorm in Panama and throughout Latin America. The scandal brought down Panama’s previous President Ricardo Martinelli, who is being held in the US for extradition back to Panama, and looks like it will take out their current President Juan Varela (who was the Vice President under Martinelli).

The Panama Papers apparently show that $800 million in bribes were paid across Latin America by the Odebrecht construction company in Brazil. Of this, about $59 million went to friends of Martinelli.

Most of the $800 million was allegedly laundered through Panama in what the local papers are calling Brazil’s Lava Jato (car wash money laundering ring that would make Walter White proud).

Then, in February of this year, Varela decided all these troubles where the fault of the lawyers they’d hired – Fonseca and Mossack. The founders of Panama Papers law firm were a arrested on money laundering charges… and Ramón Fonseca has already begun to strike back. He says Varela told him he’d accepted cash payments from Odebrecht.

Varela has said that he didn’t take any bribes. Apparently the millions received from Odebrecht were “campaign donations.”

The bottom line is that Panama is in a tailspin and needs to revamp its image. They’re fighting the war on corruption from abroad on two fronts: 1) getting out of the offshore banking business, and 2) requiring a residency visa from anyone that makes multiple trips to Panama over a 12 month period.

As to residency in Panama, if you’re living in Panama, making multiple visits to the country in a year, or spending more than 60 days in Panama over a 12 month period, you must get a visa. The government is cracking down on people “living” in the country without a residency permit.

Then there’s offshore banking. No longer can persons living and working abroad open a business bank account in Panama. A Panama corporation must now have a business permit, a physical office, and be operating in the country to get a bank account in Panama.

The same goes for personal accounts. Only those with with residency permits will be allowed to open personal bank accounts in Panama. No more personal accounts unless you can prove you have ties to the country.

Even with all this water under the bridge, Panama remains a strong international business hub. It’s the banking center of Latin America and its foundations provide some of the best asset protection and estate planning available.

If you want to do business in Panama, make multiple trips to the country, invest, or protect your assets there, you now need to pay to play. You need to get a residency visa if you want access to this market.

The easiest and lowest cost residency permit in Panama is the Friendly Nations Reforestation Visa. Invest $20,000 in their green initiative and get residency for you and your family (spouse and dependent children under 19). For more on this, see: Best Panama Residency by Investment Program.

Other options for residency include buying a bond for $200,000 or real estate of more than $350,000. In my experience, the teak program is best for anyone from one of the 50 friendly nations. If you’re from a country that doesn’t have an agreement with Panama, such as China or India, the bond or real estate is the best deal you can get.

I hope you’ve found this review of Panama’s troubles to be helpful. For more information on residency in Panama, please contact me at info@premieroffshore.com or call us at (619) 483-1708. We’ll be happy to negotiate your residency and open personal and business bank accounts for you.

Offshore Bank Accounts, Foreign Residency, and Asset Protection from South Africa

04/11/2017/0 Comments/in Articles, Asset Protection, Asset Protection Trust, Banking Offshore, offshore asset protection, Offshore Bank Accounts, Offshore Banking, Offshore Company, Offshore Trust/by Christian Reeves

High net worth South Africans are under attack from all sides… again. This time it may turn into a full blown civil war. At the very least, your assets and safety are at risk. Here’s how to move you and your cash out of South Africa and to negotiate a second residency.

A passport from South Africa is still a great business and banking tool. You don’t have the tax reporting problems we Americans do and you’re not on any of the restricted or prohibited country lists. You can open accounts at most offshore banks relatively easily.

For a list of restricted and prohibited countries, see: Opening an offshore bank account from a restricted country

This means you can qualify for just about every second passport and foreign residency program, as well as open accounts around the world. We have been working with citizens from South Africa for years and will be happy to assist you.

Before I get into what you’ll need to do to open an offshore account as a citizen of South Africa, let me point out that your status might change.

The demand for offshore bank accounts and second residencies has spiked in the last couple of weeks. Where we used to get 1 or 2 inquiries a month from South Africa, we’re now getting 10 or 12 per day.

The problem with this is that countries and banks will begin to put a cap on transactions. They don’t want to get over exposed to any one country. And, whenever world events creates a rush to the exit, some will block movement for political reasons.

If you want to be sure to be approved for residency or an offshore bank account from South Africa, you need to be at the front of the line. There are sure to be some who are unable to get through the que… some will certainly be left behind.

With that said, here’s how to open an offshore bank account, get residency in a foreign country, and build an asset protection structure for citizens of South Africa.

Let me start with an offshore bank account. Because you have a solid passport (for banking anyway), you can open an international bank account in a number of jurisdictions. In most cases, the country will depend on the size of the account.

For example, to open in Switzerland or Andorra, you’ll need $2.5 million or more. These are managed investment accounts where a Swiss investment advisor manages the account per your instructions.

For smaller accounts, you can open in Cook Islands with a deposit of $20,000. In Belize, the minimum is $5,000. However, the fee structure in Belize makes it difficult to open an account with less than $10,000.

These accounts can be in your name or in the name of an offshore structure. For basic asset protection I recommend a Nevis LLC for citizens of South Africa because this is the easiest jurisdiction to deal with from your country.

For larger accounts, and to cover both estate planning and asset protection, I recommend a Cook Island trust. This structure provides maximum protection and the Cook Islands has a lot of experience in dealing with South African clients.

Now on to second residencies. By far the best option for citizens of South Africa is Panama’s friendly nations reforestation program. Because of the passport you hold, you can get residency in Panama with an investment of only $20,000. Those from nations that don’t have an agreement with Panama pay about $110,000 for the same residency permit.

Residency allows you to live, operate a business, and bank in Panama. As a resident, you can buy and rent property and will have access to all the banks in the country. Panama is a world class economic hub and this residency is very valuable for citizens of South Africa.

After 5 years of residency in Panama you can apply for a citizenship and a second passport. Your South African passport gives you visa free travel to 98 countries and doesn’t include the Schengen Region of the European Union.

Panama gives you visa free to 128, including the EU and makes it easy to get a 10 year visa to the United States. Panama is a major upgrade to your South African passport.

If you can’t wait the 5 years for a Panama passport, take a look at Nicaragua. This program requires an investment of $35,000 and you can apply for citizenship after two years. For more, see: The Best Second Residency Program in 2017.

Finally, if you can’t even wait the two years for Nicaragua, and you have about $135,000 to spend, you can buy a passport from St. Lucia. This country is very experienced in handling cases from South Africa and you should have your passport in hand about 90 days.

For more on St. Lucia, see: Changes to the St. Lucia Second Passport Program in 2017

I hope you’ve found this article on how to open an offshore bank account, get residency in a foreign country, and build an asset protection structure for citizens of South Africa to be helpful. For more information, please contact us at info@premieroffshore.com or call (619) 483-1708.

How to invest your IRA into offshore hedge funds and active businesses

02/21/2017/0 Comments/in Articles, International Business, Offshore Bank Accounts, Offshore Banking, Offshore IRA/by Christian Reeves

You can invest your self directed IRA in mutual funds, hedge funds, and any active business. There are very few limitations on how you invest your retirement account. But that’s only half the issue. While you can invest in whatever you like, there all kinds of tax costs associated with investing your IRA into a fund or an active business.

Here’s how to avoid the tax penalties associated with investing your IRA into offshore hedge funds and active businesses.

Let me first frame the issue. When you invest your IRA in an active business taxed as a partnership or flow-through entity, or a hedge fund that pays out untaxed ordinary income, you have what’s called Unrelated Business Income (UBI). The IRS wants you to pay tax on these profits before they go into your IRA tax free or tax deferred.

There are two types of UBI that will trigger unrelated business income tax for retirement accounts:
Profits generated from a business/trade: When an IRA or 401k earns profit from an operating business that has not paid business tax on those profits before distributing them to the retirement account, those profits are taxed in the IRA.
Leveraged Real Estate Investments: When an IRA purchases real estate using a non-recourse mortgage loan, the debt financed portion of the property’s profits is subject to unrelated business income tax. Remember that all IRA loans must be non-recourse and that the owner of the account and the account itself may not guarantee the loan.

Unrelated Business Income is income that goes into your IRA from an active business or a leveraged real estate investment. It’s “unrelated” because it’s not the usual type of income an IRA will receive – passive and investment income.

Most UBI is untaxed profits from an active business. UBI is profits on which the business has not paid tax… such as a business operating as a partnership or within an LLC. If it were taxed as a corporation, the business would pay corporate tax on the profits and pass a dividend on to you. Because it’s a partnership or LLC, the net profits are not taxed before arriving in your IRA.

Unrelated business income is taxed in your IRA at Estate and Trust rates. UBIT doesn’t even get its own tables in the US tax code. You need to refer to the Estate and Trust rates

2016 – UBIT Rates
If taxable income is:	The tax is:
Not over $2550	15% of the taxable income
Over $2550 but not over $5950	$382.50 plus 25% of the excess over $2551
Over $5950 but not over $9050	$1232.50 plus 28% of the excess over $5951
Over $9050 but not over $12300	$2100.50 plus 33% of the excess over $9051
Over $12400	$3206 plus 39.6% of the excess over $12400

Basically, this means UBI is taxed at ordinary income rates.

Important tip: UBIT is reported on IRS Form 990-T. You only pay UBIT on profits from qualifying investments. If you lose money in an active business, you will owe no tax. However, you should file Form 990-T every year. UBI losses can be used to offset UBI profits in future years.

Here’s how to eliminate Unrelated Business Income Tax

Unrelated business income tax only applies to investments and transactions in the United States. If you structure your IRA offshore, setup a UBIT blocker corporation, and invest into foreign businesses and hedge funds, you will eliminate UBIT.

You can still access US investments, but you need to structure your investments offshore. If your hedge fund has an offshore feeder fund, you can setup an offshore IRA LLC and an offshore UBIT blocker, to enter the fund through the offshore feeder.

If you invest in a US fund through their US structure, you’ll pay UBIT on distributions. If you invest in a US fund through an offshore feeder, you will pay no UBIT.

The above is focused on hedge funds and leveraged real estate investments. UBIT also applies when an IRA owns an ongoing active business. Other rules apply to active businesses. For example, you can’t invest IRA money into a business or company you own more than 50% of nor can you invest in a business that pays you a “significant” salary.

The same goes for foreign real estate. If you buy US real estate with a non-recourse mortgage, you will pay UBIT on the gain. UBIT will apply to the portion of the property that was financed. So, if 50% of the cash came from your IRA and 50% from a non-recourse mortgage, you’ll pay ordinary income tax (not capital gains rates) on 50% of the profit when you sell the property.

If you invest in real estate outside of the United States, set up a UBIT blocker corporation, and use a non-recourse mortgage, you’ll eliminate this UBIT tax.

To maximize the benefit of foreign real estate investments with your IRA, you need to plan for both UBIT and local capital gains tax. You want to balance your expected returns against the capital gains tax rate you pay in the country where the property is located.

One of the best return on investment vs capital gains tax is Belize. Returns in Belize have been solid for the last 10 years and Belize has no capital gains tax. Yes, their capital gains rate on real estate is zero.

Some of the highest returns in foreign real estate can be found in Nicaragua. This market is growing quickly and attracting a lot of expats and investors. Their tax on rental profits, and their capital gains rate, are both 10%.

So, someone who buys real estate in Nicaragua with their IRA will pay total taxes of 10%. Had you done this in the United States, your total tax bill would have been 33% to 39% (per the chart above).

Investing with your IRA and a non-recourse loan in a tax free country like Belize will save you 20% on ordinary capital gains and 33% to 39% on the gain from your mortgage (UBI gain). Investing in a higher returning and higher tax rate country like Nicaragua will save 23% to 29% in taxes.

UBIT will also apply to an active real estate business. If you buy a hotel, acquire land that you divide up and build homes on, or buy a multi-unit apartment building, you’re probably a dealer in real estate or a real estate professional. Unrelated Business Income Tax will apply to all income earned in your active real estate business.

