Over the last few months and in the wake of the OECD crackdown on tax havens, when talking to my personal consulting clients and handling the free anonymous e-mail consultations we offer to members, I’ve been asked numerous questions about participating in offshore tax amnesty programs like the IRS’s ‘Offshore Voluntary Compliance Program‘ (OVCP), the UK’s ‘New Disclosure Opportunity‘ (NDO) and equivalent programs in many other countries.

Some surprising countries like the Netherlands – including Netherlands Antilles – and Argentina are also getting very agressive with their non-compliant taxpayers and are busy signing Tax Information Exchange Agreements (TIEAs) with offshore havens.

First of all, the usual disclaimers. There is no easy to answer to this question as it depends very much on personal circumstances. International tax lawyers I have talked to are divided in their opinions too. My job here is simply to report what I’m hearing on the offshore grapevine. Nothing here should be construed as tax advice.

The USA  Offshore Voluntary Compliance Program has attracted the severe criticism for being highly ambiguous – even those participating in the amnesty and filing their FBAR forms have received no guarantee that they will not be subject to criminal prosecution later. So, one might ask, what is the benefit of participating in the amnesty? The IRS are effectively saying to taxpayers “you just have to trust us.” Hmm. Any good lawyer will tell you not to trust the opposition. And on that basis many good lawyers have advised clients that it is not in their interests to participate in the amnesty.

Although it has now technically finished, we hear that the IRS may still be offering informal ‘deals’. And the main point of such deals is to collect intelligence on offshore bankers, lawyers, accountants and others who have assisted US taxpayers in tax evasion in the past.

In this regard, I have specifically warned a few clients about undeclared accounts they have in banks that I won’t name in public, but which are likely to be high on the IRS radar. Certain European banks, mainly banks in Switzerland, Austria and Denmark, that I could probably count on the fingers of my two hands, have been very active in the past in terms of marketing their services to Americans. UBS was one of them, but there are others, including some small boutique private banks with mainly American clients.

If the IRS didn’t know about these offshore banks before, they certainly do now. So which banks do you think will be top of the list for auditing with a fine tooth comb once the new QI rules are agreed sometime next year? (More on the new 2010 QI rules coming up shortly in Q Bytes – we are working on that now)

You already know if you are a client of one of these banks or not. In the past, they had representatives travelling worldwide – even to the USA – meeting American clients, often at gatherings frequented by libertarians, banking privacy enthusiasts and the like.

If your hidden account is in a bank with few US clients that has not popped up on the radar, you are undoubtedly in a much more advantageous position. But it’s still not too late to close out your accounts with the affected banks and move assets into a more robust, legally watertight asset protection structure – hopefully including assets that do not trigger reporting requirements (physical gold comes to mind.) By closing such vulnerable accounts as soon as possible, you can minimize (but not eliminate) the risk of detection, since audits should hopefully cover only active accounts.

A second, unstated, purpose of the amnesty programs and the IRS spin machine (press releases etc) is simply to scare people with bluff. A lot of the most productive Americans, who have been the stimulus that brought prosperity, jobs and wealth to their country over past decades, won’t be enjoying a relaxing holiday season this year. We don’t think this is fair, of course.

Although bank secrecy is under attack, it’s certainly not dead yet. On the other hand I’ve been saying for years that it is a BIG MISTAKE to hold unreported bank accounts in your personal name. There are much better ways to legally hide money and protect what is yours. Which are the best offshore banking countries for 2010? We regularly write about such solutions and about the safest and best offshore banks here at Q Wealth Report. We believe in practical, positive advice – not scare tactics.

If you don’t see what you want in our publications, paid-up members are entitled to a free e-mail consultation (subject to the natural limits of my time) and/or to a referral to an expert US tax lawyer we know and recommend based in Panama who can also help with disclosure and amnesty matters.

The IRS have declared the US amnesty a huge success. The UK tax authorities, however, have openly admitted that they are disappointed with the number of people coming through under the NDO. In an effort to attract more, they have extended the deadline through to January 4th.

A separate UK tax amnesty is one negotiated exclusively with Liechtenstein, which it is generally agreed by experts offers very favorable terms to taxpayers. However, only 27 people have come forward so far under this amnesty. From this month, the Liechtenstein disclosure amnesty is being extended to allow UK taxpayers who hold undeclared accounts in other jurisdictions to move those accounts to Liechtenstein and then take advantage of this special amnesty.

