offshore banking

Transcription

offshore banking

O F F S H O RE
BANKING
A B L A C K PA P E R
A REPORT FROM SOVEREIGNMAN.COM
O F F S H O RE
BANKING
A REPORT FROM
SOVEREIGNMAN.COM
WHY SHOULD YOU OPEN AN
OFFSHORE BANK ACCOUNT?
Here’s the simple answer: If you bank in your home country, whatever that country may be,
there are legions of bureaucrats who have the authority to freeze your accounts, and even dip
into your funds and help themselves to a little taste without your approval.
Governments at all levels, especially in North America and Europe, can freeze and confiscate
your assets without even having to prove their case. They might just act on a hunch.
REPO
T F R O Mthere
SO
V bankrupt
E R E I Gthat
N Mthey
AN
.CO
M
In Greece, forAexample,
theRgovernment
is so
began
arbitrarily
seizing
money from people who were ‘suspected’ of tax evasion. No due process. No trial. Straight to
confiscation.
From the Roman Empire to the Ottoman Empire, these tactics are nothing new. Bankrupt
governments throughout history have always resorted to stealing from their own people.
At least back then, though, they had to send tax collectors and armed thugs to steal your
money. Today, any bureaucrat can take your money with a few mouse clicks.
O F F S H O RE
BANKING
How would you feel like waking up one day with your credit cards not working and finding
out all your accounts are frozen indefinitely? It can take months, or even years, of lengthy
court hearings before you get your money back. How are you going to afford a lawyer if your
bank accounts are frozen?
A foreign bank account is an important diversification “flag” to plant abroad; for most people,
simply holding a personal offshore account provides more security than 99.99% of the
population can claim to have.
Why? Because you’re placing your hard-earned savings in a jurisdiction that is not
controlled by your home government’s bureaucrats.
Think about it; if you live in Canada, England, or the United States, and you bank in
Singapore, your government can’t just freeze your account with a mouse click like they can
do with your home banks.
Most people think this is something that only the rich are capable of doing. But this is totally
wrong. Its easy to do, and in some cases it’s even possible to open a foreign bank account
without leaving your living room.
All you need to do is complete the proper forms and send them to the bank. Many banks have
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Offshore Banking Report © 2012 SovereignMan.com
O F F S H O RE
BANKING
A REPORT FROM
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low or even NO MINIMUM DEPOSIT requirements and allow you to hold your funds in
multiple currencies so you can diversify your currency risk.
It’s really not much different than opening an account at home… but provides a layer of
protection between your hard-earned money and your home government.
THE AGE OF ‘KYC’
To be clear, the idea about shipping you money offshore isn’t to hide it. That’s not the goal,
never was. Years ago, there were a number of ‘tax havens’ whose sole existence were based on
hiding people’s money. Panama was a great example... you could cram so many bearer share
companies onA top
theMultimate
was.
R of
E Pa bank
O R Taccount
F R Othat
M nobody
S O V knew
E R E who
IGN
A N . Cbeneficiary
OM
These places don’t exist anymore. There are no more ‘tax havens’ in the world, at least in pure
form. Now every place follows internationally recognized “Know Your Customer” (KYC)
rules, courtesy of post-9/11 legislation. After all, if a bank doesn’t have a copy of your passport,
you could be a terrorist.
I jest, of course. Typical KYC rules are up to individual banks and jurisdictions, but they
typically include things like a copy of your passport, a proof of address like a utility bill, and
some other such occasional nonsense like letters of reference.
O F F S H O RE
BANKING
Needless to say, this has nothing to do with stopping terrorism. I honestly hate even using that
word, but I know it’s generally accepted so I’ll keep on with it for now. Anyhow, it’s not like
a ‘terrorist’ wouldn’t be able to produce a utility bill or passport... or have someone else open
up an account on his behalf.
No, it has nothing to do with terrorism. Terrorism, and the ridiculously named ‘war on
terrorism’ is just another way they dress up the tactics to degrade our freedoms. Terrorism is
what allows them to put their hands down our pants.
This is the mentality that is slowly pervading the western world, people allowing the
governments to get away with anything they want as long as there seems to be a good reason.
DIVERSIFYING YOUR SOVEREIGN RISK
Here’s the bottom line - we live in a world where $100 billion spending package is no big
deal. We live in a world where trillion dollar deficits are the norm. We live in a world where
sovereign nations going bankrupt isn’t even front page news anymore. And we live in a world
where governments have the moral authority to do whatever they want because they can
convince their constituents of anything.
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O F F S H O RE
BANKING
A REPORT FROM
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For this reason, I have long suggested moving some money offshore. By parking some cash
overseas, you are unplugging from your home banking system that is entirely controlled by a
bankrupt government.
Economic and social deterioration is a long, gradual process... but there are a few things that
can happen overnight. The one that worries me most is capital controls being passed.
I suspect this would happen at a time when the market has rapidly diminishing confidence
in the dollar. Some event - perhaps a federal or state default, or some other such financial
catastrophe - would be the catalyst. With so many people abandoning the dollar, the
government could emplace capital controls, effectively preventing the free flow of capital in
A country.