That is to say, if your IRA operates as a dealer in real estate, you must pay UBIT tax on your profits.

Note that UBIT does NOT apply to passive real estate investments if you don’t use leverage or a non-recourse mortgage. If you buy a couple of rental properties, you’re probably a passive investor. If you buy a hotel or otherwise operate a real estate business, you have UBIT issues.

I hope this article on how to invest your IRA into offshore hedge funds and active businesses has been helpful. To setup an offshore IRA LLC or a UBIT blocker corporation, please contact me at info@premieroffshore.com or call us at (619) 483-1708.

Move your IRA out of harm’s way – a battle is brewing between Trump and the establishment

02/19/2017/0 Comments/in Articles, Offshore Bank Accounts, Offshore IRA/by Christian Reeves

There’s a battle brewing between the establishment and President Trump. Powerful forces are aligning against our President and we’re left hoping the economy and our savings come out of this unscathed.

Gambling all of your retirement savings on red is a foolish risk. No one knows what will happen, but we do know that there’s a political war coming. Even if Trump brings our country out the other side better than ever, it’s going to be a rough few years.

Leaving your retirement account in the United States is like taking your savings to a Vegas roulette table and betting it all on one spin. You might win and you might lose… no one knows what will happen, but your risks are high.

Get your retirement account out of harm’s way immediately!

Take some of your cash off of the table. Leave what you want to risk in the United States and move the balance offshore. Diversify out of the dollar, eliminate country risk, and secure your investments.

You have the right to move any vested retirement account offshore. A vested account is most often an account you had with a prior employer. If you’ve been at the same job for 10 years or so, some of your retirement might have vested… you’ll need to speak with HR to find out.

You can also move most defined benefit plans out of the country. If your plan allows you to rollover or transfer the DB plan into an IRA, you can get it out of the country.

The process of moving a retirement account abroad is relatively simple. We form an offshore Limited Liability Company in a tax free country and open an offshore bank account for that LLC. Then your US custodian invests some or all of your retirement account into this newly formed LLC.

Finally, you’re appointed as the manager of the LLC. This gives you control and the legal right to manage investments in your retirement account.

There’s no need to move your entire account. You can send as much or as little of your account offshore as you’re comfortable with. Many clients start off small and grow their international holdings over time.

Others just build the LLC structure and open an offshore bank account. They hold their cash at their US custodian, ready to sent it abroad at the first sign of trouble.

The demand for offshore IRA LLCs has tripled since Trump took office. The fear is palatable… we can all see that the establishment and the media are all in on destroying Trump. They hate what he stands for and will do anything, including burning down our economy, to thwart his efforts and remove him from the presidency.

The only way to fully diversify your account, and take it out of play, is to get it out of the United States.

Of course, there are benefits to diversifying abroad in addition to the security provided. For example, there will be many international investments available once you get your account offshore. Most of them offer much better returns than you would find in the United States.

You can also decide to hold your IRA account in multiple currencies. You can open an offshore account and diversify out of the dollar. For example, Capital Security Bank in the Cook Islands, offers 11 primary currencies. If you buy a CD, you can access 26 currencies. No FX or brokerage required… just easy access to multicurrency accounts that allow you to maximize diversification without making an investment.

You can also use your retirement account to plant multiple flags offshore and create an escape hatch should you need it.

For example, you might use your IRA LLC to invest in one of the reforestation programs that give you residency and a second passport. You can get residency in Panama with an investment of $20,000 and Nicaragua with $35,000.

Panama is the easiest second residency program and Nicaragua is the fastest. Panama gives you permanent residency after 3 years and the right to apply for citizenship after 5. Nicaragua gives you permanent resident immediately and the right to apply for citizenship after 2 years.

Panama doesn’t require you spend any time in the country to maintain your residency. Nicaragua wants’ residents to become part of the community. Thus, you need to spend 183 days a year in Nica to maintain your residency.

Remember that you get citizenship and a passport in Nicaragua after 2 years. Once you have your passport, you can spend as much or as little time in the country as you like.

For more, see:

Nicaragua is the fastest low cost second passport

Best Panama Residency by Investment Program

I hope you’ve found this article on moving your IRA out of harm’s way to be helpful. For more on taking your retirement account offshore, please contact me at info@premieroffshore.com or call us at (619) 483-1708. We will be happy to work with you to safeguard your savings.

Foreign trusts can give you access to top offshore bank accounts

01/27/2017/0 Comments/in Articles, Asset Protection, Asset Protection Trust, Banking Offshore, offshore asset protection, Offshore Bank Accounts, Offshore Banking, Offshore Trust/by Christian Reeves

Most top offshore banks are closed to Americans. In fact, 95% of the best foreign banks have shut their doors to us because of the costly reporting now required by the IRS. The only way you can get into the best banks in 2017 is through the back door.

Here’s how to gain access to top tier offshore banks, currency traders, and brokerage firms when you hold a US passport…

If you, a US citizen living in America, were to walk into a top bank in Switzerland, Germany, or Andorra, and ask open an account, one of two things would happen. If you’re in Switzerland, they’ll politely apologize and say no (that’s just their nature). Anywhere else and they might laugh at you and escort you to the door.

We Americans have a big scarlet letter A across our chests. The US IRS has fined top banks billions of dollars and turned bank tellers into unpaid agents required to report all transaction involving US persons.

In addition, the Foreign Account Tax Compliance Act now requires banks to spend hundreds of millions on computer systems to generate annual reports that go to the IRS. Foreign banks have stricter compliance and US reporting requirements than US banks do!

The bottom line is that no top tier bank wants to do business with Americans… at least, not directly.

The back door into these top offshore banks is a foreign trust. You, the US person, are the settlor and owner of the assets in the structure. You then appoint a foreign trustee, and possibly a “protector.” These people are responsible for protecting the trust assets for the benefit of your heirs. They’re also responsible for making investment altercations and selecting a custodian.

Next, the trustee or protector hires an investment advisor, usually one based in Switzerland. This person has master accounts at the largest investment banks and can get you in without all the scrutiny.

This multilevel approach gets you into the bank you want and increases the asset protection provided by your trust.

For asset protection purposes, you’re two or three levels removed from the management of your foreign trust. This will be a big plus and provide the strongest level of protection should a creditor file a claim against your structure.

It’s also possible to create this structure for a large IRAs or retirement plans. When you form an offshore IRA LLC, that company is owned by your account, not you personally. You can elect to become the manager of that LLC or you can appoint a foreign investment manager. For maximum protection and access to top tier banks, go with the independent investment adviser.

When you appoint a foreign investment manager, and draft an operating agreement with much of the asset protection verbiage found in offshore trust agreements, you can add a significant layer of security to your retirement account. Also, the foreign manager can give you access to top offshore banks, just as he does for a foreign trust.

Most of these managed accounts, be they for an IRA or foreign trust, will require an opening deposit of $500,000 to $2.5 million. There are only a few well connected advisors that will open an account at a top tier bank with a deposit of $500,000. There are several that can work with $2.5 million or more.

Of course, you can take any sized IRA offshore. There are plenty of smaller international banks that will be happy to open an account for your IRA LLC. If less than $500,000, I suggest you be listed as the manager to eliminate management fees.

One last comment on these managed accounts for offshore trusts… it’s possible to create a tax free or tax deferred account for a foreign trust. Basically, you can open a US compliant tax free account, similar to a giant ROTH IRA, without any of the contribution limits or distribution requirements. Here’s how:

Your foreign trust can use its capital to buy a private placement life insurance policy on the settlor (you). Any gains inside this policy, which is owned by the trust, are tax deferred until you liquidate the policy. If you never close the policy, then this money passes to your heirs tax free.

Under current law, your heirs will receive a step-up in basis when property and assets of the life policy are distributed to them. This means that they’ll pay no tax on the gains earned on those assets while in the trust.

This same structure can be used to create generational wealth, where the assets are held by the trust for generations to come and heirs receive monthly or quarterly distributions. For more on this, see: Offshore Dynasty Trusts Explained

I hope you’ve found this article on how foreign trusts can give you access to top offshore bank accounts to be helpful. For more on how to setup a foreign trust, or to move your retirement account or defined benefit plan offshore, please contact us at info@premieroffshore.com or call us at (619) 483-1708.

Here’s How to Open an Offshore Bank Account

01/25/2017/0 Comments/in Articles, Offshore Bank Accounts, Offshore Banking/by Christian Reeves

It can be very difficult to open an offshore bank account. Whether you’re American, European, or Chinese, times are tough. Most international banks are closing their doors to everyone but those with residency visas. Here’s how to fight through and open an offshore bank account.

Opening an account offshore is VERY different from opening one in the United States. It’s this difference that causes the uninitiated much frustration and stress. If you think you’re going to walk into a bank in Cayman or Panama and open an account on the spot, you are in for a rude awakening.

In this article, I’ll explain how to open different types of offshore bank accounts. Follow these instructions and you can get an account with minimal headache… not stress free, but as efficient as possible.

There are three types of offshore bank accounts:

Managed investment accounts with $500,000 to $2.5 million minimum balances,
Basic offshore accounts at small banks in Cook Islands, Belize, and elsewhere, and
Business accounts at larger commercial banks such as Hong Kong and Panama.

The first requires an advanced structure, most commonly an offshore trust, and the use of an investment manager in the country where you will open the bank account. The most popular structure is an offshore trust set up in the Cook Islands with a Cook Islands trustee and protector. The trustee then hires an investment manager in Switzerland, who in turn opens the offshore bank account.

This offshore trust structure gives the settlor 2 or 3 layers of separation from trust activities, significantly increasing asset protection. Because of the costs of forming and managing these structures, I generally recommend them for offshore accounts with $1.5 to $2.5 million, though it’s possible to open a managed offshore account with $500,000.

Because of the size of the account, and because of the separation between the trustee and investment manager, these offshore bank accounts are relatively easy to open. In most cases, you fill out a few forms and send the package via FedEx to Switzerland. Depending on the country and the bank you select, a personal visit might also be required.

The next option is opening an offshore bank account at a small offshore bank. Most of these banks will allow you to open an account by email or FedEx, as requiring a personal visit would be to burdensome. While they might want to require a visit, no one is going to fly to Belize or the Cook Islands to open a small account.

The way into these banks is with a personal introduction. The firm that forms your offshore LLC or corporation will fill out your account opening forms and submit them to the bank on your behalf.

You will need a certified copy of your company documents, a notarized copy of your passport, a notarized copy of a utility bill that reflects your name and home address, and, in some cases, a bank reference letter. That’s it… the process is quick (about 2 weeks) and relatively simple.

Most of these small offshore banks have minimum account sizes of $5,000 to $20,000. Checks are not available and most transactions are completed by wire transfer. Some offshore banks, but not all, offer debit cards.

Smaller offshore banks are best used to hold your savings and investment accounts. If you’re looking to plant a flag offshore, these are often the best places to start.

These banks will accept business accounts. However, because of the costs of wire transfers, they’re generally not recommended for companies with more than 4 to 7 transactions a month. Of course, if the inbound and outbound transfers are sizable, you might still consider an offshore bank with higher volumes.

I also recommend smaller offshore banks for US retirement accounts. They’re usually experienced in these situations and understand the ownership structure. This is important because an offshore IRA LLC is owned by your retirement account and not you personally… a distinction that confuses many international banks.

Then there are small offshore business accounts… the bane of my existence. If you want to open a business account in a country like Cayman or Panama, get ready for the proctologist. Offshore business bank accounts are extremely difficult to get approved.

The reason for the difficulty is simple – small business accounts have lots of cash flowing through, but little staying at the bank. This exposes the bank to risks of money laundering, tax evasion and becoming embroiled in a dispute with the United States or European Union.

For all of these reasons, the bank’s default answer to a small business account is no. If you can work the system and convince them otherwise, then you might get an account opened. But, expect the process to be long and painful.

