Offshore Banking & How To Remain Private

It may be possible to open a Corporate Offshore Bank Account without your name appearing in the bank records as the beneficial owner of the Account/Company. 

 

How/why this can happen is due to the unique features of the Seychelles Foundations Law (you can view a copy of the Act via this link: http://documents.ocra.com/information%20for%20clients/laws/seychelles/Foundations_Act_2009.pdf )

 

Allow me to explain:

 

When you set up a Private Interest Foundation (“PIF”) in an Order Form your Service Provider will ask you to nominate beneficiaries as/if applicable.

 

Persons who are to receive a benefit from the PIF are called Beneficiaries.

 

There are essentially three ways that you can approach the issue of who to name as Beneficiaries (and when). The first (more traditional) method is to clearly set out in the Order Form the names of the persons (which may include you and eg your partner/children) who are to ultimately benefit from the PIF. Some people feel more comfortable if they can see, from the outset, their names appearing as beneficiaries. Note: in this instance you would need to list the parties which are to be the beneficiaries of the foundation either by name or by reference to another party (i.e. the children of XYZ).

 

Discretionary or Potential Beneficiaries (& Purpose Foundations)

 

The second, more creative approach is to set up a Discretionary Foundation and to maximize the “Discretionary” nature of the structure to avoid any person’s names appearing anywhere eg in the Regulations or Order form.

 

One of the key features of Discretionary Foundations is that the Council/lor retains the power to add or substitute further beneficiaries after the PIF has been formed. What you can do in this instance is nominate (in the section of the Form asking for details as to beneficiaries) an internationally recognized charity such as Oxfam or Unicef or The Red Cross to be the primary beneficiary from the outset. (Usually  the order form also gives you the option of being named as a beneficiary after the Foundation is formed and original beneficiaries declared). Note: The Bank will never see the order form.

 

If you are setting up a Seychelles Foundation this may not really be necessary however as under the Seychelles law there is no deemed entitlement for beneficiaries. Hence if you nominate yourself/your spouse/family members as beneficiaries it should not give rise to tax consequences onshore (ie unless or until the Foundation actually pays you/the beneficiaries a Distribution).

 

The 3rd option is the Foundation could be established as a Purpose Foundation in which case no beneficiary need even be named {see Seychelles Foundations Act Section 3.2 & 4(2)(e)}!

 

Banks

 

When applying for a Bank Account for a Company and the sole shareholder is a Foundation the bottom line is, (and even if individuals are named as beneficiaries in the Regulations):

 

  1. The beneficiaries have no legal or beneficial interest in property owned by the Foundation (unless or until such time as that property is transferred to the them – see section 71 of the Seychelles Foundations Act).
  2. The Foundation is a legal entity in its own right not a mere Trustee (See section 23 of the said Act)
  3. The Councillor of the Foundation owes no Fiduciary duty to the beneficiaries (see section 63 of the said Act)

 

As such there is no “beneficial owner” of the Foundation. The beneficial owner of any property/asset owned or held by the Foundation is the Foundation itself.

 

Obviously you would need to disclose to the bank the name of (and provide DD/KYC re) the signatory (which doesn’t have to be you). You will also have to disclose to the bank the names and DD/KYC re the Company Director, Foundation Founder and Foundation Councillor (all of which are usually nominee entities supplied/owned/managed by your Offshore Service Provider).

 

So in any/every Bank’s Corporate Account Application – where it asks for Ultimate Beneficial Owner Information (if it’s a Seychelles Foundation) this can either be left blank or have the name of the Foundation inserted.

 

Even some top level banks accept this legal argument.

 

Bottom line is it is possible to create an International Corporate Structure where you don’t have to disclose to the Bank the “beneficial owner’s” details.

 

For more information on Foundations please click on these links:

http://offshoreincorporate.com/private-interest-foundations/

http://offshoreincorporate.com/seychelles-foundations/

 

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