Sunday 25 July 2010

Smart Banking: Avoiding Hidden Bank Charges & Other Fees

All the information regarding the underhanded tactics that banks employ may have turned you off. You're probably thinking you should do away with banks altogether but before you make that decision, know that all you need is to get smart about your banking behavior, and you won't have to deal with hidden fees or any other sneaky tricks.

Debit Versus Credit

Most banks issue a debit card to customers who open an account and a lot of people use it extensively because it is convenient. However, there are many disadvantages to debit cards that it actually makes more sense to use a credit card.

Banks charge you a fee for in-store purchases and withdrawals from rival ATMs. Plus, if you use your debit card in certain establishments such as a gas station or hotel, your card can be blocked. A certain amount of money (from your account) is frozen, where you won't have access to that amount for about three days. This is a form of security measure for the merchant. Since they are not sure how much you will actually spend at the establishment, they make an estimate and put a hold on that amount to make sure the expenses will be adequately covered.

Keeping track of debit card purchases is a little trickier so the tendency to overspend is higher. If you inadvertently spend more than what your account contains, banks offer a clever little service called courtesy overdraft protection. Courtesy overdraft fees are exorbitant and the last thing you want is to have these fees pile up

Speaking of Overdrafts

If you opened a checking account, do away with overdraft programs altogether. Overdraft fees are typically pegged at $20 t0 $40 yearly and some banks will charge you a small fee each time you make use of an overdraft.

Courtesy overdrafts are even more of a no-no. Some banks charge as much as $40 per transaction. They also charge a daily fee for as long as your account has negative balance.

It helps to know as well that checks are usually cleared very quickly while banks can take a few days before they credit deposits to your account. What does this mean? You should be careful when issuing checks and make sure your account has more than enough to cover the amount. You might be thinking that you can deposit more money later but your check might have already been encashed before your deposit has been credited. This will result in an overdraft.

Credit Union Versus Banks

If you find banks might not be the establishment to keep your money in, consider joining a credit union. A credit union has some significant advantages over a bank. Credit unions typically charge lower fees and offer higher interest rates on your savings essentially because they non-profit organizations. Also, the fact that they are mostly tax-exempt might also be a factor.

Credit cards from credit unions also tend to have friendlier features. If you are late in payment once, for instance, you won't be charged additional interest. Also, most credit unions don't require you to pay annual credit card fees.
Incorporate in Cyprus

US Bank Account as a Non-Resident - A Must to Make Money Online?

We all have Bank accounts in our respective home countries or residences. No problem with that - it is easy to get. We need this to run our lives, do our day to day activities off-line and so on. It is no big deal or a problem. So it is until I got online to make money two years ago.

When you get online and try to make money, then you realize that the rule of the game will change for you. Suddenly you will realize that you need a US Bank account with a Bank over there in the US. Why? Because 80%-90% of the Internet businesses are controlled by people in US / Canada. That is the way it is for now and in the foreseeable future. And I doubt if the equation is ever going to change at all.

When you want to make money online, in most cases the buyer will be a US native who is either using PayPal or a Credit card to pay for things online. You have got to hook up with PayPal by opening an account with them to receive your payments from other PayPal users. But PayPal only allows people from about 50 countries of the world to use her services. In other words, you can not open an account with them if you are not from these 48-50 countries. Then you realize you are stuck.

What is the alternative if this is your situation?

Get a Merchant account or a third party payment processor to take credit and debit cards payments for you. From our earlier equation, 80%-90% of the time, the guys will be in the US. When it is time for the card company to transfer your money to you less their charges, you are going to receive a check which might take 2-4 weeks to get to you, depending on your location. You get the check, assuming you are lucky it did not get lost in transit, and deposit the same with your Bank in your home country. Your bank sends the check for collection in US - another 2-4 weeks. In US, your funds get cleared in 2-3 business days. Then you get your credit. Now your Bank will charge you about $25 - $45 for the check: remember they have to pay DHL / FedEx to transport your check along with other documents, plus they are in business. Get it?

Now for all they care, your check may be for an amount of between $100 and $200, especially if you are just starting out. If you get 10 - 20 checks in a year (yes you can be getting many checks from various affiliate programs) you might find yourself paying $250 - $900 for the year.

