Offshore Bank Account Archives - Page 2 of 2 - Premier Offshore Company Services

Tag Archive for: Offshore Bank Account

Swiss Bank Secrecy is Dead – Again!

03/17/2014/in Articles, My Thoughts, Offshore Banking/by Christian Reeves

Swiss bank secrecy, and banking privacy the world over, are dead and gone!

The banks of Switzerland are bowing down to the United States yet again…Swiss bank secrecy is dead and gone again. The difference this time is that basically all Swiss banks are paying up, not just those with branches in the United States.

Back in 2009, UBS paid a record $780m fine and agreed to provide US tax authorities with the names of about 4,450 American clients with accounts at the bank. As a result, U.S. persons haven’t been able to open secret accounts in Switzerland for a several years. Most thought that was the end of it…they were wrong.

The United States has been on the attack since then looking for a major payday from other Swiss Banks and to put as many Americans behind bars as possible in order to scare everyone in to compliance. And, finally, most Swiss banks have agreed to take the deal offered by the U.S. government and participate in a crackdown on wealthy Americans evading taxes.

Following is a list of banks which have said they will bend over for U.S. examiners:

Category 2

Swiss banks in this group have a reason to believe they may have committed tax offenses, and are eligible for a non-prosecution agreement if they come clean and pay fines. Banks which have said they will do so include:

EFG International
Banque Privee Edmond de Rothschild
St. Galler Kantonalbank
Banque cantonale de Geneve
Berner Kantonalbank
Banque Cantonale Vaudoise
Graubuendner Kantonalbank
Banque cantonale du Jura
Zuger Kantonalbank
Luzerner Kantonalbank
Valiant
Linth Bank
Coop Bank
Walliser Kantonalbank
Hypothekarbank Lenzburg
Unlisted banks in category 2
Union Bancaire Privee (UBP)
Rothschild Bank
Lombard Odier

Categories 3 and 4

Only three Swiss banks have been cleared by U.S. examiners and deemed “compliant” under U.S. tax rules. They agree to cooperate in any future investigation of their books, report any future U.S. clients, and do not face fines. They are:

Vontobel
Bank am Bellevue
Basellandschaftliche Kantonalbank

Valartis said it will decide at a later time whether to register for Category 3 or not to participate in the program at all.

This has always been a story which amazes me. Switzerland’s national pride was protecting the clients of its banks. It is how so many Swiss grew up identifying themselves. Ask any Swiss banker just five years ago if they would ever divulge client secrets and they would be offended at the question. It would be unconscionable to breach account privacy.

Even during the extreme circumstances of World War II, the Swiss were hiding money and gold from both sides. If they could stand up to (or with) Hitler and Stalin, they certainly could stand up to the IRS, right? (click here and here for articles on hiding gold during WWII)

Well, apparently not. Here’s what happened:

A few Swiss banks, most notably Credit Suisse, Julius Baer and Pictet & Cie, opened offices in the United States and around the globe. These branches became very profitable and soon these banks were major players on the word stage.

These ties to the U.S., and America’s ability to exert influence in a number of other countries, made the large Swiss banks susceptible to attack. Personal and national pride were no longer the priority. Net worth and stock price took precedent.

As you know, these big banks turned over client data and agreed to pay some major fines without putting up much of a fight. Well, that was not good enough for Uncle Sam. The U.S. saw a bigger payday in going after nearly all of the Swiss banks, not just those who were tied in through their U.S. licensed branches.

So, the U.S. “Justice” Department froze negotiations with Credit Suisse, Julius Baer and Pictet & Cie unless and until these big fish could bring in the other Swiss banks to the deal. Because the larger banks provide correspondent, wire transfer, and back office services to the smaller banks, they were able to pressure them in to cooperating.

Because the smaller banks were resisting, the U.S. decided to ratchet up the pressure…cooperate and pay or we will put you in jail!

