Offshore Interview Series Part 2 – Offshore Banking

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With Internationalization Architect, Stephen Petith

Warren:  Okay, hi, everyone.  And welcome to our series on Offshore Banking and the particular recording that we’re going to be doing today talking about offshore banking, what’s happening in the world, and all the changes and where it’s going to go.  And, today, I have with me Stephen Petith.

Now, just a bit of background on both of us.  I’m Warren Black, I run a company called Wealth Safe where what we do is we specialize in helping people build safe-well solutions, structuring themselves internationally.  And, really, it’s more about globalizing your business, structuring your wealth and taking it offshore.

In any kind of business, you work with the experts and Stephen is one of the best experts and probably in that the best I’ve ever met.  Stephen’s got immense experiences in internationalization and calls himself an internationalization architect.  So, talk about creating your own identity, he’s done it.  Changed the dictionary to suit himself.  He’s got a credible broad range of experience and everything to do with international structuring, offshore banking, even helping diplomats and government contacts moving money offshore, and, you know, incredible arrange of exposure in the multi millions, billions of dollars, and even as the owner of a hedge fund.

So, Stephen, no doubt, I’m going to… exactly right, but, welcome, and great for us to be chatting together.

Stephen:  Thank you, Warren, and it’s good, it’s a pleasure to be here.  You probably got 80% of it right which is good.  But, yes, I’ve done a number of things over the years. Everything from a political asylum work to helping families –

Warren:  Oh, wow.

Stephen:  Reestablish those internationally.  And even right down to the small business guy, just trying to get away and earn some more money and be more capital-efficient.  So it’s very good to be here, and, welcome to be doing this series with you.

Warren:  No, it’s really great.  And – do you sound like a bit of a movie to be written about you, might sound like a character from a James Bond movie or some kind of international movie like Clyde Allen, that kind of thing.

Stephen:  Could be, could be.  I’m in the process at the moment of writing a book about internationalization but it’d be very tamed compared to anything that Clive Cussler or Dan Brown could write, that’s for sure.

Warren:  No, excellent.  So, okay, really just a bit of a chat today because the whole idea is to get really open up the hearts and minds of business owners, and where do you get the sum of the generalities of offshore banking specifics, like, clearly, there’s so much to international planning.  There’s offshore structuring, getting residency banking.

But, really, what we’re doing is breaking this up into three parts.  So this is being the first part, where we’re going to be focusing pretty much exclusively on international banking.  So, really, I’m going to just let you do a lot of this talking because, obviously, with our clients, and with Wealth Safe and what we do, we’re always working with clients to help them internationalize their business, go offshore, set themselves up in international, take advantage of everything from competitive cost advantages right up to getting better exposure and being seen in a better life because you in a jurisdiction that’s really seen as more global about it, but then limits his way of thinking, right up to even getting into investments which, otherwise, you can’t get into, right up to, of course, the obvious tax advantages, which available to doing that.

So, just – so, really on that whole level, so offshore banking.  So, a lot of people get scared about the whole idea of offshore banking.  So, how would you define offshore banking?  Like what is it about offshore banking that makes it appealing?  And it is really a [sexist people 0:03:33] figure is?

Stephen:  It’s actually very bland.  Offshore banking is really is banking in another country.  That’s as simple as that.  It could be as simple as Australians banking in New Zealand.  And New Zealand is banking in Australia.  Americans banking in Canada.  It doesn’t have to be the top-hat wearing, cane-wielding, cigar-smoking, [sludge 0:03:56]-drinking, I’m-going-to-take-over-of-the-will types in some backwater Caribbean [0:04:03] nation.  They can exactly.

The media gives offshore banking a really bad rep.  And, yes, there is people out there that use it the wrong way.  There’s people out there that hide corruption money and drug money and all the rest in that.  But 99% of the people, they’re using offshore banking purely and simply because they live over the seas.  They’ve got friends and relatives overseas.  They want to do business and leisure.  I’ve got so many clients that all they do is set up bank accounts in places around the world so they can get paid.  They use companies that help them establish bank accounts through third-party systems.  And a lot of it is just to get paid.

So, yeah, offshore banking gets a bad rep.  It’s not dark.  It’s not mysterious.  It’s just simply opening a bank account wherever you went, you know.  I could remember going on a holiday years and years and years ago and I opening my first bank account, you know, in Panama and it was just simply as walking into a Panama bank at the time, we’re talking, oh, 25, 30 years ago when I was just a young lad, I was with mom and dad and we just walked in, opened a bank account, and [0:05:11] and I had a bank account to use.  But that was because we were doing the family had a business and operations over there.

Warren:  Yeah, makes sense.

Stephen:  But these days, yeah, these days, it gets a bit harder.  You need an introducer.  You need a good business proof.  You need some legitimate reasons at why you want to bank offshore.  And it goes with goal-setting.

Warren:  Yeah, so, maybe just before letting into some of the specifics of offshore banking, it’s good to get some context.  So what was it that really led in your mind to a world where 15, 20 years ago, it was pretty easy to really just go off and open a bank account like, “Hey, I just want an account in New Zealand because I’m going to be doing some stuff over there,” or, “Hey, why don’t I just get myself a bank account over in Singapore, Hong Kong, because Singapore is just incredible country.”  I mean, [0:05:59] airports, it wins almost every year.  You’ve got a country that’s got amazing zoos.  It’s got like clean country like you wouldn’t believe.  It’s got banks that are just magnificent.  And, you know, it’s got great hedge funds and systems and efficiency over there.

