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Why not get a bank account, transfer money and then close it before end of year to avoid reporting?

E

Educate

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Nov 13, 2017
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#1
So all the accounts get reported on 31st of December according to CRS and FACTA.

So why not just use the account all year and close it at end of year so nothing gets reported?

You could withdraw money via ATMs, purchase things with it or transfer it to stocks or something else, just getting rid of bank account altogether.
 
#2
Don't you think they report accounts that have been used during the year and got closed at the end of the year? I mean that may be the Whole thing of it they report all accounts regardless if they got closed or still operating.
 
#3
No, they don't. Read the law, it says they report on Dec 21 along with balances on that date. All in one batch. Makes total sense. Why would they waste resources reporting anything else? So again, why would my plan NOT work?
 
#4
So it may work.. I wasn't aware of that. But what sense does it make, it means you can withdraw all your Money from one account to an EMI for 1 day and then back to a new account this will open a loophole for Money laundering I say.
 
#5
Well, even if they report closed accounts, they will report an account with 0 balance. And yes, you can withdraw, but the place you will be withdrawing to WILL still have obligation to report unless they are USA based. I understand that USA does not report on its own, because CRS is not applicable to them.

You can also simply cash out via ATMs, buying real estate, buying stuff, lending to someone, converting to cryptocurrencies, etc...again would love someone to explain to me why it won't work.
 
#6
fyi Most credible banks have CRS/FATCA enabled banking platforms. This means banks will report your account whether you change address, close the account etc. They will report even if you show "indica" meaning any sign of a foreign phone numbers or mailing addresses etc in another country. Opening and closing an account during the year will not work unless you are using a bank with a cheapy banking platform with no FATCA/CRS reporting functionality built in. In which case the bank is manually producing the CRS report and may miss closed accounts.

A zero balance reported is not the end of the world. Many people open accounts abroad and never use them. A tax authority will not pursue you unless you come up on their radar as someone wealthy in which case they will use a DTA to obtain further information on the zero balance i.e all credits and debits to that account....then your caught.
 
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#7
Martin Everson said:
fyi Most credible banks have CRS/FATCA enabled banking platforms. This means banks will report your account whether you change address, close the account etc. They will report even if you show "indica" meaning any sign of a foreign phone numbers or mailing addresses etc in another country. Opening and closing an account during the year will not work unless you are using a bank with a cheapy banking platform with no FATCA/CRS reporting functionality built in. In which case the bank is manually producing the CRS report and may miss closed accounts.

A zero balance reported is not the end of the world. Many people open accounts abroad and never use them. A tax authority will not pursue you unless you come up on their radar as someone wealthy in which case they will use a DTA to obtain further information on the zero balance i.e all credits and debits to that account....then your caught.
Click to expand...
What if those are not US banks, but US brokers (stock, crypto brokers) instead?
 
#9
if you're going to do this, is not a long term game and it's not a smart move if you have figure or more.
the idea behind saving money on the bank, is to keep it for the day you want it.
if you are going to play with it evey year like this, i prefer to keep it in my house then use it to buy what i want anytime.
 
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#10
Lets say you want to get a large amount from cryptocurrency gains into stocks. So the idea is to transfer from crypto exchange to offshore private banking account, quickly transfer to stock broker, but stocks and remove the offshore account or leave it with $0 balance.
 
#11
Educate said:
What if those are not US banks, but US brokers (stock, crypto brokers) instead?
Click to expand...
Check if they are registered for FATCA. If they are registered for FATCA then they have an obligation to report...its that simple.
 
#12
Educate said:
CRS says that on dec 31 they report the balance. So if you clean the account until 31st of dec, you are good?
Click to expand...
No. FATCA/CRS software used by banks is much more clever than that. They can see peak balance, total turnover etc. One would love to think they could transfer on $1bn to an account during the year and transfer out before Dec 31st and nothing gets reported but it does not work that way. The software used is sophisticated and automated.
 
#13
Educate said:
Lets say you want to get a large amount from cryptocurrency gains into stocks. So the idea is to transfer from crypto exchange to offshore private banking account, quickly transfer to stock broker, but stocks and remove the offshore account or leave it with $0 balance.
Click to expand...

You would actually go Crypto Wallet -> Real Asset -> Bank

People are using crypto on an industrial scale to launder millions and it is being done without banks being involved. Cyrpto currencies are going directly into real assets which are sold immediately and the money banked or dumped into non-reportable assets.
 
#15
I was referring to commodities actually but some gold dealers allow you to buy gold/silver with bitcoin. They normally have a holding period of a few days when you buy gold/silver and then you are free to sell the gold back to them and move the money out out to an account. Gold dealer has made their profit on spread so has no interest on preventing you from doing this. All is not reported.

Sorry but I won't out any company using this practice here.
 
#17
Word of advice don't mess around with black money on the stock market unless you are willing to do the time :)
 
#18
How is it "black money"? It isn't. Did you read what I said? I want to sell LEGALLY BOUGHT BITCOINS. I want to trade them for STOCKS.

So let us say you bought a large portion of Bitcoins in 2012. Now that they have bubbled and are about to burst you want to cash out.

But cashing out and paying the tax will take 1/4th of the profit. Imagine if you invested that in long term stocks.

So idea is to get the coin profits to stocks directly or by avoiding unnecessary parties.

There is NO BLACK MONEY here.
 
#19
You just confirmed it is black money right there. Once you get rid of your coins capital gains is due. It's like selling your house and moving the money into a boat without paying any taxes on the gain on sale of house.
 
#20
If you earn money and tax is due on it and you don't pay that money becomes black money.


Definition of black money:

"income illegally obtained or not declared for tax purposes."
 
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