REPORT FROM SOVEREIGNMAN.COM
and out of the
Those with capital trapped within the country will have a difficult, if not impossible, time
getting it out... and once it’s trapped, it’s doomed to be inflated away by central banks and
politicians.
Opening a foreign bank account is one of the best ways to mitigate this risk and stay ahead
of the problem. If you have a foreign bank account, your savings cannot be commandeered or
forcibly denominated in a rapidly depreciating currency.
O F F S H O RE
BANKING
Moreover, foreign banks may be much safer than what you’re accustomed to at home. Banks
in places like the UK and United States are nothing more than wards of the state... the
walking dead, relying on taxpayers and central bank funny money for their profits.
Mainstream media sources talk about the financial crisis as if it’s history... but does anyone
really know what’s on Citi’s balance sheet? Can years of bad decisions and hundreds of billions
of dollars in terrible loans be washed away so quickly? No chance.
Many foreign banks have rock solid balance sheets and are in strong jurisdictions with
transparent regulations and a record of safety.
There are many great banks in many great jurisdictions, and what follows is a clear-cut guide
of how to open an offshore bank account and who to contact across various jurisdictions.
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O F F S H O RE
BANKING
A REPORT FROM
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AN EASY SHORTCUT: HSBC
Most of the time, a foreign bank requires you to come to their office in person to open an
account, as well as provide a seemingly endless array of notarized documents, stamped papers,
and letters of reference.
It is possible though to open a foreign bank account without leaving the country and manage
your foreign account online from all over the world. Offshore online banking is a great way
to manage your finances, no matter where you live in the world.
There are some international banks that will be willing to open an account on your behalf in
their foreign branch, and take care of all documentation requirements without you having to
leave the country.
HSBC Hong Kong is a great example, particularly because it has a presence in more than 80
countries, from Mexico to Sri Lanka to Singapore. You’d be hard pressed to find a civilized
country that does not have a branch.
O F F S H O RE
BANKING
Among HSBC’s many branches are offices in Los Angeles, Miami, Vancouver, etc. So first
you call HSBC inAHong
a foreigner,
R E Kong,
P O R explain
T F R that
O MyouS are
OV
E R E I Gwant
N MtoAopen
N . Ca bank
O M account,
and would like to certify all the paperwork through your local HSBC branch.
There are presently three levels of personal accounts within HSBC, and there are no account
opening or maintenance fees for any of them. The ‘SmartVantage’ account has a minimum
of roughly $1,200 (10,000 Hong Kong Dollars), the ‘Advance’ account has a minimum of
roughly $25,000 (200,000 HKD), and the ‘Premier’ account has a minimum of roughly
$125,000 (1 million HKD).
The transactional pricing structure for each account type is essentially the same; sending a
wire across the world, for example, will only set you back about $14. Each account type
also has access to HSBC’s gold deposit services, an unallocated ‘paper gold’ solution without
physical possession.
The key difference among the accounts is increasing levels of prestige and service. Premier
members are serviced at any HSBC Premier center around the world and have access to a
global concierge. SmartVantage members wait in line longer. For the casual bank customer,
the difference may be trivial.
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O F F S H O RE
BANKING
A REPORT FROM
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O F F S H O RE
BANKING
HSBC HONG KONG APPLIC ATIONS
The minimum deposit for an HSBC ‘Advance’ account is roughly USD $25,000,
and you can download the forms at:
https://www.hsbc.com.hk/1/2/hsbcadvance/apply
For a higher tier ‘Premier’ account, the minimum is roughly USD $130,000,
and you can download the forms at:
https://www.hsbc.com.hk/1/2/hsbcpremier/apply
When you have completed the documentation requirements, you should get in touch with the
nearest HSBC branch in your home country and make sure they have “international banking
services” available.
[Check HSBC.com to find the nearest branch to your location.]
O F F S H O RE
BANKING
At the branch in your home country, the bankers there will certify the paperwork on your
behalf, after which you can send the packet to Hong Kong where your account will be opened.
TIP
The bankers in your home country will probably try to talk you out of opening a
foreign account. They might even tell you that they can’t do what you’re asking.
Don’t believe them; it’s just a sales tactic. They want your business, and they definitely
don’t want to see you sending your money away. Be persistent with them, and it
WILL happen.
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O F F S H O RE
BANKING
A REPORT FROM
SOVEREIGNMAN.COM
ANDORRA
Andorra is an excellent place to bank. Compared to the nearby Spanish banks, which are so
stuffed full of worthless government paper, Andorra is the financial promised land.
Banking in Andorra is conservative; in fact, in Andorra’s modern history there is only
one instance of a banking failure, back in 1968. This was before there was even a banking
regulator, so the other banks stepped in to guarantee deposits in order to preserve confidence
in the system.
Today, INAF (National Institute of Finance) regulates Andorra’s banks, but their original
conservative principles still stand. Liquidity and solvency ratios are high, and the banks earn
their income by being wealth managers and charging transactional fees, not by making wild
bets with other people’s money and sticking taxpayers with the bill.