In order to prevail, you should have your company documents and references in order. You will also need some proof of prior income and business activities. This is usually 2 years of tax returns and cash flow / profit and loss statements.

I hope you’ve found this article on how to open an offshore bank account to be helpful. For more information, please contact us at info@premieroffshore.com or call us at (619) 483-1708. We will be happy to set up a structure and assist you through the maze of opening your bank account.

10 Reasons You Want an Offshore Bank Account in 2017

01/05/2017/0 Comments/in Articles, Banking Offshore, Offshore Bank Accounts, Offshore Banking/by Christian Reeves

An offshore bank account can open up new investment, privacy, and protection options. An international account gives you access to a new world of possibilities and higher returning investments not available in the United States. Here are my top 10 reasons you want an offshore bank account in 2017.

Each of our clients has their own reasons for putting some of their wealth in an offshore bank account. You may want to plant that first flag offshore, diversify out of the United States, or protect your cash from civil creditors. You might want a secure financial haven from political or economic uncertainty or the advanced offshore tax and financial planning options only available offshore.

Whatever your reasons, we can assist you to open an offshore bank account that’s designed to help you manage, protect and grow your wealth. We work with a number of banks around the world and can introduce you to the one that best fits your needs.

We also offer a wide range of company formation and international asset protection structures. We can place your offshore bank account behind the impenetrable walls of an asset protection trust or set up a basic offshore LLC or corporation. If you’re operating a business, we also offer business bank accounts and offshore business planning.

No matter your situation, we have a custom offshore banking solution.

So, without any more adue, here are the 10 reasons you want an offshore bank account in 2017.

1. Plant your first flag offshore

The first step in building a life abroad is to open an offshore bank account. It’s the first of many international flags you should plant to prepare your exit plan.

And an offshore bank account is the lowest cost flag. If you search out a bank and open the account on your own, you will pay nothing. If you hire a banking expert to open the account on your behalf, it might cost a few hundred dollars.

Major flags, like an offshore company cost thousands of dollars. The biggest flag, a second passport, might cost hundreds of thousands. So, start with a personal offshore bank account, get your bearings, and then devise a long term international diversification strategy.

An offshore bank account is the first step in moving you and/or your assets abroad. Spend the time to do it right. Find professionals you feel comfortable with and a bank that fits your investment and transactional needs.

2. Asset protection

The most basic form of asset protection is moving some cash into an offshore bank account and away from future creditors.

And an offshore bank account might prevent litigation. Most civil cases are taken by lawyers on contingency… they get paid a percentage of they they take from you.

Before beginning a case, the lawyer will search for your assets. If you’re a soft target, he’ll attack. If he finds no assets, or that collecting on a judgment will be a long and costly battle, he might not bring the case… he’ll move on to an easier payday.

Again, an offshore account is the most basic form of asset protection. You might decide to increase that with an LLC, corporation, foundation, or an offshore asset protection trust.

3. Take some of your capital off the table and out of play

U.S. stocks are riding high and investors are excited about the prospects of a Donald Trump presidency. We expect taxes to decrease, business to expand, and America to “win again.”

Well, what if things don’t go as planned? What if there are bumps along the way? What if there are growing pains on the road to making America great again? Are you diversified internationally as a hedge against risk at home?

According to Oxford Economics, President Donald Trump will either be a disaster or the best thing ever for the global economy. No matter your political beliefs, you must perceive some level of risk in what will happen when the establishment begins to fight back.

I can’t tell you how to assess this risk, I can only identify the fact that it exists. You might assign a probability of 5%, 15%, 30%, 50%, etc.

Use this risk ratio and place a corresponding amount of your capital into an offshore bank account. Take some of your cash off the table. Leave what you like on red in the United States and fund a nest egg offshore with the rest in case things don’t go exactly as planned.

4. Security from the IRS

If you owe money to the IRS, they can levy your U.S. bank account. The government can also seize your offshore bank account if your bank has a branch in the United States.

An IRS levy doesn’t require any type of court action or special notice. Any IRS agent can empty your account with a few keystrokes if they know where it is… and it’s tied into the U.S. system.

Thus, an offshore plan should focus on offshore banks without U.S. ties.

This is especially true for U.S. expats. If you forget to file your tax returns for a few years, the IRS is likely to prepare them for you based on whatever information is in their computers. The penalties for expats who get out of compliance are very severe… many times larger than those for U.S. residents who make a mistake.

Of course, you must file your U.S. forms and report your accounts. But, if you chose the correct offshore bank, the IRS can’t seize your account. They will know where it is but, so long as you are in compliance, there is nothing they can do to take it away from you.

Warning: the IRS can now revoke your U.S. passport. If you want to open an offshore bank account, you need to act before the government takes away your passport.

5. Get your IRA offshore

An offshore bank account can be used to hold business income, personal savings, and IRA / retirement money. When structured properly, you can move your IRA offshore and maintain the tax benefits of that retirement account.

To do this, you’ll need an offshore IRA LLC and an offshore bank account. The IRA owns the LLC and you are the manager of that LLC and of the bank account.

You’ll have checkbook control over your retirement account and can make whatever investment you like.

6. Currency diversification

As I said, the most basic form of asset protection is an offshore bank account. The most basic hedge against country risk is to hold your cash in multiple currencies.

Many international banks allow you to open accounts in multiple currencies. For example, Capital Security Bank in the Cook Islands gives you 11 currencies with a basic account and 15 more if you invest in a CD.

If you’re looking to diversify your cash or IRA out of the U.S. dollar, the first step is an offshore bank account.

7. Access to higher returning investments

If you’re tired of the miserable returns in your home country, go offshore. An international bank or brokerage account will give you access to significantly higher returning investments than those available in the United States.

Whether you’re trading the foreign markets, buying real estate, or looking for in non-traditional investments, offshore is where the profits are.

For example, the top real estate markets in 2016 were all outside the United States. My favorites are Colombia and Panama, but Singapore, UAE, and Philippines were also hot.

As for non-traditional long horizon investments, our clients have focused on hardwoods.

Since 2014, timber has been where it’s at for the uber rich. According to CNN Money, the 1% are putting hundreds of millions into trees and reforestation products. They’re moving away from the markets in favor of hardwoods.

Some of the foreign tree farms are returning 15% or more. I like Panama and Nicaragua teak, but there are many hardwood programs around the world.

Three reasons I like Panama’s reforestation program are:

If you’re from a top 50 country, you can get residency for free with an investment of $20,000 in teak.
You can use your IRA to buy teak in Panama.
You can buy into an existing farm with 6 or 7 years to go before harvest. The usual teak holding period is 25 years.

8. Build a nest egg offshore for your heirs

Combine an offshore bank account with a foreign trust and you have an excellent asset protection and estate planning tool. These two work together allow you to build a nest egg offshore, away from your creditors, for the benefit of your heirs.

A trust is intended for those who want to put some money offshore to be invested by a foreign wealth manager. You should be giving up control and the capital should be held for the benefit of your heirs.

This nest egg can be passed on tax free if you use your gift tax credits to move it outside of your U.S. estate. It can grow tax free if you add a life insurance policy to the trust. And, unlike a U.S. trust, an offshore trust can last for generations if structured as a dynasty trust.

For these reasons, an offshore trust is by far the most powerful international asset protection tool. A trust is cost effective for those who will hold $2 million or more offshore.

If you don’t want to give up control, you can get many of these same benefits with a Panama Foundation and bank account in Panama.

9. Receive payments from customers who don’t want to wire to the United States

If you’re working as a consultant, or running a business with foreign clients, you’ll find that many don’t want to send payments to the United States. Their banks ask too many questions and they don’t want the headache of dealing with FATCA and other impediments to business our government has created.

The solution is simple: open an offshore bank account in your name or the name of your company. Move the reporting requirements to your side of the ledger, making it easier for your clients to do business with you, with an offshore bank account.

An offshore bank account will improve your sales and help you close deals with those hesitant to interact with the United States.

10. Maximize your freedom of movement and privacy

Pay your international expenses with a debit card linked to your offshore bank account. Use this card for all foreign purchases to maximize your privacy while abroad. Set up a travel account with a foreign airline, such as Copa.com, to keep this data off of U.S. servers.

So long as your offshore account(s) never hold more than $10,000, you will not be required to file a U.S. Foreign Bank Account Report. Stay below this threshold and you need not inform the U.S. government of your offshore bank account.

Note that this $10,000 limit is for all offshore bank accounts combined. If you have 3 foreign accounts, each with $5,000, your total is $15,000 and you must file an FBAR. Also, it’s your highest balance during the year. Even if you have $10,000 in a foriegn account for only one day, you must file an FBAR for that year.

The work-around is to hold a “cash equivalent” offshore, rather than cash. You can avoid the FBAR by purchasing gold offshore. You can buy and hold as much physical gold in your name outside of the United States as you like without filing any kind of report.

Conclusion

I hope you’ve found this article on the 10 reasons you want an offshore bank account in 2017 to be helpful. Please contact me at info@premieroffshore.com or call us at (619) 483-1708 for a consultation. We can setup a U.S. compliant structure or introduce you to a number of international banks.

Trump is Good for Most Offshore Businesses

01/03/2017/0 Comments/in Articles, Banking Offshore, International Business, Offshore Bank Accounts, Offshore Company, Offshore Company Taxation/by Christian Reeves

With all the talk about keeping jobs at home and taxing foreign corporations, I wanted to start the year with a post on why Trump is great for the offshore industry… at least, for those operating small businesses, investing abroad, and/or moving assets offshore for asset protection.

This article will focus on why a Trump presidency is good for small businesses operated outside of the United States. Businesses where the owner is living and working abroad or a semi-autonomous division of an online or service business is based in a zero tax foreign country.

If you’re an American expat, don’t worry, President Trump is focused on the big guys…

Unless you’re a multinational with intellectual property offshore, or a manufacturing firm with a plant in Mexico, President Trump will be a friend (or a non-issue).

Tax laws that are likely to change involve intellectual property and imports from certain countries. These don’t impact small business, they’re used by multinationals to stash cash offshore.

Trump says he’ll bring back jobs and cash to the United States. He’ll do that by offering a tax holiday for previous retained earnings. Then he’ll make it more difficult for large companies to stash cash offshore and benefit from cheap foreign labor.

To reduce the benefits of going offshore, Trump says he’ll cut the U.S. corporate tax rate, modify the intellectual property laws, and impose import duties on goods from China and Mexico if they don’t agree to renegotiate existing trade deals.

None of these changes affect U.S. expat entrepreneurs and small business owners. If you’re running an online business from a low tax country, you have nothing to worry about.

First, a lower U.S. corporate tax rate doesn’t make any difference to you or change your reasons for going offshore. You wouldn’t be paying corporate tax in the United States anyway… you’d set up as an S-Corporation or Limited Liability Company and pay only personal income tax.

In fact, more than 90% of US businesses don’t pay corporate income tax. Profits flow through to the owners, who pay personal income tax, but not corporate rates. For more on this, see Forbes.

So, a lower U.S. corporate tax rate doesn’t make any difference to a small business. Moving a small business offshore is about reducing your personal income tax rate, not your corporate tax rate. Trump is all about the corporate rate.

The key to reducing your personal income tax rate by moving offshore is to qualify for the Foreign Earned Income Exclusion. If you’re a resident of a foreign country, or you’re out of the United States for 330 out of 365 days, you can earn $102,100 in salary from your offshore corporation and pay zero taxes. If a husband and wife both work in the business and qualify for the Exclusion, you could earn over $200,000 tax free.

If you net more than the Exclusion, you can hold these profits in your offshore corporation as foreign retained earnings tax deferred. When you take them out, you’ll pay personal income taxes on the dividend.

The bottom line is, if you’re offering a service or operating online, there’s nothing to worry about. The same goes for internet marketers, bloggers, and anyone with a portable business. You have no treaty or import / export concerns, so Trump will make no difference to you.

