Offshore Bank Account?

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March2009
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Offshore Bank Account?

Post by March2009 »

I'm American and plan to continue living in the USA, but I'm interested in moving some of my wealth outside the country. I'm not hiding anything or trying to get out of taxes. I only want to do this as risk mitigation for a worst-case scenario in our country; no expectation of that happening but I just like being prepared. Safety is my primary goal. Can anyone offer advice on countries and reputable banks I should consider?
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David Jay
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Re: Offshore Bank Account?

Post by David Jay »

Safety from what? The answers to “which bank, which country” are different based on your safety concerns.

Confiscation by the government?
Collapse of the FDIC?
Inability to physically get to the bank (bodily danger)?
Internet infrastructure collapse?

What currency do you wish to hold, USD or the currency where the bank is located?
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whodidntante
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Re: Offshore Bank Account?

Post by whodidntante »

Americans are highly limited in their ability to open foreign bank accounts because foreign banks don't want to do weird American paperwork. There will be some exceptions, but mostly if you work in a foreign country or at least have residence there.

If you're looking to bug out, one poster here assured me that gold was kind of useful for that.

If you're afraid of a collapse of the US dollar, there are several ways to reduce how badly that would hurt you.
123
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Re: Offshore Bank Account?

Post by 123 »

Move you wealth more than offshore, move it up to the clouds. Bitcoin.

I'm sure there are lots of countries that have banking systems "almost" as good as the US. If there is a failure/collapse of the US banking system the consequences could be just as bad in other countries. Money, and problems, flow accross borders pretty easy these days.
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NewMoneyMustBeSmart
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Re: Offshore Bank Account?

Post by NewMoneyMustBeSmart »

March2009 wrote: Thu Sep 17, 2020 2:57 pm I'm American and plan to continue living in the USA, but I'm interested in moving some of my wealth outside the country. I'm not hiding anything or trying to get out of taxes. I only want to do this as risk mitigation for a worst-case scenario in our country; no expectation of that happening but I just like being prepared. Safety is my primary goal. Can anyone offer advice on countries and reputable banks I should consider?
I had a bank account in Canada for this reason but closed it when FBAR came into effect. Do not underestimate the costs, compliance, hassle, and paperwork of a foreign bank account.

As a thought experiment, consider an offshore safe deposit box. Certainly many pros and cons, but AFAIK no FBAR requirement.

My wealthy friends suggest Singapore or Hong Kong, although with China's recent usurpation of Hong Kong's independence, I'd recommend Singapore. A second would be Thailand then Germay then Switzerland. This article has some some info:

https://www.offshorecompany.com/banking/best/
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JackoC
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Re: Offshore Bank Account?

Post by JackoC »

March2009 wrote: Thu Sep 17, 2020 2:57 pm I'm American and plan to continue living in the USA, but I'm interested in moving some of my wealth outside the country. I'm not hiding anything or trying to get out of taxes. I only want to do this as risk mitigation for a worst-case scenario in our country; no expectation of that happening but I just like being prepared. Safety is my primary goal. Can anyone offer advice on countries and reputable banks I should consider?
I think this is a reasonable risk control measure in theory. And let's first clarify why somebody would do this. It's not a hedge against the USD's value, you can own foreign currencies in US accounts. It's not a hedge against US federal default, you can hold foreign govt bonds in convenient mutual fund form in US accounts (if FX hedged there's a serious lack of transparency of expected return, which depend not only foreign bond yield but FX hedge carry profit/loss, but just holding them is no big deal). And if you have FDIC insured CD's the bank still owes you the money if the US govt defaults, and plenty of govts have defaulted without their major banks collapsing. No, the reason to have offshore accounts is if you fear the rule of law and property rights in US might be seriously compromised.

