Yet another CD supposedly containing stolen Swiss bank data is being hawked around state governments in Germany…  prompting a German politician to comment that stealing private financial data should not become a ‘popular sport.’

Meanwhile UBS is investing heavily in new ad campaigns targeting new markets, suggesting that it has ‘drawn a line’ under the tax evasion scandal that dominated has dominated the last couple of years and is ready to move on to new (non-US) markets,

In fact, more and more Swiss and other European private banks are looking toward the Asian wealth management market – with Singapore being the preferred launchpad into the coveted mainland China growth area. Some people in the west seem to think that all Chinese live in poverty on subsistence wages – while many do, out of those billion people there are many thousands of millionaires who have profited from all the money flowing into China from the west. These individuals are keen to keep their money in safe places out of the reach of the Chinese government. This target market is the new gold rush for Swiss and other private offshore banks…

And where better to base operations than Singapore? The Singapore government is building on its now firmly established base as an international financial centre. New legislation, for example, allows Singapore banks to move into associated businesses previously closed to them, like company formation, and trust and corporate administration. (Tip: Visit our Singapore jurisdiction info page)

We’ve long said that the vast majority people going offshore these days do so for completely legitimate reasons and in compliance with their local tax legislation. People who open offshore bank accounts these days are probably more interested in asset protection and capital preservation than anything to do with tax – and if they are looking for ways to legally reduce tax, they will do so through structured and legal offshore tax planning tools like corporations, offshore LLCs, foundations and annuities.

Perhaps not surprisingly, however, people are increasingly leary of Switzerland. Privacy is still an important part of international expatriation planning, and the general perception is that privacy is under threat in Switzerland. It’s not surprising therefore that there’s increasing interest from North America in private banking in Singapore. Our article How to Open an Offshore Bank Account in Singapore has been consistently the most popular article on this blog for months.

While European account holders are not the target market of Singapore banks, their accounts are generally welcome, provided they take the time to jump on a plane and go and open the account in person.  What about American account holders? Are American account holders welcome in Singapore banks? The same generally applies, but the selection of banks willing to work with Americans is smaller, and the entry level in terms of minimum deposits is generally higher.

In some cases it is possible to open accounts by mail, but this is very difficult in Singapore. Of more interest, however, is the possibility to open an account via a representative office. Representative offices are basically foreign sales offices, often staffed by private bankers who are also involved in the day-to-day management of accounts for high net worth individuals. For example, a Swiss-owned Singapore bank might have a repesentative office in Switzerland that you could deal with on a day-to-day basis. This makes the account opening process easier (not so far to travel) and also alleviates problems with the huge time zone difference between North America and Singapore.

If you would like to know more about opening a private offshore bank account, we recommend consulting our Practical Offshore Banking Guide, available free to Q Wealth Members. To keep up to date on matters surrounding private banking, offshore accounts and the like – in Switzerland, Singapore and elsewhere – you can subscribe to our free weekly newsletter Q Bytes or add this blog to your RSS feed.

We respect your privacy and will not reveal your e-mail address to third parties.

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.

If you’ve ever considered going offshore, banking, living, investing or doing business internationally in Latin American offshore financial centers like Panama and Uruguay,  or on one of the Caribbean islands (Cayman, Bahamas etc), I’ve got some important news for you below.  As Swiss banks are under pressure as never before to lift the veil of bank secrecy, places like Panama have become to look like more attractive options. But how does this work in practice? What is going on today in the secretive world of offshore banks?

The following missive was sent out in our free Q Bytes newsletter a week ago. Response from readers has been phenomenal so we decided to publish it here on the blog, in order to make it available to a wider audience. (If you would like to receive news like this in advance, directly in your e-mail box, be sure to sign up for Q Bytes – remember it’s free!)

As we noted in our last article on the benefits of Panama Corporations and Bank Accounts, Q Wealth has quite a strong Latin American bias when it comes to investing and carrying out offshore business. Although this may surprise some readers, especially in the face of the world-shaping events and undeniably huge money-making opportunities in the Far East that we’ve also recently covered in Q Bytes, we can assure you that ours is a well thought out and considered policy.

