Five offshore banking countries Americans should avoid

Written by Andrew Henderson

Dateline: Wroclaw, Poland

For years, the United States and its cronies at the OECD have led a campaign to shut down offshore banking countries that didn’t goose-step along with their goals of global financial transparency. Countries like Switzerland that have enforced strict bank secrecy laws were prosecuted and destroyed.

Today, bank secrecy is largely a thing of the past and, as a result, opening an offshore bank account is harder than ever for Americans.

Additionally, laws like FATCA have forced offshore banks to shut down to Americans. In fact, some offshore banking countries have become almost completely off-limits to Americans (and other nationalities, as well). These include some of the stalwarts of the offshore world, and those most often associated with offshore banking.

Off-limits offshore banking countries

The following are five offshore banking countries that are off-limits to Americans or should just be avoided as a rule of smart offshore banking:

Switzerland

The United States government is directly responsible for two bank closures in Switzerland. Not bank failures, mind you, but solvent banks closing their doors because the US didn’t like the way they ran their operations vis-à-vis American clients.

While Switzerland has always been an expensive place to bank, the US government has made it even more so. My colleagues, with decades of experience in offshore business, recall an era when the top Swiss banks demanded several million dollars to open an account with them. These days, almost all Swiss banks require at least $1 million on deposit. The lowest I’ve yet to find is approximately $800,000.

Swiss banks are also known for their penchant for private banking, which favors long-term money management over transactional banking. If you don’t want your millions tied up for the long-term, look elsewhere.

Liechtenstein

Thanks to an odd interest in visiting the world’s micro-states, I visited Liechtenstein early in my world travels. The place is quite quaint; you can get from Sargans, Switerzland to the Austrian border in about half an hour.

Liechtenstein banks operate much like those in Switzerland. Considering that Liechtenstein uses the Swiss military and Swiss currency in its micro-state, that doesn’t seem so crazy.

Liechtenstein has had its own run-ins with US and European regulators. The Swiss unit of a Liechtenstein bank will close down later this year and pay millions in fines to avoid prosecution in the United States.

In 2008, Liechtenstein was the center of a large tax evasion probe in Germany that left high-tax countries scrambling to condemn the micro-state as one of the last uncooperative tax havens. The country shed much of its bank secrecy and recast itself, not as a tax haven, but a “safe haven”.

As a result of all of this, Liechtenstein has become rather gun-shy about opening accounts for Americans or many Europeans. In fact, you’d be hard-pressed to find any Liechtenstein bank that will open an offshore account for Americans, let alone set up a famed Liechtenstein trust for asset protection.

Of course, some Liechtenstein bankers have bigger problems; the head of one of the country’s largest banks was recently shot dead in a “Mafia-style” murder, allegedly by the “Robin Hood of Liechtenstein”.

Luxembourg

Luxembourg is an interesting place. While not as small as offshore banking tax havens like Andorra or Liechtenstein, it is nonetheless built on the success of its financial industry.

These days, that financial industry is off-limits to Americans. Few, if any, Luxembourg banks accept US persons as clients. While several US firms, including American Express, have established financial services units in Luxembourg, most do not do business with Americans.

After the Cyprus debacle, some in the EU complained that Luxembourg should be reigned in considering its small size (less than 1,000 square miles) and the size of its financial sector compared to the overall GDP.

Of course, Luxembourg is far better capitalized than Cyprus and comes without any of the money laundering baggage that was present to the south.

However, the slings and arrows directed at any developed world offshore jurisdiction these days are enough to cause problems for those wishing to open offshore accounts. If you’re American, skip Luxembourg. You really don’t have much of a choice.

Cyprus

I don’t know which is worse: the fact that some offshore websites are still promoting their ability to open a Cyprus bank account for clients, or the fact that some people are still going for it. While some would suggest that lightning rarely strikes twice, I wouldn’t be so fast to jump into bed with Cyprus with any amount of my money.

I have concerns about their deposit insurance, their membership in the EU, the stability of their banking sector, and with their government. I don’t recommend you spend the reduced sum of 2.5 million euros for Cypriot citizenship, either.

Ukraine

You might think that Ukraine is totally out of place on a list of offshore banking countries. And you’d be right… in the sense that it is worlds apart from the safe-haven status of countries like Switzerland. However, Ukraine currently offers some of the highest deposit yields on earth, with some banks paying up to 18% on one-year CDs. In a world starved for yield, adventurous depositors might seek refuge in a place like Ukraine.

Now, I’m a big fan of claiming higher interest rates in offshore jurisdictions. There’s no reason not to earn as much interest as you can, provided the jurisdiction you’re banking in is stable.

Sadly, Ukraine is far from stable. Many banks in Ukraine are controlled by the local mob as a means of money laundering. Even some Ukrainian bank websites look remarkably similar to those 100%-a-day HYIP scams you see floating around online.

That’s not surprising, because getting your money out of a Ukrainian bank can be near impossible. Few banks in Ukraine will send proceeds from your account out of Ukraine. You have to go there to get your money.

I can’t imagine many of you want to go to Ukraine ever, let alone a second time.

Then again, it is claimed that a Ukrainian banker toppled a large bank in Lithuania after using it to launder money, so your money might not even be there at all.

There was a time I might have been cautiously agnostic about opening an account with one of the international banks in Ukraine. Today, I wouldn’t advise doing even that. Some places are easier to open an offshore account than others.

Andrew Henderson
Last updated: Dec 29, 2019 at 5:34AM

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12 Comments

  1. LibertyChick

    What about storing gold/silver? This would not be in a bank but in a depository. Seems Switzerland was highly recommended. Is it still? Singapore was also highly touted. I wonder when so close to China and North Korea (maybe more so in my mind than in geography) I wonder how safe it can be when so close to communism… Am I better off to just store it in a depository in Delaware?

    Reply
  2. Derrek

    What are some of the best offshore countries to bank and invest overseas?

    Reply
  3. Anne Liebgott

    There are many Swiss SEC-registered wealth managers that welcome American clients in the United States and abroad, providing, SEC, IRS and FATCA compliant wealth management solutions. They can be found at americanswelcome.ch – Where Americans are Welcome

    Reply
  4. Anton Olff

    One doesn’t go to Ukraine for banking. One goes there for the best looking women on Planet Earth.

    Reply
    • John

      Anton, that is a true statement! I am in Odessa as I write this for the 3rd time this year alone! One visit to Ukraine (especially beautiful Odessa) and a man is spoiled and ruined for life in terms of ever being seriously attracted western women again!

      Reply
      • Anton Olff

        Yes, I used to live in Odessa (or the “p*ssy paradise as expats call it) and am surely spoiled.

        Reply
  5. windsor1

    I have a lot of money in Switzerland. Recently I have become very disenchanted with using Switzerland as a storehouse. Europe seems to be disintegrating and so to Switzerland because of its trading relationships with Europe. I expect that capital controls are coming and it would not be a happy situation to have your wealth tied up in Switzerland and you physically living in N. America. The Swiss too have caved in and signed onto bail-in laws.

    Reply
  6. Eric Scott

    How will the Panama Papers impact Americans ability to open off shore accounts?

    Reply
  7. Dick Johnson

    Great site. Sign me up.

    Reply
  8. danepol

    The year 1984 has come and gone, but George Orwell’s prophetic, nightmarish vision in 1949 of the world we were becoming is timelier than ever. Welcome to the World Authority. You are not anonymous.

    Reply
  9. Harlen King

    As a retired American wanting to spend 3-6 months in Europe, no investments or work, which banks would be some what safe to open?!

    Reply

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