Your questions to a private banker

[Hans Hoffmann]

Hey ladies and gentleman,

I have been on this forum for a week and I really enjoy it. I wanted to make my contribution to this forum and I think I have a nice way to do it.

But first ill do a brief explanation. For last 15 years I have been working as a private banker, during last 6 months I switched for a position in a private sector company and now I found this forum. I also have an IT company, but its not the main point of the discussion.

So I wanted to share my practical and general banking knowledge with you guys. I want to start a thread where you will be able to freely ask any question you would like to know answer for about banking, maybe not about BASEL 3 standards, but anything that you could think of to ask a private banker. Those can be questions about life or about compliance.

Please note that this thread is not made for marketing purpose, and questions like in what bank can you help open account will not be answered.

Lets see how it works out and have a nice day.

 

[OKtober]

Hi Hans,

I will definitely be watching this thread.

I am currently about to incorporate my first offshore company so all this is very new to me and I am trying to learn as much as I can to avoid bad surprises later on but I have to say that the opening a bank account bit is the most confusing part of the process so far.

Just a few questions to start off this thread if that's OK:
- since I am not very familiar with the offshore banking environment, I can only rely on the feedback I find online about the bank I would potentially open a corporate account with. So apart from opening several bank accounts with different banks to avoid putting all my eggs in the same basket, is there anything else I could do in order to mitigate the risk of a bank going bust on me for example?
- What do you think of service providers like TransferWise for example? By this I mean: are they a good option to keep money available or stored away on top of a "standard" bank account?
- I am very new to all this so sorry for the dumb question but could you explain what an EMI account is and what the main advantages/disadvantages of them are. I have read quite a lot about them but can't say it is very clear to me just yet.

Thanks again for starting this thread.

 

[happyjohn]

One looking for a bank account will have to move from the screen to the real world. You want to travel to different destinations to visit banks and lawyers, some of it will pay back and other is waste of time, anyway, it's the way to do it.

If you don't have the money for it or you don't think your business is big enough to do so, you don't need a offshore account.

 

[Hans Hoffmann]

Hi Hans,

I will definitely be watching this thread.

I am currently about to incorporate my first offshore company so all this is very new to me and I am trying to learn as much as I can to avoid bad surprises later on but I have to say that the opening a bank account bit is the most confusing part of the process so far.

Just a few questions to start off this thread if that's OK:
- since I am not very familiar with the offshore banking environment, I can only rely on the feedback I find online about the bank I would potentially open a corporate account with. So apart from opening several bank accounts with different banks to avoid putting all my eggs in the same basket, is there anything else I could do in order to mitigate the risk of a bank going bust on me for example?
- What do you think of service providers like TransferWise for example? By this I mean: are they a good option to keep money available or stored away on top of a "standard" bank account?
- I am very new to all this so sorry for the dumb question but could you explain what an EMI account is and what the main advantages/disadvantages of them are. I have read quite a lot about them but can't say it is very clear to me just yet.

Thanks again for starting this thread.

Thank you, those are good questions. To start off with the answers, ill note that in order to provide you with the information which I know for sure, I will speak about European jurisdictions.

Answer for first question will be that you should consider investing in a low risk securities such as bonds. The fun thing with them is that govenment bonds are really safe security ( just dont buy Venesuela bond, use common sence) and they wont be counted as cash on your regular account in bank. In case of bank bankrupcy you will be able to transfer them to another investment account in another bank, without any loss.

Second question, its interesting, but I cant predict future, I can only assume here. I think that regulators see where this is going and will just hit such providers with same harder regulation in future. I would give 2-3 years until that happens.

 

[Hans Hoffmann]

Sorry I missed third question, EMI account is an account in Electronic Money Institution. Its just an account for regular operations the difference is that EMI is not a bank, different regulations apply. An example of EMI would be Tran*ferW***, I hope youll get the name since I dont want to get banned for marketing.

 

[OKtober]

One looking for a bank account will have to move from the screen to the real world. You want to travel to different destinations to visit banks and lawyers, some of it will pay back and other is waste of time, anyway, it's the way to do it.

If you don't have the money for it or you don't think your business is big enough to do so, you don't need a offshore account.

I agree with that. Although learning from someone else's experience might save some time and sometimes enable a small business to save substantial amounts of money and in turn grow faster.

 

[OKtober]

Thank you, those are good questions. To start off with the answers, ill note that in order to provide you with the information which I know for sure, I will speak about European jurisdictions.

Answer for first question will be that you should consider investing in a low risk securities such as bonds. The fun thing with them is that govenment bonds are really safe security ( just dont buy Venesuela bond, use common sence) and they wont be counted as cash on your regular account in bank. In case of bank bankrupcy you will be able to transfer them to another investment account in another bank, without any loss.

Thanks for the advice. I will keep that in mind.

Second question, its interesting, but I cant predict future, I can only assume here. I think that regulators see where this is going and will just hit such providers with same harder regulation in future. I would give 2-3 years until that happens.

Sorry again for the dumb question but in which way the regulation on these providers is softer?

 

[Hans Hoffmann]

Thanks for the advice. I will keep that in mind.


Sorry again for the dumb question but in which way the regulation on these providers is softer?

About the advice, just ask your bank what is the regulation about bankrupcy and securities in that country

And about regulation, the thing that I know for sure is that regulation about financial ratios and financial stability which are applied to banks are not that strict for EMIs, but it may differ from country to country

 

[OKtober]

About the advice, just ask your bank what is the regulation about bankrupcy and securities in that country

And about regulation, the thing that I know for sure is that regulation about financial ratios and financial stability which are applied to banks are not that strict for EMIs, but it may differ from country to country

Thank you.