Some places in Latin America are very liveable – Panama, for example, for those who dream of living tax-free near a tropical beach, or Uruguay for traditional European style city living at a fraction of the cost of the original version.

This week we are pleased to announce a brand new report prepared by Alternative Latin Investor magazine in association with Peter Macfarlane and The Q Wealth Report. This brand new report covers in-depth the state of offshore banking and wealth management in Latin America and the Caribbean – from a completely new, independent perspective.

It’s based on exclusive interviews with hands-on people in the know, movers and shakers like top bankers and business leaders. And best of all, this report is available entirely free of charge to Q Wealth members. You can download your copy right now in our Members’ Area.

If you have ever considered setting up a Panama bank account, retiring to a vineyard in Argentina, or opening an offshore internet  bank account (or an e-commerce offshore merchant bank account), then you need to read this report. It will help you understand how offshore banking in Latin America and the Caribbean works today – not so much the nuts and bolts of how to do it that you can already get from our Practical Offshore Banking Guide, but things like why different jurisdictions offer different services, how and what the local people, expat bankers and retirees are thinking right now, how governments in the region are reacting to political pressure from the USA, G20 and OECD, and how to ensure the security of your bank deposits… this report will give you the geopolitical depth behind the headlines, essential information for anyone considering living, investing or doing business in the region. You might also enjoy reading our post on the best offshore banks.

We would especially recommend this report as essential background reading alongside our Practical Offshore Banking Guide 2009.

HERE’S WHAT YOU WILL LEARN IN OFFSHORE BANKING LATIN AMERICA 2009

Will reading this report be a good investment of your valuable time? I’m sure that’s what you want to know. So here are a few of the key points and quotes specifically covered in this report, that I thought you might find particularly interesting. I’ll try to expand on these in future articles, but in the meantime you can read the details in this Offshore Banking Latin America 2009 report…

• Diversifying location for capital is a significant trend in both the Americas and Europe. Those new to offshore banking may be thinking twice about moving in that direction, but those familiar with its mechanisms feel it is a haven in the present climate. You’ll find out why.
• Whereas before most people thought the worst couldn’t happen, now smart people are planning for worst case scenarios. For Americans, that means a total collapse of the dollar. While inexperienced investors may feel that foreign markets are risky during times of crisis, smarter investors are well aware that risk can be substantially reduced by diversifying offshore.
• Instability provoked by the financial crisis could spark the return of economic nationalism like currency controls or even expropriation around the world. This may be carried out via the back door. Learn how investors and banks in the region are protecting themselves and their assets. For example, learn why corporate accounts at Brazilian-owned banks in New York and Nassau have grown ten-fold since the beginning of 2008.
• Find out more about the breakdown between corporate and personal accounts, and how clients typically achieve stronger asset protection through the use of corporate structures
• Read candid interviews with bankers about how European tax directives could affect European banks with branches in Latin America… this is stuff you won’t read on banks’ corporate websites.
• Why Panama is “not so artificial” and has “a solid economy” – compared to certain Caribbean jurisdictions that might look great on paper, but where the rule of law may not be respected. What image do you want to project when people do due diligence on your offshore corporation? One offshore provider gives a few warnings about things that don’t appear in the official brochures, and names a couple of jurisdictions (including one island that is particularly popular with Americans) that have a less than positive reputation.
• Learn more in-depth about the Panama banking system by reading interviews with local bankers and business people. Legally speaking, there are three different types of banks in Panama – what are the differences? Which should you choose, if any? How does Panama provide security for bank deposits?
• Why asset protection is so important: “If you want to sue someone in the States it doesn’t cost you anything but you can go bankrupt defending yourself.” Learn how Caribbean jurisdictions easily prevent this kind of fantasy lawsuit from ever being filed.
• “Before you had to be a multi-millionaire to make it worthwhile. Now there are people with $100,000 looking to diversify into foreign currencies or invest overseas. This has been made possible by offshore internet banking.” Read about the latest internet banking technologies, debit and credit cards, and multi-currency accounts in the region.
• Read an exclusive interview with Gaetan Bucher, Swiss-Dominican banker and the founder of the $850 million ‘International Financial Centre of the Americas’ – the first financial free zone in the world. This is literally a new ‘financial city’ due to start construction by the end of 2009 with completion scheduled for 2012. IFAC will offer real time offshore banking as well as an electronic clearing and settlement house LAIFEX – backed up by sophisticated financial services from big names. The regulations are being drawn up by Washington law firm Patton Boggs and Deloitte Consulting in London. Lloyds of London are also involved in the project.  Crucially, it is completely aligned with ‘best practice’ guidelines from the OECD and G20. This interview in my view represents a fascinating vision of the future of offshore banking and investing, where borders become insignificant. What will the offshore landscape look like when IFAC opens in 2012? Anyone thinking of going offshore now should think very seriously about this last question.
• Discover a new free online networking opportunity aimed at Baby Boomers retiring offshore, where they can search for international real estate, ask questions of experts, and meet people with similar interests. It’s a chance to connect with people who have ‘been there and done that.’
• Nothing beats doing your homework on an offshore jurisdiction before you finally select. One banker comments how smaller banks are often more orderly than big banks. He says, “Look for a historic bank that has worked well for many years, that has a strong balance sheet and doesn’t do strange things.” And you’ll learn other due diligence tips too.
• Do people who are retiring in the region need offshore accounts, or can they get better services from local banks? An important question for those applying for residence or buying property. It’s answered in this report.