As an expat, you should focus on the tax laws of your country of residency. Stick with nations that won’t tax your foreign sourced income, and qualify for the Exclusion, and you’ll pay zero tax on your profits.

For a list of countries that don’t tax foreign sourced income, see territorial tax jurisdictions. These countries tax local income but not profits from sales to people and companies outside of their borders.

For example, Panama has a territorial tax system. If you’re living and working in Panama, operating an online business, and selling products to clients in the U.S., all of your income is foreign sourced to Panama and not taxable there.

What if you’re business is netting well over $100,000 (single) or $200,000 (joint)? Then you might consider going “offshore” to the U.S. territory of Puerto Rico. The tax deal offered by Puerto Rico is the opposite of the Foreign Earned Income Exclusion.

Under Puerto Rico’s Act 20 and 22, you’ll pay tax on your salary at ordinary rates and zero tax on dividends from your corporation. So, if you net $500,000, and draw a salary of $100,000, you pay tax on the first $100,000 and nothing on the remaining $400,000. Net $2 million, pay tax on the first $100,000, and zero on $1.9 million.

Note that I said the amount after your salary is tax free, not tax deferred. For mid-sized corporations or very profitable online businesses, Puerto Rico is a unique opportunity. You can realize a significant savings over the FEIE.

I hope you’ve found this article on why Trump is great for offshore corporations to be helpful. For more information on how to structure your international business, or set up in Puerto Rico under Act 20, please contact me at info@premieroffshore.com or call us at (619) 483-1708 for consultation.

US Government Shuts Down Balboa Bank in Panama

05/06/2016/0 Comments/in Articles/by Christian Reeves

The United States Government has decided to take down Balboa Bank in Panama. American authorities claim that this bank facilitated money laundering on behalf of Abdul Mohamed Waked and his band of evildoers.

In a crazy coincidence, this is the SECOND TIME the US has gone after this bank… at least, this banking license.

Balboa Bank Panama is owned by a company called Strategic Investors Group. Back in 2010, these guys paid the Panama government $15.5 million for the license of the defunct Stanford Financial Group. Yes, THE Allen Stanford who was convicted of running a massive ponzi scheme through his US hedge fund and the offshore banks he owned in Antigua and Panama. The guy who allegedly perpetrated the second largest scam in US history was the original licensee of Balboa Bank.

Sometimes life is stranger than fiction. Here’s what happened in Panama this time around.

As you can see from the image attached to this post, Waked is associated with a large and powerful money laundering cartel. Anytime the US government puts out a flowchart with its press release, you know it’s a big time prosecution.

You can read the official report here and the news version here. For the politically correct version, here’s CNN. You know it’s CNN from the title: 3 Nations Move Against Alleged Big Money Launderer in Panama. A more honest title would be: Acting on Instruction from their American Overlords, Panama and Colombia Move Against Alleged Money Launderer.

Whenever these cases come up, I like to give you some of the back story and describe how it will affect the many hundreds of account holders at Balboa Bank. You know, the 99.9% of the clients of Balboa Bank Panama who did nothing to anger Uncle Sam.

First, you might like to know that the Waked family is very well respected in Panama. They are leaders of the community and one of the primary movers behind the Colon free trade zone which supports the Panama Canal. They are Panamanian citizens and one of the top 10 families in the country.

Another point of interest is that there are two competing families in control of the Colon free zone – Waked and Motta. With the Waked clan out of the picture, Motta will dominate trade in the region.

Now let’s focus on Balboa Bank. How did the US “shut down” the bank and what’s likely to happen now?

The US government doesn’t actually have the authority to shut down a bank in Panama. Instead, the US State Department says Balboa Bank has done something wrong and puts them on a black list. By placing the bank on this list, called the Clinton List, the US government is now able to freeze all of the assets of Balboa Bank Panama… both assets in the US and abroad are subject to seizure.

It’s called the Clinton List because it was created during Bill Clinton’s time in office. No, it’s not maintained on Hillary’s email server.

Because most banks hold the majority of their customer’s cash in the US (through their correspondent banking partners), they are at the whim of the US government.

If a foreign bank gets on the wrong side of Justice, it’s cash is frozen and it’s wire facilities turned off. A bank without cash or wire transfer capabilities is effectively out of business. It can’t execute inbound or outbound transfers, debit cards stop working, it can’t buy or sell securities, and it can’t return any of the money held in trust for its depositors.

As of today, Balboa has almost no cash, customers can’t pay their bills or get to their savings, and it’s shut down… just like Stanford before it.

As a result, the Central Bank steps in and takes over operation of Balboa Bank Panama. They will eventually close down the bank and sell off the license once again.

Remember that no trial has taken place – not in the US nor in Panama. No one has been convicted of wrongdoing and the bank has not been charged with a crime. The seizing of cash and the effective closing of Balboa Bank is done with a stroke of a pen in Washington.

Now begins the fight for cash between the United States and the Panama Central Bank. On one side, the Central Bank will beg and plead for the return of Balboa Bank’s dollars so they can pay it to the bank’s customers. On the other side, the US will keep any booty it deems to be the proceeds of criminal activity – even if that activity had no connection to the US.

The US does the same to its citizens – if you are suspected of a crime, the government can take whatever assets you have until you prove your innocence. For a great commentary on these civil forfeiture laws, check out Last Week Tonight on YouTube.

Based on past experience with Stanford, customers of Balboa Bank can expect to wait over a year for the return of their money. Yes, the US government will keep all of the cash in trust until negotiations are complete. Average Joe’s with accounts at Balboa Bank will be expected to make due. They will have no access to ATMs or other services.

If have an account at Balboa Bank, you might be wondering what you can do to get to your money. Here’s the truth – nothing, nada and zilch. It’s stuck until the US government allows it to go free. No amount of angry calls to Panama will help. The staff at Balboa Bank would happily give you your cash if they could. It’s the US who has your money, not anyone in Panama.

I will close with one word of caution: If you are a US citizen with an undeclared account at Balboa Bank in Panama you should be afraid, be very afraid.

As a part of the negotiation with the US, Panama will attempt to prove which accounts had nothing to do with money laundering or the Waked clan. In this effort, the bank will be providing the US government with access to every account, document, and wire transfer that has gone through Balboa Bank in the last few years.

Rest assured that the US IRS will be reviewing these files right along with the US Justice Department. If you have an undeclared account at Balboa Bank, you should take action immediately. Consider joining in one of the Offshore Voluntary Disclosure Programs * offered by the IRS – but do it fast before your file comes up for review.

* The link above is to the 2014 Voluntary Disclosure Program. This is the current program and still available in 2016.

I hope you have found this post informative. If you are a US person with an undeclared account at Balboa Bank, please contact me for a confidential consultation. I can be reached any time at info@premieroffshore.com or by phone (619) 483-1708.

Anti Money Laundering Guide for India

10/21/2015/in Articles, Banking Offshore/by Christian Reeves

Here is a link to a 97 page report on Money Laundering in India. We are providing this downloadable PDF for two reasons:

1. Money laundering is commonly misunderstood and misused term. It has come to be a catch-all in the United States for any movement of currency that the government can’t track or control. This report gives you the history and proper definition of money laundering, along with some food for though.

2. We have a number of international business clients based in India. The second half of this report will detail the issues you face in business, banking, finance, and money transfer.

Money Laundering Guide for India

This report was prepared by Priyanka Ghosh, LLM. She is an attorney licensed to practice law in India working out of our offices in San Diego, California. She specializes in assisting clients from India setup offshore and negotiate residency / second passports from a variety of jurisdictions.

You can reach Priyanka directly at pghosh@premieroffshore.com.

Offshore Bank Advertising Rules – Why Opening an Account is Difficult

04/26/2015/in Articles/by Christian Reeves

Opening an offshore bank account can be hell for Americans. It’s 10 times more difficult for the offshore bank trying to navigate the ever changing environment. I’ve written posts on the impact of FATCA and how the US has turned foreign bankers in to unpaid IRS agents. Here’s the rest of the story on offshore bank advertising and why opening an account is so difficult.

Not only must offshore banks report most transactions involving US persons, they’re prohibited from marketing to us gringos. You won’t see a commercial for a Panamanian bank on ESPN any time soon. Nor will brokerages in Cayman advertise in the Wall Street Journal. The US has made sure our banks aren’t forced to compete on a worldwide playing field.

Advertising by foreign banks is prohibited by the Securities Act of 1933. Regulation S specifically covers international banks, brokerages, exchanges, and securities offers. It essentially prohibits all forms of solicitation of people in the United States.

Offshore banks that offer investments must also comply with the advertising rules of Section 15 of the Exchange Act and statutes enforced by a myriad of other agencies that are beyond the scope of this article. This post is focused on banking and will barely scratch the surface of foreign securities offerings.

So, a bank in Singapore can’t advertise in the US nor cold call prospects to sell securities or banking services. If a US resident approaches the offshore bank, that’s fine. We are talking here about the bank’s ability to market to US residents.

Note that HSBC and a few others offer their offshore services to Americans online and in print. This is allowed because HSBC has a US banking license. An offshore bank is one without offices in the United States.

Because foreign banks don’t want to deal with the SEC, many have decided to avoid the issue altogether by refusing accounts to Americans. Because of Reg S and FATCA, the majority of offshore banks, along with their highest returning investment options, are closed to US citizens.

Banks that do accept Americas with our scarlet letter A are careful not to solicit our business. TV and print ads are obviously out. The internet is a more interesting medium.

The most recent guidance by the SEC on internet advertising is from 1998, 5 years before Facebook and when Compuserve and AOL were cool. These rulings are more recent than the 1933 SEC code but still way out of touch with today’s online world. See: SEC International Series Release No. 1125 (March 23, 1998).

Advertising by Offshore Banks

Here’s what offshore banks need to do to avoid the SEC’s wrath.

Offshore banks are considered to be “offering” and “selling” an offshore bank account, much like an offshore brokerage sells you an international security. To qualify under Regulation S, the offer and sale (account opening) must both occur outside of the United States.

Let’s first consider the offer. An offer is made to a person in the States when someone located in America views an advertisement or any other message from the bank meant to “condition the US market.”

On the internet, this means the bank’s website may not “push” advertisements to Americans. Pushing includes advertising in outbound email campaigns and pay-per-click where you can control the region / country where the ad is displayed. For example, Google’s PPC system allows you to determine where your advertisements will be seen. Online ads may not be displayed to anyone located in America. In my opinion, affiliate marketing also falls in to this category and is prohibited.

Push ads vary from “pull” lead generation or organic search optimization in that pull is passive content applicable to anyone anywhere. Most agree that blogs and other SEO tools for organic placement are acceptable so long as content does not directly target US investors. An American actively searching for information is seen as being different from a US person who sees and ad and is thereby motivated (coerced) to view an offer.

Active push campaigns may constitute an offer where pull posts might not… unless the website allows the customer to open an account online. In general internet terms, a “sale” occurs online wherever the server is located. It seems logical that a Belize bank could allow customers to open an account online through their server located in Belize. Not so sayeth the SEC. The ability to complete the transaction online while physically present in the US means the bank is making an offer to US persons, which is prohibited. It’s the location of the buyer and not the server that controls here.

So, how do you find the best offshore bank if they can’t push out advertisements? Some have invested in SEO and content based pull systems. Otherwise, firms like mine can qualify and introduce clients to offshore banks that accept Americans. An offshore bank will always be more comfortable with a referral than someone off the street, especially if you hold a blue passport. Also, if the referrer offers US tax compliance, all the better because the bank knows the client won’t get them in to trouble.

Regulation S for Offshore Banks

Regulation S, rules 903 and 904, and a variety of other sections govern advertising to US persons by offshore banks. Under Reg. S:

An offer or sale must be made in an offshore transaction; and
No “direct selling efforts” may be made by the issuer, a distributor, or any of their respective affiliates, or any person acting on their behalf.