So, okay, let’s open a bank account in Singapore.  It’s not just a simple case anymore.  What changed the world and led things to that?

Stephen:  The biggest change happened around 2001, around 9/11.

Warren:  Yeah, the bombing, yeah.

Stephen:  It was the catalyst for the American and British or the European governments at that time to crackdown and become controlling and to inflict capital controls on the population.  As we know, most governments of the world are broke.  You take America and Europe and Japan, they’re just broke.  There’s no way they can repay their debts.  Australia’s heading that way.  It’s not far from it from getting towards the tipping point, but it’s not quite there yet.  But governments are broke, it’s as simple as that.

So, this was a way for them to use money laundering and [terrorist 0:07:08] financing and a whole heap of other silly reasons to basically clamp down on we want to keep our tax money back in Australia.  And we want to know what you’re doing with the currency.

Warren:  [So this is what I’m talking 0:07:21].

Stephen:  Pardon?

Warren:  It’s a way of [0:07:25] inflicting debts to basically fund just the fact they’re financially screwed pretty much.

Stephen:  Exactly.  And then, that’s why it’s a big push at the moment to go cashless because that way they can tax every single transaction that happens.  The right that everyone has is the right to own an income and it’s the right to keep money that they own.  It’s not to pay out, say, some politician or some government can spend it frivolously.

We’re living in a world at the moment where politicians think that they’re better than everyone else.  They won’t do what the people want, and this is a way that keeps them in power and that’s to restrict to control our money.  And a lot of it is absolute crap.  They go and talk about factor, common reporting CRS, money laundering, anti-money laundering provisions.  And it’s really got nothing to do [a powerful 0:08:18] I want to know where the currency is.  I want to know where the money is.  I want to be able to tax your money.  And that’s the one.  But, that’s the downside.

The good side is it’s also legal as long as you know what you’re doing, where you’re going, who you’re being introduced by and why.  The biggest thing is know your why and have your story why you want to do this in front.  There is a lot of accommodating banks out there.  If you’re American it’s harder and harder.  But if you’re Australians and New Zealanders, it’s very easy to just to open bank accounts.  It’s getting costlier and it’s getting longer to do, but it’s definitely still able to be done.

Warren: Excellent.  So, just before we go onto specifics of banks, so, there’s a general comment – what are the kind of requirements or criteria and they’re really important a practical to getting offshore bank account.  Like, let’s say, in, you know, before we start going to specific banks in that, just generally like, let’s say, you’re going to Singapore, Hong Kong, what are the important things that you’re going to have to make sure you can justify and verify like I know, for example, that getting one for a investment or trading account is slightly is much harder than, say, a really a business account where you got supplies, invoices, and the fact – and if you’re able to actually go into the bank and show them more of your invoices from your business, show them the supply contracts, show them your legitimate business, you just have to be expanding internationally, generally, it’s cut and dry you’ll get it, no problem.

Whereas it becomes a lot more difficult if you got no address which you could show utility bill for fixed address.  If you can’t actually show a passport they like but you got to, you know, passport from the Philippines rather than, say, Western country.  Just little things like that, or your investment or trader, I mean, what are some of the practical criteria that you could share on that?

Stephen:  Yeah, it’s getting very cut and dried actually what you need.  So, if you’re doing it for a business account, say, here at Hong Kong we’re home-based, it’s basically you got to show business proof.  We’re doing a lot of Internet-based sellers at the moment that are going through and that’s very easy.  We can show that they’re buying product in China, they’re selling it on websites like Amazon and eBay and that around the world.  So we have a strict criteria.

If you’re an individual, especially in Singapore and Hong Kong and places like that, they want to know that you have a reason to have a bank account in that jurisdiction.  So, in Singapore, if you’re a director of a company, they’ll open bank accounts for you.  In places like Hong Kong and that it’s to receive dividend interests, so, if you’re investing into the local stock market, if you have insurance products, say, you’re an international digital nomad, and you have insurance products with certain banks up here, they’ll open bank accounts for you because there’s a reason.

So, it needs to be a reason these days to get around it.  It’s gone are the days where you could just say, “Oh, I want to because I just want to part some money into it.  Because I’d be traveling around backwards and forwards.”  Now, they want to know a specific reason and why and they want to know your background.  They want to know that, you know, you are who you are on your paperwork that you have banking relationships in other places.
It’s – especially here in Asia, are getting very wary on corruption and the laundering of money as well as in the side.  But, most people, as long as you have the right story, the right introductions and go to the right bank, we can basically get you an account no worries at all.

Warren: Great.  And what about, let’s say, in business and traders because I know that’s where I’ve – one chance is I’ve faced in my own business with helping clients is clients who invest or trade who want to open up for investing, which is a pretty obvious just normal reason, but that seems to be very hard to get an offshore bank account.  Like almost to the point where you’ve almost just got to turn up and open it for the business and then use it for investing later, I mean, what would be your comment there?

