Numbered bank accounts don’t just exist in the movies. Discreet private banks are opening secret numbered bank accounts for their privacy-conscious wealthy clients more than ever before. Secret numbered accounts don’t just exist in Switzerland, but also in the best offshore banks in other European private banking havens including Austria, Singapore, Monaco and Andorra.

The main reason for this is probably recent high-profile data thefts by corrupt bank employees, hoping to turn a quick penny by turning over stolen data to foreign governments. A numbered bank account offers protection against the theft of data by corrupt bank employees. Although the holder’s identity is known to the bank, the files are kept in a safe using a paper based system accessible only to a few highly-trusted private bankers – typically the relationship manager and the branch manager. Anyone who may have access to the bank’s computer records only gets to see an account number – not a name.

Private bankers don’t, however, like to talk about these accounts!

“These accounts are subject to exactly the same duty of diligence as any other banking relationship,” UBS spokesman Dominique Gerster told swissinfo.ch. “We are obliged to know the origin of the funds and the identity of the beneficiary. If we receive a legal request, we can supply the authorities with information, just as we can for any other account,” he is reported as saying.

“We always know the identity of our clients, whether the account is a numbered one or not,” commented Jan Vonder Mühll, head of media relations at private bank Julius Bär in Zurich, in the same article.

“A colleague from another branch of our bank couldn’t discover the identity of a client who has an account with us,” an asset manager at the Ticino branch of a  Swiss co-operative bank told the swissinfo reporter. “Foreigners are now going for numbered accounts as a precaution…”

Apparently, smaller banks, particularly the independent co-operatives such as Raiffeisen banks, and the state-owned Swiss Cantonal banks which are both seen as bastions of strength, are profiting from the huge capital outflows at big international Swiss banks like UBS and Credit Suisse. Depositors feel safer dealing with smaller, more personal banks that better reflect the Swiss banking traditions of yesteryear.

“There’s no doubt that given the attacks by the Italian government in particular, or to ensure that their details do not fall into the hands of some untrustworthy bank employee, our customers are becoming more and more demanding as far as confidentiality is concerned. And there is nothing better than a numbered account to respond to their expectations,” he explained.

Fortunately, the article also points out that it  is not only for tax reasons that clients of private banks are looking for numbered accounts:

In cases of divorce, inheritance or even blackmail it gives the holder additional protection. If there is a court case, the plaintiff has to name the bank where he believes the funds in question are held before proceedings can go ahead. And that is a major advantage for potential victims of blackmail, such as politicians or celebrities.

Most bank orders pass through several hands within a bank and any bank slip normally includes the client’s name and address, but a numbered account avoids these risks.

Who can open a numbered bank account? Almost anyone with a private bank account in one of the European offshore banking centres can qualify for this type of account. Like anything else, it’s a service that costs money and the banks will charge extra for the additional administrative burden involved. But it’s not a service that is advertised in flashy brochures at the counter. It’s a matter of knowing who to ask.

More information on numbered bank accounts can be found in the Practical Offshore Banking Guide, available free to members of Q Wealth. Not yet a member? Click here to see what you are missing!

by Peter Macfarlane, Offshore Banking Consultant

Our recent article on How to Open an Offshore Bank Account in Singapore has attracted a great deal of interest and feedback from readers, so I wanted to revisit this theme and talk a little about the differences between Singapore and Panama, two international financial centres we talk about a lot here at Q Wealth. I will also briefly touch on Switzerland. And I will tell you below about three factors you should look for in choosing the best offshore bank for you - in today’s financial environment.

