What to do when Your Offshore Bank asks Tedious Questions

‘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.

Leave a Comment