Stephen:  It is.  Investing – what’s happening around the world is a lot of people opening investing accounts, brokerage accounts especially.  And they’re parking money into it and then they’re passing it to their brother or they’re passing it their sister.  That to use it that’s so, it’s basically laundering money.  Using it for other uses other than brokerage account.

So, brokerage offices are getting quite wary with what’s going on.  But, if there is still good ways of getting brokerage accounts.  A lot of it means you’re going to travel, and you’ve actually got to come face to face with the bank to do it.
But, just on an asset protection and on a privacy point of view, you should be doing this through companies anyway.  And having a company that is active in the business of trade and then opening a second company or opening trading accounts associated with that is actually a better way to going than opening anything in your personal name anyway.

Warren: Now, that’s excellent.  So, that’s really, really good.  Okay.  So, now, just getting onto some more specifics.  So, let’s – I know that one of the things in our intro yesterday we did podcast, you made some comment about white tier, gray tier and black tier in terms of banking and things like that.  So, in the banking level, can you elaborate a bit more what you mean by that?  So when it comes to the different tiers of banking and how that impacts getting a bank account or even using it or using those accounts to actually send money to different countries and what it means?

Stephen:  Yeah, okay.  Yeah, that’s a good point and it’s a pertinent point to what we’re going on about.  So, the white tier, black, gray tier, black tier refers to the, well, a couple of things.  One, the privacy that each one gives people.  And, two, the ease of opening accounts.  So a white tier level is what I call the day-to-day.  It’s where you do your general transactions.  It’s where you have your credit cards or it’s your bank account in Australia.  It’s the bank account where you want your customers to pay you.  Because you’re not going to send off any flags, you’re not going to raise any questions, it’s the general transactional stuff.  It’s not where you’re holding money in a cash surplus account, for instance.

Or it’s not necessarily where you’re going to be holding money for investment purposes.  So that’s the white account.  So these are accounts pretty claim, claim.  They’re in major banking countries that everyone knows about.  America, Australia, New Zealand, the UK, Europe, Hong Kong, Singapore, Dubai, if you’re dealing in that part of the world.  So, it’s where you do your day-to-day banking.

The gray tier, which is the next tier down, offers a little bit more privacy.  But it’s where the institutions of the world.  So when you start doing some offshore investing into property, into agricultural assets, joining hedge funds, joining mutual funds or anything like that, have a large scale, doing larger deals, buying companies, and all that sort of stuff, the institutions will normally run the transaction through a gray tier bank.  So a gray-tier bank are normally in some of the world’s better offshore financial jurisdictions.  Once again, Hong Kong, Singapore fall into that.  Malta falls into that category.  Dubai, you’re sort [0:15:51] there.  And then you have some of the sort of other areas like Brazil, if you’re dealing in Central – South America, Panama.  If you’re dealing in Central America, the Bahamas.  If you’re dealing sort of with Americans, the Isle of Man in Guernsey if you’re dealing with Europe.  All these sort of places – Estonia, Latvia, if you’re dealing in Central – they’re all sort of gray-tier jurisdictions.

The black tier jurisdictions are places that give you the most privacy.  And it’s also a place where you don’t want to transact on a day-to-day.  You’re not going to have – normally, you’re not going to have Internet banking.  So there are bank accounts where you’re keeping family estate money, pension monies.  A lot of the times the money would be looked after by an independent third-party trustee.  So we’re talking about places here in like the Cook Islands with the Cook Islands Trust.  We can use Panama for this.  Grenada in the Grenadines in the Caribbean.  There’s also Cayman Islands, British Virgin Islands that could fall into the gray tier, but they could also fall into the black tier.

We’re also then talking about other places around the world – the Seychelles.  The bank in Mauritius.  We’re banking – these are the areas that we’re sort of getting into the black level.  You may hold precious metals through these accounts.  You may have just large sums of money in CDs, in term deposits.  That’s definitely not a place where you’re going to be transacting on a day-to-day basis.

Warren:  That’s good.  So, okay, perfect.  So, let’s just look at some of the things you bought on a bit more detail.  Like just, so, when you come into white-tier jurisdiction, what you experience like a really just great, just brilliant ones that pretty much fit most sizes.  Like, from my experience, Hong Kong, Singapore, like Hong Kong companies pretty much fit most places.  Singapore bank accounts or Hong Kong are pretty standard cut-and-dried.  What are some of the really great white-tier jurisdictions to get bank accounts from your experience, really great ones?

Stephen: The best place that I found is here in Hong Kong.  I, today, especially if you’re trading business as in you’re buying a widget in China or somewhere in Asia, and then you’re selling it somewhere else.  Or just – even an education-based, Internet-based business.  Hong Kong ticks all the boxes.  All the banks up here are quite good.  The one we’re working with at the moment is Hang Seng, which is an offshoot of HSBC.  They seem to be one of the best.
There is other banks up here as well that will work.  China CITIC is another one.  CBS, which is a Singapore-based bank, they’re up here.  OCBC are up here as well, Singapore-based banks.  Singapore companies are good as well for any business operations and then the base three banks that I’ve mentioned are great.

If you’re looking into –

Warren:  With HSBC?