The big draw of Andorran banking is privacy. Numbered accounts are still available, and
the true identity of the account holder is known only to a handful of senior managers. This
term is thrown around quite a bit in financial lore, so I’ll explain fully what I mean below.
O F F S H O RE
BANKING
There are only aAhandful
R E P ofObanks
R T Fthat
R Ooperate
M S in
O Andorra.
V E R E IEach
G N of
M them
A N .requires
C O M that you
turn up in person to Andorra to open an account, though in special situations, an alternative
can be arranged. I recommend going there if you’re interested in opening an account.
Of all of them, I had the best experience with Banca Privada.
Banca Privada only has one branch outside of Andorra; it’s in Panama. There are no branches
in Europe or anywhere else in North America aside from an affiliate office in Mexico City. To open
an account, you simply need to make an appointment and show up with your passport. They will
accept accounts from all nationalities, including the cursed US citizen.
The actual process of establishing an account feels more like a conversation between friends.
You have some coffee and talk about your financial goals, your background, your profession.
The bankers want to understand how you have earned your money and what you do for a
living so that they can responsibly say that they have met the KYC rules that the OECD has
been so keen on imposing around the world.
Afterwards, the paperwork is very simple and takes just a few minutes. There are two or
three short forms, depending on your nationality, in which you agree to comply with the
relevant laws in Andorra and your home country... and then a specimen signature. It’s not
like a standard commercial bank where you have to fill out some long application. Here it’s
shockingly simple.
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O F F S H O RE
BANKING
A REPORT FROM
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When you finish, the banker will bring you three things.
First, you’ll receive a small card with your account number and account alias. This is
what people mean when they refer to a ‘numbered account’. The name on the account becomes
some sort of alias or code... so if John Johnson opens a ‘numbered account’ in Andorra, the
name “John Johnson” would not appear anywhere. Instead, the name on the account may be
something like “105533”.
Needless to say, the match between identity and account alias are kept secret and accessible
only by the most senior bankers.
Customers are
number,
allM
have
account
A still
R Eissued
P O Ran
T account
FROM
S O Vjust
E Rlike
E Iwe
GN
A Nbank
.CO
M numbers
at other banks. In Andorra, they use the IBAN system, which stands for International Bank
Account Number. It’s commonly used outside of North America, generally consisting of a
2-letter country code followed by 22-digits. In some countries it can be up to 30.
IBANs are more secure, and in international transactions, they contain all the relevant
information required to transfer funds. When you want someone to wire you money, you
generally give them your IBAN and bank’s SWIFT code. The banker will provide you with
all of this information.
O F F S H O RE
BANKING
The second thing that you receive is another card containing your Internet banking
login ID. For security reasons, this is different than your account alias. You only use it when
logging in to the website.
The third thing you receive is an RSA secure token that acts as your password for the
website.
Through the Banca Privada website, you can send worldwide wire transfers, or transfer
money within your own account to multiple currencies, including dollars, euros, Swiss francs,
Australian dollars, yen, British pounds, Hong Kong dollars, and Canadian dollars.
You can also sign up for a Visa credit card that is linked to your account. In the absence of a
credit report for a numbered account, the bank requires a minimum of 6,000 euro (roughly
$7,800) as a fixed deposit. This amount becomes your credit card limit, and you can increase
this amount should you desire a higher limit.
I mentioned before that the bank generates income on fees. The standard account fee is
360 euros per year. This fee applies regardless of the size of the account - there is no account
minimum, or you could have tens of millions of dollars... the same fee applies, and it is the
only fee that affects the entire account regardless of what you do / do not do.
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O F F S H O RE
BANKING
A REPORT FROM
SOVEREIGNMAN.COM
Other fees are transactional in nature, and they are all negotiable. For most people, the only
other fee that generally applies is the wire transfer fee, i.e. what does it cost to send a wire
internationally.
You can reach the bank by emailing [email protected]
Aside from Banca Privada, I was favorably impressed with andbanc’s strong balance sheet as
well... though the English proficiency of their bankers was lacking. If you speak reasonable
Spanish, you can contact Ms. Meritxell Reyes Mariscal of andbanc (meritxell.reyes@
andbanc.com +376.739.011) to discuss opening an account there.
BANKING
ITNRIGHT
A RIN
E PANDORRA
O R T F R O M - WHO
S O V E R EISI G
M A N . C FOR?
OM
A good candidate to open an account in Andorra is someone who:
1. Can get on a plane and go to Andorra to open the account
2. Is looking to hold savings in a strong banking jurisdiction with excellent balance sheet
fundamentals
O F F S H O RE
BANKING
3. Does not plan on doing much transactional banking from the account (i.e. frequent wires,
bill payments, etc.)
4. Is comfortable with the annual fee
5. May want to take advantage of private banking investment products that the bank offers
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O F F S H O RE
BANKING
A REPORT FROM
SOVEREIGNMAN.COM
AUSTRALIA
Australia is a country with a robust banking system and strong currency that you may want
to consider.