An example was made of UBS banker Raoul Weil who was charged with hiding money from US authorities on behalf of his clients. He was arrested in Mid-October in Italy and was extradited to the United States. He plead not guilty on January 19, 2014 and was released on a $10 million dollar bond (presumably put up by his bank). He sat in a jail cell for nearly three months without being convicted of a crime. Had his bank not come to his rescue, he probably would have been in jail for a year or two awaiting trial. For more information on this case, see the U.K. Telegraph.

Now that U.S. authorities have all of the fish in the preverbal barrel, they are ready to cash in. The agreement requires the banks to hand over all records of any current or previous American clients, allow U.S. auditors to review their books, and pay penalties equivalent to up to 50 percent of the assets they managed on behalf of Americans. Only after payment are their employees safe from rendition and imprisonment.

These agreements signal the end of the war on banking privacy. The battle took years to complete, many Americans lost their savings, their jobs, and their freedom, but money was made and the beast was fed. Swiss banking privacy is dead and gone and the U.S. has turned its sights on the likes of Singapore and Australia.

Plant that First Flag Offshore

10/10/2013/0 Comments/in Articles, Asset Protection, Offshore Banking, Offshore Company/by Christian Reeves

As America hurdles towards default, more of us are considering diversifying out of the United States and planting the first flag offshore. While there may be some last minute backroom deal to stave off disaster, many of us have lost confidence in a system out of control.

If this resonates with you, I suggest you plant that first flag offshore. Create a safety net and a conduit to move assets abroad before these avenues are blocked.

For example, most experts agree that it will soon become impossible to invest or move your retirement account offshore. In order to take control over your IRA, you must form an offshore IRA LLC and invest your retirement in to that structure. These LLCs have been around for 20+ years, but their demise is eminent as the US government attempts to gain control over its citizen’s savings and assets.

Another example is the much maligned Foreign Account Tax Compliance Act (FATCA) legislation. This law basically requires all banks around the world to report to the IRS. It doesn’t matter if that institution has a branch in the US or any ties whatsoever to America. So long as it accepts US clients, it must report to the IRS. Failure to comply will result in fines, penalties, closing of correspondent accounts, the inability to transact in US dollars, and basically, making it impossible to do any business at all.

As a result, many banks have closed their doors to Americans. Those who still accept us have had to put in place special data gathering, reporting, and investigating processes that have cost even the smallest of banks millions of dollars. These costs are being passed on to account holders in the form of new application and monthly fees…which only apply to accounts with American signors.

FATCA doesn’t come in to full effect until July 1, 2014, so plant that first flag offshore as soon as possible.

What form might that first flag take? Here are a few options with links to find out more about each.

Offshore Retirement Accounts

You can take control over your retirement account, move it in to an offshore IRA LLC, open offshore bank and brokerage accounts, and get your savings out of the US. You can move some or all of your retirement assets from a prior employer. You can leave some with your current provider and transfer the balance to your LLC.

For an introduction, see my article on Offshore IRA LLCs.
For a different take, see my article on Making Your IRA Confiscation Proof.
For the tax benefits of taking your account offshore, see Tax Benefits (about half way down, in the section titled Take Your Retirement Account Offshore).

Offshore Corporation

You can form an offshore corporation, open a foreign bank account, and fund that structure with as much or as little as you like (depending on the bank selected). This will plant a flag, open a conduit to an offshore bank, and create a layer of asset protection not available in the United States. Should trouble arise, or you simply wish to diversify or move abroad, you are ready to go.

The basics can be found in my article titled Offshore Corporations.
For information on tax saving opportunities, see Eliminate US Tax in 5 Steps.
Worried about getting scammed or in to trouble with an offshore structure? Checkout my article Offshore Asset Protection Scams and How to Avoid Them.

Invest in Foreign Real Estate

Want to get money out of the US and in to an appreciating asset that can’t be seized by Uncle Sam? Consider investing in foreign real estate. While I recommend Belize, Panama and Colombia as great growth markets that are sufficiently developed and therefore relatively safe, just about anywhere in the world will provide some level of protection.