Stephen:  HSBC is okay.  HSBC is good in Asia.  I wouldn’t touch them in Europe so much.  If you’re in Malta, Malta is a jurisdiction because it gives you exposure to Europe and North Africa to great locations run frontier investing.
So, Malta, you’ve got the banks like Bank of Valletta, Mediterranean Bank, Lombard Bank – all these banks are very good white-tier banks.  They’re known in an out of Europe for [doing 0:19:24] jurisdictions.

But then, again, if you’re dealing with Americans, having an American bank account is actually quite helpful. And you can do this a number of ways.  You can go and open an account in person at one of the local banks, Bank of America, Citi, any of those.  Or you can use a third-party service like World First or Payoneer.  And then they give you an account in these jurisdictions and then you can transfer the money back to your other white account here in Hong Kong or Singapore.

The UK, of course, Barclays, HSBC in the UK.  For general banking, I wouldn’t do anything major transactional-wise with them.  But for general banking, they’re quite fine.

Warren:  But also HSBC now is hard to use them as well because a $10-million balance or something.

Stephen:  It’s getting harder and harder.  It’s who you’re introduced to.  And it’s how established your business is.  So, if your business is very, very new; very small $100 million turnover a year, HSBC is not going to talk to you.  Hang Seng will and some of the others will.  OCBC in Singapore will.  DBS will.  And I found then this is good for getting personal accounts attached to, if you’re a director of a Singapore company.

Warren:  Okay.  Great.  That’s good.  I personally have found OCBC in Singapore fantastic, too.  So, I mean, a lot of banks in Singapore work really, really well.  I mean, I know that setting up an offshore company in Singapore, which we’re going to talk more about in our next series, offshore companies, but, I know that offshore companies of course are although you need a resident director so that’s made it difficult.  But I used OCBC to get bank accounts for Hong Kong companies and they’re fantastic.  I mean what’s your experience [0:21:11] other banks?

Stephen:  Yeah.  So, OCBC is a very good bank.  And we use them quite often to get them a secondary account.  So, a Hong Kong company opens a bank account in OCBC, but also has a bank account here in Hong Kong.  Singapore companies has OCBC.  I like DBS very much.  I personally use DBS in Singapore.  Very good bank for personal banking, easy to use, very understanding, especially if you’re, as I said, a director of a local company or you’re getting dividends from a hedge fund or some sort of investment product in Singapore.

Bank of East Asia which is a Hong Kong bank, they have branches in Singapore.  They’re pretty good.  And the other ones, the Malay banks.  Some of the Malaysian banks that are in Singapore are actually quite good to deal with as well.
I wouldn’t do major international transactions with them, but inter-Asia, fine.  Very good to work with.

Warren:  That’s excellent.  I mean any of your experiences of any of these banks have anything to watch out for?  And I know one of my little things I’ve found out was like, let’s say, I’ve got a client with a Seychelles company.  You can get – they can get to open at OCBC, as a rule, they will do it in Singapore.  Whereas Hang Seng in Hong Kong won’t do it.  That’s one little trick.  Anything similar – anything else like that you found?

Stephen:  Yeah, normally what’s happening now is you need the company based in the same jurisdiction as where your bank account’s going to be, especially in this white-tier layer.  They’re getting more and more picky.  Using Seychelles companies now to and opening accounts it’s getting harder because that’s basically everyone’s trying to work out who the ultimate beneficial owner is.

And as long as you [0:22:56] that to waive the past rewrites and sign all the documents of the EVO, you normally find you can normally get accounts opened.  But also been introduced by someone like myself like an agent or someone in a network that it has bank accounts already goes a long way to saying that this person is trustworthy and someone that you can deal with.

The other thing is don’t get too tricky when you’re trying to open accounts.  We change that further on down the line, but be very open and be very frank about why you want the account, and have all the right documentation.  It’s basically if they ask for a document, give them the document.  It’s that simple these days.

Warren:  Yeah, I mean, one little trick we learned as well was that the one worst thing you’d ever do, if that’s so, you’re opening up a Hong Kong company or something like that, to then go ahead and say, “Make the shareholder anything out of an individual because one of my clients went ahead and made his family trust a shareholder, even though I said not a good idea, I said you’re going to [0:23:58] later down the track.  And he did that and he calls the bank six months later, he still didn’t have an account because the bank was asking questions about the trustee, they want to be a lawyers to check that, they wanted to see the beneficial owners, and because they didn’t understand Australian family trust deeds, they wanted to actually get past what’s all the different key beneficiaries of the trust.  It was a nightmare.

And, so, my experience is you make it individual.  Keep it simple and you could always change it down the track, if you want it.

Stephen:  So, normally when we open accounts these days, it’s the same individual shareholder and director.  We do that straight off the bat.  We go in, we get the accounts, we get all that sort of stuff.  And then later on, we can change who the shareholder is, but we leave the directors individual.  Being a director of a company doesn’t change a lot of your reporting because you don’t own the money because the company owns the money.  It’s a separate entity.

So, being a director, you’re just directing.  You’re just operating on a day-to-day basis.  You’re helping call the shots.  That’s why you have general managers and all that sort of stuff assigned as well.  But keeping it simple is definitely the key.  [0:25:06] making it complicated, you could be in for a six-12-month process to get your account open.

