Just the utterance of the title makes some people cringe with fear and lower their voice in public. In January I was at an investment conference in Zurich and met with several bankers who would barely speak to me once they heard my American accent. One beautiful, young woman with a very well known private Swiss bank even asked me to lower my voice when I asked her if they would accept American clients.
I approached a group of 5 men that worked for another private Swiss bank and the men over 40 scattered as if I had tossed a grenade in the middle of the group. The guy that remained must have been low on the totem pole as he was about 28 years old. He was left to explain to me why Swiss banks won’t accept US clients anymore.
Of course it isn’t hard to understand why considering what is going on in the news lately. But it does seem to dampen the spirits of those who are implementing their own asset protection plan.
Even my 70 year old mother is aware of UBS handing over nearly 5,000 names of US citizens with private Swiss bank accounts. The Germans, Italians and French are in no better shape than the Americans at this point. The Swiss now are seemingly ready to hand over names to any OECD country that requests it. And the reporting requirements for Swiss banks to maintain American clients make it cost prohibitive.
But what does this mean for you? First of all, all is not lost with Swiss banking, but that doesn’t make it your best choice either. There are ways to open an account and maintain your privacy. But you need to know someone. But generally this means depositing large sums of money and in many cases you will need to work with a private family office. If you have a net worth of $5M USD this is not necessarily a bad idea. But for those less capitalized, you need to find another option.
Just to be clear, the US government requires reporting of all offshore financial assets over $10,000 in a calendar year. To clarify a bit, if your offshore financial assets, in aggregate, total over $10,000 at any point during the year you are required to file form TD F 90-22.1, also known as FBAR (foreign bank and financial accounts) reporting.
(As an irreverent, freedom loving libertarian, I call this form the FUBAR. If you don’t know what that means, Google it.)
I do not advocate failure to report foreign bank accounts at this point as the penalties are quite high. You can be fined $10,000 per account, per person, per year with no statute of limitations along with any penalties and fees. The Treasury department is very, very serious about this.
But as with any problem, there always lies the seeds of opportunity. The US government does not consider precious metals as a financial instrument. This is rather ironic as gold has been the only stable form of money for thousands of years. Only in the past century has paper money become so widely accepted.
What we have been recommending recently to clients are gold accounts. We have found an Asian bank that offers all of the normal banking services you are used to in the western world, in addition to gold deposits.
What this allows you to do is make a cash deposit of less than $10,000 for account opening, then you can buy any amount of gold in the account that you desire. As you draw down your cash, you can convert gold and transfer it into your cash account in order to stay below your $10,000 threshold of the reporting requirement.
For those of you interested in complete banking privacy, this is a fantastic option. You can hold an unlimited amount of wealth in your gold account while maintaining less than the $10,000 of reportable financial assets in an offshore bank account. In addition to the bank account, you could also form an offshore LLC or IBC as the account owner for maximum privacy and security.
In addition to the services offered by this particular bank, this Asian country is not an OECD country and has no intentions of ever complying with the tax and financial asset reporting requirements imposed on all member countries. Essentially this means this country has said they intend to maintain their sovereignty and have no intentions of imposing these draconian laws on their citizens and foreign investors.
In truth, I am not terribly bullish on the prospects of financial privacy in the coming years. With the US and most western European countries desperately in need of cash, they will be pursuing any means necessary to get their hands on your wealth.
With our clients, we recommend offshore banking as a crucial first step towards your financial freedom. As the saying goes, you don’t want all of your eggs in one basket. And with increasing financial controls coming, every freedom loving individual on this planet should consider asset diversification.
By having an offshore bank account, you are taking step one in your asset protection planning process. You have given yourself options. I didn’t coin the phrase and don’t remember the source, but geo-arbitrage is the process of having your assets, residence, citizenship, and business in different countries. And offshore banking is a critical component of this.
If you are interested in pursuing this Asian bank option, feel free to contact our office today for your free 30 minute consultation. Our firm provides asset protection planning services such as offshore company formation, offshore banking, private placement life insurance, offshore and domestic trusts, and domestic LLC’s.