There are only three exceptions to this rule. The US has IRS levy agreements with Canada, France and the UK that allow the government to grab and sell real estate in these three countries. No court action is required and no extra protections are provided. Real estate in Canada, France and the UK is just as vulnerable to attack as property in the United States of America.

For the benefits of investing in offshore real estate, please read US Tax Breaks for Offshore Real Estate.
For information on Panama, checkout Is Panama the Next Singapore?
For information on Belize, checkout our Escape Artist portal.

I hope you have found these articles and reports helpful. Please contact me at info@premieroffshore.com or (619) 483-1708 for a confidential consultation on planting your first flag offshore.

US Bank Accounts for Foreign Corporations – Be Afraid…Be Very Afraid!

08/03/2013/0 Comments/in Articles, Offshore Banking, Taxation/by Christian Reeves

Not so long ago I was bemoaning how difficult it is for my American clients open offshore bank accounts and comparing that to the ease with which foreigners could open an offshore bank account in the US. Well, those glory days for non-nationals are gone…and yes, it is still very difficult and time consuming for US citizens to open offshore bank accounts.

Back in the day, which, in this context means about 6 to 12 months ago, a person living and working in Panama, with no ties to the US, could open a business bank account for their Panama corporation at Wells Fargo, Chase or Bank of America by email. They did not need to go through an extensive background check, provide reference letters, etc. All that was required was to sign the forms and provide a copy of their corporate documents and passport. The account would usually be opened in a day or two.

Now, it has become near impossible to open an offshore bank account account in the US for any type of foreign corporation. It does not matter if it is from Panama, Mexico, the UK, or wherever, you can’t open a corporate bank account in the United States without a US entity.

And it does not matter whether the owner of the offshore company is a US person or a foreigner, we are all equally suspicious under the eyes of the US government. Banks just don’t want to deal with the reporting or trying to figure out their responsibilities under the new laws…so they have shut their doors to all non-US entities.

Of course, the rules are different for the uber rich private banking client ($5m+ accounts) and publicly traded corporations. I am referring here to average citizens and small businesses.

I first began to see this trend with my Offshore IRA LLC clients. In 2011 and through mid-2012, we had no trouble opening US brokerage accounts for Nevis and Belize LLCs that held US retirement funds. We could also go to US owned firms with offices in the UK, such as E-trade, and have an account within hours.

Now, it is impossible to open an account in the US, or at the international offices of a US company, with an offshore LLC. Even when the LLC is a properly structured and fully reporting retirement vehicle, no one is interested.

For my retirement planning clients, this means that their offshore IRA LLCs must hold their assets outside of the United States. As this is what the offshore IRA LLC does best (maximum diversification and asset protection), these limitations have not posed much of a problem.

But, what about all of the foreigners who have accounts in the US under an offshore company? There are thousands structured in this way and they are being told by their bank to switch to a US entity or get out.

Because many businesses need a US bank account for a variety of reasons, these foreigners happily pay a few hundred dollars to convert from an offshore company to a US corporation, having no idea that they have just opened in to the US tax system an turned over control of their accounts to the IRS.

In fact, the banks are telling their clients how easy it is to form these US corporations, advising them that it is the new normal, and how it will help them transact faster and with fewer questions in the US.

I have emails to my clients from Wells Fargo advising them exactly this…go ahead, it is no big deal…it should just take a day or two!

Well, it is a very big deal. By forming a US corporation you are opting in to the US tax system. That corporation is subject to US tax on its earnings, you have created a presumption of doing business in the US, and could be opening up your other corporate structures (those outside of the US) to audit and review by the US Internal Revenue Service.

Let’s go back to my client in Panama. She wanted a US bank account to receive payments from her US customers, open a low cost credit card processing account, and use PayPal…which will not deposit in to a Panamanian bank, so a US account was required. Such a business has no ties to the US (other than the bank account) and no US source income.

When this account was under a Panama corporation, there was zero US tax reporting and zero chance of an audit. No US tax ID was required and no interaction with the IRS was expected…the IRS had no right to investigate a company with no ties to the US. Change the entity to a Delaware corporation and this relationship is completely different.

