Question How are US-Based Puerto Rico Banks "Offshore"?

[Icandbacc]

For example, checking GK Bank International, with headquarters in San Juan PR -- even mentioning "USA" as Country instead of Puerto Rico on their website, even though it's actually Puerto Rico, I am not quite sure..

There is a difference between USA and Puerto Rico when it comes to FACTA/CRS/AEOI and other reporting methods. It's important therefor to know if a bank is in Puerto Rico or in the USA.

I know that Puerto Rico more or less belongs to the USA, but still it's a own country.

I am wondering if a bank, that has it's license in Puerto Rico, but has is headquarters in the USA, is secure at all regarding that? Can you really relay on such bank regarding FACTA and CRS?

For example lets pick ARIVAL, they have their headquarters in Miami (USA), while their Bank license is in Puerto Rico.

When I open a bank account, will I get a US-Bank Account or Puerto-Rico Bank Account?

And even if I get a Puerto Rico Bank Account, as I understood correctly, a US-Bank will still need to report all customers through FACTA/CRS. - Even if their bank license is in Puerto Rico.

Specially this means the bank reports to FACTA/CRS, or not:
"[...] is a bank regulated by US federal law and providing financial services to clients worldwide."

 

[Golden Fleece]

I know that Puerto Rico more or less belongs to the USA, but still it's a own country.

I do not have the time to offer a full response, but your analysis begins with an erroneous assumption. Puerto Rico is not its "own country." It is unincorporated territory of the United States.

The U.S. has full and complete control over Puerto Rico, but the U.S. also allows it substantial leeway over tax and banking matters. Puerto Rico is a third-world money pit for the U.S., which is is why the U.S. allows Puerto Rico to offer great tax benefits to investors. Whatever money gets raised by those programs means less money that the U.S. must pay to the highly dysfunctional local Puerto Rican governments.

Puerto Rico is offshore for everyone except U.S. citizens -- and even U.S. citizens can obtain substantial benefits from the PR residency / tax regime. If a U.S. citizen lives there for at least half the year, they pay favorable PR income taxes instead of much higher U.S. income taxes.

I do not know much about the PR banking. But knowing what I do about the dysfunction of the local PR governments, I would not rely on the protection of PR banking regulations. Be sure that the banks are highly liquid and have sound management.

 

[Wyoming]

@Golden Fleece is 100% right but I will give you more insight. First, calling it a pit is correct. It is corrupt, inefficient, and laws are inconsistently applied. It's not that they treat certain people differently (PR citizens, US citizens, foreign citizens, even PR government officials are all treated the same), its just that at certain times certain people just do not care. In ranking Caribbean islands, I put PR just below Jamaica.

The US had a certain degree of being known as a good offshore location. PR's laws on the books and typical Caribbean dysfunction made them even more so appealing. Simply put (and I am being simple) banking in PR is either a fully integrating bank with the US Federal Reserve or the offshore consisting of many small and some medium banks with usually only one correspondence/intermediary bank. They do the absolute minimum they are required to do. This means speficity details must be requested rather than freely given. On paper those banks are safe with 100% reserves. In practice their risk tolerance puts their correspondence banks at risk. None will allow a US citizen. Many will not entertain any passport holder of any majority English speaking country. Since the end of 2021 most are shedding Russians but not long ago I heard they still loved all Asians. Others here might have better to say on this subject.

I pay all my taxes and yet attempt to maintain as much privacy as possible. All my business is above board and legal. I even work with governments. I know just about everything I do is known to any government who cares to inquire but I do not want any Tom, Dick, or Harry to know my business. My reasoning in being here might be significantly different than yours but I will tell you my experiences with PR. I started one consulting firm with six employees in 2005. I sold that firm in 2008 after growing to 22 employees. In 2015, I started another company to staff my employees as contractors in local telecom companies in PR. At this time my primary Wyoming, USA based LLC is only a minority owner of that firm and neither I, nor any of my current employees, are an officer of that PR company. Until 2020 I still had one personal bank account with a local bank and I know the PR firm has two banking relationships, the same I started, the same local bank and another with Citibank. All are easy to work with and all had no issues. Closing my personal account was simple. Actually everything was simple and I do not speak Spanish.

Speaking Spanish is well worth the effort in PR or having a trusted partner who speaks Spanish. I know people get by with English but sometimes you run into someone who doesn't want to speak English with you that moment so they don't. They spoke perfectly good English with no issues the day before.

I stayed in PR for about six weeks in 2005 while periodical short visits over the next two plus years and only for one month in 2015 without further need of visits. It's not even really nice to visit as a tourist let alone conduct business there let alone live there. Either you are semi-safe and spend significant money or not safe outside of your villa/resort/building but spend much less. I had negative cash flow when I was there.

To prove my point, for mobile service antennas you have very few areas labeled green so a technician can head out anytime (they still don't late at night since they have to actually travel to the green area with red areas in between), some yellow allowing police escorts (who will never escort unless they're personally affected by the outage) and many red areas with no dispatch to site when the sun is below the horizon. Take a map of PR, have a couple of dots of green in San Juan, a little yellow in San Juan, and red throughout the rest of the island.

