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Short news and ideas

Global offshore banking


23/06/2015

Wherever in the world we maintain a bank account, there are certain things which have to be considered, irrespective of the bank or country.

Ignoring these points may lead to significant operational problems, and possibly even financial loss. The following 5 facts have been drawn from the everyday experiences of LAVECO Ltd., and are very real factors affecting the recent past and the current day.

  • Today, banks are not managed by bank managers, but by the heads of compliance departments. Unfortunately, this fact can be witnessed and perceived worldwide. The heads of the compliance departments, however, are not businessmen, but bureaucrats who, fearing for their own jobs, introduce regulations which make normal business-based banking all but impossible. The rules are not only rigid, but often incomprehensible and illogical. Putting up a fight, though, is pointless, as the banks hold all the trump cards.
  • If we have a foreign bank account and it works, on the one hand, this should not be underestimated, as there is no guarantee that this could be opened again, and if it could, then it would probably involve considerable expense. On the other hand, it is important to examine what tax repercussions its operation until now may attract in the light of the exchange of tax information due to begin in 2017.
  • When considering opening a new account, put your dreams to one side and concentrate exclusively on the realistic possibilities available. Don’t compare the current situation with what it was like 20, 10 or even 5 years ago. These days, the opportunities have changed and the choice is much more restricted. Fewer and fewer banks are prepared to open and maintain offshore-type bank accounts.
  • If the bank asks or requests something, then it is important to show complete cooperation. They consider short, inexplicit or even dallying responses in a very bad light. Clients who respond this way will often find that the banks close their accounts, as the banks are not prepared, on the one hand, to make any additional effort in such cases, and on the other hand to take any risk whatsoever. Questions and comments such as “Why are they asking this?” or “That’s none of the bank’s business.” should be avoided. This sort of attitude will almost certainly lead to the closing of accounts.
  • Whatever you do, don’t give the bank false information. This can come to light very quickly, possibly even with the first transfer. One common mistake is in connection with the activities of the company. When opening the account the client declares a certain activity, but then something totally different comes to light from the names of the partners transferring funds to the account. The banks’ compliance departments not only examine us at the time of opening the account, but also carry out continuous monitoring of activities while the account is operational. In this way they quickly flush out contradictory information.
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