On the available evidence, Australian banks today are among the best capitalized in the
world; the last bank failure in which any depositor lost any money in Australia was during the
Great Depression, in 1931, when depositors in the Primary Producers Bank of Australia lost a
negligible amount of their deposits. Furthermore, in more than 100 years, not a single dollar
of taxpayer money has been required to reimburse bank depositors in Australia.
And, unlike in many countries, the Australian government’s deposit guarantee (A$1 million
per customer, per bank) is actually backed by something.
If it were called upon, this insurance fund would actually stand a chance of paying.
Australia has one of the lowest government debt-to-GDP ratios in the world. Indeed, it stands
out as being exceptionally low, even when compared to other countries with strong currencies.
It’s lower than Norway’s, lower than Switzerland’s, and even lower than Singapore’s.
O F F S H O RE
BANKING
A Rendowed
E P O Rwith
T Fnatural
R O Mresources.
S O V EItsRtop
E I 3Gexports
N M Aare
N iron
.CO
Mcoal, and
The country is richly
ore,
gold. Moreover, it’s one of the only stable, low-inflation economies in the world where you can
earn decent rates of interest on bank deposits these days. As of the present time, the Reserve
Bank of Australia’s (RBA) “official” cash rate is 3.75%, while the official inflation rate is at
1.6%.
Most Aussie retail banks offer “at-call” savings products (demand deposits, or cash management
trusts) that pay interest rates close to this amount.
However, when it comes to opening accounts for non-residents, Australian banks are a mixed
bag. Some will, some won’t. As such, I’m happy to announce that, through our contacts in
Australia, we’ve found a solution that should work for nearly all readers of this report.
If you qualify, you can open an account with as little as A$1,000. And, you do NOT have to
make a trip to Australia to do so.
Our friend Greg Chalom of BBY Stockbroking in Sydney is able to work directly with
several banks in Australia on your behalf to get your account open without you having to set
foot on Australian soil.
Greg has guided a number of non-residents through bank account opening procedures, and
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O F F S H O RE
BANKING
A REPORT FROM
SOVEREIGNMAN.COM
his experience will make the process go much faster and more smoothly for you.
In full transparency, Greg (or likely his employer) may be paid a small trailing commission on
any business they introduce to local banks per standard industry arrangements. These details
are disclosed in the Product Disclosure Statement.
As is our standard policy, however, we at Sovereign Man neither receive nor accept any
compensation from referring you to Greg, or to any bank. We are passing on this information,
and Greg’s contact details, purely for your benefit, not ours.
If you want to reach Greg, you can do so through the contact information below:
A BBY
R E Limited
PORT FROM SOVEREIGNMAN.COM
Greg Chalom,
Phone Direct: +61 2 9226 0117
Email: [email protected]
O F F S H O RE
BANKING
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O F F S H O RE
BANKING
AUSTRIA
A REPORT FROM
SOVEREIGNMAN.COM
Traditionally, Austria has generally been one of the better places to bank in the world. Austrian
banks are based on the Swiss model – part bank, part broker, all wealth management center.
Unlike Switzerland, though, Austrian banks tend to carry lower costs and an even lower
profile. There is no Austrian bank stigma... no one will look at you leery-eyed and assume you
are guilty of tax evasion if you say that you have an Austrian bank account.
But let’s briefly review the reasons why we bank internationally to see if Austria fits the bill.
Remember, offshore banking isn’t about hiding money. The Society for Worldwide Interbank
Financial Telecommunication (SWIFT) is already giving governments access to their records
of worldwide money transfers, making any attempt at true financial privacy within the banking
system a frustrating exercise.
Rather, the biggest reason that we bank internationally is for asset protection. Between
out of control government agencies, lawsuits, shadow creditors, and trigger-happy judges, the
threats to our savings are truly incredible.
O F F S H O RE
BANKING
In terms of assetAprotection,
reasonable
R E P O RAustria
T F RisOaM
S O V Echoice.
R E I GUntil
N M2009,
A N Austrian
. C O M banking
privacy was among the strictest in the world. This has been reduced now as the Austrian
government began a process to renegotiate tax treaties and information exchange agreements
under OECD pressure. Customer information is still kept private, however the burden of
proof to exchange information is much lower than it used to be.
Asset quality is the big elephant in the room with Austrian banks. Throughout the 1990s and
early 2000s, Austrian banks were expanding rapidly in the developing economies of the former
communist Eastern block; this practice made a lot of sense to bankers during the boom years when
Europe’s emerging markets were roaring to the tune of 7% GDP growth per annum.
By early 2009, Austrian banks were holding a full 20% of all outstanding loans to central, eastern,
and southeastern European countries. The aggregate balances of these loans dwarf the entirety of
Austria’s economy. In a worst case scenario, a wave of defaults in the region could set off a chain
reaction of losses to the Austrian banking system and wipe out the equity.