Now compare yourself with someone with a US Bank account. He gets paid by what they call ACH (Automated Clearing House) system. This is just an electronic fund transfer system initiated by individual account owners in US to pay others within a network of some banks in US / Canada. This takes just 2-3 days and bang, your money is in your US bank account. It is mostly free to go. In some case you pay a token. I pay $3 to receive ACH into my US Bank account. I live in Africa and I have access to my funds by use of the Card issued to me by the US bank. I can withdraw money daily at the ATM in my country, no problem! My problem is to make the money go into my US bank account:- Also I can use my Card to buy things online, a privilege not enjoyed by many especially in the developing and under-developed countries.

Now you can see that it is a must for you to have a US bank account if you want to make and retain money from the Internet. But getting one is one of your greatest nightmares as a non-resident. A non-resident refers to the non-US citizens, having no residential base in the country. It is generally put in to the use by the country's banking sector.

The banking laws as it concerns a non-resident are very strict. It is almost impossible if you do not know how to go about it. The thing is complex and complicated and most Banks will just avoid doing this for non-residents. For them it is a mine field which only a few have mastered. I spent 4 years researching this after I found myself in the above situation earlier mentioned. In my case I even had money trapped with PayPal, after opening my account in PayPal with a US mailing address (perfectly legal).

I found a way to do it and this is now documented in a Special Report. If you need a US Bank account - I think you should get one and start making money online. This is an amazingly lucrative thing to do if mastered rightly. I have opened my US Bank account and I now sell through PayPal, having satisfied all their requirements. You can now get a US Bank account as a non-resident.

You do not need to incorporate a US Company before you can get a US Bank account. That is an expensive approach. Follow the above link to get what you need. I feel you have now realized the importance of a US account as a non-resident. So go ahead and get your own US Bank account now. Do not wait until tomorrow as the laws are constantly changing. What is possible today may not be possible tomorrow. ACT fast. Good Luck.
Incorporate in Panama

Tuesday 20 July 2010

Offshore Investment Theories

The long-heralded recovery in the Japanese financial markets appears as far away as ever. Michael Wilson looks at why government reforms have been slow to spark a revival

Will the Tokyo revival ever happen? A year ago you’d probably have dismissed this as one of those stupid questions, like “Will the euro ever strengthen?” or “Will the rain ever stop?” Of course it will, you’d have said. Simple logic tells us that you can’t undervalue a perfectly satisfactory manufacturing economy indefinitely. Sooner or later, the combined effects of a weaker currency and a stronger export position are bound to have the desired effect, and simple arbitrage pressures will force the Japanese stock market back into a proper state of balance with the international investment community. Shares are bound to go up.

Offshore Investment Theories - Signs

It’s a nice theory, but this year the signs are that things are working out differently. Japan’s official growth rate has just been regraded by foreign investment analysts from 1 per cent to as much as 2.2 per cent. Industrial production levels have been rising by as much as 10 per cent year-on-year and its newly-appointed government (somewhat hastily convened and re-elected in July, after the sudden hospitalisation of the serving Prime Minister) has made a passable job of a political transition that most people thought was beyond it. The yen has tumbled back by 7 per cent in the last year, making it easier for Japanese exporters to sell into foreign markets such as China or the US.

But the stock markets have been inconsolable: the Nikkei 225, Japan’s most important large-company index, has slumped by nearly a quarter since the late spring, and even the broader-based Topix is 12 per cent down on the year (all figures correct in mid-October).

Offshore Investment Theories - Japanese Private Investors

Even worse, it seems clear at present that Japanese private investors are in no mood for taking any further risks at all. They’re buying bonds, they’re opening bank accounts, they’re doing everything except investing in domestic Japanese equities. And all our recent conversations with fund managers and analysts have confirmed that, apart from a handful of small-company stock-pickers, nobody in the international markets has much of an appetite for Tokyo either.

Besides, some people are saying, we haven’t defined what we mean by a revival anyway. Do we mean a stock market revival that will carry company valuations to the kinds of levels that we might expect to see on Wall Street? If so, we’ve already arrived: average Japanese price/earnings ratios are almost twice what they are in the States - 60, and rising. How much higher would it be sensible for us to go?

Or do we mean an economic revival, perhaps? Japan has the world’s third-highest per capita income (after Switzerland and the US) and its industrial performance has improved quite a lot since the redundancy programmes of the past five years. Its current industrial expansion into other parts of South-East Asia (surely the world’s biggest potential developing country market) is both timely and well-judged, for reasons we’ll examine shortly. But foreign investment analysts are still muttering darkly that it will all end in tears.

Offshore Investment Theories & Moodys

Moodys, the world’s most widely-recognised credit rating agency, has recently downgraded Japan’s domestic bond rating by two full grades, leaving Japan on the same risk rating as Portugal. Increasingly, there are fears that Japan may have got itself so heavily mired in debt that its economic growth will never become fast enough to shrug it off.