An offshore transaction is one where:

No offer is made to a person in the United States; and
At the time the buy order is originated or the account opening initiated, the buyer or client is (or is reasonably believed to be by the bank) physically outside of the United States.
1. The customer is outside of the US if he is physically located out of the country. It is not sufficient for her agent to be offshore. She must be out of the country.
2. If the buyer or account holder is a corporation, then the company’s authorized representative must be out of the country. The authorized representative is the account signatory.

Offshore banks and brokerages are prohibited from advertising in publications with a “general circulation” in the United States. This applies to newspapers and magazines with circulations of more than 15,000. If less than 20% of a publication’s circulation is in the US, offshore banks may advertise but are required to include all kinds of disclaimers telling Americans to stay away. Whether these limitations will apply to online marketing is unknown.

Offshore banks are also prohibited from mailing printed marketing materials to US prospects, conducting promotional seminars in the United States, and any other activity that is meant to “condition the US market.”

Offshore Bank Marketing – Making the Sale

As a result of the above, offshore banks have limited their internet marketing efforts to pull campaigns and SEO content creation.

When it comes time to make the sale, most foreign banks require new accounts to travel to their offices to open the account. They take a copy of your passport and your entry stamp for their files to prove you were in country when the application was submitted.

There are a few notable exceptions to this travel requirement. For example, Belize and Cook Islands allow you to open an account by courier. Their forms included statements about where you were when the board meeting authorizing the account opening took place and they expect you to enter a foreign country in these pages.

Whether these forms are sufficient for the bank to “reasonably believe” you are out of the US is up for debate. They are more likely the result of a need for these smaller jurisdictions to offer an easier path to account opening for competitive reasons rather than a solid legal solution to a complex problem. Hopefully the fact that they are “off the radar” of US regulators will cover for their willingness to take a risk in exchange for a competitive advantage.

Other form based workarounds include banks that require new accounts to sign a statement that they didn’t view the bank’s website before opening an account. Many offshore banks refuse to respond to email inquires from US persons.

Finally, some offshore banks and brokerages that refuse accounts to US individuals will accept offshore corporations held by Americans. The thought here is that the corporation is the client and not the individual. Of course, such banks will report transactions by the beneficial owner to the IRS under FATCA. The corporation might work for the SEC but does not affect tax reporting requirements to the IRS.

Offshore corporations provide excellent privacy and protection. They can manage either investments or active businesses efficiently offshore. My only word of caution is to avoid structures with nominee directors where you are required to give up control of the assets. Even when nominees are used, you must be the only signor on the offshore account.

I hope you’ve found this post on the trials and tribulations of offshore bank advertising interesting. Offshore banks must overcome a number of hurdles to continue offering services to Americans. This explains why they charge higher fees than their US counterparts who don’t need to follow any of these rules. Their operating and compliance costs per account are significant.

If you have any comments or questions on offshore banking, please send them to christian@premieroffshore.com.

Offshore Bank Internet Marketing Best Practices

Here are my suggestions to anyone responsible for advertising an offshore bank. It’s intended as a guide for bankers who already have a handle on Reg. S, FATCA, et al.

Host your website outside of the United States. All of the bank’s emails, data, and website content must be hosted outside of the United States. This should be obvious for security reasons and don’t let the less expensive and faster US based services convince you otherwise. While a US website does not constitute a US presence for tax or licensing purposes, it is one of the factors the SEC might use against you in a Reg S or marketing case.

Only advertise on websites hosted outside of the US. Potential advertising partners should have no US presence, office or mailing address, and a significant portion of their traffic should be from international readers. A good example of such a site is www.lowtax.net

No PPC targeted to the United States. If you push advertisements on the internet, you must avoid US users. Any type of PPC campaign targeting the US is sure to make you a target.

Be smart with your SEO posts. Don’t affirmatively target US persons. Write about internet banking, offshore privacy, and related matters without discussing US centric issues. When writing on FATCA, do so from the bank’s perspective (compliance) and not from the client’s point of view.

All SEO and internet work should be done outside of the United States. The last thing you need is your US SEO team to be subpoenaed and telling a court they were instructed to target US customers.

Outbound email ads are only recommended for to lists with 20% or fewer US names. A US name is a person living or present in the US. Most Americans abroad, except for active military, are fair game.

I don’t believe the maximum list size of 15,000 subscribers for print mediums will hold up in email campaigns. Any email campaign where you don’t know the demographics of the list is high risk.

Place any offerings of securities behind a password protected page accessible only after the user agrees they are not US person or that they are an accredited investor. How to confirm identity and accredited status are complex matters for internet marketers and beyond the scope of this post.

Your client should be out of the US when they sign and submit the account opening request. Forms may be submitted in person or by courier. If by courier, the city of origination on the waybill should be outside of the United States and you must put this form in the client’s file.

Here are a few options to regarding the requirement the contract be entered into abroad:

Maybe you use a form like Belize and hope for the best.
Maybe you require the customer to travel to your bank. Certain countries, such as Panama, have laws requiring an in-person visit.
Maybe you set up an unlicenced office in a city Americans can access easily.
- For east coast clients, Nassau, Bahamas offers the most direct flights from the US in the Caribbean.
- For west coast clients, it appears Los Cabos, Mexico is the most efficient option with non-stop flights from 40 US cities. Mexico City has the most flights, but that’s a much longer journey and a tough place to navigate.
- Of course, you will be prohibited from marketing to persons in the country where you have this unlicensed office.
- It doesn’t matter where the clients complete the paperwork so long as they are outside of the United States. A single office in a centrally located city could service multiple foreign banks.

The bank may only present at or sponsor conferences held outside of the US. Any display of your logo at a US event may be considered conditioning the US market. No form of advertising, including investment tombstones, are permitted in the United States.

You might work with unrelated websites to post positive articles about your offshore bank but avoid traceable affiliate programs. You may not own or control the website posting articles about your bank.

First, I’ve been writing about offshore banking for over a decade. My most recent (2015) articles on the topic are:

If you have questions on forming an offshore bank, please send them to christian@premieroffshore.com.

The Impact of FATCA

11/12/2014/0 Comments/in Articles, Taxation/by Christian Reeves

Foreign Account Tax Compliance Act is finally here and you can be sure that the impact of FATCA will be severe. This brief article considers the impact of FATCA on Americans living, working, or investing overseas.

FATCA is founded in a U.S. tax code that attacks small business and lavishes tax holidays on the wealthy (tax inversions, for example). It came about because America is the only large economy which taxes its citizens on their worldwide income. We are the only country that forces our citizens abroad, including those who are residents of another country, to pay tax at home.

In to this system comes FATCA. It basically turns bank tellers at foreign institutions in to unpaid IRS agents. The first impact of FATCA is to require all foreign banks to determine which of its clients are U.S. persons and to report all of their transactions to the IRS.

The problem is, proving someone is a U.S. person for tax purposes is tough. Of course, anyone with a U.S. passport is caught. But the law also tags those who spend 183 days a year in America. It expects the banker to determine who has “other substantial ties” to the United States and thus might be subject to income tax here.

If the banker fails to report, the bank will lose its ability to work with any U.S. banks, correspondents, and U.S.-based companies. While FATCA says U.S. banks must withhold 30% of all transactions going to non-compliant banks. This is unsustainable and means the offshore bank is effectively blocked from all U.S.-based transactions. Banks that don’t sign up are pushed out of the worldwide system.

The next impact of FATCA is to outsource tax compliance and policing to foreign banks. The law puts the onus on bankers and tellers to ensure everyone around the world is paying Uncle Sam. These people might have no understanding of the U.S. tax system, or the intricacies of our law, but they become the gatekeepers. And, if they fail, the costs to their employer will be swift and severe.

As an expat myself, the most direct impact of FATCA in my life is that very few foreign banks will to have anything to do with me. We 7 million Americans abroad now wear a scarlet letter A which causes most bankers to turn up their noses when we enter the room.

The majority of banks, brokerage firms, insurance companies and mortgage lenders are now closed to U.S. persons. Where it was once tough to get a loan or open an account, it is now nearly impossible. Those banks that are open to us charge hundreds of dollars in extra fees and offer lower returns on investments than they did last year. This is done to recoup the hundreds of thousands, or even millions, of dollars they were forced to pay out to set up compliant systems.

The most notable unintended consequence of FATCA is that many foreign companies are now hesitant to hire U.S. expats. It is becoming more and more difficult to find a job outside of our borders. If the employer doesn’t already have American workers, they won’t want to deal with the risks and paperwork.

Having U.S. employees also comes with banking risks. The employer will be depositing money in to an American’s account, be it onshore or offshore. This might trigger FATCA reporting by the bank on the company, bringing with it attention and problems they don’t want.

The impact of FATCA which garners all of the headlines is that record numbers of Americans are giving up their citizenships and passports. In fact, the latest numbers show that expatriations have quadrupled in anticipation of FATCA.

* If you renounce your citizenship and provide your bank with a letter from the U.S. State Dept. confirming expatriation, FATCA no longer applies. Though, you must go through a lengthy process and audit to receive that letter. You will find a number of articles on giving up your U.S. citizenship and obtaining a second passport on this site.

I hope you have found this article on the impact of FATCA interesting, if not disheartening. For more information, please send me an email to info@premieroffshore.com. I will be happy to help you structure your affairs abroad and keep you in compliance with ever changing U.S. laws.

The Costs of Banking Regulation

10/31/2014/in Articles, Offshore Banking/by Christian Reeves

As U.S. banking regulations have increased each and every year, the costs for smaller domestic and offshore banks have made doing business with the U.S. prohibitive. These banking regulation costs have more than doubled since 2003, and are now running at about 15% of most institution’s income… essentially, a 15% tax levied on all banks doing business in the U.S. or that allow U.S. clients.

So, why are banking regulations so costly? In order to understand their obligations to the U.S. government, and avoid fines that are being handed out like candy on Halloween, banks must employ an army of lawyers to read, analyze, and then implement each and every rule that comes out.

For example, the latest banking regulation is called the Volcker Rule. It basically prohibits banks from speculative trading. In order to define what banks can and can’t do, a 71 page rule, and 900 pages of explanation, was required. Clearly, only a legal genius can figure out all of the nuances of such a convoluted law, so compliance costs associated with banking regulation go through the roof.

Then, you need to buy computer systems and hire employees to implement the new requirements. All the lawyer tells you is what to do. Now, you get to hire a team to do it. These start-up costs can be a killer for small banks. It might not be a big deal for the likes of JP Morgan to spend $3 billion of shareholder money over 3 years to implement the new regulations, but for a small local bank to spend $95 million on the same, might put them out of business.

Now, let’s say you are a small offshore bank with half of your clients coming from the United States and half from elsewhere. Under FATCA, you are required to report all transactions to the U.S., just like a U.S. bank. Also, you are required to follow money laundering and terrorist financing rules, which means any time you send a wire of more than $3,000, you must independently review it and make detailed records of where it went and why. Failure to comply will result in major fines. Failure to pay those fines will result in your being put out of business… unable to transact in USD and unable to do business with any correspondent bank.

* Obviously, these rules have very little to do with terrorists. They are targeted at U.S. citizens with unreported assets abroad and those who aren’t giving unto Uncle what is his (paying their taxes).

If you’re a smaller offshore bank, say in Belize, that wants to keep doing business with U.S. persons, then you need to find a way to cover these costs. Many have implemented account opening fees and monthly charges, which cover only about 50% of the new banking regulation costs.

At the end of the day, if a small bank is netting about $5million a year in profits, and regulations come out that increase their costs by $2 million, they can either dump their U.S. clients or increase their fees.

Why Banks in Belize are Safer than Those in the U.S.

I’ll leave you with this on banking in countries like Belize. These institutions have very strict capital requirements. They hold 20% to 50% in reserve for every transaction. This compares to just 2% to 4% for U.S. banks.

Such calculations are strict, but the cost of compliance is relatively low… the legal fees and accounting costs, not the cost of capital. Basically, banks in Belize must perform six to twelve calculations each quarter and adjust their capitalization accordingly.