Warren:  Yeah, makes sense.  So, that’s Hong Kong and Singapore.  What about places like, say, the Caribbean?  I mean it’s obviously we’re jumping straight down to the, you know, dark or gray tier, and I’ve got a few other things this task about.  Let’s say, Caribbean, I mean, one of the most popular search on the Internet apparently and just generally get queries is about banking in [Nevis 0:25:34] apparently it’s quite sexy, it’s the real, juicy little thing to go and actually have a bank account in Nevis or some kind of lawyer’s trust account or LLC over there.  What’s your comment on Nevis for banking?

Stephen:  Nevis is a great little jurisdiction especially if you’re doing investment work.  So you can set up a little LLC down there, open a bank account with one of the local banks or open one of the bank, even some of the others said [0:26:00] Bank, or one of those others in the Bahamas or in [0:26:06] or that sort of stuff.  Nevis is a good little jurisdiction.

So, and still so is the British Virgin Islands, Cayman Islands, the Bahamas, [0:26:15].  They’re all good jurisdictions.  I’ve got a list here of people that – yeah, Bermuda, Belize, all those are good.  Nevis is – what makes Nevis outstanding as a jurisdiction especially when [0:26:32] is that if there is someone files to freeze your assets, well, they basically can’t because there’s no charging orders or they’ll never sell [LLCs 0:26:42].  But that’s the thing hold your bank account through an LLC.  And Nevis becomes good at that.  It’s got [0:26:50] really good privacy protections that have been upheld in American courts especially.  It can be a long way to go for Australians to open accounts, so, but it can definitely be worth it.

Warren:  I know you made some comment to me a little while ago that Nevis was good, but there are actually better Caribbean options like Grenada or a few others.  So, is that the case?  You said there’s better options now.

Stephen:  Yeah, there’s going to be some better options and some better banks.  So if you look at like Euro Pacific Bank, which is in the Grenada, Grenadines, they’re really, really forward-thinking banks.  But, once again, we’re sort of in the dark-gray-black area, you wouldn’t want to do your daily banking and transaction work with them.  But I’d definitely open a bank account with, say, [0:27:37] Bank in the Turks and Caicos or one of those sort of local Caribbean banks.  And then use their platform for investing into stocks and bonds and or other different things, holding precious metals because most of them hold precious metals.

And the good thing with a lot of the banks over there, especially for asset, when you’re getting to the asset protection and legacy, so you’re trying to hold your pension income and the rest of that is that these banks aren’t commercial banks.  They are purely retail banks for holding deposits.  So they’re deposit-taking institutions. So most of them don’t do loans.  They may issue credit cards, but they don’t do loans.

So, their book-to-[0:28:23] ratios are huge.  So, they’re – we’re talking in the 80% and 90% range.  So, if there was ever a major run on the bank, the cash is all there.  It’s just it’s either in precious metals or derivative CDs or the like.

Warren:  So you’ve got [Butterworth 0:28:40] Banks.  What are some good banks in Grenada or Bahamas or Nevis?  But are they only ones you’d only recommend or?
Stephen:  They’re the ones I’d probably recommend at this stage.  There’s more and more opening up all the time.  And there’s – when I say ‘opening up’ they’re opening up to the outside world.  Caribbean First Bank is another one that comes to mind that is open and willing to take.

There’s also a lot of private banks that are run by a trust company so they’re a trust company that sets up an account for you.  And they’re done through some of the big law firms down there.  You’re talking in – you’d nearly – you’d need to be depositing $1 million to get into those sort of banking accounts.  But for $5,000 or $10,000, you can open stuff at Euro Pacific or Butterworth, or you know, like First Caribbean.

Warren:  Where in Nevis or Grenada or where?

Stephen: A lot of them have spread across the eight or nine jurisdictions down there.  So the Bahamas, the Barbados, Nevis, the Cayman Islands, Saint Vincent’s, the Grenadines, Turks and Caicos, U.S. Virgin Islands, a lot of them have representative offices in banks in each.  That’s why in [Butterworth 0:30:00], one of the biggest banking groups in the Caribbean.

Warren:  Wonderful.  So, any specific – so you can obviously find these banks online, okay. I mean, any specific requirements in relation to these banks that are different to, say, Hong Kong, Singapore – things to be aware about if you’re opening an account there?

Stephen:  If you’re opening an account there, you basically aren’t going to be doing major day-to-day transactions.  Their wire fees and all that sort of stuff can be high because their fee-for-service banks.  They don’t, as I said, most of these banks don’t do major loans in there outside of [0:30:35] outside of the island itself.  If you’re a local [0:30:38] to, say, Barbados, you may be able to get a loan.  But if you’re an international client, you’re not going to be able to; it’s there for deposit only.  You’d be able to open up accounts.  The process can be slow.  You probably need an introducer to verify your background because they’re going to want to know your KYC rules, your customer rules.  But you can do most of the stuff online, or at least enquire online and find out where.

If you’re heading into the Caribbean on a holiday, I daresay duck into any of the banks there and ask them if you can open an account while you’re there.  They may want to see a USD $20,000 deposit or equivalent.  But that could mean only transfer it in after.