Anyway, if you want to be kept informed on this subject it is a regular topic in our weekly Q Bytes newsletter. It is absolutely free, just sign up and confirm your e-mail address. We will not spam you and you can unsubscribe instantly at any time. To sign up to Q Bytes click here.

When you decide to open an offshore bank or brokerage account, whether in Switzerland, Cayman, Belize, Panama or anywhere else… one of the most typical requirements is for a bank reference letter. Offshore bankers are generally required to ask for such letters in order to complete their due diligence file on you as a new account holder. This applies equally whether you are opening a personal or corporate account.

Yet, bank reference letters can be a big threat to your privacy. You are opening an offshore account mainly for privacy reasons, I would assume. You believe that your finances are your business and nobody else’s. You are concerned about threats to your banking privacy onshore, in the form of tax information exchange agreements, credit reference bureaux and the like. So in this blog posting, I am going to look at what you can do to ensure your privacy, and whether it is possible to open offshore bank accounts without reference letters?

It has been reported recently in the offshore media that requests for “Bank Reference Letters” are now subject to “Suspicious Transaction” reporting in the USA. The story goes that banks are refusing to issue reference letters because they would then have to file a suspicious transaction report.

Frankly, we have seen no evidence to support this claim. It’s worth noting that more and more entities are requesting bank reference letters. For example, these days buying a high value property quite often entails providing a bank reference to prove clean funds, clear of criminal origin. So requests for bank references are really on the increase and most requests probably have nothing whatsoever to do with offshore accounts. On the contrary, one would think the powers that be would like to encourage more use of bank references because they create a paper trail. But therein, of course, lies the problem!

One of my clients in the UK did tell me today that she had been asked to justify to the bank’s head office her request for an open reference letter addressed “To Whom it May Concern.” Most UK banks now blankly refuse to write references like this, though some still do.

Anyway, whatever the truth of the matter, I understand that many clients are reluctant to tell their bank at home about the business they are doing offshore, and a bank reference request might entail this. So many clients ask how they can open an offshore bank account, whether corporate or personal, without a bank reference.

The answer is that it is difficult, but certainly not impossible. Over the years I have built up excellent relationships with a number of top flight European, Latin American and Caribbean banks, and I do understand how they work. By dealing at a higher level, I get to talk to intelligent bankers who are prepared to get to know clients as individuals not as numbers (though they might still offer numbered accounts!) The benefits of these referrals and relationships I am happy to pass on to my readers.

Let’s make it clear, I am not saying that I deal with banks that will cut corners on due diligence. We only want to deal with honest individuals. I have plenty of experience of sniffing out scammers or crooks and they will not get in the door at any bank, at least not with my endorsement.

But if you are a true, honest, freedom-loving and privacy seeking individual with good intentions and clean funds, who is sick of government intrusion in your life, then I am prepared to help you to open accounts without bank references. We can do it properly and legally in reputable banks. I do know which banks have more flexible policies, especially where higher level personnel are involved in the account opening.

You will have to provide some kind of reference letters, but not necessarily from a bank. Commercial reference letters might be acceptable, or references from a lawyer or accountant. Other banks might accept copies of the last 3-6 months of your bank statements, in place of a reference. Or sometimes you are permitted to open a personal account without a reference, and then use that as the basis to open a corporate account if you wish soon after.

I am certainly not going to name specific banks here in public, only to have them deluged with scammers trying to open accounts and picked on in public by the anti-tax-haven people. Suffice to say that if you are holding off opening an offshore bank account because of worries about providing a reference, don’t wait any longer. Take a look at my Practical Offshore Banking Guide 2009. If you are already a Q Wealth Member, it is available free of charge for download instantly in pdf format. If you’re not yet a member you can sign up right now and get instant access.

Within the Guide, I would refer you specifically to the section about “What Can You Do if Not All the Documents Are Available.” You’ll find some guidance there. You’ll also find a list of various different offshore banks and brokerage houses all around the world we have successfully worked with, done due diligence on, and recommend. If you need additional help with bank referrals, remember that as a paid Q Wealth member you are entitled to a free e-mail consultation with Peter Macfarlane in order to get your structure up and running smoothly.

Full membership brings a host of other benefits too… including information on Secure, Non-Reportable Gold Investments for example. You will also be invited to exclusive Q Wealth Events… designed for present and future millionaires!