Remember, I am talking about a Panama corporation owned by a Panamanian who is neither a US citizen nor a US resident.

Under the new structure, the US corporation is required to file a US tax return on Form 1120, net profits are assumed taxable, and the IRS can audit the return filed and require the corporation to prove whether income is US source and that deductions comply with US accounting principles. The burden of proof has shifted to the Panamanian to prove she owes no tax to the US.

With proper planning, the US corporation may not owe any taxes to the US, but their filing obligations, accounting costs, and audit risks are significant. The best case scenario is that they will spend a few thousand dollars a year on compliance. The worst case is that the IRS will seize on the opportunity to investigate all companies that look like sources of revenue and grab what they can.

Once the IRS has its nose under the foreigner’s tent, they can seize on any little discrepancy. For example, did you forget to regularly bill your US entity from your Panama corporation to ensure the US company broke-even each year? Did you travel to the US on business creating US source income? If you were in the US on vacation, can you prove no business was conducted? Did you buy real estate in the US? Can you prove it was not a rental property or used as an office? Are you ready for the IRS to contact your suppliers and business associates and start asking questions about you? Do you have proper accounting prepared for your business each year using GAAP or US tax accounting standards?

And what of those without US counsel who took the advice of their banker? They used an online incorporator, have no idea of their obligations and risks, file no US tax returns (why would they, they have no ties to the US), and then are completely screwed.

You see, after the company has been around for a few years, and no returns have been filed, the IRS will get interested. After sending a notice to the registered agent, which the owner will probably never see, they audit the company by sending a summons to the bank demanding all account statements.

The IRS will then prepare returns on behalf of the corporation, assuming all deposits are income and giving no credit for expenses. These deposits are taxed at the corporate rate of 35% and a bill is sent to the registered agent…again, the owner may never see this invoice.

Next, with no response from the owner, the debt becomes due and payable and a levy is issued to the bank requiring them to seize the funds and send them to the IRS. Keeping in mind that this bill covers ALL deposits and multiple tax years, plus ridiculous amounts of interest and penalties, you can assume that it will be quite sizable.

Now that the IRS has the owner’s money, you can believe they have his attention, but it may be too late. He has two options at this point: 1) hire a tax attorney at hundreds of dollars an hour to attempt to fix this mess, or 2) give up and let the IRS keep his money. Many people are so scared of the IRS they do just this…curse the day they listened to their banker and give up.

I will also point out that the tax attorney has a tough battle ahead of him. By not responding to the notices, the account owner may have lost his right to fight the matter in the US Tax Court, so the attorney is left to argue his case to the IRS and begging them to “do the right thing”…imagine having to explain this to the guy who just had a few hundred thousand seized by the US government. Loss of the right to tax court means the loss of legal remedies, protections from an abuse of power by the IRS, and the loss of significant leverage in negotiations.

With all of this said, a US corporation and bank account may be the best and only option for the foreigner selling products to the US, who needs a cost effective merchant account, who wants to send and receive electronic transfers rather an international wires, who needs to pay US vendors by check, or who simply need to access the US banking system for one reason or another (such as PayPal).

Just remember, once you form a US corporation, you are signing on to the US tax system and you must be ready to deal with the consequences. Make sure you have well qualified US tax and business advice before you move begin, prepare proper accounting each year, file your US tax returns, and, above all, do not take the switch from a foreign corporation to a US entity lightly.

Offshore Banking is Safe!

11/27/2012/0 Comments/in Articles, My Thoughts, Offshore Banking/by Christian Reeves

When potential clients call me about an offshore company or trust with an international bank account, their number one concern is security.
Is there money safe in an international bank that they have never heard of?

The simple answer is YES, your money is safe…often significantly safer than in your local United States bank.
The real question should be, is your money safe in a U.S. bank?

According to the August issue of Global Finance, only 5 U.S. banks are in the top 50 for safety. Of these, the first, Bank of New York Mellon, doesn’t appear until #29, followed by CoBank ACB at #32, U.S. Bankcorp at #37, Northern Trust Corp at #39, and Wells Fargo at #48.