A frequent question is “which is the best jurisdiction for offshore banking?” However, there’s no cookie-cutter answer to this question. What works for one person might not work for another. I tell people that these days, that the bank you choose to work with is actually more important than the jurisdiction. So bearing that in mind, here as promised are three factors you should look for in choosing the best offshore bank for you:

• The bank must have experience with and value international clients. The bank’s management must show a commitment to the international or offshore banking market – for example by opening branches and representative offices overseas, and by knowing how to use jurisdictional arbitrage to the advantage of their clients.  Banks that have mainly local business simply won’t have the expertise that is required in today’s highly complex regulatory environment for international banking. Lack of knowledge is dangerous, because banks need to know how to protect themselves in order to protect their clients. If a bank does not depend on international clients, they might simply wake up one morning and decide that your account is more hassle to them than it’s worth. That would be bad news for you

Note: every rule has an exception. In Swiss banking, I always recommend Cantonal Banks. These are strong, locally owned banks that have no presence outside Switzerland. Switzerland must be about the only country in the world where banks that live mainly off the local market generally have sufficient expertise to provide good service to non-residents. Want to know how to open accounts in Swiss Cantonal Banks? Check out this post: Alternatives to Swiss Banks for Wealth Management.

• The bank should offer precious metals dealing services. With the decline in fiat currencies in full swing, every astute investor should have part of his or her portfolio in precious metals. A bank that does not offer gold or silver does not understand the type of clients like you who read this blog – period. More and more banks are offering precious metals bank accounts. I’m grateful to Simon Black of Sovereign Man for this very informative post with a good tip on how to open precious metals accounts in Singapore. Sovereign Man suggests trying United Overseas Bank in Singapore. (The very name suggests that this bank fits our first criteria, adaptability for international clients, doesn’t it?)  You can also open precious metals accounts at banks in other jurisdictions: some I know of are Andorra, Austria and Switzerland. My preference is still for banks where you can walk in off the street and buy gold coins such as Krugerrands, the Canadian Maple Leaf coins or the Austrian Philharmonikers. One of the European banks I sometimes refer clients to is actually involved directly in the gold mining business – now that is the kind of bank I like! I won’t embarrass them by naming them in public, but I will say it is one of the banks listed in my Practical Offshore Banking Guide.

Note that this advice kind of rules out Panamanian banks. I like Panama as an offshore business centre. It beats the typical IBC jurisdictions hands down in my opinion. I’ve never recommended it for banking. I always say, ‘take your Panama Corporation and open a bank account in Europe.’ If you don’t know why, find out by reading my Panama Hidden Truths Report that you can download absolutely free right now.

• Choose a Low Profile Bank. Another thing I’ve been telling people for years is not to rely on bank secrecy laws. The recent string of data theft cases has finally rammed this point home to people. Liechtenstein might have the best banking laws and best privacy in the world, but that doesn’t help if a corrupt employee steals the data. In my view the culture of the bank is a lot more important than the legal protections. Let’s compare an international banking behemoth like UBS or Credit Suisse, with a small Swiss Cantonal Bank. First of all, which is more likely to be the target? Of course, UBS or Credit Suisse with all the glossy ads, is more likely to be a target than some small Cantonal Bank that nobody outside that area of Switzerland has ever even heard of. And outsourcing is not a concept known to small European banks, who still have a true privacy culture out of respect for client confidentiality. In banks with privacy cultures, you can still open numbered accounts. These are not anonymous, but your name will not be in the computer system. It will be in a paper file in the bank’s vault. Yes, there are still banks that offer numbered accounts. Again, details in my Practical Offshore Banking Guide.

Of course, there’s a lot more to choosing the best offshore bank than simply the above three factors. But I do believe they are an important part of the decision making process. The bottom line is that these days, you should choose the bank not the jurisdiction. The right bank will be ready to move to another country at the drop of a hat to protect clients’ interests.

Finally please allow me my customary reminder, that if you like the above information and haven’t yet read our free ‘Secrets of the Super Rich’ course you should sign up immediately by using the sign-up box at the top of this page. There is no obligation and of course you can unsubscribe at any time.

by Peter Macfarlane

‘Where did these funds come from? ‘We want these funds matched to proof of income’ Every bank in the world has to follow a ‘Know Your Customer’ or KYC policy. The theory is that by knowing their customers’ business – and being sure it is legitimate – banks are able to recognize any activity that’s out of the ordinary.