This is unlikely I believe, and you seem to also. I don't think it's virtually impossible as other posters seem to. Moreover, I think it's clearly incorrect to assume every country would 'collapse' because the rule of law and property rights were compromised enough in the US for US investors to wish they had offshore accounts. Ask people in foreign countries if they think their country would 'collapse' because the US became a country which no longer respected the rule of law or property rights. I doubt many if any would say yes.

However there's a big practical drawback to this just mentioned: in seeking to foil people who do this to cheat on their taxes, which you made clear is not your intention, Congress/IRS have set very strict standards for reporting offshore accounts. Even besides criminal penalties for willful failure to report, civil penalties can potentially result in loss of the entire account, in the limit. Moreover, even accidental errors can be charged at $10k per violation. And back on the 'willful' side, there's potential contradiction in moving money offshore due to potential deterioration of the rule of law in the US but then counting on the IRS and courts to give you a fair shake on whether your reporting errors on foreign accounts were 'willful' or not, or they are even telling the truth in saying you made a mistake.

The other drawback more basically is that the actual advantage to having offshore accounts, if you live in say Russia (a place that carries on more or less, it has not 'collapsed' by any reasonable definition, but can you count on the govt to act under law and respect property rights? no) is to evade government action, albeit extra-legal or legal but illegitimate. If you feel it would be unethical to ever evade your country's govt's actions, no matter what the govt became or what it did, then there's no point in having money in offshore accounts.

Personally I've ruled out offshore accounts on the basis of potential hassles with the IRS as of now. The cost/benefit doesn't work, IMO.
SteadyOne
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Re: Offshore Bank Account?

Post by SteadyOne »

JackoC wrote: Thu Sep 17, 2020 5:46 pm
March2009 wrote: Thu Sep 17, 2020 2:57 pm I'm American and plan to continue living in the USA, but I'm interested in moving some of my wealth outside the country. I'm not hiding anything or trying to get out of taxes. I only want to do this as risk mitigation for a worst-case scenario in our country; no expectation of that happening but I just like being prepared. Safety is my primary goal. Can anyone offer advice on countries and reputable banks I should consider?
I think this is a reasonable risk control measure in theory. And let's first clarify why somebody would do this. It's not a hedge against the USD's value, you can own foreign currencies in US accounts. It's not a hedge against US federal default, you can hold foreign govt bonds in convenient mutual fund form in US accounts (if FX hedged there's a serious lack of transparency of expected return, which depend not only foreign bond yield but FX hedge carry profit/loss, but just holding them is no big deal). And if you have FDIC insured CD's the bank still owes you the money if the US govt defaults, and plenty of govts have defaulted without their major banks collapsing. No, the reason to have offshore accounts is if you fear the rule of law and property rights in US might be seriously compromised.

This is unlikely I believe, and you seem to also. I don't think it's virtually impossible as other posters seem to. Moreover, I think it's clearly incorrect to assume every country would 'collapse' because the rule of law and property rights were compromised enough in the US for US investors to wish they had offshore accounts. Ask people in foreign countries if they think their country would 'collapse' because the US became a country which no longer respected the rule of law or property rights. I doubt many if any would say yes.

However there's a big practical drawback to this just mentioned: in seeking to foil people who do this to cheat on their taxes, which you made clear is not your intention, Congress/IRS have set very strict standards for reporting offshore accounts. Even besides criminal penalties for willful failure to report, civil penalties can potentially result in loss of the entire account, in the limit. Moreover, even accidental errors can be charged at $10k per violation. And back on the 'willful' side, there's potential contradiction in moving money offshore due to potential deterioration of the rule of law in the US but then counting on the IRS and courts to give you a fair shake on whether your reporting errors on foreign accounts were 'willful' or not, or they are even telling the truth in saying you made a mistake.

The other drawback more basically is that the actual advantage to having offshore accounts, if you live in say Russia (a place that carries on more or less, it has not 'collapsed' by any reasonable definition, but can you count on the govt to act under law and respect property rights? no) is to evade government action, albeit extra-legal or legal but illegitimate. If you feel it would be unethical to ever evade your country's govt's actions, no matter what the govt became or what it did, then there's no point in having money in offshore accounts.