Some of the most worrying trends are social. We know, of course, that Japan’s population profile is ageing faster than any other developed country in the world, because of low birth rates and much longer life spans during the past 40 years. Everyone is agreed that the question of pension provision will soon start to get very urgent and that Japanese companies will need to come up with something pretty special if they’re to pay for all these people with the money produced by a dwindling working-age population.

There are a lot of doubts out there in the marketplace about just how much it’s going to cost, and that’s part of the reason why so many fund managers are wary.

Offshore Investment Theories & Unemployment

The other main social factor is unemployment, something that we’ve already touched on. Now that unemployment levels are pushing 5 per cent, the highest rates in post-war history, people are scurrying down to their post offices and buying special government bonds with which to build up their retirement nest-eggs, rather than hitting the high streets with their credit cards. So the domestic consumer market is in crisis, shops are empty and even long-established chain stores are reporting losses.

Resellers and referrars services

Banking Online: Your Money and the Internet

Banking online is one of the newest and more important technological advances for the banking system. Banking online makes basic banking much more accessible. Suddenly, you can perform many basic banking tasks whenever you would please. As long as you have an Internet connection, you will be able to perform all of these tasks. There are some things to know and consider about online banking to understand the connection between your money and the Internet.

Security
There are multiple things to consider with security and online banking. There are various parts of online banking that require special security precautions. Initially, you need to make sure that you are on a secure connection. There will be a small lock at the bottom of the browser. This lock means that the connection is secure, and that your information will be safe. You also need to be secure with your password and account. You need to create a password that is random and hard to predict. You also need to make sure that, when done with online banking, you log out manually. This can help to make sure that you are the only person who can get into your online banking account.

What Can Be Done
There are a lot of different things that can be done with online banking. All of your accounts can be viewed. You can see all transactions, and can see the balances for all of your accounts. You can easily transfer money between all of these accounts. You can pay bills online. You can set up an automatic online bill payment system that will cause you to be billed monthly. This makes sure that you do not miss any payments. You can also easily check up on rewards points for your credit cards through the bank online. All of this can be done wherever there is an Internet connection.

Downtime Issues
There are some downtime issues to consider when thinking about online banking. Just like any other website, the online banking website will have downtown. Some of this will be schedule for maintenance. Sometimes, this will be without notice. While online banking is nice, it may not be smart to fully rely on it for major banking issues.

Security issues are huge when it comes to online banking. Many people fail to realize that online banking can be somewhat of a safety concern, as far as your personal information is concerned. There are a lot of positives to online banking, however. Suddenly, you can do work with your bank, even when the bank is closed. This can save people multiple trips to the bank every year. There are some downtime issues, however. Just like any other website, online banking can feature downtime and technological issues. When this happens, the usefulness of online banking is gone. With all that being said, online banking is the most efficient way to work with your bank. Take advantage of all online banking opportunities.
Get your anonymous credit cards

Sunday 18 July 2010

US Bank Account as a Non-Resident - A Must to Make Money Online?

We all have Bank accounts in our respective home countries or residences. No problem with that - it is easy to get. We need this to run our lives, do our day to day activities off-line and so on. It is no big deal or a problem. So it is until I got online to make money two years ago.

When you get online and try to make money, then you realize that the rule of the game will change for you. Suddenly you will realize that you need a US Bank account with a Bank over there in the US. Why? Because 80%-90% of the Internet businesses are controlled by people in US / Canada. That is the way it is for now and in the foreseeable future. And I doubt if the equation is ever going to change at all.

When you want to make money online, in most cases the buyer will be a US native who is either using PayPal or a Credit card to pay for things online. You have got to hook up with PayPal by opening an account with them to receive your payments from other PayPal users. But PayPal only allows people from about 50 countries of the world to use her services. In other words, you can not open an account with them if you are not from these 48-50 countries. Then you realize you are stuck.

What is the alternative if this is your situation?

Get a Merchant account or a third party payment processor to take credit and debit cards payments for you. From our earlier equation, 80%-90% of the time, the guys will be in the US. When it is time for the card company to transfer your money to you less their charges, you are going to receive a check which might take 2-4 weeks to get to you, depending on your location. You get the check, assuming you are lucky it did not get lost in transit, and deposit the same with your Bank in your home country. Your bank sends the check for collection in US - another 2-4 weeks. In US, your funds get cleared in 2-3 business days. Then you get your credit. Now your Bank will charge you about $25 - $45 for the check: remember they have to pay DHL / FedEx to transport your check along with other documents, plus they are in business. Get it?