So... does Austria have a deposit insurance agency? No. Austria has five deposit insurance
agencies. Unlike the FDIC, they’re actually solvent and not dependent on constant life support
from the national government; the deposit guarantee limit on an individual account is 100,000
euros.
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O F F S H O RE
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SOVEREIGNMAN.COM
I have a long-standing relationship with a few banks in the country, one of which is Bank
Austria. Bank Austria has number of advantages:
1) You can open an account through the mail. Unlike many banks in the region, you do
not need to turn up in person to establish an account. And yes, they will open accounts
for US citizens.
2) Bank Austria did not expand internationally as aggressively as its competitors like Erste
Bank or Raiffeisen, so its asset portfolio bears substantially lower risk. On the downside,
Bank Austria is owned by Italy’s Unicredit... a disastrous financial institution that has
become Europe’s version of Bank of America. Bank Austria, however, is separately licensed
A its
R own
E P Ocapital
R T ratios
F R Oand
M reserve
S O Vrequirements
E R E I G Nwithin
M A NAustria.
.COM
to maintain
Profits kick up
to Unicredit, but Unicredit’s risks do not necessarily flow down to the shoulders of Bank
Austria. As always, do your own due diligence to get comfortable with any bank’s balance
sheet before making a deposit, as well as the deposit guarantee limits. The staff members
at Bank Austria’s international division are incredibly kind and open people; they would
be more than happy to discuss the bank’s financial condition with you.
O F F S H O RE
BANKING
3) Bank Austria makes loans to its non-resident customers. You can apply for a credit
card or even a mortgage... and interest rates in Austria right now are pitifully low... 3 or
4%.
4) The bank offers accounts in every major currency. Accounts of at least 350,000 euros are
also eligible to be denominated in gold.
5) For non-US customers, the bank has solid wealth management and brokerage services
to access worldwide markets. US citizens are not eligible for this.
Bank Austria’s international division can be reached at [email protected], or by phone
at +43 50505-44620
Their English is great, so there are no communication problems.
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BANKING
A REPORT FROM
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BELIZE
As Latin American and Caribbean destinations go, Belize is a pretty reasonable place to bank;
particularly if you live in North America, it may be a good situation for you, depending on
certain circumstances. I consider the following to be advantageous:
1) Belize is a common law jurisdiction. This means that the courts are not an absolute
circus, and that precedent generally has authority over personality. If the worst happens
and you have to go to court (or if somebody sues you), what happens ultimately shouldn’t
be up to the whims of a judge, but determined by hundreds of preceding cases.
2) Banking in Belize is based on the British system. You might not find this such a
benefit given what happened to British banks in the subprime meltdown… but Belize,
as a former British colony, inherited a stable, courteous, pro-business banking system
that is leaps and bounds more professional than the bureaucratic institutions you’ll find
in much of the region.
3) The banks will pay you more. I know 4-5% isn’t much to cheer about, but it’s a major
step up from the 0-1% interest rates up north and in Europe.
O F F S H O RE
BANKING
4) They speak your language. The bankers in Belize are native English speakers, and the
offshore bank managers/officers often tend to be North American.
5) Belize is in compliance. The country’s banking system is not the subject of an OECD
witch-hunt, so you won’t have to worry too much about getting a Dear John letter in
the mail requesting that you close your account.
6) You don’t have to go there. You can open a bank account from your living room,
anywhere in the world. They don’t need to see you in person in order to open up the
account. You’ll have to FedEx some certified or notarized copies back and forth, but
there’s no need to get on a plane.
7) Belize doesn’t want your money. The government will not tax you on interest received
in your bank account. Furthermore, there are no exchange controls in the country, and
you’re free to hold deposits in whichever currency you can work out between you and
your banker.
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As with anything, there are some disadvantages that I want to highlight:
1) There is no deposit insurance. If your account gets wiped out, it’s between you and your
banker to sort it out. Frankly I’m comfortable with this sort of arrangement – I’d rather
be forced to do the due diligence on my bank then wait for the government to bail me out
with inflated/taxpayer dollars.
2) Sometimes size matters. Belize’s banking system is small. The largest bank has far less
than $1 billion in assets. By North American and European standards, this is so tiny
it’s practically cute. Consequently, the system simply cannot absorb large capital flows.
3) Big brother
A RisE near.
P O RBelize
T F Ris Odefinitely
M S Owithin
V E R the
E I GUSN sphere
M A Nof. Cinfluence.
O M The US
government routinely doles out grants and aid to Belize. Furthermore, the country lacks
a diversified independent economy, and it’s deep in debt. When the US says jump, Belize
may not ask “how high”, but will certainly listen.
4) Bankers work bankers’ hours. Banking hours are generally much shorter in Belize. For
many banks, it can take a few days just to get an email response.
O F F S H O RE
BANKING
5)There’s a flip side to higher interest rates. Deposit rates are higher than what you
might be accustomed to, but loan rates are higher as well.
6)Higher fees. Because it has such a small banking system, Belize banks typically have
to go through multiple corresponding banks for wires and the like. Wiring money from
a Canadian bank to a Belize bank, for example, will likely go to New York first, then
Panama, then to Belize. This means higher fees and longer waiting times to get your
money.