Personally I've ruled out offshore accounts on the basis of potential hassles with the IRS as of now. The cost/benefit doesn't work, IMO.
If having foreign bank accounts are such a hassle what about buying a property: condo -something that doesn’t require a lot of expense. Not for income but rather as an insurance of sorts. In this case my guess is that the reporting requirements for IRS not that hard. Though I don’t know exactly if that so.
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Dmd149
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Re: Offshore Bank Account?

Post by Dmd149 »

I have bank accounts in Canada, Australia, and New Zealand with TD Bank, Westpac, and ASB respectively.

The Canadian account I just went into a branch in Canada and opened it up. Easy enough.

The Australian and New Zealand ones were more difficult.

I had to find the right customer service/bankers at those banks that could assist me with opening the bank from the US without visiting. This was in 2017 or so. At the time, you could open the account and deposit funds, but you couldn’t remove any until you verified your identity.

To do that from the US, I had to have my identity verified at the Australian and New Zealand embassies here in DC, where I live. A consular officer at each verified some documents and I mailed the documents for the Australian account to a Westpac branch in Sydney, and then I had the consular officer from the New Zealand embassy directly e-mail the banker at ASB for verification.

I then had full account access.

Getting a debit card was a bit trickier with the Australian bank. I actually went to Australia for my honeymoon and stopped by a branch to see if a manager there could get me one. Fortunately, the banker there was very competent and managed to get one shipped to me in the US.

With the NZ account, I could just request one from the banker via e-mail or chat or something. It was then mailed to me.

Anyway, it’s a big PITA but I feel better about having funds in foreign accounts that I can access electronically.

I also have a safety deposit boxe in Canada that includes those countries currencies in cash as well as Swiss Francs.

You will need to report the accounts via the FBAR form online every year but it is pretty straight forward. However, there are severe penalties for not doing so don’t forget.

A bit of persistence goes a long way with this process...
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Gray
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Re: Offshore Bank Account?

Post by Gray »

Sounds like a better approach is to work with a bank (multinational) with a significant presence in many countries, or that is geared to support customers working (or deployed) around the world.

I bank with USAA, Citibank, Chase, Barclays. I would imagine that at least one or all of them would meet my international needs.
InvestorP
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Re: Offshore Bank Account?

Post by InvestorP »

Good thread. I'm also looking into doing this. Like Gray mentioned, banking with a U.S. bank that has branches overseas is a great option. I was looking into Citigroup. I think they have the most international branches than any other U.S. bank.
vu8
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Re: Offshore Bank Account?

Post by vu8 »

You're signing yourself into a load of trouble with the IRS.

Annual FBAR filing requirement, penalty of wrongful filing or late filing is 10000 dollars.

Form 8938
Form 3520
Form 3520A
SlowMovingInvestor
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Re: Offshore Bank Account?

Post by SlowMovingInvestor »

SteadyOne wrote: Thu Sep 17, 2020 8:49 pm
If having foreign bank accounts are such a hassle what about buying a property: condo -something that doesn’t require a lot of expense. Not for income but rather as an insurance of sorts. In this case my guess is that the reporting requirements for IRS not that hard. Though I don’t know exactly if that so.
There aren't any specific reporting requirements for foreign real estate, unless you derive income from it. But to maintain foreign real estate, you'd normally need a foreign bank account too -- to pay property/maintenance taxes, upkeep etc. And that may be reportable.
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Pete12
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Re: Offshore Bank Account?

Post by Pete12 »

We have a GBP denominated account in Guernsey with Skipton International. Super easy to work with and no issues opening the account from the US. Guernsey has a similar program to FDIC, the limit is 50k GBP. They don’t provide 1099 INT forms so you have to figure your annual interest, convert to USD, and ensure you report it on your 1040, if you are a US taxpayer. You will also have to file an annual FBAR if applicable but this is a 5 minute job.
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AerialWombat
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Re: Offshore Bank Account?