All the above and more is covered in Offshore Banking: Latin America 2009, available free for download in Q Wealth’s Members Area. If you are not yet a member, you can buy access online now for just $87 for a year’s membership. Sign up now and get this info while it’s hot of the press!

by Frank Suess, BFI Consulting

For centuries, gold has attracted investors seeking to protect their wealth and provide a ´safe haven´ in troubled or uncertain times. This remains a reality for modern investors too, although there are also a number of other reasons that underpin the widespread renewal of investor interest in gold. Gold can add an element of potentially outstanding capital gains to your safety-oriented portfolio. And, if structured adequately, gold will entail a minimal downside risk.

We consider buying gold “the right way” to be a HOT topic and unique opportunity in achieving the following benefits:

• Diversification out of continuously devaluing paper currencies, thereby protecting one´s assets against a loss of purchasing power AND, at the same time, setting it up for capital gains.

• Retaining liquidity and purchasing power for the next upturn in business cycles (which in our view has NOT arrived yet), thereby securing the opportunity of taking part and benefiting from it. It is important that the gold format one chooses is supported by a liquid market, i.e. you want to be able to buy and sell rapidly if need be.

• Safe haven: In volatile and uncertain times, there is typically a “flight to quality” as investors seek to protect their capital by moving it into assets considered to be safer stores of value. Gold is among a handful of financial assets that do not rely on an issuer´s promise to pay, offering refuge from default risk. It provides insurance against extreme movements that often occur in the value of traditional asset classes in unsettled times.

• Paper Currency Hedge: Gold is often used as an effective hedge against fluctuations in fiat currencies. In particular, a close relationship tends to exist with the U.S. dollar. When it appreciates, the dollar gold price falls, while a fall in the dollar relative to the other main currencies produces a rise in the gold price. While this may also be true of other assets, gold has consistently proved among the most effective in protecting against dollar weakness.

• Added asset protection and privacy: Structuring your strategy appropriately can provide a considerable level of privacy. Depending on the format gold is bought in, there are considerable privacy and safety related differences. More specifically, buying gold “the right way” can mean avoiding reportability and minimizing confiscation risks.

• Portfolio diversification: Most investment portfolios are invested primarily in traditional financial assets such as stocks and bonds. The reason for holding diverse investments is to protect the portfolio against fluctuations in the value of any single asset or group of assets that react in a common fashion. Portfolios containing gold are generally more robust and less volatile than those that do not.