One bank in Belize that will open accounts through the mail for non-residents is Caye Bank.
If you’re interested in opening an account, you can contact JR Tash ([email protected]).
I should note that Caye Bank requires no minimum deposit, making it a reasonable option to
consider if you just want to get something open without moving much money. The downside
is that Caye’s customer service has often been lacking in the past, and many readers have
experienced substantial delays in correspondence.
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A REPORT FROM
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COOK ISLANDS
The Cook Islands is one of the best asset protection jurisdictions in the world. Cook
Islands law is one of the most difficult in the world for creditors to penetrate. Financial privacy
is strict; there are no fishing expeditions, and local law forbids the enforcement of foreign
judgments against a Cook Island entity.
Capital Security Bank (CSB) is a small standard commercial bank that also provides
investment accounts. They essentially hold a master broker account with a Swiss firm and
create corollary sub-accounts for each investor.
This is a common practice, many retail investment firms run their accounts through a single
wholesale account at a larger brokerage.
I’ll also go out on a limb to say that their customer service is excellent - this is a tight ship
run and staffed by North Americans, Europeans, and Kiwis, not a team of Pacific Islanders
on maana time.
O F F S H O RE
BANKING
As a bank, one of the unique characteristics about CSB is that they do not make loans. This
gives them an effective
A R Esolvency
P O R Tratio
F RofO100%.
M SOVEREIGNMAN.COM
As a brokerage, CSB have no online platform...but these accounts are typically geared towards
full-service investors anyhow. If you make trades in the range of at least $50,000 to $100,000,
using a full-service broker pays for itself many times over: a good broker is able to gain
much better entry points for securities by working directly with the market maker, and this
works especially well for thinly traded stocks.
Discount online brokers often make their money on the spread between what the market
maker gives them and what the investors limit price is. With a good full-service broker, you
can save thousands on this spread.
When placing trades at CSB, you can either have their people in the Cook Islands execute the
order, or you can use one of their registered investment advisors (perhaps the only regulatory
requirement for North Americans). The bank has a long-standing relationship with Rochdale
Offshore Investment Management in New York that can handle the trades.
If you’re interested in more information about CSB, you can contact John Evans, Operations
Manager - email: [email protected], phone: (+682) 22505, fax: (+682) 22506, US free
fax: (+1) 800 863 0056, web: (http://www.capitalsecuritybank.com/), address: ANZ
House, Maire Nui Drive, PO Box 11, Rarotonga, Cook Islands.
16
O F F S H O RE
BANKING
A REPORT FROM
SOVEREIGNMAN.COM
HONG KONG
Hong Kong has one of the most advanced, stable banking systems in the world, and it’s
backed by the full power of mainland China. In short, no Western government really has
the teeth to really bully Hong Kong Monetary Authority (HKMA), the island’s money and
banking regulator.
This is the reason why you don’t see Hong Kong on any OECD black list… the French and
Americans simply cannot stand up to China.
One of the advantages of Hong Kong is that it is one of the easiest places to bank outside of
mainland China if you intend to held any of your wealth in renminbi.
In fact, just about any bank that you could go to in Hong Kong allows you to open a renminbi
cross border settlement account, along with a variety of other currency sub-accounts. You can
even denominate an account in precious metals – in a way, it’s like having a GoldMoney.
com account that’s still plugged into the banking system.
O F F S H O RE
BANKING
If you’re looking for a bank that doesn’t have any locations outside of Asia, you may
consider Hang Seng
Hang
A R Bank.
EPOR
T FSeng
R O isMtheSsecond
O V E largest
R E I Gbank
N MinAHong
N . CKong
O M by assets
and deposits, and it focuses exclusively on Hong Kong and mainland China. Hang Seng
will open accounts for most nationalities without hassle, including US citizens, however a
personal visit to the bank is required.
All you need to do is show up to any branch in Hong Kong, bring a passport and proof of
address (driver’s license is acceptable if it has your address on it), and you’ll be out of there
within 20-minutes.
If going to Hong Kong is too cumbersome at the moment, then I suggest you consider
HSBC. See the ‘shortcut’ section of this text for more information about how to open an
HSBC account remotely.
As a final note on Hong Kong, if you’re interested in a discount online brokerage with
substantial access to Asian markets, I’d recommend Boom Securities.
You can go through most of the account application steps online at the company website
(www.boom.com.hk). You will need to send a notarized copy of your account application
form and notarized passport copy.
US citizens / residents cannot trade US securities, and at present they do not offer trading of
Canadian stocks. Boom is a great choice if you want to trade Asian and Australian equity markets.
17
O F F S H O RE
BANKING
A REPORT FROM
SOVEREIGNMAN.COM
MONGOLIA
What? Why would you even want to have a bank account in Mongolia? Well, because as a massive,
resource-rich country with a tiny population, Mongolia is set to become a world class producer of
copper, gold, coal, oil, rare earths, and much more. At present, there are tens of billions of dollars
of development projects being invested in this country with a $6 billion GDP.
