says Peter Macfarlane, Offshore Banking Expert at The Q Wealth Report
The recent scandal involving Swiss bank UBS and the closure of 19,000 offshore bank accounts for American account holders has people running scared. It’s been a big publicity coup for the IRS and indeed for European tax authorities too. However, I was interviewed the other day for a forthcoming magazine article, and the interviewer asked me bluntly whether offshore banking, and more specifically Swiss private banking, is “over.” This got me thinking.
The why and the how of offshore banking for security and asset protection is alive and well. In fact, for American and European Union citizens, banking offshore is more important than ever. Here’s why:
- First of all, the hype in the media suggests that those 19,000 account holders will be in trouble with the IRS. This is not true. Sure, it’s what the IRS want you to believe, because they don’t want you to bank offshore. If you bank offshore they have less control over your money – so bad news for governments. But provided you have done nothing illegal, those people have nothing to fear. Even if those people have been illegally evading their US tax obligations, most likely they still have nothing to fear – though they should be taking urgent steps to put things right. The truth is that IRS attempts to learn the identities of the 19,000 account holders will be handled by UBS on a case-by-case basis strictly in accordance with both Swiss and American law and the respective international treaties, with UBS refusing to cooperate in any wide-net fishing expedition. By closing the accounts, UBS have done the right thing in helping to protect their clients.
- UBS clients will need to move their accounts to other banks, or the clients will receive checks in the mail. Obviously, depositing the checks in a home bank would leave a paper trail – playing right into the hands of the IRS. The IRS hopes that those affected who might not have declared their Swiss bank accounts will be scared and own up. If they don’t, however, the chance that they will be ‘caught’ is almost nil. Fortunately, there are still plenty of lower profile, secure offshore banks out there who are willing to take on the new business – even from American or European citizens.
- The mistake these people made was banking with UBS in the first place. It is stretching things these days even to call UBS a Swiss bank. It would be better described as an international bank, and it has a huge presence in the USA. It is therefore vulnerable to pressure being put on its US operations to breach Swiss bank secrecy laws. If you want further proof, Senator Carl Levin of Michigan said “We can’t get every bank in front of us to do what they did,” referring to UBS rolling over and apologizing. Very true words from the Senator! The basic rule in choosing an offshore bank is to go for one that has no offices or employees in your ‘home’ country. Another basic rule is “you don’t know until you go” – in other words, if you want to open a serious Swiss or other offshore bank account, get on a plane!
I mentioned above that affected account holders should be taking “urgent steps to put things right.” What are those steps? The fact is there are plenty of ways you can achieve the goals you are seeking, serious asset protection, and full compliance with all applicable laws and regulations. Those are topics we frequently write about here in The Q Wealth Report, and you will find some starting points in my Practical Offshore Banking Guide 2009 which is available right now for free download in the Members’ Section. The Practical Offshore Banking Guide includes some offshore banking notes especially for US citizens and residents, and another section especially for European Union residents and citizens.
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