Large banks in the United States basically get to self-regulate, though they must follow an incredible array of capital reserve requirements. According to one study, these rules require as many as 200 million calculations to determine capitalization.

Any model with that many calculations will leave plenty of room to game the system… which is exactly what a number of U.S. banks have been accused of doing. No one in the industry trusts the U.S. capital model, while small foreign banks have kept to a simple system that promotes security and transparency.

I hope you’ve found this post on banking regulations informative. For more information on taking your assets or business offshore, maybe to a jurisdiction such as Belize, please give me a call or send an email to info@premieroffshore.com. I’ll be happy to work with you and answer any questions you may have.

Offshore Basics – What’ Legal and What’ Not

08/06/2014/in Articles, Offshore Banking, Offshore Company, Taxation/by Christian Reeves

If you’re new to the world of offshore, then this article on offshore basics is for you. Thinking about starting a business abroad? Want to move you or your assets out of the United States? Offshore basics will tell you how… and what’s legal and what’s not for an American abroad. Many of the articles on my site are quite detailed. This one is intended to cover just the basics of going offshore.

First, let’s talk about the person living in the United States that wants to invest abroad. The bottom line is that Uncle Sam will tax your worldwide income. No matter where you invest, so long as you are living in the United States, there are very few breaks for going offshore… there are three exceptions below.

That’s not to say there are no benefits to moving your assets abroad… there are just no tax benefits in doing so. Investing abroad will give you access to dynamic markets, get you out of the United States dollar, and allow you to hedge or diversify much more effectively than you can here at home.

As for asset protection, so long as you set up the structure before someone comes after you, you’ll be able to maximize privacy and protection offshore. A trust or Panama Foundation will provide maximum protection and may minimize estates taxes.

If your estate is over $5 million, a well designed trust or Panama Foundation will get those assets out of your taxable estate and make the transfer to heirs more tax efficient.

Note that the income earned in the offshore trust is taxable to you, the founder or settlor. Passive or investment income is always taxable to you – the U.S. person and “owner” of the assets until your passing.

Transferring property to an offshore foundation, and then to your heirs will eliminate the 3.8% Obamacare tax on investment income. Your children will still pay tax at your rate, but should avoid the extra bump.

There are three major exceptions to the rule that investing offshore is tax neutral. They are: 1) the offshore IRA LLC, 2) the offshore captive insurance company, and 3) the offshore life insurance policy.

You can invest your retirement account in to an offshore LLC and keep the same tax benefits (deferral for a traditional IRA and tax free for a ROTH) you had onshore. If you invest with leverage or in to an active business, you may add a UBIT Blocker Corporation to your structure for big time tax savings not available in the United States. For more information on this topic, please see my various offshore posts on IRA and UBIT Blockers.

With an offshore captive insurance company, your business can (basically) reduce its U.S. taxes by $1.2 million per year… moving that money offshore. Any passive investment income that this premium generates is taxable in the U.S., but your business gets an immediate deduction for the $1.2 million insurance premium. If you would like more information, please send and email to info@premieroffshore.com.

The offshore basics for offshore life policy are basically the inverse of the offshore captive. You can invest an unlimited amount of after tax savings (money you have already paid tax on) in to a single pay life insurance policy. Any returns earned in the policy are tax deferred or tax free. This assumes it’s a U.S. compliant offshore life policy and typical underwriting guidelines apply.

So, if you are living in the United States, the IRS wants its cut. What about those of us living abroad? If you’re out of the U.S. for 330 of 365 days, or are a tax resident of another country, then you qualify for the Foreign Earned Income Exclusion and get to earn up to $99,200 in salary for 2014 free of Federal Income Tax. If you’re self-employed, operate your business through an offshore corporation, you can draw a salary up to the FEIE and leave the balance in the company as retained earnings. This will usually be taxable in the U.S. only when taken out as a distribution. You should be able to leave it there tax deferred for many years. For more information on these topics, please check out my articles on moving your business offshore and the Foreign Earned Income Exclusion.

Even if you’ll owe no tax because of the FEIE, you must file your U.S. tax forms each year.

If you retire abroad, you won’t see much of a tax benefit. Your passive income will be taxable in the U.S., though you should be able to avoid most state taxes.

That is to say that the offshore basics for a person who retires offshore is that their Federal tax rate will not change much. Their retirement, Social Security, and passive income will go to Uncle Sam. Most of the offshore loopholes are for active businesses.

There is one big exception… though, I guess, it’s not an offshore basic, because it isn’t offshore.

If you move (retire) to Puerto Rico, you can eliminate all capital gains taxes on your passive income. This only applies to assets you acquire after you move to PR, and requires you to become a resident of the island.

You see, when you retire to a foreign country, U.S. Federal law controls. When you move to the U.S. territory of Puerto Rico, their tax code takes precedence… and they have a great deal for you. See my articles on Puerto Rico for more information.

I’ll conclude this post on offshore basics with a suggestion: If you have a foreign souse or a foreign business partner, and are living abroad, you have some significant planning options.

A foreign spouse or partner is one who is neither a U.S. resident or a U.S. citizen for tax purposes. Anyone who holds a U.S. passport or green card is a U.S. person.

For example, your spouse can open an offshore bank or brokerage account and trade her funds without paying U.S. tax. She can also buy real estate and do business without the U.S. looking over her shoulder.

If you’re operating a business with a foreign partner, and that partner owns 50% or more of the business, you will find there are many tax advantages not available to a company owned 100% by Americans.

For example, the business will not be a Controlled Foreign Corporation, so its income may not be taxable in the United States (assuming it is not U.S. source income), and your filing obligations will be reduced. Take a read through the instructions for IRS Form 5471 for more information on your filing obligations.

I hope this article on offshore basics has been helpful. Feel free to contact us for information on moving your business or assets offshore.

Offshore Privacy Exists!

07/23/2014/in Articles/by Christian Reeves

Offshore privacy is available for U.S. citizens with offshore bank and investment accounts. If you know the tricks, offshore privacy is alive and well.

Unless you have been living under a rock, you know that the IRS has declared war on Americans with hidden assets and accounts offshore. There are 1.000 plus individuals sitting in jail right now for this exact “crime.” So, throughout this site, and in various publications, I ramble on incessantly on how offshore privacy is dead and that you must report your offshore bank accounts to the IRS or risk their wrath.

Well, the uber rich have built in backdoors to offshore privacy. If you know how the game is played, you too can have offshore privacy in your international banking and investments. Here are a few examples:

The best and biggest offshore privacy loophole is the offshore IRA. You can take your IRA offshore by forming an offshore IRA LLC and opening an offshore bank account, and you are not required to report either of these activities. That’s right, you do not need to file a Foreign Bank Account Report for an offshore bank account in the name of your retirement account. Also, you do not need to file a tax return to report an offshore LLC that is owned by your retirement account. Even better, your LLC and bank account maintain the same tax benefits as they had onshore, but with a much higher level of asset protection.

If you have a taxable offshore LLC and/or bank account with over $10,000, you are required to report them each year on your personal income tax return, on a tax report for the LLC attached to your 1040, and on the FBAR. If the account and assets of the LLC are sizeable, you might also need to file a statement of foreign assets.

If you, like Mitt Romney, have $100 million in an offshore IRA structure, you don’t need to file any of these returns or forms. So long as you know the rules of the game, you can maintain complete offshore privacy without running afoul of the U.S. tax laws.

Note that these offshore privacy laws don’t apply only to the rich and monster sized offshore IRA LLC accounts. They may have been added to the tax code at the behest of the “1%ers,” but we can all use them for maximum offshore privacy. Any IRA can be taken offshore and placed in an offshore bank account… though, I suggest the minimum size be around $35,000 because of the costs involved.

There are two other major areas of offshore privacy, and they apply to taxable assets (money not in a U.S. compliant offshore IRA). They are gold and real estate.

You can hold unlimited amounts of physical gold and real estate offshore in your name with no U.S. reporting requirements. In fact, you have maximum offshore privacy in all precious metals, so long as they are in your name and held in a vault outside of the United States. This applies only to physical gold and not gold certificates.

As you might expect, there are a few caveats when it comes to offshore privacy, gold and real estate. Most importantly, these assets must be held in your name, and not in an offshore corporation or LLC. If held in a Trust, they may be reportable.

You see the offshore privacy rules apply to the underlying assets (gold and real estate) but not to the structure. So, if you have Panama real estate in a Panama corporation or foundation, you must report the structure to the IRS. If you hold real estate in Panama in your name, you have no reporting requirement.

We are talking about reporting requirements here. When you sell the property, you must report it on Schedule D, Form 1040, and pay taxes on any gain. Offshore privacy does not affect your U.S. tax paying obligations… only your tax reporting obligations.

The same is true of gold and other precious metals. If you hold them in an offshore structure, including a reportable offshore trust, then the structure must be reported, which means offshore privacy is eliminated. Unless asset protection is a major concern, I recommend holding precious metals in your name only.

In many cases, offshore privacy might not be efficient for foreign real estate. There may be significant tax benefits for a foreigner to buy real estate in a local structure. You should discuss this with a local expert before deciding how to hold real estate.

A final note on offshore privacy and real estate: privacy applies to your ownership of the property, not any taxable events that result from that investment. If you have a rental property in Panama, you must report income and expenses on your 1040, Schedule E, just like a U.S. rental. Offshore privacy benefits refer to the reports required by the IRS, such as the FBAR and Report of Foreign Assets, not taxable events, like the sale of the gold or real estate, nor the rental income that comes from the foreign property.

I hope this article on offshore privacy has been helpful. You will find a detailed post on foreign real estate on this site.

If you would like more information on offshore privacy, to take you retirement account offshore, or for an asset protection structure to facilitate your international investments, please call us or send an email to info@premieroffshore.com. We will be happy to work with you. All consultations are confidential and free of charge.

Fakta Situs Poker Online Resmi 2019 Makin diminati di Indonesia

05/13/2014/in Articles, Offshore Banking/by Christian Reeves

Selintas tentang Situs poker online otentik yang berada di Indonesia tentu saja banyak orang-orang yang mengetahui jika betting online di Indonesia tumbuh dengan cukup cepat, keterangan riil perubahan judi on line di Indonesia ini ditemui dari banyaknya situs produk judi online yang berpunya di internet seperti web poker online, bola, togel, casino serta masih penuh yang lain. Hingga bisa disebutkan jika perubahan permainan judi ini pun bukan lepas dari ketertarikan warga yang benar-benar bersemangat untuk coba semua type sajian judi online yang berpunya di Indonesia. Diartikel tersebut kami akan mengulas penuh hal yang terkait dengan unsur yang memberi sumbangan perubahan judi online dalam Indonesia sendiri. Berikut penjelasannya.

Situs poker online otentik makin disukai di Nusantara Ketertarikan warga yang tinggi.

Hal pertama sebagai point perubahan Situs poker on line Resmi di Indonesia sendiri ialah ketertarikan dari kelompok yang lumayan tinggi. Kaum permainan judi online yang ada di Internet oleh karena itu daya tarik sendiri bakal tiap pemain judi untuk coba memperoleh keuntungan dari taruhan yang mereka perangkat, makin beberapa pemain yang memperoleh keuntungan karena tersebut makin banyak juga beberapa orang yang mulai interes untuk bermain judi online di internet. Jelas dampak seperti ini yang kemudian bawa tiap pemain untuk mecoba semua type sajian yang ada untuk mencatat keuntungan yang semakin raksasa.

Situs poker online sah lumayan besar di internet digital

Tidak hanya ketertarikan kelompok yang masih demikian perhatian dengan permainan judi online sendiri, nyatanya ada pula dampak yang semakin raksasa pada perubahan judi online yang berada di Indonesia yakni dari pemakaian internet digital sendiri. Peranan internet oleh sebab itu satu diantara wadah dan fasilitas untuk perubahan pertaruhan online memberi dampak gede untuk tempat bermain kurang lebih pecandu judi online yang berada di internet. Secara demikian judi online makin gampang berkembang serta kemudian terkenal oleh beberapa tokoh judi online yang berpunya di Indonesia sendiri.