Now for all they care, your check may be for an amount of between $100 and $200, especially if you are just starting out. If you get 10 - 20 checks in a year (yes you can be getting many checks from various affiliate programs) you might find yourself paying $250 - $900 for the year.

Now compare yourself with someone with a US Bank account. He gets paid by what they call ACH (Automated Clearing House) system. This is just an electronic fund transfer system initiated by individual account owners in US to pay others within a network of some banks in US / Canada. This takes just 2-3 days and bang, your money is in your US bank account. It is mostly free to go. In some case you pay a token. I pay $3 to receive ACH into my US Bank account. I live in Africa and I have access to my funds by use of the Card issued to me by the US bank. I can withdraw money daily at the ATM in my country, no problem! My problem is to make the money go into my US bank account:- Also I can use my Card to buy things online, a privilege not enjoyed by many especially in the developing and under-developed countries.

Now you can see that it is a must for you to have a US bank account if you want to make and retain money from the Internet. But getting one is one of your greatest nightmares as a non-resident. A non-resident refers to the non-US citizens, having no residential base in the country. It is generally put in to the use by the country's banking sector.

The banking laws as it concerns a non-resident are very strict. It is almost impossible if you do not know how to go about it. The thing is complex and complicated and most Banks will just avoid doing this for non-residents. For them it is a mine field which only a few have mastered. I spent 4 years researching this after I found myself in the above situation earlier mentioned. In my case I even had money trapped with PayPal, after opening my account in PayPal with a US mailing address (perfectly legal).

I found a way to do it and this is now documented in a Special Report. If you need a US Bank account - I think you should get one and start making money online. This is an amazingly lucrative thing to do if mastered rightly. I have opened my US Bank account and I now sell through PayPal, having satisfied all their requirements. You can now get a US Bank account as a non-resident.

You do not need to incorporate a US Company before you can get a US Bank account. That is an expensive approach. Follow the above link to get what you need. I feel you have now realized the importance of a US account as a non-resident. So go ahead and get your own US Bank account now. Do not wait until tomorrow as the laws are constantly changing. What is possible today may not be possible tomorrow. ACT fast. Good Luck.
Get your co-branded debit card

Getting to grips with offshore banking

You might already think that you know all you need to about private offshore banking, but if you’ve got a fair bit of capital to manage and could do with re-structuring your finances, then it is probably right up your alley.

Private Offshore Banking is designed to offer a personalised, tailor-made service which will optimise your existing assets, preserve your wealth and generally make your financial life a lot easier.

Offshore private banks cater for a wide variety of clients; from expatriates and international executives, to those looking to establish an effective way to transfer wealth to their heirs. It’s ideal for people looking to diversify their funds internationally while guarding against unnecessary taxes and minimising financial uncertainty, alongside those who need the flexibility and freedom of efficiently dealing in more than one currency.
The background

Historically, private Banking has tended to be seen as quite elitist, with certain institutions imposing stringent criteria when it comes to choosing their clientele. To some extent this is true and certain banks ask for a minimum deposit of around £500,000 – £1 million, but in recent years most banks have begun to offer similar services to customers with just a tenth of this kind of cash in their back pocket.

Private banks pride themselves on offering a diverse range of services to their clients including wealth management, savings, estate planning, trusts, and all kinds of tax planning. Private Offshore Banking means that you will benefit from all of these, alongside the assurance that your account will be based in a tax haven.

Similarly, if you wish to move a certain amount of money onshore, your personal relationship manager (RM) is already aware of your individual circumstances and can suggest the best way to mitigate against any unnecessary Capital Gains Tax (CGT).

One thing is for certain; private Banking means that there is no mis-selling and no fobbing you off with products that you don’t really need. RMs are there to help you structure your finances appropriately, and not simply earn commission based on the specific products you invest in. You also benefit from the close-knit support network surrounding each RM; if you are looking to invest in a fund, they will first consult an investment specialist to advise on the most appropriate decision for you.

Decisions, decisions…

If you’re set on the idea of channelling your fortune into an offshore private bank account, then the next question is which one to choose.
Looking for the ideal bank might seem like looking for a needle in a haystack, but if you are serious about your investments and have a large chunk of money to deposit, it’s worth familiarising yourself with the winners of Euromoney’s annual global private Banking awards.