Warren:  Excellent.  It’s really quite simple like it even sounds not quite so difficult to say Hong Kong, Singapore or the bank invoice and suppliers.  So is it easier than that, would you say?

Stephen:  It is easier, but the background check.  Some of these guys will do background checks on you.  So, if you have anything that is a bit out of the ordinary, they will just say, “No, sorry.  We can’t help you.”
But if you go and make a – build a relationship with your banker, and, of course, money talks.  The more money you have to deposit and the more fees that they can see they’re going to make out of you, going forward, the better and easier it is.

If you open companies down there and hold the accounts or companies, that’s probably the easier way rather than doing it through an individual name. And for asset protection reasons, I’d be informing my clients to do it that way anyway.

Warren:  Yeah, I know it makes sense.  Okay.  So it gives a bit of a good great insight.  What about Estonia?  I’ve heard about the wonderful myths of Estonia and how you can open up online in a day.  I mean, what’s the deal with Estonia and Latvia [0:32:30] about this?

Stephen: Okay.  So, Latvia, Estonia, Slovenia, they’re all opening up and all their banks are opening up.  Some of their accounts you can open online.  I haven’t personally done a lot of work in Latvia or Estonia.  I’ve done a bit in Montenegro over the years but we did that in person.  Great private banks over there for clients that have got $500,000 to $1 million to invest.

But, Estonia, what Estonia is really, really, really good for is the bloggers.  And the Internet entrepreneurs, the digital nomads.  Because you can go thing got e-Estonia, which is Estonian residency.  That gives you a biometric pad and you can open companies, manage your companies all online.  But from this month onwards, February 2017, there are certain banks so they’re going to be able to do Skype chats to open bank accounts.  And then you could [0:33:25] yeah, so be able to put e-Estonia e-residency in there and open your account.

I was one of the earlier doctors of the e-Estonia thing which is where my blog and my Internet, my personal internet publishing empire is based.  I had to go and visit Estonia today for the bank account.  But I’ve been told recently that from the bank that they’ll stop doing live chats.  And that’s so –

Warren:  That’s crazy.

Stephen:  They’re all forward-thinking.  And another thing Eastern European are very forward-thinking.  They realize that people are mobile.  Chile is another one that they’re [0:34:10] realizing that people are mobile.  And they don’t want to have to travel to the bank to open accounts.  The face-to-face could be done via telecommunications, like we’re doing here.

Warren:  That’s excellent.  I mean, so is Estonia a black tier or a gray or what would you describe this?

Stephen:  At this stage, if you’re into European Member, if you’re it for blogging or, let’s say, it’s very light gray, at the moment, it wouldn’t be 100% white tier.  What makes them white tier is that your customer knows what it’s about.

So, it’s not what you know.  What you know is gray tier.  So, I know that it’s safer.  I know that I can do transactions there.  I know this is where the game is played.  Where white tier is all about everyone else on the other side.  Does my customer feel comfortable with depositing money in that account?  Does my customer feel comfortable dealing with payment providers that are from that jurisdiction?  That’s what it’s all about being a white tier.

So, Estonia, I’d say, is very light gray, but moving very fast to becoming a white tier.  Same as Latvia, Slovenia, Montenegro, any of that Hungary.  Hungary is actually not a bad jurisdiction in that light gray tier as well.
But it all depends.  So when we do a consult with a client, we break down what’s their goals, objectives, what they’re trying to achieve and who their customers and clients are.  If their customers and clients are governments, for instance, you know, the guys consult the governments, no basically, we’re telling them opening bank accounts in the U.S., UK, Germany, that’s basically it.  Australia.  They’re limited to there because governments going to feel more safe.

If their clients are other companies in Europe, well, let’s look at European or even Hong Kong and Singapore.  How would their people know about Hong Kong and Singapore?  So we need to do a bit of an assessment.  It’s not just a one-case-fits-all.  Even though in the widget industry in the Internet business, it’s pretty much getting to be a one-case-fits-all.  And that’s Hong Kong and Singapore.

Warren:  Excellent.  So what about places like just going into some of the other ones – Panama and places like this?  You hear a lot about Panama and residency.  I know we’re going to be talking about residency in another one of our series, but, on, let’s just say, getting Panama, what’s banking like over there?  Like getting offshore banking over and say, Panama or Costa Rica or Belize, but Panama especially.

Stephen:  Costa Rica and Belize, I’ll touch on those first.  Basically, they’re an in-country visit.  You can get banks there but once again, you’re dealing in the dark gray area.  A lot of people don’t feel comfortable banking in – sending money to those jurisdictions.

Costa Rica, if you’re in the gaming industry and app industry, it’s a very commonplace to set up app stuff.  Belize, if you’re in the sort of asset protection, family-office-type area, Belize is good for that.  Panama I love as a jurisdiction.  As I mentioned before, it’s one of the places I opened an offshore bank account the banks there are very, very professional.  They’re great offshore jurisdictions.  Walk downtown Panama, see the other side of walking downtown Singapore.

You’ll see all the major banks down there – HSBC, Citibank – all the major Asian banks are over there as well.  All the major banks in South America.  Everyone [0:37:54].  It’s the hub of Central and South America banking.  And it’s becoming the hub for banking in the Americas full stop.  So you basically, every major region has a major banking and Panama is becoming that part.

