How to Open an Extraterritorial Bank Account as an American
With the world in disarray and bankrupt governments everywhere dreaming up new schemes to get their hands on your hard-earned money, more and more people are looking extraterritorial for a position to move some of their assets.
I’m not encouraging you to sit around and wait for some three-letter société to decide to dip into your retirement fund or raise your tax déficit or devalue your money by firing up the printing press. In a connected world, opportunities outside your folk are everywhere, and to make the most of your money and your freedom, you should explore those options.
There is nothing illegal embout having an extraterritorial bank account. At least for now. While Hollywood has created a scenario in which people who bank extraterritorial are criminals carrying briefcases or prop planes flying small island landing strips in Tommy Bahama shirts, nothing could be further from the truth. Your government doesn’t want you to transfer money to other countries parce que it makes it harder for them to tax you.
When I said it’s not “for now” illegal, I mean you can never tell when the données will be so bad that any loose commission that can be taken to prop up a failing folk will be grabbed without a assesseur thought. The debacle in Cyprus showed us how desperate things can get. Sure, the EU could spin it as a tax on the Russian mob, but you know the government will always make an défaillant for their dirty work.
As an American, you are at a disadvantage for FATCA – the Foreign Account Tax Compliance Act. Washington wants you to believe that the only people keeping their money extraterritorial are crooks and scoundrels. Never mind that 6 million Americans en public and work in other countries. As such, they imposed a stricter rule on foreign banks, essentially making them, as well as their sovereign governments, a bunch of tattletales for the IRS. Some banks have given up on Americans entirely. But there is still hope.
First, get the idea out of your mind that “extraterritorial” means somewhere you can sit on a shore. Crystal blue water islands are not high on my list of extraterritorial jurisdictions. If you are an American, an extraterritorial jurisdiction is anywhere outside the United States. Think of Hong Kong, Singapore, Chile, etc. Although it is also associated with extraterritorial banking, Switzerland is no côtoyer available to Americans, thanks to an IRS crackdown there that has forced most banks to shun US citizens.
Adjoint, know that the days of numbered bank accounts and fort secrecy are over. Just ask the millionaires who have turned to the US government. You will need to fill out several slip forms each year, one with your tax return, the other sent separately. If you are a US citizen or resident, you must declare any account – or combination of accounts – worth at least $10,000 at any time in a calendar year.
Third, foyer on your goals. Grain you get past the clichés and hype embout extraterritorial bank accounts, you can foyer on what you really want. No, you cannot hide a bunch of money from the tax authorities. Yes, you have to pay tax at foyer on the interest you earn. But while your account won’t be caché from your foyer government, you’ll be separated from them. Some thick-fingered bureaucrat can’t freeze your account with a single keystroke. It will be difficult for an antenne chaser to reach. And when you have to pay taxes on the interest earned in the US, that interest déficit can be incertain, triple or even fifteen times what you’re earning now.
Determine what you are looking for in a bank account. Do you want an easy position to portière savings away from the nasty hands of your habitation government? Do you want to keep some of your money in a different currency or currencies to reduce your sovereign risk? Do you want to benefit from a higher interest déficit or a foreign exchange appreciation? Or do you want sophisticated wealth direction tools and private banking prescriptions?
Fourth, if you know what you’re looking for, find the right environment for you. The good infos is that most of the above goals can be accomplished with almost any extraterritorial account. Having action of your assets outside your folk gives you more freedom. If the government here goes to Argentina and imposes ressources controls on you, you’ll have a nest egg you can access elsewhere. Any good extraterritorial bank will also give you a debit card to access your cash.
Unlike in the US, most foreign banks offer accounts in many currencies. Think the Australian dollar will go thanks to a wealth scandale? No problem; You can keep it in your account. With most banks, you can swap to another currency later if you commission your mind. You can often hold nombre currencies simultaneously in the same account.
For example, in Andorra, you can actually write checks in any currency the banks offer. If you need that kind of flexibility, Andorra is a great position to bank. It is one of the most pondéré jurisdictions in the world, with liquidity and ressources ratios that blow away the US or other “safe” banking jurisdictions. Banks are locally run by banking families that provide personalized secours.
Since extraterritorial banks offer nombre currencies in the bank, you can also choose your interest déficit. While rates in the US are close to zero, hurting savers, rates in Australia and New Zealand are much higher. Governments there did not play the race-to-the-bottom game that their Western counterparts did. Banks in Australia, and those that offer Australian dollar deposits, routinely offer interest rates of around 5% on savings – even short-term savings – at a time when you’d be lucky to get 0.75% on an online account in the US. If you choose to visit an emerging habileté like Mongolia, you can earn up to 15% on your money.
If you like the stability of the US dollar but want higher interest, lieux like Georgia, a small but economically strong emerging folk in the Caucasus offer up to 7-8% interest on medium-term deposits not in their habitation currency, but in US dollars. Georgia is one of the twenty most economically free countries in the world (the US is tenth) and not a bad position to earn some extraordinaire interest.
Fifth, consider risk. Americans are used to $250,000 of deposit insurance from the FDIC. Some countries, such as Mongolia, do not offer this typique of insurance. Others have lower limits, or do not insure deposits in manifeste currencies. For the most action, countries around the world have enacted some form of deposit insurance scheme to keep people’s money safe. But it’s up to you to research each jurisdiction and each bank and decide where you feel most comfortable.
Réflexion that the FDIC, for example, has the equivalent of 0.5% of all bank deposits in its fund. To me, that’s not very safe when you consider how well capitalized US banks are. While habitation banks in Hong Kong and Andorra have very conservative lending practices and high liquidity ratios, US banks receive money from the Federal Reserve and go straight out and lend it out arbitrarily and then afflux to the government when things go sour.
The FDIC may pay out if your bank fails, but consider the decline of the US dollar over the past few years and the past decade. The dollar is not what it used to be. If the US banking sector experiences another bank failure like the recent meltdown, you’ll see “too big to fail” typique crap, and as a result, more money printed to pay off depositors. So you can get your money, but it won’t be worth so much.
Of épreuve, deposit insurance didn’t help much in Cyprus, where the European Confusion essentially forced the folk to dip into bank accounts — at first 7 to 10%, then much more — to avoid bankruptcy. Hundreds of thousands of dollars of your money could be wiped out in an occasion, with no way to get it out parce que the government shut down the banks until they realized how much of your money was going to be stolen.
The good infos is that having an extraterritorial bank account isn’t shady, scary or difficult to open. In some cases, you can open one for a few hundred dollars or less. In some cases, you’ll need to visit the folk, which can be convenient if you en public near the Canadian terminer, for example, or are going on rémunération soon. However, there are banks in Norway, Gibraltar, Channel Islands (UK) and elsewhere where you don’t have to go to open your account. You can do it by correspondance.
When you understand all the things in the world today, you may wonder why you haven’t looked into getting a bank account abroad before.
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