• Physical or virtual ownership: You can buy gold in its physical form and store the coins, gold bars or jewelry that you have acquired. However, storage fees must be considered. And, one must consider a lower level of liquidity compared to a gold certificate or metal account (also referred to as a claim account).

BUYING AND STORING PRECIOUS METALS “AT HOME” OR OVERSEAS?

A key issue that needs to be addressed is whether an investor should buy gold offshore or “at home”. The answer will not be the same for everyone. Depending on your specific objectives and situation, you may be better off keeping your assets in your home country and storing physical gold in your local bank´s deposit box. You might, however, be well advised to buy and store physical gold offshore. Or, maybe, you should consider a mix of both.

Buying Gold “At Home”

Obviously, this is (a bit) more convenient, simply for the fact that you are not dealing with time and language differences. Furthermore, you can have the gold delivered to your home or directly to the local bank or storage facility of your choice with more direct control over your assets. However, a key issue arises — and this applies to U.S. investors in particular – in regards to the risk of government confiscation when buying and storing gold “at home”!!!

How might a gold confiscation be possible nearly 70 years after the last one occurred? This question is best answered with a series of other questions: Firstly, how will the massive U.S. federal debt (nearly $6 trillion and growing) and the outstanding international dollar float (resulting from the U.S. trade and budget deficits) be reconciled?

Currently, the U.S. dollar (still) enjoys a special status around the world as the primary reserve currency. This status encourages central banks and individual investors around the world to hold it. Leaving the various circumstances and potential scenarios aside, what would be the outcome if the stilts that propped it up were kicked out from underneath this built-in dollar market?

How might the U.S.government react to an economic emergency in which individuals, beset by either a devastating domestic inflation or a deflationary nightmare — or both — were fleeing the banks and equity markets for gold as a means of preserving their personal capital?

Historically, confiscation has all too often been the option taken by governments beset by an economic breakdown. Just as gold is the asset of last resort for the individual portfolio doing service in the most financially threatening times, it is often times the asset of last resort for troubled governments as well. As recently as 1998, during the Asian Contagion, both South Korea and Thailand implemented “voluntary” gold call-ins. The temptation presented by its citizens´ gold holdings was simply too facile to resist.

No matter how you look at it, investors must beware of government confiscation risks that rise exponentially in times of a severe economic crisis (as seen under U.S. President Franklin D. Roosevelt in 1933).

Buying Gold Offshore

The advantages of buying and storing gold offshore are primarily related to PRIVACY and ASSET PROTECTION. However, what is required to reap these benefits is a structure that allows you to re-allocate your precious metals rapidly and store them safely. Ideally, this is done in an efficient and low-cost mode despite any geographic distance issues.

Some clients may prefer buying and storing physical gold over a “virtual” gold account or certificate. They perceive a higher degree of safety in this strategy because of the fact that they are allocated a specific and tangible lot of gold. However, storing physical gold is obviously more costly. And, it is generally less liquid than its “virtual sisters”.

Despite higher holding fees, in today´s environment, BFI ultimately recommends holding physically allocated precious metals, preferably in bullion coin or bar format.

Conclusion

Both options, buying gold offshore or “at home” have their advantages over the other. The offshore option is more complex in execution and requires a larger investment. This is not a “do-it-yourself” commodity, unless you have lots of time and like to travel. Therefore, we recommend taking advantage of a full service program as offered by BFI Consulting and some other firms.

When going the offshore route, beware of strategies that sound too simple. Think the process through. And consider the hefty fees and taxes (VAT) you will pay in some European countries.

The “at home” solution is more convenient and efficient. The key risk, in case of a severe crisis, is government confiscation. It appears, however, that if approached cleverly, these risks can be minimized.

Further reading: Frank Suess Jr is CEO of BFI Capital in Switzerland. His firm provides solutions for buying and storing physical gold bullion, as well as offering a range of excellent portfolio management services for high net worth individuals. He can also assist with Swiss Bank account opening.

If you would like to read more about how to buy, hold and store physical gold bullion offshore, visit our Offshore Precious Metals page. You will also find good information for free here on Gold and Silver Investments.