Right now Mongolia is on the cusp of massive GDP growth. The definitive moment
occurred in 2009 when the Mongolian government agreed to change the laws affecting mining
operations and taxation, and this gave the green light to multi-national mining companies.
Oyu Tolgoi, OT for short, will be one of the largest mines in the world, doubling Mongolia’s
existing GDP all by itself.
OT and TT (Tavan Tolgoi, a nearby and equally massive coal project) are being increasingly
discussed in the wider media, but not enough is said about the dozens of smaller projects in
the works, which in aggregate are multiples of OT and TT. It’s difficult to imagine the sheer
enormity of capital expenditure taking place, and it’s taking place in an economy that is
minuscule in comparison.
O F F S H O RE
BANKING
To be sure, the country’s GDP is going to go vertical as more and more of its resource assets
are developed and cash pours into the country.
Mongolia is the least populous country on the planet per sq. km. The massive increase in per
capita wealth that will come with the jump in GDP will combine to propel the Mongolian
currency, the Tugrik, much higher.
In 2009 the Tugrik bottomed out around 1600:1 against the dollar. It’s currently trading at
1316:1.
Oh, and not to mention that you can generate yields from 12% to 14% on your deposit
in a Mongolian bank.
First, in order to have an account in Mongolia, you have to throw out everything you know
or think about modern banking. Like just about everything else in Mongolia, banking works
a bit... differently. I’ll explain.
There are several banks in Mongolia, and I’ll discuss four of them: Khan Bank, Golomt Bank, Xac
Bank (pronounced Has, rhymes with loss), and Trade & Development Bank (TDB). To give you an
idea of size, Khan Bank has just shy of $1.5 billion in assets. This is considered quite large in Mongolia.
By way of comparison, Bank of America has more than $2 trillion in assets, over 1,000 times the size.
18
O F F S H O RE
BANKING
A REPORT FROM
SOVEREIGNMAN.COM
Yet while Bank of America has been squandering its depositors’ savings on government and
subprime debt, Mongolian banks are witnessing the biggest boom in finance that the world
has seen for decades.
Why? Because five-years ago, the average Mongolian was still living in a yurt. Today s/he
probably has a job, a home, and a bank account. Moreover, 100% of GDP worth of foreign
investment is flowing into the banking system year after year.
Their capital base is legitimately growing. Wealth in the country is increasing. Foreign
investment is constantly reinforcing their balance sheets. TDB’s asset base, for example, has
increased over 400% since 2007.
Another major difference to bear in mind is that the business of modern banking in Mongolia
is quite new. When you walk into a bank, you get the impression quite quickly that these
people (particularly the front-line employees) are still new at their jobs.
For example, a bank manager is constantly being presented with different problems and having
to decide how to handle it on the spot. Bank tellers will scurry over and ask how to handle a
situation if the customer doesn’t have the right ID, or the signature doesn’t look quite right.
O F F S H O RE
BANKING
There is no giant regulation, no tome of procedures to follow. Some may describe this approach
as maverick, others as more personalized. Either way, it’s probably different than what you’re
accustomed to. Be advised.
Now, what are the key benefits to banking in Mongolia?
• First of all, it’s off the radar. There is no IRS field office in Ulan Bator, no entry on the
OECD black list of evil countries. They don’t know what a ‘suspicious activity report’ is and
think that ‘money laundering’ is when you accidentally leave your wallet in your pants on
Sunday afternoon.
• Second, it’s open to everyone. These people have never head of FATCA, and they won’t
sneer at you because you happen to be from the United States. Or Pakistan for that matter.
• Third, it’s... eh... loose. As I mentioned, there is no great book of procedures to follow,
making the entire banking system fertile ground to strike a deal on a case-by-case basis
to suit your needs.
• Fourth, as mentioned, the local currency (Mongolian tugrik) certainly seems poised to
appreciate in the long-run. The rate of economic expansion and the amount of committed
foreign investment flowing into the country suggest that demand for the tugrik should remain
high, long-term. Further, in an inflationary environment, the currency should appreciate.
19
O F F S H O RE
BANKING
A REPORT FROM
SOVEREIGNMAN.COM
•F
ifth, Mongolian banks maintain reasonable liquidity ratios. TDB, for example, maintains
a full 30% of its customers’ deposits in cash. Including highly liquid securities, this ratio goes
up to 42%. TDB is not alone - Golomt is holding 32% of their customers’ deposits in cash. By
comparison, a US bank like Suntrust (according to most recent 3rd quarter 2011 filings) has $4.6
billion in cash on $123 billion in deposits... a ratio of just 3.7%.
* Again, there is no such thing as risk-free. The audited cash levels at Mongolian banks are generally quite
high, but you should still get comfortable with the balance sheets. Audited figures are available online for
each of the major banks.