Warren:  Any particular banks you’d recommend?

Stephen:  Once again, all the majors.  Actually [0:38:15] Citibank in Panama.  They’re actually quite a good – because it’s totally separate from the U.S. It’s a totally separate bank.  But then there’s First National, the First National Bank of Panama.  It keeps changing its name.  Banco de Panama.  There’s a few of them that are all quite good banks.  Good institutions to work with.  But you do need a referrer.  You do need someone on the ground over there to refer you.  And some of them, if they’re not 100% certain they’ll ask a ridiculous deposit, so, won’t say, “No, we can’t open account.”  They’ll just say to you, “We’ll need USD$200,000,” rather than the normal USD$5,000 or so.  But Panama is a good place to get credit cards, cash-back credit cards as well.

Warren:  Oh, okay.

Stephen:  But you need to be a part of the residency program.

Warren:  Okay.  Otherwise, they won’t open the account.  Yeah.

Stephen:  But as soon as you’re part of the residency program, and that goes with everywhere, if you are a resident of the – which we’ll cover later in the series, if you are a resident, it’s easier to get a personal bank account or it’s easy to get company bank accounts because their government’s already done a check on you. So, why we set up a lot of our clients with residencies overseas to then help and get bank accounts and credit cards and all the rest of the other stuff.

Warren:  That’s excellent to Panama.  Sounds like it’s, yeah, it’s different to what I thought of.  That’s one area haven’t had a lot of experience in, I must admit, even in.  Okay, sounds really good.  The residency is pretty straightforward and I had clients who independently of me have gone off to actually to Panama and then they were on the phone to me the other day, telling me all about it and saying how easy it was and how fantastic it was that the banking system is actually much better. And I was like, “Wow!”

So, this is the second time in a few days I’ve heard this now.

Stephen:  Yeah.  Panama is a great little – a little jurisdiction that everyone forgets about.  And, it’s making waves.  Yeah.  [0:40:27]. Sorry, just on banking.

The other thing to look for is watch where all the major institutions are doing their business.  So, look where the Goldman Sachs, the CD corps, the Barclays, the Commerzbanks out of Germany.  Have a look where they’ve got all their offices.

A little unknown fact is the Commonwealth Bank of Australia, its European operations are based in Malta.  So, the Common Bank has a bank in Malta that does its European operations through.  Citibank, why I like Citibank in Panama is that’s where they do a lot of their offshore work through.  [0:41:02] all through Panama rather than through America.

So, the other rule is watch what the institutions are doing and watch what the politicians are doing.  If the politicians aren’t banning, [0:41:13] setting a rule on certain jurisdictions, it’s 9 times out of 10 it’s because they’re made to using it.

Warren:  Yeah, I’ve heard that.  People are telling me trust in Australia.  That’s how why I made it in [0:41:23].  It’s just a –

Stephen:  The Australia Fund is based in the Cayman Islands.  You know, the Commonwealth Government Australia Fund is based in the Cayman Islands.  Yeah.  So.

Warren:  Wow.  That’s interesting.  Just like the Commonwealth of Australia is registered in Washington right now, so.

Stephen:  And that’s for a bond-buying scheme.  Yeah, there’s a whole story behind that.  But, yeah, it’s quite an interesting story.  Yeah.

Warren:  Yeah, just a few more questions I’ve got, Steve.  One of them is a quite an important one.  So what about going into Europe and doing business there like the best kind of banking like I’ve heard you said all the [0:42:02] Guernsey.  I’ve heard even sometimes open a UK account or just in a E-member country like or Malta or somewhere.  So just what your comments on those and even opening accounts in all of [0:42:13], Guernsey or Malta, I’ve heard it’s very expensive and difficult.  So what’s your comments on those?

Stephen:  Okay.  So, getting [0:42:20] for what you’re trying to achieve.  So, if you’re doing business in the UK or you’re doing business in Europe, opening accounts in Europe and Germany or Malta are definitely worth it.  So, Barclays will open accounts for UK companies, not a problem at all.  HSBC will open accounts for UK companies.  European-based companies in Germany at the Commerzbank can also get accounts. But you need to go in person.  You need to have strong business proof.  And you need to have a take on their boxes.  And sometimes it could be today is not a good day; yesterday was a better day.  Or tomorrow could be even a better day.

Malta, you need to be introduced.  Having a Malta company there is a good way of doing it.  I like the Bank of Valetta, BOV in Malta.  They have a good international banking arm.  And we’ve got some good contacts that can get you introduced there to open corporate accounts.

Now, Gibraltar, Isle of Man, Guernsey, if you’re in the financial services world, lay down.  Don’t open your accounts there.  Set up your companies there, do all your investments through there.  Gibraltar’s good for gaming, the gaming industry, app industry, anything that betting industry, go there, set up your companies and register.

Places like Portugal, if you’re under the Portugal residency program and you’re living in Portugal, then getting bank accounts there is quite easy.  But once again as an individual, if you’re a resident, it’s easier.  And it’s really easy to get accounts because you need it because you’re living there.  You’re getting your income, you’re going to get pension, you’re getting whatever delivered there.