So yes, KYC policies are all about spying on customers. And no, they are not going away. Here are a few suggestions to make the best of the situation, keep your bank happy, and keep your offshore banking and asset protection strategies private.

Reader JH writes: “It’s obvious you go out of your way to cater to your readers’ interests. Well, I’ll bet many readers would like to know, in general terms, what to do about Banks etc asking tedious difficult questions … Everything has to be considered case by case but as a matter of principle, is there ‘a best way’ to approach these questions where you don’t have a personal account manager at the bank. Should full information be given? Or should you bypass the local branch and deal direct with the head office? Should any ‘proof’ be prepared by an accountant? Give the minimum information or compromise and be fully helpful? I ask because if you don’t deal with issues properly at the outset and ‘nip it in the bud’ they can turn more difficult.”

Well JH certainly has a point. These are problems we all come across every time we want to move money. And although he is right that each case needs to be handled individually, here are a few pointers.

The most important thing is to know how your bank’s KYC policy works, and to choose the best offshore bank for you accordingly. The best offshore bank foryou might not be the same as for somebody else. Choose a bank that understands your business. For example if you are sending lots of international wires go to a bank that handles this kind of business for its other clients, not a small community-based bank. If you are going to be sending wires to and from South America or South East Asia, find a bank that has branches in those countries.

Colombia for example might appear suspicious to some bankers, but these days, I have clients retiring there. They would be better off dealing with international banks that have a presence there, like BBVA or Citibank. They understand the market better. So you need a bank that you can communicate with and that understands the kind of general business area you are in.

There are plenty of banks out there that you can develop a good working relationship with, no matter who you are or the size of your account. Some of these are listed in our Practical Offshore Banking Guide. There is no reason to deal with banks that have poor customer service, or make you deal with faceless bureaucrats who are hard to talk to. You need direct access to intelligent human beings. For that reason I would avoid dealing with head offices of big offshore banks unless you really know the bankers at head office.

When opening your account, and at subsequent meetings, ask your banker about their KYC policy. Offer to provide information. You could offer, for example, to routinely provide information about transactions over a certain size, by e-mailing your banker at the time you initiate the transaction. That way you can pro-actively ‘solve’ problems like compliance delays on transfers before they happen. If the banker won’t give you a clear, informative answer about what is expected and needed in terms of KYC and due diligence, move to another bank.

Often, if you are carrying out international business transactions, it is helpful to have your bank account designated as a business or corporate account… maybe by using an offshore company. Large or frequent transactions on personal accounts are automatically classified as unusual, whereas they would probably slip through under the radar on a corporate account.

If you take care to become known as someone who volunteers information, the bank will see you as a good, problem-free client, so they are more likely to go out of their way to help you – even to the point of putting their necks on the line for you. Bankers are human and it pays dividends to be known as someone nice and responsible, rather than a prickly customer who doesn’t respond to requests for information.

Now from the point of view of privacy, you may ask how volunteering information could be a good thing. Simple answer: it gives you much greater control over that information! Think about that. By being prepared in advance you decide what information you give out and on what terms.

Knowing Your Banker (KYB) is very important too. By working with several banks and knowing each one’s compliance policies you can avoid placing them in difficult positions that could cause problems. If you have to do a transaction that might raise red flags at one bank, you will most likely have another bank at which that same transaction could be run through smoothly. The obvious example is large cash deposits – some offshore banks don’t accept them at all, whereas others are still relatively open to receiving cash. But if you don’t ask them, you won’t know.

Besides having access to our Members’ Area which includes a wealth of offshore banking and asset protection resources, Q Wealth members are all entitled to a free personal consultation by e-mail on any matters around our key subjects: freedom, offshore wealth creation, and privacy. So if you are not sure what kind of bank you are looking for, and would like some advice, don’t hesitate to contact me directly.

When requesting a personal consultation please be as detailed as possible about what you wish to do, any banking problems you have or have had in the past, and include key details like typical amounts, countries involved, and whether you are talking about personal or corporate offshore accounts.

Please remember our personal consulting service is only available to paid up members. If you are not yet a member, join now. It costs just $87 per year.