Timbulnya Type Judi Online Yang Baru

Selanjutnya yang lalu kemudian ialah ada type permainan judi online baru yang bawa dampak pada perubahan permainan judi online di Indonesia sendiri yang makin hari akan makin berkembang secara baik. Dari tersebut sudah semua kelihatan sungguh ada jika judi online yang berada di internet dikuasai oleh beberapa faktor suporter seperti permainan judi yang masih baru sampai kurang lebih macam skema permainan yang diperbarui.

Hadiah Yang Ditawarkan Demikian Besar

Dampak unik yang membuat perubahan produk judi lebih baik di internet ialah hadiah yang ditawarkan lumayan besar terlintas harus semua pemain hendak tertarik untuk coba seluruh permainan judi online di Indonesia untuk memperoleh pelajaran yang semakin besar. Mungkin ada banyak permainan yang betul-betul dapat mmeberikan pelajaran besar seperti Situs poker online sah, bola, togel online serta beberapa games judi yang lain.
Oleh karena itu nantikan ditambah lagi, mangga daftar poker online beserta beberapa permainan judi yang cukup populer di Nusantara serta rasakan sensasi kelebihan saat ini juga. Sampai disini dahulu artikel tersebut, terima kasih telah terbit (perasaan).

How to Open an Offshore Bank Account in Cayman Islands – Cayman Banking Guide

04/28/2014/in Articles, Asset Protection, Offshore Banking/by Christian Reeves

The Cayman Islands is one of the world’s largest and most respected financial centers boasting a wide variety of offshore bank accounts and wealth management options. In this article, I will explain how to open an offshore bank account in Cayman Islands. If you are looking for the best in wealth management, tax planning, and investment services from a tax neutral jurisdiction, you may want to open an offshore bank account in Cayman Islands.

Just south of Cuba and northwest of Jamaica, the Cayman Islands are a British Overseas Territory in the western Caribbean. They were settled by the British in the 1730s and became a Crown colony in 1962. These 3 islands are home to about 56,000 people representing more than 100 nationalities, of which about 50% are of Caymanian descent. The largest city is George Town with around 29,000 residents.

The preverbal offshore bank account in Cayman Islands was made famous (or infamous) by to many books and movies to count and has become synonymous with tax cheats and money launders. Adding insult to injury, Obama pandered to this pop culture image when he attacked Mitt Romney in 2012 for his use of the island as a home for his money.

The truth about the offshore bank account in Cayman is far removed from these fairytales sold to the uninitiated. The Islands are one of the most transparent and professional of the tax neutral jurisdictions, allowing large corporations and sophisticated investors to maximize the international tax benefits available to them from their home country (ie. Loopholes in the United States tax code for Americans). If you are thinking about incorporating a business or investing abroad, you might open an offshore bank account in Cayman Islands as a place to park retained earnings or as a base of operations for your global tax plan.

History of Offshore Bank Account in Cayman Islands

Offshore companies and offshore bank accounts in Cayman are a major part of the island’s economy. With nearly 100,000 registered corporations, there are more companies than residents. International financial services make up 55% of the island’s economy (GDP), 36% of employment, and 40% of all government revenue.

The Islands are the world’s sixth largest offshore banking center with 212 banks and US$1.5 trillion in international assets booked through the islands as of March 2014. As evidence of its status as a financial center, 40 of the world’s top 50 banks hold licenses in Cayman.

Of these 212 banks, 197 are what we call offshore banks (only allowed to do business with people and companies outside of Cayman), 55 are from Europe, 57 from the North America, and 38 from South America. For more stats, see Cayman Monetary Authority website.

Then there are the hedge funds and captive insurance companies, which are also significant contributors to Cayman’s diversified financial services industry. There are 10,932 hedge funds with more than US$1 trillion in assets, which represents a steady increase over the last two years (9,258 in 2011). Rounding out the industry, there are 741 captive insurance companies with $88 billion in assets, of which 90% are from North America. Of these, 34% insure medical malpractice and 21% insure workers compensation accounts.

This emphasis on high-end financial management services has paid off for the tiny island. With an average income of around US $58,800, Caymanians have the highest standard of living in the Caribbean. In fact, according to the CIA World Factbook, the Cayman Islands GDP is the 14^th highest in the world.

Tax Neutrality in Cayman (Never a Tax Haven)

The Islands have a long history of tax freedom and neutrality. For this reason, American’s may be able to maximize the offshore loopholes in the U.S. tax code by opening an offshore bank account in Cayman Islands.

This demand for tax and personal freedoms has been a part of Cayman life for centuries. For example, local lore claims that King George III rewarded the island with a promise to never introduce taxes as a reward for saving his son Prince William when his ship wrecked upon a reef in February of 1794. Whether this story is true is up for debate, but the “Wreck of the Ten Sail” is deeply engrained in Cayman culture and tells you a lot about the local mindset.

Whatever the history, the government of the Cayman Islands has always relied on indirect taxes, never passing an income tax, capital gains tax, or wealth tax. In 2012, the government attempted to introduce a “community enhancement fee,” which was a payroll tax on Expat workers only. The voters were exempt from this tax, but it still failed miserably. For more information, see the U.K. Telegraph. (Comment: I will always have great respect for Caymanians…maybe someday this attitude of freedom and standing up for your neighbor will come to America…probably not.)

But, if you decide to open an offshore bank account in Cayman Islands, never use the phrase tax haven in polite conversation. Ask a Cayman banker about his country being a tax haven and you’ll likely get an angry diatribe about how pop culture has vilified Cayman. Locals call it the Grisham effect…ever since his book The Firm in 1991, American’s have believed Cayman is a pirate’s paradise.

That divisive term, which implies a country with laws blocking the sharing of information and a lack of honesty or compliance, is far from the truth and a sign of ignorance. In fact, Cayman is on the OECD “white list” of countries, along with the UK and the USA, for their acceptance of internationally recognized tax standards in their laws.

President Obama attacked the Cayman Islands in 2009, referring to the country as a tax haven. Enough said. See the video on YouTube.

Cayman has been cooperating with the OECD since 2000, signed tax exchange agreements with the U.S. covering all civil and criminal cases in 2001, and is party to a number of other treaties in the years since. As to FATCA, the Islands have elected the U.S. Treasury’s Model I Intergovernmental Agreement, which goes in effect this June.

The proper term for the efficiencies offered by Cayman is “tax neutrality.” Cayman will not tax you or your business and your offshore bank account in Cayman will integrate with the laws of your home country, allowing you to minimize taxes when available. If you are an American living and working abroad an offshore corporation in Cayman may afford you significant tax benefits. For general information on this topic, please ready my article Benefits of an Offshore Company.

These tax savings, and the advanced financial services industry described above is not founded on secrecy. They requires political and economic stability, tax efficiency, a responsive legal system, a stable banking environment, sound regulatory regime, and sophisticated service providers. They are based on an integrated approach where tax neutrality, combined with the tax code of your home country, results in tax efficiency. This is what Cayman offers the investor, not backroom deals or hidden assets.

And this is why the Islands take such offence when they are attacked for being a tax haven. The Islands are simply a tax neutral country that doesn’t bury it’s citizenry in taxes. For Americans, it is the United States tax code that allows companies to hold billions offshore and incentivizes high net worth individuals to minimize taxes and protect their assets abroad.

Tax and Wealth Management in an Offshore Bank Account in Cayman Islands

Many global wealth management firms have offices in Cayman, including Barclays Private Bank, Butterfield Bank, HSBC, Royal Bank of Canada, Scotiabank, and the asset management arm of Cayman National Bank, the only bank headquartered in Cayman, Cayman National Securities. These institutions can provide access to a wide array of investment choices and will be familiar with the tax and regulatory issues of your home country.

For example, if you want to take your IRA offshore, you might follow the lead of Mr. Romney and use a Cayman Islands structure. For more information, see my page on taking your IRA offshore. Note that you don’t need to be a millionaire…the size of your IRA doesn’t matter…anyone can take advantage of these benefits.

If you are a sophisticated investor, Cayman’s advanced wealth management and captive insurance industries may allow you to access major tax incentives embedded in the United States tax code. Many of these opportunities, such as captive insurance, require an investments of $1 million and Cayman has the best in the field to assist you.

If you want to open an offshore bank account in Cayman Islands, here is a list of the major wealth management firms:

Butterfield Bank (Cayman) Ltd.
Butterfield House, 68 Fort Street
PO Box 705, Grand Cayman KY1-1107
Phone: (345) 949 7055
Email: investments.cayman@butterfieldgroup.com
Website: www.butterfieldgroup.com
Focus: Private banking, asset management, trusts and estate planning, custody services and lending.

Caledonian Global Financial Services Limited
Caledonian House, 69 Dr. Roy’s Drive
PO Box 1043, Grand Cayman KY1-1102
Phone: (345) 949-0050
Email: cayman.investorservices@caledonian.com
Website: www.caledonian.com
Focus: Banking, fiduciary, funds, securities, and insurance.

Cayman National Corporation Ltd.
200 Elgin Avenue, George Town
PO Box 1097, Grand Cayman KY1-1102
Phone: (345) 949 4655
Email: cnb@caymannational.com
Website: www.caymannational.com
Focus: Private banking, wealth management, trusts and investments.

CIBC FirstCaribbean International Bank
FirstCaribbean House, George Town
PO Box 68, Grand Cayman KY1-1102
Phone: (345) 949 7300
Website: www.cibcfcib.com
Focus: Private banking wealth management.

Fidelity Bank (Cayman) Ltd
Cayman Financial Centre, Dr Roy’s Drive
PO Box 914, Grand Cayman KY1-1103
Phone: (345) 949 7822
Website: http://www.fidelitygroup.com/index.php
Focus: Private banking, asset protection, financial planning, and pension plan management.

HSBC Bank (Cayman) Limited
HSBC House, 68 West Bay Road
PO Box 1109, Grand Cayman KY1-1102
Phone: (345) 949 7755
Website: www.hsbc.ky
Focus: Wealth management, retirement planning, deposit vehicles, global currency management, customized portfolio construction, managed portfolios, global bonds, equity funds, alternative and money market funds and access to HSBC’s global network of advisors.

RBC Wealth Management
Royal Bank House, 4th Floor
PO Box 1095, Grand Cayman KY1-1102
Phone: (345) 949 9107
Email: timothy.mccarthy@rbc.com
Website: www.rbc.com
Focus: Wealth management, custody and brokerage; private banking, fund administration and trust services.

Scotia Private Client Group
Scotia Centre, 6 Cardinal Ave, #rd Fl, George Town
PO Box 689, Grand Cayman KY1-1107
Phone: (345) 914 6274
Email: scotiaci@candw.ky
Website: www.scotiabank.com/ky
Focus: Private banking including lending and financial planning, investment advice and management, private trust formation and management, foundations, private investment and custody.

If you prefer to manage your own investment account, I recommend the following brokerage:

OneTRADEx Ltd.
4th Floor Cardinal Plaze, 30 Cardinal Ave
PO Box 12177, George Town
Grand Cayman, KY1-1010

Phone: (345) 943-3212 or (800) 381-1026(800) 381-1026 from the United States
Email: info@onetradex.com

Website: onetradex.com

Focus: Online securities trading for offshore residents and expat investors, including non-resident U.S. Citizens.

Offshore Bank Account at Cayman National

Those of you who follow my column know that my #1 rule is to never open an offshore bank account at an institution with a branch in the United States. Holding funds at any offshore bank with a U.S. branch exposes you to IRS levy and civil creditor judgments. If you will go offshore, then go offshore.

For this reason, and because of their diverse investment options and excellent customer service, I recommend Cayman National Bank (CNB) and Fidelity Bank to those who want an offshore bank account in Cayman Islands.

