How To Choose An Offshore Bank

At last week’s Live and Invest in Belize Conference, I was able to catch up with Belize contacts and friends. I learned two specific things from my discussions and meetings that I think are worth passing along.

The first is that Belize now requires all IBCs to confirm to their registered agents that they are keeping accounting records. In the past, this wasn’t the case. It’s still not required that you submit accounting records; what is now required, though, is that the directors of any IBC state to their in-country registered agents that they have complete accounting records in case they ever might be requested by a government review entity. I was told that this kind of review has never happened and that the government has put the requirement in place as part of their ongoing efforts to minimize greater intrusion by the OECD. It’s part of Belize’s ever-more-vigilant self-policing efforts intended to contain policing from external forces as much as possible.

My other news from Belize is that sometime last week one of the country’s international banks lost its correspondent bank. I haven’t been able to confirm this with a second source, so I won’t name the bank (note that it was not Caye Bank, which I recommend regularly). However, my contact has clients with accounts at this bank who weren’t able to wire money out of their accounts last week and who were told the reason was because the bank had lost its correspondent bank. The correspondent bank in question seems simply to have cut off the Belize bank without notice or reason…at least that’s the story I’ve got at this point.

It’s a big deal for a bank to lose its correspondent bank. Thousands if not tens of thousands of individuals are affected.

A correspondent bank is a money-center bank that smaller banks use (and need) to conduct international transactions, such as wiring money to other countries. As all banks in Belize are relatively small, they all have correspondent banks that make it possible for them to conduct business around the world. Not having a correspondent bank means, in effect, that a Belize bank is out of business.

I learned years ago why it’s important to have at least two bank accounts for any offshore entity you have. This way, if a bank sends you that dreaded 30-day notice letter (you know…telling you unceremoniously that you have 30 days to move your money from their bank, as they intend to close your account), you’re not caught off-guard and vulnerable. What I hadn’t thought about until last week is why it’s also important for any bank that needs one to have back-up correspondent banks.

While I presume the bank in Belize will quickly sort out its trouble with its correspondent bank…or find a new correspondent bank to work with…clients at the bank right now are stuck. They have limited options for moving money out of their accounts.

It’s easy enough to find out which correspondent banks any offshore bank you’re considering working with is depending on. Simply ask for copies of incoming wire instructions; these will list a correspondent bank if one exists. If the bank is working with more than one correspondent bank, it should have more than one set of wire instructions…so ask to see all versions. Or, simpler, just ask your banker which correspondent banks his bank works with.

Diversification and redundancies.

Lief Simon

“Lief, what is your experience driving in Panama, besides Panama City traffic? Would one be stopped/hassled often if they had Florida or U.S. tags on the car as a part-time resident?

“A while back, I was with a group in a car that was being followed by police in Santo Domingo, Dominican Republic, but didn’t pull over, and the police eventually gave up. They were only looking to make some $$. There was no violation. In California, if you don’t stop, they aim their guns at you and make you get on the ground with rifles pointed at your back and arrest you.

“By the way, I was just in Peru and northern Chile and had a wonderful time, even traveling to non-tourist zones. No beggars, no hassles, very affordable, and people generally act civilized. A shame that offshore promoters rarely mention Peru. Maybe they want to keep it as a secret.”

B.K.

Panama police are generally very professional. They are currently better equipped than they’ve ever been, with new uniforms, new vehicles, and new radar guns. You see them these days along the sides of the highways pulling people over with their new radar equipment. They don’t need to make up a reason to stop you, as there are plenty of speeders to catch.

When they pull you over, they may hint at the idea of a bribe, but this is much less common than it was even a few years ago. Martinelli’s administration has been trying to crack down on these kinds of payoffs…with some success.

Still, many a gringo will slip a policeman a US$20 bill when handing over his ID, in an effort to avoid a ticket. I don’t recommend it. Personally, I have a hard-and-fast rule against it. I don’t pay bribes…ever…not to traffic cops or to anyone. Though I’m pulled over now and then (for speeding), I’ve gotten only a couple of tickets. Most of the time they let me off with a warning.

Note that, if you decide you’d prefer to pay the bribe rather than investing the 10 minutes in chit-chat that getting the cop to wave you on will require, US$5 will do. Twenty bucks is too much.