 

[7889]

Thank you for sharing. What's your experience with CRS so far? Is it working as expected? How far the bank is ready to go to check CRS data submitted by the client? What do you do with cliens who say they are from non-CRS countries?

 

[Hans Hoffmann]

Thank you for sharing. What's your experience with CRS so far? Is it working as expected? How far the bank is ready to go to check CRS data submitted by the client? What do you do with cliens who say they are from non-CRS countries?

Another interesting question, thank you.
To give you a good example I will briefly describe how this works inside the bank.

Banks within CRS countries are obliged to report information about foreign customers to local tax authorities. After local tax authorities receive information about foreign customers they send this info to tax authority of which this customer is resident. Its sad to say but info about amounts on the account are sent too (those which were on the account on the day of report, atleast it was so last time I was involved in the process). Hope this answers the first part of your question, CRS works;(

Usually bank will check the info submitted by the customer in regards to CRS, its obligatory according to regulation. If customer is from non-CRS country bank will just pass on, but they will double check that based on provided explanations and documents.

 

[happyjohn]

hmmm, where did I miss that all banks have to report you and your banking venture if you live in the EU and most other parts of the world! Only way to avoid it may be whet I read the last day here on the forum.

You apply for a business bank account, when the bank is asking for tax residency number you provide the one of the company which has to be outside of the EU i.e. Belize, Seychelles, St. kitts etc. and you will be fine. Not sure if this is going to be valid but it may work.

 

[Hans Hoffmann]

hmmm, where did I miss that all banks have to report you and your banking venture if you live in the EU and most other parts of the world! Only way to avoid it may be whet I read the last day here on the forum.

You apply for a business bank account, when the bank is asking for tax residency number you provide the one of the company which has to be outside of the EU i.e. Belize, Seychelles, St. kitts etc. and you will be fine. Not sure if this is going to be valid but it may work.

Please note that bank will send info about company which belongs to beneficiary in the bank. And bank will also specify tax id of the beneficiary when you open a corporate account. When Russia joined CRS alot of company accounts were closing in EU. They didnt want to get reported.

Also please get familiar with the list of CRS countries, for example Andorra, Antigua, Belize, Cayman, Cyprus, Gibraltar, Domi

 

[Hans Hoffmann]

Please note that bank will send info about company which belongs to beneficiary in the bank. And bank will also specify tax id of the beneficiary when you open a corporate account. When Russia joined CRS alot of company accounts were closing in EU. They didnt want to get reported.

Also please get familiar with the list of CRS countries, for example Andorra, Antigua, Belize, Cayman, Cyprus, Gibraltar, Dominica, Hong Kong, Isle of Man, Marshall islands, Panama, Seychelles, Saint Kitts, BVI and many others.

People just tend to think that this isnt a major issue while tax administration is collecting info which they yet dont know how to use.

 

[7889]

Usually bank will check the info submitted by the customer in regards to CRS, its obligatory according to regulation. If customer is from non-CRS country bank will just pass on, but they will double check that based on provided explanations and documents.

Thank you. Do you know if banks only send information based on customer's residency at the time of reporting, or they also send info on his citizenship, former residency, mailing addresses and such "just in case"?

 

[Hans Hoffmann]

Thank you. Do you know if banks only send information based on customer's residency at the time of reporting, or they also send info on his citizenship, former residency, mailing addresses and such "just in case"?

You are welcome, the tax residency which you will provide will be used for this purpose. Usually banks dont tend to get info on all of your passports, tax residencies etc. They will use the documents which you will provide when opening a bank account. They dont send the info which you listed as "just in case"the list is quite precise and nobody wants to send more then is needed.

 

[andres33]

Hello Hans
it is normal that a swiss private bank are asking to justificate any movement from my account? I was asking a cheque 30K to make an option contract to reserve a real estate property. And they ask about a copy of contract.
By other hand, my account is an IBC company and there is no posibility to change this account for account at my name because I'm resident in a EU country that no signed some convention with OCDE. This is normal?
I tried to change my banque but any banks in Switzerland say the same. omr an IBC account nobody want nothing. What can I do?
Wtih all my thanks for your reply, regards

 

[Hans Hoffmann]

Hello Hans
it is normal that a swiss private bank are asking to justificate any movement from my account? I was asking a cheque 30K to make an option contract to reserve a real estate property. And they ask about a copy of contract.
By other hand, my account is an IBC company and there is no posibility to change this account for account at my name because I'm resident in a EU country that no signed some convention with OCDE. This is normal?
I tried to change my banque but any banks in Switzerland say the same. omr an IBC account nobody want nothing. What can I do?
Wtih all my thanks for your reply, regards

Thanks for your question, lets start with a general phrase that banks have the right to ask for confirmation documentation when they want to do so. It should be even stated in the general agreement rules which you signed with the bank. As far as I understand you have Belize IBC company? Are you an attorney or beneficial owner of the company? What is the ownership structure?

It should be possible to buy real estate in the name of the legal entity which you hold, but I need more information from you in order to provide you with an answer. Could you please describe the situation abit more precicely?

 

[andres33]

Hello Hans. Thank you very much for this quick reply. It's IBC Seychelles. I'm the director and unique shareholder. So beneficial owner.
I did the option contrat as a 3º part participating in the business. But it remain for the moment as a private contract.
Befor to finish, my apologies for may basic english

 

[andres33]

Sorry for the curiosity. You was banker in Europe. If you can't reply that, don't worry