The United States is not even the safest jurisdiction in North America. Canada, a frozen tundra of a nation, that thinks hockey is a sport, that can’t pronounce the word ‘about,’ and has about 10% of the population of the U.S., has seven banks in the top 50, compared to our five.

To quote Global Finance, “Canadian banks are the best performing in North America with seven banks in the top 50 compared to five from United States. Banks from Singapore are the strongest in Asia and from Chile in Latin America. Credit ratings and rankings of most European banks have suffered except for those at the very top of the list which have explicit guarantees from AAA rated governments.”

And things seem to be getting worse in the U.S. banking sector. According to the FDIC website, during 2005, 2006 and 2007, only three US banks failed. However during 2008, 2009, 2010 and 2011 a staggering 414 US banks failed. From 2008 through 2011, the FDIC fund lost $88 billion.

Year to date 2012, 43 U.S. banks have failed. The most recent was Truman Bank, based in St. Louis. This local bank had 4 branches, $282.3 million in assets, and $245.7 million in deposits as of June 30 and will cost the FDIC fund $34 million. The FDIC expects to lose only $12 billion in 2012 through 2016…this is what the U.S. banking sector calls improvement.

After safety, potential clients are concerned with access and convenience. Of course, it might be difficult to regularly “visit” your money if it is in Luxembourg, but is that really necessary? Banking convenience has been globally equalized through the Internet and online banking. Nowadays no matter where your bank is, and no matter where you happen to be, you have access to your account information, money transfers and electronic deposits. It really doesn’t matter what your bank’s physical address is anymore, you can transact business through old school telephones, computers, tablets and smart phone apps.

In fact, you can often open a bank account through an eligible introducer without traveling to the bank. About 95% of the applications I submit are done through a courier service, with only certain private banking institutions requiring a personal visit.

There has never been a better time to put your money in one of the safest banks in the world and plant your most important international financial flag. Because of various U.S. laws coming in to effect throughout 2013, it is strongly recommended you have your international finances squared way before the end of 2012.

For additional information on international corporations, asset protection trusts, and international banking, you can contact us at (619) 483-1708 or info@premieroffshore.com.

For more on the world’s safest banks, CLICK HERE to go to the Global Finance website.

The Storm is Coming – Issues Moving Your Assets Offshore

11/22/2012/0 Comments/in Articles, Offshore IRA/by Christian Reeves

The HIRE Act will turn international bankers in to unpaid IRS Agents.

By: Christian Reeves

Since 2011, the offshore industry has been preparing for a storm originating from the United States and its increased attention on offshore tax evasion and desire to maximize revenues from international sources. To support these collection efforts, the United States enacted the Hiring Incentives to Restore Employment Act of 2010 (HIRE Act). As adopted, the HIRE Act includes a slightly modified version of another previously proposed bill, called the Foreign Account Tax Compliance Act of 2009 (FATCA), which contains a number of provisions attacking international bank accounts and transactions.

The HIRE Act comes in to effect on January 1, 2013, to be implemented to various degrees throughout 2013, with all banks falling in line by December 31, 2013. To avoid the confusion and problems that are certain to ensue, I strongly recommend you complete any contemplated international transfers before this date. If you are considering moving some or all of your retirement offshore, or opening an international corporation and bank account, now is the time to act.

The stated goal of the HIRE Act is to close perceived gaps in information reporting to the Internal Revenue Service and curb abuses relating to the use of offshore accounts by U.S. taxpayers. It is expected to have a widespread impact on the offshore community by making transacting and transferring money more difficult and costly.