• S ixth, the currency diversification opportunities are interesting. In Mongolia, you can open
an accountA denominated
ranging
R E P O R T inF currencies
ROM SO
V E R Efrom
I G NtheM US
A Ndollar
. C O and
M Mongolia
tugrik to the Russian ruble and Chinese renminbi... not the exactly the standard menu
of euro, pound, Canadian dollar.
• Seventh, interest rates are much higher than what you’re probably used to. Deposit rates
on fixed terms of 6 or 12 months can easily yield 13.5%.
When I told people that I was getting 13% in my Mongolian bank account, nearly all of them
were skeptical. They couldn’t believe it, it must be a pyramid scheme. How can such a number
be legitimate?
O F F S H O RE
BANKING
Easy. If you think 13.5% on a 1-year deposit is high, imagine paying 24% on a car loan, or
18% on a mortgage. That’s the reality in Mongolia, and it’s all about supply and demand of
local capital.
It won’t be this way forever, but we can take advantage of the opportunity now.
So... how do you actually go about doing this?
Golomt Bank offers a remote Certificate of Deposit (CD) program that you can open it
online by going here:
https://www.egolomt.mn/OnlineAccount/index
This is an incredibly convenient way to get some of the upside without the hassle of visa
application or travel.
At the time of this writing, the bank is offering a 12-month CD yielding 13.44% (in local
currency) and a 6-month CD yielding an annualized 12.0% (also in local currency).
If Mongolian currency isn’t your thing, you can choose a US dollar 12-month CD yielding
6.6%, or a simple demand deposit yielding 2.4%.
20
O F F S H O RE
BANKING
A REPORT FROM
SOVEREIGNMAN.COM
S AINT VINCENT AND THE
GRENADINES
St. Vincent and the Grenadines is a Caribbean island nation that is overlooked by many and
easy to miss. However, it has something going for it when it comes to offshore banking. The
jurisdiction practices bank secrecy and has a common law legal system. This means that
legislation in SVG does not allow a bank to provide any kind of information to third parties
and protects bank secrecy and confidentiality. SVG authorities will need an international
court order formally issued by the demanding government, before evaluating any information
disclosure request.
The country, however, has tax treaties in place to share information and will do so readily if
requested to do so. Another drawback for the country is its weak public finances. The 2011
budget deficit was 10.6% of GDP and its public debt in 2010 was a staggering 90% of GDP,
both among the highest in the world.
One bank that opens
is Loyal
Bank;
you
A accounts
R E P OforR all
T nationalities
F R O M SinOSt.VVincent
EREIG
NMA
N.C
Ocan
M open
an account with Loyal Bank without having to travel to St. Vincent. You must provide a
notarized copy of your passport and driver’s license, a notarized copy (or original) of a utility
bill or bank statement confirming your address, and a reference letter from your bank.
O F F S H O RE
BANKING
You can find out more by accessing their site here:
https://www.loyalbank.com/eng/account_open_pers.html
For people who are neither residents or citizens of the United States, Euro Pacific Bank
Ltd (http://www.europacbank.com) is a full-service bank and brokerage set up by Peter Schiff
that offers some interesting products.
They are a boutique bank/brokerage firm that can open accounts for any clients that either do
not want to deal with big banks such as HSBC or Barclays, or that do not qualify for those
big banks. They offer a personalized banking service and a 24/7 phone line.
They can open an account for you in USD, CAD, EUR or GBP with full online banking
services. They also offer managed accounts, mutual fund accounts, gold investment account
(with storage and physical delivery) and brokerage accounts (they are a Saxo Bank “White
Label” partner).
21
O F F S H O RE
BANKING
A REPORT FROM
SOVEREIGNMAN.COM
The real kick here is that they offer the world’s first true gold backed debit card. What
this means is that you can purchase and store physical gold (no storage fees) through their
established partnership with Perth Mint, and when you want to spend some of your gold, sell
the amount you choose and load up your MasterCard.
The minimum deposited amount to open an account is $500 with a $50 opening fee. If you
deposit $5,000 or more, the opening fee is waived.
They also offer self-directed or assisted brokerage accounts, both with a $2,500 minimum,
and managed accounts with a $250,000 minimum and three available strategies: defensive,
market or balanced.
To open an individual account they require:
1) One certified copy of a photo ID (passport, driver’s license, identity card)
2) Copy of recent utility bill
3) Bank reference letter or recent bank statements.
O F F S H O RE
BANKING
To apply for a corporate account you also need to include:
1) A notarized copy of Certificate of Incorporation and Certificate of Good Standing
2) A notarized copy of Memorandum of Articles of Association/Incorporation
3) Corporate resolution detailing authorized person(s)
Once all the required documents have been submitted and the compliance check has been
met they can open an account for you within the same day.
Once again, they do not accept US clients plus clients from Organization of Eastern
Caribbean States members (Anguilla, Antigua & Barbuda, British Virgin Islands, Dominica,
Grenada, Montserrat, St. Lucia, St. Kitts & Nevis, St. Vincent & the Grenadines).
To get started or find out more, our best contact is Vincent Le. He can be reached at vincent.
[email protected]
22

offshore banking

Transcription

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