The awards rank the best private banks according to their wealth management services, profitability, ratio of clients to relationship managers and services offered – so you know if it’s sitting pretty at the top of the list, as UBS was at the 2007 awards, then it offers a top notch, all round service.

General consensus is that the bigger the bank, the better your funds will be taken care of. This is to some degree rooted in truth considering an international financial institution with a steadfast reputation has an exceedingly slim chance of going bust, meaning your funds are in very safe hands. With this in mind, the best choice for most expats will probably be a global private bank with a well-established branch in your chosen jurisdiction.

The Isle of Man, Jersey and Guernsey all play host to a wealth of offshore private banks, although the stereotypical Swiss bank account still lives on. Switzerland currently controls an estimated 35 per cent of the world's private and institutional offshore funds, equating to a monetary value of 4.6 trillion Swiss francs or around £1.9 trillion.

Certain types of offshore account, such as the Dual Currency Deposit account offered by Royal Bank of Canada (RBC), will protect against currency fluctuations, allowing expats to deposit capital at a fixed exchange rate and, as long as the desired currency has not seen a marked depreciation in value, investors can then withdraw it at the agreed rate.

The inner workings

Offshore private Banking in the 21st century is regarded as more of a bespoke gateway into investment management rather than the traditional ‘family’ relationship built on generations of trust, however it undoubtedly still offers a highly personalised service.

As a result, relationship managers have assumed the position of objective Financial adviser and sounding board, rather than just the service provider. In addition, RMs will only work with a handful of other clients – lower net wealth individuals Banking with RBC will share theirs with an average of 50-60 others – meaning that you don’t end up getting a watered down service.
Individuals opening an offshore private bank account will not have to compromise on the usual, tangible benefits either. Offshore clients will be granted universally accepted debit and credit cards, cheque books in different currencies and global ATM access, as well as interest paid gross and favourable foreign exchange facilities.

What should I look for?

Moving from your comfort zone can be daunting so make sure you know what you want to achieve. Familiarise yourself with the average annual management fee, as well as the cost for any extras – remember that although extras are great, you shouldn’t skimp on the services you really need in order to obtain them.

If you are serious about investing, it will also be of benefit to find out how well equity managers have done over the past 5-10 years, alongside the range of bespoke services offered and how far the specific advisory services extend.

Buy Credit cards with account

Tuesday 13 July 2010

Internet Offshore Banking

Storms gather over fantasy islands

Mmm...the Bahamas, the Cayman Islands, Grenada... the very names trip off the tongue and conjure up images of exotic and sophistication. Bet you could get a decent return or two from a company out there...

Imperial Consolidated, for example: 15 per cent per year for one of its funds - guaranteed. 15 per cent per year! Guaranteed! Why even a poor old hack could make a decent man of himself with returns like that.
But that’s the thing about fantasy holiday destinations, they always seem just a little too fantastic.

Internet Offshore Banking & Investment International

As reported elsewhere in Investment International, Imperial Consolidated is offering fabulous returns. And while we are not saying IC will fail to achieve, one wonders whether the firm would have passed more stringent regulatory requirements in say, Jersey.
It has been a tough time for IC lately. News has been filtering through from the Bahamas that the firm has been forced to cease offering its Hint credit card.

This, because it lost the backing of card issuer Leadenhall Bank & Trust, and card administrator Axxess International. The firm has also decided to ship out of the Bahamas and may set up shop in Grenada, where it also has offices.

Internet Offshore Banking - Grenada

Meanwhile, over in Grenada, a firm called Preferred Trust, run by a man who is operating under a new Grenadan passport and a different identity, is offering even more enormous returns for investors.

Joseph Severin (previously Verlin Swartsendruber) is hoping to give investors returns of up to 60 per cent per year on investments as low as US$10,000.

Mouth watering stuff. But Swartsendruber, sorry Severin, admits the returns are not guaranteed and says his company has not been independently audited because this is unnecessary under Grenadan law.
So there you have it. Enormous returns and risk to match. But then, that’s the fantasy of the sunshine islands.

Still, it may be harsh to criticise some of these jurisdictions too heavily. After all the Bahamas has just landed the much-coveted Qualified Jurisdiction status that is awarded by the IRS in America.

Internet Offshore Banking & America

What this means is that America approves of the way the Bahamas is being regulated and of what it is doing to fight money laundering and tax ‘avoision’ by US citizens.
For jurisdictions that fail to land the ‘qualified’ status, the punitive measures are severe. Companies operating in such centres will face the sanction of a 30 per cent withholding tax on US-sourced income.
Ian Fair, chairman of the Bahamas Financial Services Board, was naturally overjoyed at the news.

