It's tough to find the right offshore bank. If you're an American, it can be near to impossible.
If you hold a blue passport, step one is to find a bank that will accept you... that will put up with all the BS from the IRS. Then one that won't bury you in fees, that offers multi-currency accounts, and one that has the investments you need.
I've written before on which banks I recommend and how to find the best offshore banks. This post is about which banks to avoid. The banks at the bottom are ones you should run away from as quickly as possible!
First, avoid any bank with a branch in the United States. There’s is little or no difference between a US bank and the foreign branch of a bank with a branch in the US when it comes to privacy and protection.
The US IRS can levy any account at a bank with a branch in the US. All the agent need do is tap a few keys on his keyboard (send notice to the US branch) and your "offshore cash" will be gone.
Of course, all offshore banks cooperate with the IRS. They report your account and your transactions. However, the US government needs to jump through all kinds of hoops before they can seize an offshore account... unless that bank has a branch in the US. It is rare for the US to go after an account at a bank that doesn’t have an account in the US.
NOTE: Some offshore banks have representative offices in the US. These are not branches and they do not have a US banking license. The IRS cannot levy an account through a representative office, only a licensed branch.
And the same holds true for civil creditors. If a US judge issues an order to a US branch, you can be sure they will comply and turn over your money. Again, very little difference between a US bank and an offshore bank with a US branch.
List of Offshore Banks to Avoid
Just about all large multinational banks have offices in the US. Before opening an offshore account review the bank's website to make sure they don’t have a US license. Here are some of the offshore banks to avoid:
- UBS (also number one on my list below)
- Credit Suisse
- Standard Chartered
- East West Bank (Hong Kong)
- Citibank - Should go without saying, but many ask me about opening accounts at Citibank Panama.
So, if one reason to go offshore is privacy and asset protection, avoid banks with branches in the US.
Second, avoid any bank listed by the IRS as a “target.” You'd be crazy to give your information and money to a bank that is under attack from the US government. You're likely to see your cash seized and held for years even if you are in compliance... Your might just get caught up in the wave that is your government.
You will find an up to date list of target banks on the IRS website. As of today, those are:
- UBS AG
- Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd.
- Wegelin & Co.
- Liechtensteinische Landesbank AG
- Zurcher Kantonalbank
- swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG
- CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates
- Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd.
- The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India)
- The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates
- Sovereign Management & Legal, Ltd., its predecessors, subsidiaries, and affiliates (effective 12/19/14)
- Bank Leumi le-Israel B.M., The Bank Leumi le-Israel Trust Company Ltd, Bank Leumi (Luxembourg) S.A., Leumi Private Bank S.A., and Bank Leumi USA (effective 12/22/14)
- BSI SA (effective 3/30/15)
- Vadian Bank AG (effective 5/8/15)
I hope you have found this post on offshore banks to avoid helpful. Please send me an email at firstname.lastname@example.org for a list of recommended banks or for help opening an offshore account.