A lot of readers have been asking me lately about offshore banking and wealth management opportunities in Singapore. Unquestionably, Singapore has some very sophisticated banks and bankers, and it has developed a well-earned reputation for discretion and confidentiality.

However I found the following observation on an internet discussion group, that I found interesting:

“Switzerland said it would seize UBS AG data to prevent the U.S. Justice Department from pursuing a U.S. court order seeking the identities of 52,000 American account holders in a crackdown on tax evaders.”

“The Swiss government “will use its legal authority to ensure that the bank cannot be pressured to transmit the information illegally, including if necessary by issuing an order taking effective control of the data at UBS that is the subject of the summons,” according to the filing.”

————————-

“The Singapore government is proposing changes to its tax laws to meet demands from the U.S. and Europe to clamp down on bank secrecy.

“Singapore will seek to amend its domestic laws to allow it to extend further cooperation on information exchange” via double-taxation agreements with other countries, the Finance Ministry said in a statement.  It is seeking public comments through July 28 on the amendments.”

So, how can we interpret these two news items?

First of all, they both have to be taken in context. While it’s good to see Switzerland sticking up for its sovereignty, we have always recommended clients against doing business with big, international banks like UBS or Credit Suisse. Iwas hardly surprising that UBS were targeted, given their large US presence that makes them something of a sitting duck. We have numerous articles about the Right Way to do Swiss bank accounts (Cantonal Banks, for example), and our Practical Offshore Banking Guide includes contact details of other recommended sources for private banking in Europe (not necessarily Switzerland).

Singapore is a place we’ve never done a lot of banking business with, and the quotation above goes some way toward explaining our reticence. But we full admit that our geographic bias when it comes to banking is more towards Europe and Latin America. Singapore is certainly convenient for Asians and Australasians, due to time zones, languages and culture. On the other hand, it would have to be up there with Hong Kong at the top of the hit list for say the Aussie tax authorities, who are getting more and more agressive these days.

But is banking in Singapore and Hong Kong such a good idea for Europeans and North Americans? In my view, probably not. Both the EU (particularly the UK) and the USA have quite strong influences there, and neither of these entities are friends of offshore banking. Canadians might be OK in Singapore. If you are interested in banking in Asia, then World Offshore Banks has some intriguing services worth exploring.

Generally, the rule is that convenience is a threat to privacy. If you are looking for the most private, best offshore bank for you, you want to be as far away as possible – both geographically and culturally – from your home country and the places where your fellow countrymen do their offshore banking. Europeans might do well in Latin American havens like Panama and Uruguay. North Americans might do well still in obscure corners of Europe.

Whatever you decide, remember that nothing is for ever. You need to monitor the situation and changes taking place in the world of offshore finance. It pays to work with banks that are nimble enough to help you with this. We can recommend a few. And The Q Wealth Report is here to help you with offshore banking advice and recommendations. If you haven’t yet signed up for our Free Offshore Banking and Asset Protection course, I would recommend you do so!

by Peter Macfarlane for The Q Wealth Report

by Peter Macfarlane for The Q Wealth Report

Anyone looking for currency diversification strategies should consider a multi-currency bank account. Unfortunately this banking product is virtually unknown in North America and the UK, although it is commonplace in some European countries. I say ‘unfortunately’, because this is one of the most simple and convenient tools for anybody looking to diversify out of the dollar. In this article, I’ll explain more about multi-currency accounts and how you can open one.

A multi-currency account is simply a bank account, with a single account number, in which you can hold balances in various different currencies. For example, you log in through internet banking and immediately you see a summary screen showing you have so many US dollars, so many Euros, so many Canadian dollars, so many British pounds etc. Many banks allow you to hold a wide range of currencies, including more exotic currencies. Some European banks now even allow you to hold ounces or grams of gold in your account alongside national currencies.