He said: “It is obviously very, very good news because it clearly indicates recognition and acknowledgement that the laws that we have put in place and amended meet international standards.”
Fair also reckons the boost from the US will help the Bahamas to escape the OECD’s purge on tax havens.

Internet Offshore Banking & The Bahamas

“Our chances [of escaping the blacklist] have been increased. They have been enhanced by this because the only country which keeps a constant watch on us is our great neighbour, the United States.”
The Bahamas submitted its case for QJ status in the middle of last year, but the US stalled because of the centre’s lack of compliance with Know Your Customer rules.
It was only recently that the Bahamas introduced KYC rules which allowed the islands to win the status. At the moment the Bahamas doesn’t know how long it will retain QJ status.
Register an offshore numbered account

OFFSHORE TRUSTS FOR ASSET PROTECTION

Introduction To Privacy Issues Personal privacy is valued by all, but attacks on it are unobtrusive, and people usually do not know who has personal information about them. When you obtain a new credit card, buy a major appliance on credit, make a catalog purchase, and so on, a remarkable amount of your personal information is made available in computer databases. Records of martial status, income, age, credit ratings, academic qualifications, place of employment, and many others are available to commercial firms, the government, and pretty much anyone else who has the tenacity to find it. Personal privacy includes the concept of keeping information about our financial affairs private. Business firms, especially if they are privately owned, feel the same way; they are particularly resentful when financial and other confidential information is made available to competitors. Most people consider their financial affairs to be no one's business but their own, and no one wants strangers rummaging around in their bank accounts finding out where they spend money or where money is being put toward retirement. This is especially so if there is no knowledge of who is looking at the records of their purpose for doing so. Privacy, including that of financial matters, continues to erode in the United States. Many believe that Internal Revenue Service income tax statements have been made available to strangers even though confidentiality is claimed. Applications can be made to courts who can compel that books and records be made available to lawyers and government departments. They can then be used as evidence against a person in lawsuits. In the Boyd case of 1885, the Supreme Court said that a person's private books and papers used in a business cannot be used against that person. However, in 1984, the Doe decision said that a court can now compel a person to turn over private books and papers used in a business. Consequently, the Boyd decision was rendered worthless, which would appear contrary to the position that a person cannot be compelled to provide evidence that might be used against him. These privacy rights that many have fought to protect should attach to all people, not just criminals, to protect the innocent as well as the guilty. A Solution to Protecting Assets Anyone who has property, money, or investments of, perhaps, $350,000 should consider planning protection against possible attacks on privacy. (Schneider, 1995). Litigation, or "lawsuit lotto," has become a national pastime and a popular means for the accumulation of wealth. Today, if a person believes there is a possibility of obtaining money by means of a lawsuit, he or she may approach a lawyer. The converse is often true: a lawyer may approach a possible client and suggest bringing suit. In either case, the lawyer is likely to take the case on a contingency basis. When a lawyer and prospective client discuss the advisability of bringing a suit against someone, the lawyer will look at the probability of success. If probability is low, he or she will not take the case; if the probability is high, the prospective defendant's assets will be examined to ascertain if they are large enough to justify bringing suit. If the assets are small, the fee would be small, and the lawyer would not take the case. Let us assume that a prospective defendant has money in a bank account and other assets and that the danger of losing them from a lawsuit exists. The assets can be protected by placing them, before a suit is brought, into an asset protection trust. Asset protection planning means adopting advanced planning techniques by placing one's assets, whether inherited, earned, or won, beyond the reach of potential creditors. The trust is a legal and ethical way of protecting assets that does not involve hiding them or fraudulent transfers. (Donlevy-Rosen, 1997). As with any potential legal problems, advanced planning is of paramount importance. While few people ever plan to be sued and have their assets taken away from them by creditors, litigants, or through divorce settlements, these situations unfortunately occur too often for people to ignore them. They need to be part of a sound financial plan.Increasingly, individuals are looking offshore for protection and are setting up offshore asset protection trusts. Potentially, both creditors and the IRS can be held at bay, although the IRS has imposed stricter reporting requirements and penalties on deferred income for those who abuse the privileges that trusts provide.
Register an offshore merchant account

Tuesday 6 July 2010

Financial help: how and why to open an offshore bank account

Basic information on why and how you might want to open an offshore bank account, including preliminary research, application, profits and tax issues.