 

[Icandbacc]

But still I don't understand, if those bank's are treated as bank in Puerto Rico or as bank in the USA.
Specially if I read this: "[...] is a bank regulated by US federal law and providing financial services to clients worldwide." in the footer of a Puerto Rico licensed bank, it does not make any sense.

If it's a Puerto Rico Bank, than why should it be regulated by US federal law.

Also the good question would be, if the USA has access to all Puerto Rico bank accounts. Meaning that the US can easily access all data in Puerto Rico Banks, maybe even without court order. More or less it feels like opening a bank in the US than in Puerto Rico.

I could open a bank with Bank of Amercia, would it make any difference to a Puerto Rico bank account?

Right now I see no additional protection (privacy, difficult law/court processing) if I open a bank account in Puerto Rico compared to the USA. If a bank licensed in Puerto Rico has it's headquarters in the US, than its more or less like opening a bank in the US. It will at least not help to feel really like offshore.

 

[Golden Fleece]

If it's a Puerto Rico Bank, than why should it be regulated by US federal law.

As I said above:

Puerto Rico is not its "own country." It is unincorporated territory of the United States.

If you are a U.S. citizen, then there are some reporting requirements under FATCA if more than $50k:

With respect to a financial account located in a U.S. territory or possession, the asset will be reported differently on the two forms. For FBAR purposes, such an account is treated as a U.S. account and therefore does not need to be reported on the FBAR.5 That same account, however, is considered a foreign account for purposes of Form 8938 and must be reported on that form.6

https://www.americanbar.org/groups/...ay/20may-pp-mohammad-foreign-asset-reporting/
If you are not an American citizen, then it appears there is no CRS reporting:

According to a 2017 Bloomberg report, several International Financial Entities (private international bankers) have been created as part of a 2012 Puerto Rican law. As of August 2017, 44 IFEs are operating in Puerto Rico. Part of the IFEs’ appeal is their discretion: these financial institutions allow non-U.S. individuals to invest anonymously. The IFEs are not subject to the Common Reporting Standard, which allows jurisdictions to exchange information from their financial institutions with one another to combat tax evasion, because the United States is not a participating country. However, because Puerto Rico is a U.S. territory, IFEs must comply with the Foreign Account Tax Compliance Act (FATCA), which requires foreign banks to report accounts held by U.S. taxpayers as well as requires taxpayers themselves to disclose their assets if the value of said assets exceeds $50,000.

https://www.thorntaxlaw.com/tax-law...uerto Rico is,of said assets exceeds $50,000.

 

[Icandbacc]

If you are not an American citizen, then it appears there is no CRS reporting:

Even if the bank has it's address in the US (not puerto rico), and has only the bank license in Puerto Rico? (E.g. Arrival.) - they even provide IBAN from EU. Are you sure about that?

By that what you said, all Puerto Rico banks must be regulated by US federal law.

 

[Golden Fleece]

Even if the bank has it's address in the US (not puerto rico), and has only the bank license in Puerto Rico? (E.g. Arrival.) - they even provide IBAN from EU. Are you sure about that?

By that what you said, all Puerto Rico banks must be regulated by US federal law.

"Are you sure about that?" No, I am not -- because I am merely quoting from a random web site, which is why I used the word "it appears." You need professional legal guidance.

 

[Fulton Abraham Sanchez]

PR banks do not report FATCA or CRS. If the PR bank owns its ABA, it will be like any bank in US. If you open bank account in USA with a PR bank it will be PR bank account, which is the same as any regular account in US.

 

[Cetme308win]

I advise you guys to look into the international branch of Banco Popular or latinoamerican multinational banks like Banesco or Bancolombia

 

[Radko]

I see a lot of misinformation on this thread.
As someone that has an account in PR, I can tell you with 100% certainty the following:
If you have an account in PR and you invest funds via a broker you are required to submit FATCA.
PR does Not subscribe to the CRS.
PR has its own regulator, it's not the SEC, it's a local regulator called OCIF and they use to be very relaxed, but bad press and corruption forced them get tough, at the moment OCIF commissioner Natalia (I don't recall her last names) is very tough as she is pressured by the IRS to get tough, she will not hesitate to close a bank if they don't fullfil the requirements set by OCIF, a couple of bank's have been closed this year, once she decides to close a bank, there's no way back.
But if the bank is in full compliance then there's no problem, and once again, No CRS, just like the mainland.

 

[mythoffshore]

I see a lot of misinformation on this thread.
As someone that has an account in PR, I can tell you with 100% certainty the following:
If you have an account in PR and you invest funds via a broker you are required to submit FATCA.
PR does Not subscribe to the CRS.
PR has its own regulator, it's not the SEC, it's a local regulator called OCIF and they use to be very relaxed, but bad press and corruption forced them get tough, at the moment OCIF commissioner Natalia (I don't recall her last names) is very tough as she is pressured by the IRS to get tough, she will not hesitate to close a bank if they don't fullfil the requirements set by OCIF, a couple of bank's have been closed this year, once she decides to close a bank, there's no way back.
But if the bank is in full compliance then there's no problem, and once again, No CRS, just like the mainland.

Puerto Rico has various banking licences, such as EURO PACIFIC BANK, which holds Entidades Financieras Internacionales. These international banks are not FDIC insured in the US. There is also no CRS.