Post by AerialWombat »

For everybody trying to scare the OP regarding the paperwork and recordkeeping, it’s not that onerous. The forms are simple and straightforward, even the FBAR. It takes me about 5 minutes to file my FBAR online every year for my Aussie accounts. As long as you file and disclose properly, there are no scary penalties. It’s really no more onerous than adding interest or dividend income to your 1040 every year.

OP, I bank with St George in Sydney. I’ve had nothing but good things to say about them since opening my accounts 7 years ago. I’m a US citizen.
Money Market
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Re: Offshore Bank Account?

Post by Money Market »

Agreed with AerialWombat above - FBAR is straightforward for ordinary bank accounts. I just fill out the maximum value for my account during the tax year, and that's it. What's funny is that the foreign banks I work with, with the exception of Citibank, always fails to transmit the proper information back to the IRS (e.g., interest income).
Topic Author
March2009
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Re: Offshore Bank Account?

Post by March2009 »

Thanks to all for the replies. Really great information and insight!
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wfrobinette
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Re: Offshore Bank Account?

Post by wfrobinette »

123 wrote: Thu Sep 17, 2020 4:57 pm Move you wealth more than offshore, move it up to the clouds. Bitcoin.

I'm sure there are lots of countries that have banking systems "almost" as good as the US. If there is a failure/collapse of the US banking system the consequences could be just as bad in other countries. Money, and problems, flow accross borders pretty easy these days.
No way! Not that I don't like the tech but I am more concerned with losing the key
FireSekr
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Re: Offshore Bank Account?

Post by FireSekr »

For those of you who have foreign accounts, are you citizens of the countries where you hold the accounts or do you have any residence there?

I have been thinking of doing something like this too, but admittedly have not had time to do the research
SteveinVanvcouverWA
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Re: Offshore Bank Account?

Post by SteveinVanvcouverWA »

Interesting discussion. I'm also considering moving some funds overseas.
dcop
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Re: Offshore Bank Account?

Post by dcop »

NewMoneyMustBeSmart wrote: Thu Sep 17, 2020 5:20 pm
As a thought experiment, consider an offshore safe deposit box. Certainly many pros and cons, but AFAIK no FBAR requirement.
I've considered it because of a possible FDIC failure or complete collapse here in the good ole USA. But considering is as far as I ever got. But I'm curious about the safe deposit suggestion but not offshore. I'm curious about how a large cash stash in a safe deposit box here in the USA would play out in a national banking collapse.

Obviously this is getting a little speculative and if a Mod wants to delete my inquiry that's fine.
NewMoneyMustBeSmart
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Re: Offshore Bank Account?

Post by NewMoneyMustBeSmart »

dcop wrote: Mon Sep 21, 2020 9:39 pm
NewMoneyMustBeSmart wrote: Thu Sep 17, 2020 5:20 pm
As a thought experiment, consider an offshore safe deposit box. Certainly many pros and cons, but AFAIK no FBAR requirement.
I've considered it because of a possible FDIC failure or complete collapse here in the good ole USA. But considering is as far as I ever got. But I'm curious about the safe deposit suggestion but not offshore. I'm curious about how a large cash stash in a safe deposit box here in the USA would play out in a national banking collapse.

Obviously this is getting a little speculative and if a Mod wants to delete my inquiry that's fine.
You will find safe deposit companies in Los Angeles, San Diego, New York City, Los Altos, CA, etc. Call them and ask them.....
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TravelGeek
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Re: Offshore Bank Account?

Post by TravelGeek »

Dmd149 wrote: Thu Sep 17, 2020 9:14 pm
You will need to report the accounts via the FBAR form online every year but it is pretty straight forward. However, there are severe penalties for not doing so don’t forget.
TurboTax asks about foreign accounts and reminds me to file the FBAR form. I do it as I work on my tax return, in Feb or March. I also have a recurring reminder item set in my to-do list. The effort for my two accounts is about 10 minutes.