Think of offshore bank accounts and you tend to think of millionaires, money laundering and unscrupulous deals. The reality is that opening an offshore account – basically meaning a bank account in a foreign country - can be relatively straightforward, completely legal – and of course profitable. Offshore banks – also known as tax havens -- have proliferated in recent years. Today there are over 200 countries and territories that specialize in such activity. In the Cayman Islands, it is sometimes jokingly said that there are more banks than people. Citicorp, the huge banking company, was one of the first of many large US companies to set up its financial operations offshore.

So why would anyone want to – or need to – open an overseas bank account? One of the misnomers about an offshore bank account is that it is only for the very wealthy. In fact, theoretically anyone can open an account overseas and in these days of electronic banking, most applications can be handled on-line or by mail. You can also have your application handled by specialized companies or financial

advisors who will help to deal with the paperwork and regulations. The reason most individuals and companies open an overseas account is of course, to save or make money. Foreign banks offer a very good interest rate – usually much better than most US banks. In general, the longer you keep your money in one account, the more interest you will earn. Apart from the benefits to you, the investor, there are also huge economic benefits for the small foreign country where your bank is located. Privacy is also a major factor – many countries specialize in banking confidentiality; Switzerland immediately comes to mind. Some offshore banks have secrecy laws so strict that it is considered a crime for any bank employee to discuss your account with anyone except the account holder. Some overseas banks even allow you to open an account in a fictitious name.

To actually open an overseas bank account, you must firstly do some research – which country and which bank will be most suitable for your needs? Is a large or small bank better? There are advantages either way here – a larger bank may offer greater security and more services, but with higher fees. Keep in mind that you will have to communicate regularly with the bank, be able to check your account, deposit and withdraw funds and perhaps even visit them occasionally. The factors you would take into account when opening your regular checking or savings account here would also apply – what kind of fees will apply, do you have to maintain a minimum balance, and of course what rate of interest you will earn. Is the interest rate on your account tied into the US economy or the local currency of the country you are banking in? You may want to consider other services the bank offers, such as different types of accounts, credit cards and safety deposit boxes. Although you may not need any of these things; opening an offshore account can be as straightforward as just having a checking or savings account. Finally, you may want to consider the location of the bank as well – most offshore banks are situated in warmer climates, such as the Caribbean or Bahamas and it can be fun to combine business with pleasure!

Most people who open an overseas bank account want to enjoy the significant tax breaks that this will give them. The tax rules regarding offshore accounts can be complicated and you should get specialist tax advice if you are thinking of doing this. In general, if you have money in a bank account in another country it does not fall under US tax laws. You may have to declare your income but not necessarily pay taxes on it. Once you start applying this same rule to other investments - stocks, real estate etc – the tax rules can be even more confusing. Again, be sure to get professional tax advice before signing anything!

Paypal debit card ATM

Offshore Investment Theories

The long-heralded recovery in the Japanese financial markets appears as far away as ever. Michael Wilson looks at why government reforms have been slow to spark a revival

Will the Tokyo revival ever happen? A year ago you’d probably have dismissed this as one of those stupid questions, like “Will the euro ever strengthen?” or “Will the rain ever stop?” Of course it will, you’d have said. Simple logic tells us that you can’t undervalue a perfectly satisfactory manufacturing economy indefinitely. Sooner or later, the combined effects of a weaker currency and a stronger export position are bound to have the desired effect, and simple arbitrage pressures will force the Japanese stock market back into a proper state of balance with the international investment community. Shares are bound to go up.

Offshore Investment Theories - Signs

It’s a nice theory, but this year the signs are that things are working out differently. Japan’s official growth rate has just been regraded by foreign investment analysts from 1 per cent to as much as 2.2 per cent. Industrial production levels have been rising by as much as 10 per cent year-on-year and its newly-appointed government (somewhat hastily convened and re-elected in July, after the sudden hospitalisation of the serving Prime Minister) has made a passable job of a political transition that most people thought was beyond it. The yen has tumbled back by 7 per cent in the last year, making it easier for Japanese exporters to sell into foreign markets such as China or the US.
But the stock markets have been inconsolable: the Nikkei 225, Japan’s most important large-company index, has slumped by nearly a quarter since the late spring, and even the broader-based Topix is 12 per cent down on the year (all figures correct in mid-October).