Advantages to this are numerous:

• For a start, it is clearly a very convenient tool for anyone who is serious about diversifying currency risk. Instead of having lots of different account numbers and logins, you keep everything on one convenient screen. At any time you can easily exchange your balance in one currency (or part of it) for another currency.
• You can wire money in and out in different currencies, to and from anywhere in the world, without the need for currency conversions.  This type of account is therefore ideal if you frequently send and receive money internationally, perhaps dividend payments, or transfers related to an overseas property or family living abroad.
• Banks normally permit you to go overdrawn in one particular currency, provided your overall ‘global’ balance is in the black.
• You can have credit cards and checks linked to your main multi-currency account. Checks can be drawn in any currency. For credit cards, you normally have to choose one particular currency balance that will be debited.

Multi-currency accounts are a good, conservative way to hedge against currency risks or make profits with fluctuations. Unlike ‘forex trading’ your account is not leveraged, so there is not so much potential profit but there is also less potential for loss. This is an easy version of forex trading – for people who don’t want to have their eye on currency rates every minute or even every day.

A multi-currency bank account also beats currency ETFs hands down. With currency ETFs you buy and sell back to your base currency, paying a brokerage fee each time. With multi-currency accounts you hold the actual currency on bank deposit, rather than stock in an ETF.

Anyone who is serious about diversifying outside the dollar needs a foreign bank account –and for many people a multi-currency bank account is the logical choice. But what about the IRS’ Foreign Bank Account Reporting requirements? Simply by opening a personal account like this, you will not affect your tax situation in any way, neither positive nor negative. US persons will be liable to declare foreign bank accounts to the IRS.

However, as outlined above, there are many extra benefits besides tax benefits. One of the greatest advantages, besides the currency diversification out of the dollar, is privacy. Privacy is a basic human right, which is unfortunately disappearing fast when it comes to financial services, where domestic investments are basically an open book these days. Although you might be obliged to report your offshore multi-currency account to the IRS, private parties like credit rating agencies or lawyers who might want to sue you certainly won’t know anything about a private foreign bank account of this nature.

The multi-currency account was not designed as a sophisticated financial instrument. Rather it’s an accident of history, something that developed in smaller European countries like Switzerland, Luxembourg and Andorra where individuals commonly needed bank checking accounts in various currencies. This was especially true in the old days before the euro when Europeans did business in many different national currencies. Not coincidentally, these countries now offer the best international financial services as well as good banking privacy.

However, in modern private banking terms, such an account can provide a basic transactional banking relationship with a foreign bank, onto which you can tag many much more sophisticated wealth management services: for example, foreign currency loans for investing in bond holdings or stock portfolios. Most banks offer such services.

Needless to say, corporations, trusts, foundations and the like can also open multi-currency accounts and in such cases there is an even greater privacy benefit, and in some cases, depending on individual circumstances, tax reporting requirements may also be legally sidestepped.

How, then, can you open a multi-currency account?

Quite a number of banks in some European countries offer multi-currency services by default, as soon as you open account. Unfortunately, especially for US citizens, it has become very difficult to find a foreign bank that will open an account.

It is undoubtedly best if you can travel to meet the bank and open the account. Personal meetings and referrals from known and trusted parties still open a lot of doors that initial research might suggest are closed! It is, however, possible even today to open a multi-currency bank account through the mail.

If you would like further information, including links to specific banks that offer this service, you might like to check out my Practical Offshore Banking Guide, available free to Q Wealth members (just one of many asset protection, offshore banking and wealth creation related benefits). Another major advantage of Q Wealth membership is a free e-mail consultation on your personal situation, in which we can also make referrals to banks where we have working relationships as trusted business introducers.

You can either go sign up now, or if you prefer, sign up first absolutely free and without obligation to receive our five part online course, Secrets of the Super Rich.

When your government acts “above the law”, it is time for serious planning…

The following is reproduced with kind permission from Mountain Vision, the newsletter for clients of BFI Capital in Switzerland. The idea of privacy being a cornerstone of asset protection is very simple when you think about it. Long before banks even existed, people protected their assets by hiding them!

