The Asset Protection Law Letter
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               THE ASSET PROTECTION LAW LETTER            

Picking the Right Foreign Bank

Foreign bank accounts have always been an important consideration for wealthy Americans. Whether the objective is privacy, tax planning, asset protection, currency hedging or broader investment choices, a foreign bank account can accomplish some or all of these goals.

Picking the right foreign bank requires addressing several considerations that clients usually do not bother with.

In the 1980s and 1990s a lot of Americans banked in the Caribbean. The bank accounts were easy to establish, provided Internet banking capability, and offered credit cards tied to the accounts. Following 9/11, the U.S. government began exerted pressure on the Caribbean-based banks, forcing them to do a lot more due diligence on their clients, maintain better records and share information with U.S. investigators in certain types of investigations. The Caribbean banks, to a large extent, complied, making Caribbean-based accounts unattractive to a lot of Americans seeking privacy, tax planning or asset protection.

Caribbean banks also do not provide a large selection of investment choices and many of them are fairly small. A couple of banks have failed in the recent past.

Beginning with 2002, we had shifted most of our clients to European-based banks, with the banking done in Europe. Having tried numerous banks in numerous jurisdictions, we concluded that Swiss banks are now the best choice for Americans desiring foreign bank accounts. We have completely abandoned the use of the Chanel Islands (like Isle of Man, Guernsey) due to lack of good customer service.

The Swiss private banks usually provide fantastic customer service, are very responsive to client needs, are large and stable, offer a universe of investment choices and afford a better degree of privacy than any other jurisdiction. Swiss banks do not cooperate with U.S. government investigations, do not make funds available to creditors and Swiss laws make it difficult to obtain banking information. For example, in Switzerland it is illegal to depose a banker. For celebrity (or really paranoid) clients, numbered accounts may be used, assuring that only a few people at the bank are aware of the client's identity.

But not all Swiss private banks are equally good for American depositors. What happened with UBS in May is a good example. UBS is Switzerland's largest bank. A couple of UBS higher-ups were indicted in a Florida District court by the U.S. government for assisting wealthy Americans with tax evasion and evading the disclosure requirements for foreign bank accounts.

As a part of this prosecution, the U.S. federal government subpoenaed from UBS a list of American clients that bank with UBS in Switzerland and Lichtenstein. While UBS is still considering its options and is unlikely to comply willingly, this sent a wave of panic through Americans with UBS accounts offshore.

They are right to panic. UBS, while a foreign bank, has extensive business activities in the U.S., allowing the U.S. government to exert tremendous leverage over UBS's foreign operations.

Our clients are sleeping well. We have always advised them to bank only with those foreign banks that have no business activities in the U.S. The U.S. government has no leverage and no jurisdiction over foreign banks that are not present in the U.S.

Foreign banking choices available to Americans are numerous. But careful planning is required when picking the right bank. Having set up hundreds of offshore accounts for our clients we are happy to share our knowledge with you.

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Robert F. KluegerJD, LLM 
Mr. Klueger is one of the very few private attorneys in America who has argued a tax case before the United States Supreme Court, [United States v. Brockamp, 519 US 347 (1997)], which resulted in a change in the tax law regarding tax refund claims filed by disabled taxpayers....

Jacob Stein, JD, LLM
Mr. Stein is one of California’s best known attorneys and AV rated by Martindale-Hubbell (highest possible rating). He lectures dozens of legal seminars each year on the subjects of asset protection and advanced tax planning....
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