I’m often asked Is it still possible to have an anonymous offshore bank account?

 

The answer is yes it is still possible. Here’s how:

 

To succeed in your mission of having a truly anonymous offshore account there are 4 things you need to address.

 

1. Firstly you will want to set up an anonymous Corporate entity to be the account holder. To achieve this you will want to incorporate a Company in a Privacy Haven ie somewhere that does NOT have a public register of Directors or Shareholder or Company owners (ie somewhere like Seychelles or Belize or BVI or Anguilla or Nevis).
2. To minimise the chances of your ownership of this company being discovered you will want to ensure it is incorporated in a country which does NOT have a Tax Information Exchange Agreement (“TIEA”) with your home state (a TIEA enables your home state to demand of a tax/privacy haven, as of right, details of owners of an Offshore Company).  If you want maximum privacy then you would be wise to include a Foundation as part of the Corporate Structure (See below which explains why).
3. Thirdly you will want to ensure you open a Corporate Account at an Offshore Bank which is not going to share ownership information. Ideally that bank will NOT be located in a country which has agreed to be part of the OECD Bank Account Info Sharing Initiative (see below which lists those countries).
4. Fourthly you will want to open an account at a Bank which can/will issue you with an anonymous card ie on which one which your name (and ideally your company name) does not appear. Banks which offer this include Euro Pacific Bank, Loyal Bank, Choice Bank, CSC Bank and more.

 

Why set up a Foundation? 

 

If an IBC alone is used you will still be liable to declare and pay tax at home on your IBC’s earnings if/when you live in a country which has a Controlled Foreign Corporation (“CFC) law. Failure to do so usually is regarded as tax evasion (which is a crime and usually carries heavy penalties).

 

What you might do then is set up a Private Interest Foundation to own the shares of the Offshore Company.

 

Offshore Trusts used to be used for such purposes back in the noughties but the problem there is that you have someone (ie a Trustee) holding property for the benefit of 3^rd parties who are inarguably beneficial owners of that property and probably/potentially entitled to the income/capital of the Trust (which can have tax consequences onshore).

 

A Foundation is very similar to a Trust in that it’s set up by a Founder (like a Settlor in the case of a Trust) and managed day to day by a Councillor (like a Trustee in the case of a Trust) who manages the Foundation property for the benefit of the beneficiaries of the Foundation. A key advantage of a Foundation is that it’s a separate legal entity in its own right (ie the Foundation actually owns the assets held by the Foundation – unlike a Trustee who holds property for someone else ie the beneficiaries) and generally speaking the beneficiaries are not entitled to the income or capital of the Foundation until it’s actually received.

 

What this means as a beneficiary is that you should be able to defer paying tax at home on the income of investments held by the Foundation enabling you to reinvest 100% of that income not just the after tax component. (One jurisdiction ie Seychelles has even taken this a step further by specifically stating in their law that the legal and beneficial owner of any asset held by the Foundation is the Foundation itself).

 

Seychelles Foundations 

 

If you are a resident or citizen of a country which has the ability to track Offshore Bank account beneficiary details and you would like to keep private details of your Offshore earnings (or if you plan to set up a very sensitive business eg one that might be illegal if owned/operated from where you live) again a Seychelles Foundation can help:

 

How so?

 

It all comes back to the legal structure/operation of the Seychelles Private Interest Foundation.

 

Bottom line is notwithstanding that individuals (or a class of beneficiary) may be 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 them – per section 71 of the Seychelles Foundations Act).
2. The Foundation is a legal entity in its own right not a mere Trustee (per section 23)
3. The Councillor of the Foundation owes no Fiduciary duty to the beneficiaries (per section 63)

 

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.

 

What is the OECD Account Info Sharing Initiative? 

 

In May 2014 a number of countries committed in principle to the OECD Bank Account info sharing initiative. Under the initiative, a range of OECD and other countries have agreed to pass new domestic laws that will allow them to collect information on any foreign bank account holder (or any non-local underlying beneficial owner of a Corporate bank account holding entity) and then automatically exchange that information with other participating countries. The list of countries who have committed in principle to the initiative include Andorra, Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Chile, Colombia, Costa Rica, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland,  India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Malaysia, Mexico, The Netherlands, New Zealand, Norway, Poland, Portugal, Saudi Arabia, Singapore, The Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, The United Kingdom, The United States and  The European Union

 

If you want to avoid your interest in an Offshore account being reported to local authorities you have options:

(a)   Open an account in a country which is not in the above list; and/or

(b)   Set up a Seychelles Private Interest Foundation to hold the shares of the Offshore Company account holder (as this shifts legal and beneficial ownership of the Company to the Foundation by virtue of section 71 of the Seychelles Foundations Act)

 

Local laws can have an impact hence you should seek local legal/tax advice before executing a plan such as that conceptualized above.