But sometimes we get so bogged down in legal details that we can’t see the wood for the trees. Legal protection is only as good as the legal system (and aren’t you trying to protect yourself against the legal systen?) This article discusses how you can achieve the goal of total privacy and confidentiality for asset protection purposes, while remaining compliant with the law in your country of residence. It discusses the use of physical precious metals such as gold bullion, and international life insurance and annuities of the type offered by BFI.

Anyone who understands anything about asset protection also understands the importance of privacy. It is primarily privacy that protects you from the intrusions of frivoluous lawsuits, greedy attorneys and other predators. Asset protection laws and structures are only the second line of defense. A good asset protection plan should aim at first avoiding exposure and visibility altogether.

What this DOES NOT mean is that you must break any laws. To the contrary, we recommend doing your offshore planning compliantly. However, in reading the newspapers, one could come to the conclusion that privacy is criminal. It is not. Governments around the world are running into fiscal problems, particularly the governments of Germany, the United Kingdom and America. Thus, they are setting off on an aggressive hunt for tax money, increasingly employing methods that are beyond legality.

When your government acts “above the law”, it is time for serious planning. In the absence of rule of law, the most fundamental prerequisite of a functioning free country is undermined. At that stage, protecting your freedom and your property within that country becomes a gamble. Privacy and property are in jeopardy and need to be protected OUTSIDE of your country.

Key principles of offshore privacy

This is the point where you enter the realm of offshore (i.e. international) wealth management and tax planning. A few principles in this context must be understood by all of our Mountaineers, no matter which jurisdiction they come from.

• The purpose of privacy is to protect the well-being and fortune of you and your family. Privacy does not necessarily require a numbered account though. It starts with your going about your affairs “quietly”, particularly in jurisdictions with a high level of litigation. It is important to keep a low profile if interested in avoiding unnecessary risk exposure.

• Privacy amongst tax authorities within a country that is fiscally bankrupt will generally not exist. Countries like those mentioned earlier have given up such privacy protection long ago. Banks, accountants, and other financial professionals have, to a large degree, become tax agents. The transparent citizen has become the norm.

• Safekeeping and investing assets offshore – in other words, outside of the borders of your country – per se is NOT illegal. What may be required though is regular reporting of those assets, depending on where and how your assets are deposited and managed abroad. Not declaring assets held overseas is what can get you into trouble.

• Making “offshore” (i.e. international) arrangements for the deposit and management of your assets does not mean that you can thereby leave the tax rules of your country of residence behind. They will generally apply elsewhere, too. Therefore, one should aim at implementing an offshore plan that achieves asset protection and privacy in compliance with the rules of one´s country of residence.

The ingredients of a solid plan

The ultimate objective of a solid international wealth management strategy should be to incorporate the benefits of overseas privacy while respecting the rules. The key elements of achieving that strategy are to implement a plan that provides for TAX DEFERMENT and NON-REPORTABILITY.

In most jurisdictions, there is no reporting required unless there is a taxable event. Thus, countries with a wealth tax, such as France or Switzerland, will require annual reporting of all assets. Most other countries, for example Germany, the UK, the United States, Spain or South Africa, do not have wealth taxes. Therefore, the employment of investment vehicles and structures that offer tax deferment will generally not be reportable.

The United States presents a bit of an exception here. Treasury Department Form 90-22.1 requires the reporting of all offshore accounts. The form was adjusted recently provoking widespread commentaries. One question that has been raised frequently was whether the new form requires the reportability of international life insurance policies and annuities. The answer, based on a legal opinion we’ve obtained from a top-notch international legal firm, is clearly NO. As long as the policy is tax-compliant, i.e. provides for compliant tax deferability, the state of non-reportability continues as in the past.

While other countries still have a number of strategies, including private placement life insurance and tailored annuities, the US is pretty much left with two strategies that offer compliant privacy and tax deferment:

1. physically stored precious metals without using a bank account
2. compliant life insurance “wrappers” and annuity policies.

Editor’s note: You can obtain a free subscription to Mountain Vision here. Don’t forget if you haven’t already done so to sign up also for our free Q Bytes newsletter from The Q Wealth Report.

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