Founded in 1974, CNB has assets of over CI$1 billion (about $1.25 billion USD) and shareholders’ equity of CI$80,000,000. Total deposits were CI$982 million, up by 13% on a year ago (2013 Annual Report). The CI dollar is fixed to the US Dollar at US$1.25 to CI$1.

The size and security offered by Cayman National is superior to most regional or local offshore banking choices. Keeping in mind that other banks in Cayman have branches in the United States, CNB provides an excellent alternative for cautious investors.

Cayman National offers wealth management and business banking services to U.S. persons who are operating through tax compliant structures. The use of a U.S. tax expert (such as Premier) or an U.S. based lawyer to form your company and open an offshore bank account in Cayman Islands with CNB is required. Using an online incorporator who is not approved by the bank will cause significant delays and additional reporting requirements.

CNB will open an account after receiving the required documents by courier, so a personal interview is generally not necessary. Documents must be notarized, but an apostil is not required. CNB does not currently charge to open an account, though many banks around the world have implemented fees of $500 to $1,000 for Americans. I assume CNB will follow suit soon.

Minimum opening deposits with Cayman National are US$1,000 for non-residents and CD’s usually start at US$5,000. You may hold funds in CI$, US$, CAD$, Sterling, and other major currencies. Some currencies may require higher minimum account balances. These minimums notwithstanding, I suggest American’s should only consider Cayman National if they will hold at least $30,000 in the account. Cayman National considered $250,000+ a premium account.

Documents required from each signor to open an offshore bank account in Cayman Islands:

Completed application,
U.S. tax compliance referral and IRS Form W8-BEN if applicable,
Notarized copy of your passport,
Notarized copy of a utility bill reflecting your name and home address (no P.O. Boxes and not older than two months),
Notarized copy of your bank statement,
Bank reference letter,
Personal or business reference letter, and
Notarized copy of your offshore trust or corporation
- Certificate of good standing will be required if your structure is older than one year.

Once you have established your offshore bank account, you might expand in to an offshore brokerage with OneTradeEx. Clients have found there online trading platform very effective and their fees reasonable for an international trader.

OneTradeEx offers a full range of trading choices and investment products in over 100 market centers in 23 countries with direct access to stocks, bonds, futures, currency trades, ETFs and funds, and advanced structured products.

The “Benefits” of FATCA

Beginning June of 2014, financial institutions around the world are required to report most transactions involving U.S. persons to the Internal Revenue Service. The Foreign Account Tax Compliance Act (FATCA) requires offshore banks to report all American accounts with more than US$50,000 in assets. So far, 50 countries, including the Cayman Islands has signed on to this legislation.

Now that the battle of privacy vs. the need to collect more tax revenue is over, and the American machine is the victor, offshore banks can get back to business. Since 2010, FATCA has held the offshore bank account industry in limbo, tearing asunder the stability required by high quality providers. With the June deadline approaching, most banks have decided where they will land on the issue of American accounts, having kicked U.S. persons to the curb or spending big on computer technology and human resources to get in to compliance. For information on the havoc that still exists, check out this Forbes article.

While anyone who values personal freedom should object to turning foreign bankers in to unpaid IRS agents, clarity and stability are important to the sophisticated investor. Now that the dust has settled, Cayman has signed on to the agreement, and compliance measures have been implemented, American’s can open offshore bank accounts in Cayman Islands with confidence that they will be handled and filed properly and will not be a risk of running afoul of the IRS.

At the end of the day, opening an offshore bank account in Cayman Islands is about maximizing the benefits available in the United States tax code, and not hiding assets from the IRS. So long as you use banks and brokerage accounts that do not have branches in the United States, the asset protection component of going offshore is preserved.

I hope you have found this article on opening an offshore bank account in Cayman Islands to be helpful. For more information, or to schedule a confidential consultation, please send me an email at info@premeiroffshore.com.

How to Open an Offshore Bank Account

03/28/2014/0 Comments/in Articles, Offshore Banking, Offshore Company/by Christian Reeves

Want to open an offshore bank account? Here is our guide on how to open an offshore bank account quickly and easily. Do you want to know how to open an offshore bank account? Are you thinking about moving some of your assets out of the United States? Want to protect yourself from issues within the American economy? In this article, I will tell you how to select an offshore bank and give you step by step directions on how to open an offshore bank account. More importantly, I will tell you how to keep that offshore bank account in compliance and your most important “asset” out of jail.

As the U.S. government attacks its own citizens in a grab for tax revenue, the number of offshore banks willing to deal with the pressure and hassle is dwindling. These days, it is very difficult to open an offshore bank account…and, keeping that account open can be even more challenging.

Before we talk about how to open an offshore bank account, let’s review where to open that account. When you open an offshore bank account, you have two choices: size and security or privacy and asset protection. This is because, the U.S. government can levy any bank account, anywhere in the world, if that bank has a branch in the U.S. and most large banks have branches in America.

So, if you have money in HSBC Panama, the IRS can send a letter to HSBC N.Y. and demand they grab your cash and pay it over. No legal or court proceedings are required and no special effort need be made. The person assigned to your case simply enters a few keystrokes in his or her computer and your cash in Panama is gone.

Note that this is not unique to Panama. Any bank, anywhere in the world, that has a branch in the U.S., is subject to Uncle Sam’s whims. Are you hording cash at Royal Bank of Canada, Cayman Islands? This seems safe enough…a Canadian Bank in the Cayman Islands. RBC has a branch in Georgia, USA.

I also note that Canada is especially troubling to those seeking security. Any asset, including bank accounts and real estate, in Canada, France, or the UK can be seized by the US IRS. While taking and selling real estate in these countries does require a manager’s approval, it is a relatively simple process that most IRS revenue officers are familiar with.

Therefore, if asset protection and privacy are important to you, I suggest opening an account at an offshore bank that does not have a branch in the United States.

You, my well informed reader, might be thinking to yourself, with the Foreign Account Tax Compliance Act (FATCA) coming in only a few months, does it matter if your offshore bank has a U.S. branch? Do I still need to know how to open an offshore bank account? Yes it does.

FATCA requires banks to report your account and transactions to the U.S. IRS. If you are in compliance, this information gathering is not a major issue. However, information exchange is quite different from the right to seize your property.

In other words, FATCA means the government will know where your money is. If that cash is in a bank with a U.S. branch, or in Canada, England, or France, then it is subject to levy. Otherwise, you are at least free from that worry for now.

HOW TO OPEN AN OFFSHORE BANK ACCOUNT

Now that you have a general idea of where to open an account, let’s talk about how to open an offshore bank account.

You can forget about the easy and relatively painless experience of opening an account in the United States. Offshore banks are much more cautious and require quite a bit of supporting documentation.

First, some banks require, and all recommend, that you open an account under an offshore company. This will provide you a level of asset protection and allows the bank to put you in their business group.

Next, the bank will need your name, date of birth, address, citizenship and occupation. With this, they look you up in a database called WorldCheck. If you have a criminal history, or ended up in this database for another reason, your application will be denied.

After this first check, the offshore bank will put you in one of two categories: American or Other. If you are a gringo, more due diligence will be required, you will probably pay more in fees (as much as $500 to open the account and $300 per year in compliance costs), and all of your transactions will be reported to the IRS.

Along with your application, you will need to provide a notarized copy of your passport, a utility bill that reflects your name and home address, a reference letter from your bank (all US banks have form letters they use, which will be fine), and a personal or professional reference letter.

Finally, some banks will require a copy of your last year or two of tax returns and a résumé. The intent here is to demonstrate the source of funds…that you are a legitimate business person and not a drug dealer.

Some countries allow you to open an offshore bank account by FedEx, and others require you to be present in the bank. For example, the banks I work with (listed below) in Belize accept applications by courier while the banks in Panama require you to be present.

A note of caution: the number of banks that are kicking out Americans with offshore bank accounts is growing quickly. If you want to ensure your banking relationship, you should consider obtaining residency in countries like Panama and Belize. Once you are a resident, your account is no longer tagged as offshore and you should be protected from future purges.

The best residency program available now is the friendly nations program in Panama. When combined with an investment in teak of about $15,000, you can obtain residency quickly and efficiently. For more information, please contact me at info@premieroffshore.com

Offshore Bank Account and Brokerage Suggestions

The bank selected will depend on the size of your account. For accounts of less than $500,000, I recommend Caye Bank (www.cayebank.bz) or Atlantic Bank (www.atlanticibl.com) in Belize.

Because Caye Bank does not have a branch in the U.S., they have a good handle on FATCA, focus on U.S. clients, and offer a wide range of investment options, I often suggest clients plant their first flag offshore with Caye Bank and then open brokerage accounts or diversify from there.

For accounts over $2m, I recommend Andbanc in Androa or their branch in Panama (http://www.andbanc.com/).

In the Cook Islands, I recommend Capital Security Bank or a managed investment account at First NZ Capital (https://www.firstnzcapital.co.nz/). These bank may require a Cook Islands structure.

In Panama, I recommend Uni Bank (https://www.unibank.com.pa/en/index.html). For accounts over $2M, I recommend Andbanc (http://www.andbanc.com/).

For online currency trading, I recommend Saxo Bank in Denmark. Their website is http://www.saxobank.com. Though, there have been rumors that this bank will dump Americans this year.

Finally, I recommend Panama Wall Street (http://www.panamawallstreet.com/) and Titan in Belize (http://titanbelize.com/index.html?agree=0) as online trading platforms.

If you prefer a financial advisor and bank in Europe, I recommend PIC in Luxembourg. Their website is http://pic-europe.com/.

I hope this article on how to open an offshore bank account has been helpful. Feel free to ask any questions or list your favorite offshore bank with a link to its site in the comments below. The list of offshore banks who accept American’s is always shrinking, so your suggestions are appreciated.

Offshore Bank Account Reporting Requirements

Now that you know how to open an offshore bank account, let’s make sure you don’t shoot yourself in the foot with this knowledge. Be careful, because your offshore bank account comes with many new and exciting U.S. filing obligations.

Most importantly, if you have more than $10,000 offshore, you must file the Report of Foreign Bank and Financial Accounts, Form TD F 90-22.1, referred to as the FBAR. Anyone who is a signor or beneficial owner of a foreign bank or brokerage account must file this form.

The law imposes a civil penalty for failing to disclose an offshore bank account of up to $25,000 or the greatest of 50% of the balance in the account at the time of the violation, whichever is higher. Criminal penalties for willful failure to file an FBAR can also apply in certain situations.

The penalties can be imposed for each year. So, fines can add up quickly and will exceed the total value of the account if you have not reported for just a few years.

In addition to filing the Foreign Bank Account form, the offshore account must be disclosed on your personal income tax return, Form 1040, Schedule B.

If your offshore bank account is under a foreign corporation, you will be required to file IRS Form 5471. This is a U.S. tax return, similar to IRS Form 1120 for domestic companies, and includes a profit and loss statement as well as a balance sheet. An offshore corporation is always the best structure, and 5471 the best form, to use with an offshore business.

If you elected to form a single member LLC, rather than an offshore corporation, then you will file IRS Form 8858 for a Foreign Disregarded Entity. This is a simplified return, so your costs to hire someone to prepare it for you should be less than Form 5471. However, it is not efficient to operate an offshore business through an LLC…holding investments in an LLC is just fine and often preferred.

If you have significant investments offshore you will need to file IRS Form 8938, which is a report of foreign assets. The filing requirements for this form are detailed, so check out the instructions before completing the form. There are a number of articles on PremierOffshore.com describing Form 8938. For example, reporting requirements for gold transactions, and reporting requirements for real estate transactions.

I hope you have found this information helpful. If you would like to learn more about how to open an offshore bank account, or to form an offshore company, please contact me at info@premieroffshore.com for a confidential consultation.

Tag Archive for: Offshore Bank Account

2016 – UBIT Rates

HOW TO OPEN AN OFFSHORE BANK ACCOUNT