How to Open an Offshore Bank Account As an American

How to Open an Offshore Bank Account As an American




With the world in chaos and bankrupt governments everywhere dreaming up new schemes to get their hands on your hard-earned money, more and more people are looking offshore for a place to move some of their assets.

I don’t encourage you to sit around and wait for some three-letter agency to swoop in a decide to dip into your retirement funds or bump up your tax rates or devalue your money by firing up the printing press. In a connected world, opportunities out of your home country are everywhere, and to make the most of your money and your freedom, you should analyze those options.

There’s nothing illegal about having an offshore bank account. at the minimum for now. While Hollywood has produced a scene where those who bank out of the country are briefcase-carrying criminals or guys in Tommy Bahama shirts flying prop planes onto tiny island landing strips, nothing could be further from the truth. Your government doesn’t want you to move money to another country because it makes it more difficult for them to tax.

When I said it’s not illegal “for now”, I average that you can never tell when things will get so bad that any loose change that can be grabbed to prop up a failing country will be grabbed without a second thought. The debacle in Cyprus has shown us just how desperate things could become. Sure, the EU can spin it as a tax on the Russian mob, but you know the government will always make up an excuse for their dirty deeds.

As an American, you’re at a disadvantage thanks to FATCA – the Foreign Account Tax Compliance Act. Washington wants you to believe that the only people keeping their money offshore are rogues and scoundrels. Never mind the six million Americans living and working in other countries. As such, they’ve imposed a draconian set of rules on foreign edges, basically making them in addition as their sovereign governments a bunch of tattletales for the IRS. Some edges have given up on Americans altogether. But there is nevertheless hope.

First, put out of your mind the idea that “offshore” method somewhere where you can sit on a shore. Islands with crystal blue waters are not high on my list of offshore jurisdictions. If you’re an America, anywhere out of the United States is an offshore jurisdiction. Think Hong Kong, Singapore, Chile, and so on. While it is also associated with offshore banking, Switzerland is no longer obtainable to Americans, thanks to IRS crackdowns there that have led most edges to shun US citizens.

Second, know that the days of numbered bank accounts and intense secrecy are over. Just ask the millionaires who got turned over to the US government. There are several short forms you will need to fill out each year, one with your tax return, another sent in separately. If you’re a US citizen or resident, you must declare any accounts – or combination of accounts – with a value of at the minimum $10,000 at any time during a calendar year.

Third, focus on your goals. Once you’ve moved beyond the cliches and propaganda about offshore bank accounts, you can focus on what you really want. No, you’re not going to be able to hide a bunch of money from the tax authorities. Yes, you will have to pay tax at home on any interest you earn. But while your account won’t be a secret to your home government, you will have separation from them. Some bureaucrat with a fat finger won’t be able to freeze your account with one keystroke. It will be harder for an ambulance chaser to get at. And while you will have to pay tax in the US on interest earned, that interest rate could be double, triple, or already fifteen times higher than what you’re earning now.

Determine what you’re looking for in a bank account. Do you want a simple place to store savings away from the grubby hands of your local government? Do you want to keep up part of your money in a different money or currencies to diminish your sovereign risk? Do you want to earn a higher interest rate or assistance from appreciation of a foreign money? Or do you want complex wealth management tools and private bank service?

Fourth, once you know what you’re looking for, find the right ecosystem for you. The good news is that most of the goals above can be had with just about any offshore account. Just having a portion of your assets out of your home country gives you more freedom. If the government here goes Argentina on you and imposes capital controls, you’ll have a nest egg you can access somewhere else. Any good offshore bank will give you a debit card to access your cash, in addition.

Unlike in the United States, most foreign edges offer accounts in a multitude of currencies. Think the Australian dollar will go up thanks to a resources expansion? No problem; you can keep up it in your account. With most edges, you can swap out to another money later if you change your mind. You can often times keep up multiple currencies in the same account at once.

In Andorra, for example, you can truly write checks in any money the edges offers. If you need that kind of flexibility, Andorra is a great place to bank. It’s also one of the most stable jurisdictions in the world, with liquidity and capital ratios that blow away the US or most other “safe” banking jurisdictions. edges are locally run by banking families that provide personalized service.

Because offshore edges offer multiple currencies to bank in, you can also choose your interest rate. While rates in the US are near zero, making savers suffer, rates in Australia and New Zealand are much higher. The governments there didn’t play the race-to-the-bottom game that their western counterparts did. edges both in Australia, and those offering Australian dollar deposits, ordinarily offer near 5% interest rates on savings – already short-term savings – at a time when you’re lucky to get 0.75% in an online account in the US. If you want to branch out to an emerging destination like Mongolia, you can earn up to 15% on your money.

If you like the stability of the US dollar but want higher interest, places like Georgia, a small but economically strong emerging nation in the Caucasuses offers as high as 7-8% interest on medium-term deposits not in their local money, but in US dollars. Georgia is one of the twenty most economically free countries in the world (the US is tenth) and not a bad place to earn some additional interest.

Fifth, consider the risks. Americans are used to $250,000 in place insurance from the FDIC. Some countries, like Mongolia, don’t offer such insurance at all. Others have lower limits, or don’t insure deposits in certain currencies. For the most part, countries around the world have enacted place insurance plans of some kind to keep peoples’ money safe. But it’s up to you to do the research on each jurisdiction and each bank and determine where you’re most comfortable.

Keep in mind that the FDIC, for example, has less than the equivalent of 0.5% of all bank deposits in its fund. To me, that’s not very safe when you consider how thinly capitalized US edges are. While local edges in Hong Kong and Andorra have very conservative lending practices and high liquidity ratios, US edges get money from the Federal save and go right out and loan it indiscriminately and then come running to the government when things go bust.

The FDIC may pay out if your bank goes bust, but consider the decline in the US dollar over the last few years and over the last decade. The dollar just isn’t what it once was. If the US banking sector had another run of bank failures like it did in the recent recession, you’d see more “Too Big to Fail” kind nonsense, and as a consequence, more money printing to pay off depositors. So you might get your money, but it wouldn’t be worth as much.

Of course, place insurance wasn’t of much use in Cyprus, where the European Union basically forced the country to dip into bank accounts – first for 7 to 10%, then for much more – to keep from going bankrupt. Tens of thousands of dollars of your money could have been wiped away in an moment, with no way to get it out as the government kept edges closed until they could figure out just how much of your money to steal.

The good news is that having an offshore bank account isn’t shady, scary or difficult to open. In some situations, you can open one with a associate hundred dollars or already less. In some situations, you have to visit the country, which could be easy if you live near the Canadian border, for example, or are taking a vacation sometime soon. There are, however, edges in Norway, Gibraltar, the Channel Islands (UK), and in other places where you don’t need to visit to open your account. You can do it all by the mail.

When you realize all of the things going on in the world today, you just might surprise why you didn’t look into getting a bank account out of the country earlier.




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