Which Offshore Banking Jurisdiction Is Right For You?

In this month’s expanded issue of my Simon Letter offshore advisory service, I take subscribers through some of the most important lessons that I’ve learned in my 20-plus years of living, working, investing, and doing business around the world.

While some lessons are timeless, the offshore world is in fact an ever-moving target. Things can change quickly in this arena.

At my recent Global Asset Protection and Wealth Summit in Panama City, my assembled team of offshore experts discussed the best current opportunities for diversifying your life and your investments offshore… and highlighted some important recent and emerging changes.

In this context, we spent a great deal of time talking about banking. The dust has just begun to settle post-FATCA. Banks around the world have taken their FATCA positions and done what they needed to do to become compliant—some by kicking all their American clients to the curb and taking the straightforward position of not allowing any new American account-holders.

Now the global banking industry is amidst a new dust storm, the result of the United States’ current and aggressive anti-money-laundering crusade. Most acutely affected by this newest war the U.S. government is waging are small banks and small jurisdictions, including, as I went to press with this month’s Simon Letter issue, Belize.

Belize is indeed a small offshore banking jurisdiction. It has five international banks. In the past several months, every one of them has lost its correspondent bank. A correspondent bank is the connection between a small bank and the rest of the banking world. Without a correspondent bank, a small retail bank can’t accept incoming wires and can’t move money anywhere outside its own jurisdiction.

One Belize bank with a local license, FirstCaribbean, sold out to Heritage Bank. It has ceased to exist as FirstCaribbean in Belize.

Atlantic Bank was without a correspondent bank for months but has obtained a new one. Most recently, Heritage and Caye Bank lost their correspondent bank (they both were working with the same one). Caye Bank has been able to put a new correspondent relationship in place (and is working on a second one, as a backup). Heritage Bank, as of this writing, continues to work to replace its correspondent.

Some offshore gurus are saying it’s time to run from Belize, to write off this jurisdiction for banking. You could take that position.

On the other hand, once those Belize banks that are able to replace their correspondent banks do so (as Caye Bank has now done, for example), I’d say they could be good choices for offshore banking… better than many others in other jurisdictions that haven’t yet come under the U.S. government’s anti-money-laundering microscope. Right now, the United States has Belize in its cross-hairs. After it’s put Belize banks through the ringer, it’ll move on to a next jurisdiction of focus. If you move your account from a bank in Belize to a bank in a different country, what’s to say that country isn’t next on the target list?

Other important changes coming to light in the offshore world as we go to press include changes to immigration law in Ireland that have made it harder if not impossible for foreign retirees to get residency in that country. The Irish, it seems, now are requiring a retiree to have 50,000 euros of verifiable pension income for life to qualify for retirement residency. Few pensioners would be able to clear that hurdle.

Meantime, in second passport news, St. Lucia continues to release teasers about its new economic citizenship program, officially approved in August. Applicants will be required to have at least US$3 million in net worth and to invest (donate) a minimum of US$200,000 in the country to qualify for the passport.

Indeed, the offshore world is ever-changing. That’s one reason I say that you should take advantage of an opportunity—to do with residency, investment, banking, retirement, etc.—when it presents itself. Don’t wait for some point down the road when you think you might be more ready to act. By then the opportunity could have changed in a way that isn’t as advantageous for you… or it could be off the table altogether.

Lief Simon

“Lief, I am a reader of your editorials and try to follow a lot of advice that you have given, in particular to always have a second bank account available for personal and corporate use. Recently, I’ve experienced difficulty in opening a bank account in the Caymans. After a long waiting time, finally the bank (RBC) declined to open an account for me, without giving explanations.

“I am in the process of opening an account in Panama with the help of my attorney. Apparently this will work. But where should I go for the second account? Is there an offshore haven that still is reputed to be willing to open accounts for Americans? Your advice would be greatly appreciated.”

R.G.

Uruguay is one option, but you’ll have to fly down to open the account. You’ve got to be there in person.

As I’ve explained today, I’m still recommending Belize for banking. Both Atlantic Bank and Caye Bank now have new correspondent banks in place, and you don’t have to visit Belize to open an account.