Except from a corporate perspective, yeah, it’s your normally need to go in person.  Basically the ground rule this day is if you can do it over the Internet, you still want to follow up at some point with a visit because they will do reviews of the account, especially in 6 to 12 months.

Warren:  Okay.  Is Isle of Man pretty easy or Guernsey or any particular banks you’d recommend?  Like could I just walk in tomorrow and get one of the Isle of Man and which bank would I do it?

Stephen:  I don’t do a lot in the Isle of Man anymore.  But it’s still possible.  A lot of the Barclays in Isle of Man is actually not a bad institution.  They were looking at stopping any foreign accounts being opened.  And then there’s a couple little local banks there that doing – but still, their minimums to open are getting higher and higher and higher if you do not have a [0:45:09] for the island.

Warren:  So, really, it’s not difficult to give, but it’s expensive.

Stephen:  It’s expensive.  Because you need to put up the deposits and that’s just a – and it helps to be introduced.  And that’s for sure.  [HSBC 0:45:23] in Guernsey was one of the best banks in the world to bank with at one stage.

Warren:  Okay.  So, really, Barclays is about the only one you know right now?

Stephen:  It’s not the only one that I know that I trust.  There’s a couple little ones and that sort of stuff that people have mentioned to me.  Without having done anything with them, I couldn’t tell your listeners to go and spend their time.

Warren:  Excellent.  So just two more questions.  So bank secrecy and privacy.  Is that now a myth?  Is it still real?  Has it all changed of all this transparency and all these papers and hackers like [0:46:01].  [0:46:02] groups and how things will be released.  What’s your views on privacy and secrecy now?

Stephen:  Basically, bank privacy is dead.  The number to count – the Swiss number to count, the Italian number to count, they’re basically gone.  Luxembourg still has some banks that would do it.  We’re talking about people who have got $10 million, $20 million to put into an account.  That would do it for that.

But if you’ve got $10 million or $20 million that you want to put into an account, you’re going to do it through some sort of family office structure anyway.  Seek another trustee.  You’re going to have all the right credentials to be able to put that money.  Because you want to be [0:46:40] investor.

So, putting it into a bank and having it set into a bank account, and not being able to do anything with is a pointless exercise.  If you create privacy by putting different tiers and different structures in place which we’ll sort of go through some of that tomorrow.  But the general rule of the [0:47:00] number to count, the old Swiss bank, yeah, they won’t ask any question, that’s basically gone.  And it’s getting – it’ll deteriorate more and more over the next couple of years.

But then as factor removes itself and a few of these other reporting standards, Basel 3 gets [0:47:17] down, we’ll start to see some privacy coming back, but at the end of the day, banks now got used to knowing who you are and they’ll sort by who [you are 0:47:25].

Warren:  Excellent.  So, yeah, so, that leads into my last question, in fact, I’ll sort of make a quick comment, but I mean, before September 11, there were people knew who could walk into [0:47:37] Bank, for example, or Parex in Latvia, and get a numbered accounts and no names on debit cards and straight after September 11, they told me within a few months they’re getting notes.  So, last question.  So what do you see future of it all now, especially the Trump Presidency?  Like how is that going to change especially now, I sense change coming for the better and freeing up a little bit more [0:47:58] this?

Stephen:  I definitely see change coming for the better.  There’d be a lot of resistance from the current banking cartels and the current people that are running central banks around the world.  You’re going to remember central banks are run by individuals, they’re not actually owned by the country that run them.  They’ve got the best interest to make sure that their banking and they have their foot on the banking system.

Trump and the Republicans now that they’ve got the full access to Congress, they’ll start to move legislation in place that’ll make it easier and stop the silly reporting requirements.  We’ll like get back to pre-2000 levels of walking in and opening accounts and not getting a name on the market. I could still remember doing that here in Hong Kong.  Go, “Oh, I need a bank account to do a transaction.  Just walk in and get me a little envelope and in that was my ATM card and all my Internet stuff that I needed,” and it was in [0:49:00] an hour.  That’s never going to happen again.

There is still going to be some sort of compliance levels. Banks are risk-free on their retail sites more than they are on their trading sites.  And they’re very conservative institutions.

So, once something happens, it’s not going to change a lot.  But will it get easier to open accounts around the world?  I think so.  There’s going to be a couple of trigger points that are going to have to happen beforehand.  Things like factors going to have to be removed.

The whole American system may have to fall over in the likes of China and Russia and maybe even India and take over a lot of the responsibility in this world.  But, if you’re a businessman and you have legitimate business, I think it’s going to be quite easy to move forward and get accounts opened.

Warren:  Excellent. Well, Stephen, you’ve been a wealth of knowledge and information.  I absolutely thank you.  And look forward to the part 2 in the next one tomorrow where we’re going to be talking about offshore structures and the new jurisdictions and the best place to set yourself up.  And, thank you for your time and we look forward to tomorrow and continuing this series and in giving more information you’re getting contact with yourself, myself and moving forward to make this happen.

Stephen: Not a problem.  Definitely, thank you, listeners, and look forward to working with anyone that wants that to get a bank account offshore.  And, thank you, Warren.

Warren:  That’s good.

-End of Podcast-

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