Generally speaking, FATCA will implement a new 30 percent withholding tax on “withholdable payments” made after December 31, 2013 to a “foreign financial institution”, unless certain requirements are met. Under the new law, an FFI is broadly defined to include all non-US banks, asset custodians, and investment funds. A “withholdable payment” generally includes

(i) any US sourced payment – e.g., interest, dividends, rents, compensation – and

(ii) the gross proceeds from the sale of any asset that could produce US sourced dividends or interest. Since virtually all US sourced payments to offshore financial institutions will be within the scope of FATCA – whether or not any portion of a payment is allocable to a US person – it will place a serious reporting and compliance burden on an international bank.

It is expected that most international banks will comply with these regulations in order to maintain their U.S. correspondent accounts and their abilities to conduct business in and hold United States Dollars. Complying banks will be required to enter in to an FFI agreement.

In general, entering into an FFI agreement with the IRS will require the bank to

(i) collect sufficient information on all of its account holders to enable the FFI to determine whether the account holder is US or foreign,

(ii) report the following information about U.S. accounts to the IRS annually,

(A) The name, address, and U.S. Social Security number or U.S. Tax ID of each account holder which is a specified United States Person and, in the case of any account holder which is a United States owned foreign entity, the name, address, and Tax ID of each substantial United States owner of such entity.

(B) The account number.

(D) The gross receipts and gross withdrawals or payments from the account (transactional records.

(iii) withhold 30 per cent of payments made to the FFI that are allocable to account holders that fail to comply with reasonable requests for identifying information or made to non-compliant FFI’s,

This means that 30% must be withheld from any transfer from a U.S. bank made to a non-compliant international bank. Of course, no one can do business in this manner, so the non-compliant bank would not be able to do business with any U.S. person or company.

(iv) close any accounts where identifying information about the owner of the account cannot be obtained within a reasonable period of time, and

(v) comply with IRS requests for additional information about any US account. In a chain of ownership that includes multiple FFI’s, each FFI in the chain generally must enter into and comply with an FFI agreement in order to avoid application of the new 30 per cent withholding tax upon pass through of any payment to an upper-tier FFI. Additionally, each FFI in a chain of ownership is considered to be a withholding agent potentially liable for collecting and remitting the 30 per cent withholding tax.

In order to meet the documentation, withholding, and reporting requirements of FATCA, participating FFI’s will need to make significant changes to a wide range of processes and systems, including procedures for existing and new accounts, marketing and client interaction, tax reporting and remitting, information technology systems, and legal/privacy controls.

These changes are certain to come at a significant cost to the banks for technology, accounting and massive human resource drains. It is difficult to estimate these expenses, but some banking professionals claim they will be in the hundreds of millions of dollars, while others have projected costs of $10 billion. The United States says it expects to increase revenues by $800 million per year.

One often missed component of the HIRE Act is the new civil penalties on taxpayers for failing to report their offshore accounts. The initial penalty for failing to disclose the required information in a timely manner is $10,000. If the failure to disclose continues for more than 90 days after the IRS notifies the taxpayer of a failure to report, the taxpayer must pay an additional penalty of $10,000 for each 30-day period (or fraction thereof) during which such failure continues after the expiration of the 90-day period. The maximum penalty imposed is $50,000.

Additionally, the HIRE Act increases the accuracy-related penalty under IRC Sec. 6662(a) from 20 percent to 40 percent for underpayments which are attributable to understatement of undisclosed foreign financial assets.

The bottom line is that the HIRE Act will turn international bankers in to unpaid IRS Agents. And, these newly deputized Agents are certain to be even more aggressive or conservative in defining and reporting transactions because their banks futures, and their jobs, are on the line in each and every transfer.

If you are considering moving your retirement account or nest egg offshore, I suggest you complete the transfer before the end of the year. The HIRE Act is certain to cause significant confusion and delays in 2013 and you would not want to be caught in the wash. Even in a best case scenario, you may transfer money offshore, have 30% withheld, and be forced to claim that money back on your 2014 tax return. This could mean the loss of the use of your money for over a year, along with a significantly increased probability of being audited by the IRS.

For information on moving your IRA, 401(k) or other assets offshore, forming an international company, or opening an offshore bank account, please contact me for a confidential consultation at (619) 483-1708 or email to info@premieroffshore.com.