For those who have or are contemplating opening accounts abroad for risk mitigation purposes, how much (in total or % of networth) do you plan to keep abroad?
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sperry8
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Re: Offshore Bank Account?

Post by sperry8 »

Dmd149 wrote: Thu Sep 17, 2020 9:14 pm I have bank accounts in Canada, Australia, and New Zealand with TD Bank, Westpac, and ASB respectively.

The Canadian account I just went into a branch in Canada and opened it up. Easy enough.

The Australian and New Zealand ones were more difficult.

I had to find the right customer service/bankers at those banks that could assist me with opening the bank from the US without visiting. This was in 2017 or so. At the time, you could open the account and deposit funds, but you couldn’t remove any until you verified your identity.

To do that from the US, I had to have my identity verified at the Australian and New Zealand embassies here in DC, where I live. A consular officer at each verified some documents and I mailed the documents for the Australian account to a Westpac branch in Sydney, and then I had the consular officer from the New Zealand embassy directly e-mail the banker at ASB for verification.

I then had full account access.

Getting a debit card was a bit trickier with the Australian bank. I actually went to Australia for my honeymoon and stopped by a branch to see if a manager there could get me one. Fortunately, the banker there was very competent and managed to get one shipped to me in the US.

With the NZ account, I could just request one from the banker via e-mail or chat or something. It was then mailed to me.

Anyway, it’s a big PITA but I feel better about having funds in foreign accounts that I can access electronically.

I also have a safety deposit boxe in Canada that includes those countries currencies in cash as well as Swiss Francs.

You will need to report the accounts via the FBAR form online every year but it is pretty straight forward. However, there are severe penalties for not doing so don’t forget.

A bit of persistence goes a long way with this process...
I too have bank accounts in the 3 countries you list, although with 3 different banks, as well as accounts in the UK, Europe (Germany), and Norway. HSBC, BNZ, Deutsche Bank, and DNBNor allow US citizens to open accounts (although with minimum amounts). One can also keep currency accounts in additional countries via some of the those banks.

I opened all except DNBNor in person at those banks - and have never seen them in person again (once opened, one can online transfer monies back and forth). Not sure what all the hubbub about paperwork is. My accountant files Fincen form 114 and Fbar with the IRS annually. Takes him no time at all.
JackoC wrote: Thu Sep 17, 2020 5:46 pm
March2009 wrote: Thu Sep 17, 2020 2:57 pm I'm American and plan to continue living in the USA, but I'm interested in moving some of my wealth outside the country. I'm not hiding anything or trying to get out of taxes. I only want to do this as risk mitigation for a worst-case scenario in our country; no expectation of that happening but I just like being prepared. Safety is my primary goal. Can anyone offer advice on countries and reputable banks I should consider?
It's not a hedge against the USD's value, you can own foreign currencies in US accounts.
Yes, but if you keep them open in the home country I've found you earn different (higher) interest for deposited monies. Less of an issue nowadays with interest rates so low, but still higher when opened in home country bank.
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theresearcher
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Re: Offshore Bank Account?

Post by theresearcher »

Holding a non-U.S. bank account may complicate your estate plan- to what extent depends on the country/jurisdiction, amount on deposit and bank policy. At the extreme, it may be necessary for your executors to apply for probate or its equivalent in that country and your U.S. will may or may not be recognized. There may also be foreign estate or probate taxes levied.
TooOldForThis
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Re: Offshore Bank Account?

Post by TooOldForThis »

OP...have you given any thought to transferwise?

I will not profess to having expertise, but I believe this is an option to holding foreign currency without actually opening foreign bank accounts (so not triggering tax complications).

I opened an account....oh....3 years and 10 months ago or so :) Never completed any exchanges, but I felt like it was going to give me what I wanted in terms of spreading the risk of holding too many USD.
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