If however you would prefer just to try our services first of all without any cost, commitment or obligation, sign up now for our free five-part introductory course on Offshore Banking and Asset Protection.

In this article: which Swiss banks still offer privacy, and which do not (like Credit Suisse). And where to find better wealth management services that are not subject to the same political pressure… in other words, private banking that really is private…

We’ve all heard a lot recently about the supposed downfall of banking privacy in Switzerland. I’ve personally been contacted by many clients of UBS who have been notified that their Swiss bank accounts are being closed because of the recent scandals in the US.  Many clients undoubtedly chose UBS thinking it was “too big to fail,” or maybe just because they had hundreds of sales reps in the USA, not realizing that UBS was also “too big and too exposed.”

UBS actually describes itself on its website as “one of the world’s leading financial firms”…  and therein lies the problem! It’s not really a Swiss bank at all… it’s a global bank just like JPMorgan or Citigroup.

I’m on record elsewhere as saying that Credit Suisse will have similar problems soon too. If your money is in Credit Suisse, you have been warned! It’s too easy for foreign governments to put pressure on big international banks to give up their secrets.

So what are you to do if you want to bank in Switzerland? For starters, you could go for either one of those ultra-discreet private banks. They are so discreet they don’t have websites, they don’t even have their names outside their offices. But they are certainly a dying breed. Besides, they are overrated in my view – charging enormous fees for service that as a sophisticated investor you probably don’t need or want. In the last few years many have been taken over by bigger banks like UBS and the large Swiss Private Bank Julius Baer.

A better option in my view would be one of the Swiss Cantonal banks. These are banks owned by Swiss local governments (cantons) which means they are both very strong, and very focused on their local markets. They are good for three reasons:

1. They don’t have too many overseas clients – that makes them less of a target in the first place for foreign governments.
2. They often don’t have any offices outside Switzerland – which makes it much harder to apply pressure on them
3. Being associated with the government gives them additional political clout.

Many little cantons have their own banks and the best way to open accounts with them is to get on a plane. If you feel like paying a sizeable fee for a referral, a company called Micheloud & Cie has made quite a business out of bank introductions and is currently busy promoting Cantonal Bank accounts. But remember membership of Q Wealth costs just $87 and our members do get FREE bank referrals – full details in our Practical Offshore Banking Guide 2009.

One of the bigger Cantonal banks, for example,  is Zuercher Kantonalbank, from Zurich. Here’s a link to ZKB’s Private Banking division, but the site is only in German. I’m sure they speak impeccable Englis – but not having English language publicity on the internet is undoubtedly  a calculated decision about the clientele they are seeking. You probably need a good local referral and a sizeable deposit to get in the door, but this is the kind of Swiss bank you should be looking for if your aims are privacy, class and good service at a fair price.

Many Swiss banks, of course, will no longer accept accounts from US or EU citizens at all. Who can blame them, given the recent pressures. In this case it may be necessary (and a darn site better privacy wise) to look for alternatives outside Switzerland. Neighboring Liechtenstein is no longer desirable, given that it is signing agreements with the US treasury and is working on a ’swift agreement’ with UK tax authorities amongst others.

Austria is known as “where the Swiss go for private banking” and indeed Austrian banks have world class wealth management services. However, their membership of the European Union could be a problem. Austria is also a great place to buy gold bullion offshore.

Indeed I think to find real banking privacy today it is necessary to go further afield. Not so much to specific countries, but to banks that realise that jurisdictional arbitrage is one way to enhance their clients’ privacy. The modern boutique private bank will have highly qualified private bankers who are able to open accounts at subsdiary banks in several different jurisdictions. As an additional layer of both privacy and asset protection, offshore corporations and foundations are always a useful way of handling offshore accounts too.

I don’t have space to get further into ‘how to achieve real banking privacy’ here, but it’s the kind of thing we cover in our quarterly issues of The Q Wealth Report and at our events. You’ll also find the publications in our members’ section represent an excellent start, and I am happy to answer questions by e-mail on this topic from paid subscribers (sorry, but I just don’t have time to answer queries from people who have not signed up) Our next event is scheduled for Bantry, Ireland, so maybe you can make it? If you would like to be kept informed on such matters please take a moment to sign up to our free e-mail newsletter Q Bytes