How to Get Your Offshore Bank Account Closed

By: Gissela Martinez
Submitted: 2007-01-17 16:17:29
Print this article | Tell a friend | For publisher |

Rating:

 

It is one thing to have an offshore bank account in a tax haven country but is quite another thing to keep it open. Many do not know the ins and outs of offshore banking and wind up having their bank account closed for a variety of reasons which we will discuss so hopefully this never happens to you.

Money Laundering – This is one of the biggest reasons for offshore account closure. The FATF, Financial Action Task Force, sets forth rules and practices that all banks in any jurisdiction must adhere to. What a lot of people do not realize is that something called “Money In, Money Out” is considered to be money laundering. If one were to open a new bank account and then fund the account with a wire transfer for say $475,000 on a Tuesday and remove from the account say $450,000 on Thursday of the same week this would be looked at as money laundering. Now, if you have an account with the bank for a period of time, say six months or longer with no problems and you are let’s say selling a house and buying another one the same week and so notify the bank they will probably allow the transaction to go through without requiring documentation. This of course assumes you notify them before any of this money has been sent. If you are a brand new account and this is how you are going to be opening up your relationship with the bank, you should plan on the outgoing not being sent and the bank account closed.

Will the bank close the account and lock up the funds? Most unlikely, it is easier for them to just refuse or return the incoming wire, not send the outgoing wire and then shut the account or give you a bank check for any funds. Locking up your account is a much more serious matter and requires more than just a money in money out transaction. What such a person should have done is notified the bank about the incoming wire offering any documentation they needed before the wire was sent. Next after the money has been received you should withdraw the funds in small amounts slowly with wires going out of maybe $65,000 a week for several weeks until you reached your amount. If there is not more money coming into the account this is of course going to cause more suspicion than if the account was to receive even modest amounts of money each week.

Let’s look at what a criminal seeks to do so we can better understand how the banks look at transactions. Let’s say you were a fraud operator selling non-existent company stock. You got a sucker who is buying $350,000 worth of your worthless stock. He is sending your bank account the funds. You want to receive those funds and get them out of the receiving bank as fast as you in case your victim suddenly gets smart and calls the authorities who may try to get the bank to hold the funds. Whether or not any such hold would happen depends on the jurisdiction. In Panama such a hold would be extremely difficult and would probably take months. In other countries offshore or not the bank may cooperate since the bank secrecy laws are extremely weak in many so called offshore jurisdictions. Well the fraud artist is not going to take any chances he wants that money to be received and then go right out the door to another bank in another country in another corporate name. So if the authorities were chasing the funds going to a second country this would require lots of time and being able to keep the trail intact would become much more difficult. Of course the fraud artist will want to move the money out of the second bank as fast as he can and then into a third bank in yet another country with yet another corporate identity.

Eventually, when the thief feels it is safe he will have the money converted into cash, usually by showing up and making a cash withdraw. Another option would be to purchase securities and have possession of the physical securities. Sometimes the thief may use cash to buy precious stones, rare coins, jewelry, art etc. which can be moved over borders without the necessity of declaring it and they would have to declare negotiable instruments. They could even attempt to take the money out of atm machines in cash over time. The thieves are often good at this and the banks know it and are trained to detect such activity. The problem is the filters used to catch such criminals often cause difficulties for regular people just trying to conduct routine banking transactions without causing any harm to anyone. Of course one could argue that the system is currently broken in this regards but inspite of this we must all learn to work within the guidelines.

The point of this article is to show you how the bank looks at such transaction so you can avoid such practices thus preserving your relationship with the bank.

Wire transfers to and from hi-risk or blacklisted countries is another way to have your account closed. Some of these countries are the ones where there is a lot of terrorism, war or the source of a lot of fraud like Nigeria. The list is not static and can change frequently.

Accepting checks that are going to come back saying insufficient funds or account closed is another great way to have your account closed.

Having wires returned for any reason numerous times will also get an account closed.

Try to get to know your account manager or branch manager at the bank. Always inform them of any substantial transactions before they occur and be prepared to offer the bank any requested documentation. Never lie to the bank about anything and make sure the bank can reach you quickly and easily so if there are questions they can be answered quickly.

Generally a surprisingly small amount of people ever have any problems with their offshore bank, follow these tips and you should never be in the small minority of people who have issues with their bank.

For more information go to: http://www.panamalaw.org

Article source: Expert Articles