Offshore Investment Theories - Japanese Private Investors

Even worse, it seems clear at present that Japanese private investors are in no mood for taking any further risks at all. They’re buying bonds, they’re opening bank accounts, they’re doing everything except investing in domestic Japanese equities. And all our recent conversations with fund managers and analysts have confirmed that, apart from a handful of small-company stock-pickers, nobody in the international markets has much of an appetite for Tokyo either.
Besides, some people are saying, we haven’t defined what we mean by a revival anyway. Do we mean a stock market revival that will carry company valuations to the kinds of levels that we might expect to see on Wall Street? If so, we’ve already arrived: average Japanese price/earnings ratios are almost twice what they are in the States - 60, and rising. How much higher would it be sensible for us to go?

Or do we mean an economic revival, perhaps? Japan has the world’s third-highest per capita income (after Switzerland and the US) and its industrial performance has improved quite a lot since the redundancy programmes of the past five years. Its current industrial expansion into other parts of South-East Asia (surely the world’s biggest potential developing country market) is both timely and well-judged, for reasons we’ll examine shortly. But foreign investment analysts are still muttering darkly that it will all end in tears.

Offshore Investment Theories & Moodys

Moodys, the world’s most widely-recognised credit rating agency, has recently downgraded Japan’s domestic bond rating by two full grades, leaving Japan on the same risk rating as Portugal. Increasingly, there are fears that Japan may have got itself so heavily mired in debt that its economic growth will never become fast enough to shrug it off.
Some of the most worrying trends are social. We know, of course, that Japan’s population profile is ageing faster than any other developed country in the world, because of low birth rates and much longer life spans during the past 40 years. Everyone is agreed that the question of pension provision will soon start to get very urgent and that Japanese companies will need to come up with something pretty special if they’re to pay for all these people with the money produced by a dwindling working-age population.

There are a lot of doubts out there in the marketplace about just how much it’s going to cost, and that’s part of the reason why so many fund managers are wary.

Offshore Investment Theories & Unemployment

The other main social factor is unemployment, something that we’ve already touched on. Now that unemployment levels are pushing 5 per cent, the highest rates in post-war history, people are scurrying down to their post offices and buying special government bonds with which to build up their retirement nest-eggs, rather than hitting the high streets with their credit cards. So the domestic consumer market is in crisis, shops are empty and even long-established chain stores are reporting losses.
Anonymous Visa Card

Friday 2 July 2010

Co-Branded and Affinity Credit Cards in the U.S

Co-branding has entered its late adolescence and is a fixture of American marketing, and increasingly so, of the global payments industry. There are literally thousands of co-branded and affinity card programs on offer. According to some industry estimates, approximately 45% of the cards in the wallets of U.S. consumers are co-branded or affinity cards.
American consumers are moving away from cash and checks as the means to purchase the things they need and want, while increasingly using plastic for shopping, and electronic vehicles to pay their bills.

The use of credit and debit cards and electronic methods (pre-authorized and remote payments) is displacing the traditional paper (cash and checks), even as the dollar volume of payments and the number of transactions expand. Consumers are migrating to card-based forms of payment (credit, debit, pre-paid cards, gift cards, benefits cards and chip-based cards), motivated in part by their convenience, enhanced services and reward programs, as well as growth of the Internet channel.

Methodology

Packaged Facts’ study of co-branded and affinity cards is based on extensive secondary research and interviews with industry and regional experts. Secondary sources include data-gathered from relevant trade, business, and government sources, including card industry journals, trade and general press (print and electronic), annual reports and 10(k) filings, company literature, consultancy publications, Packaged Facts reports, websites and white papers.

Interviews were conducted with representatives of Discover, Visa, Visa Europe, Capital One, Kroll-Info Americas, Maritz Inc., Auriemma Consulting Group and other marketing and consulting firms operating in the co-branded and affinity card space.

About the Author

An expert in primary research, Té Revesz is the principal of Revesz International and Kentera Associates. She has conducted thousands of in-depth interviews with business, political and labor experts around the world. She was featured in Super Searchers Go to the Source as one of the US’s top primary researchers. Prior to founding Kentera Associates, Té headed the Healthcare and Industrial Practices of FIND/SVP’s Strategic Consulting and Research Group and was its International Practice Coordinator. She was also a Director of FIND’s Signia Partners division. Before joining FIND, Té served at Business International as Director of North American Publications, Editor-In-Chief of its global newsletter, and helped create BI’s global risk assessment product. She also worked at Prudential-Bache’s financial planning group and at Citibank’s Washington Representative Office.

What You’ll Get in this Report

Co-Branded and Affinity Credit Cards in the U.S. makes important predictions and recommendations regarding the future of this market, and pinpoints ways current and prospective players can capitalize on current trends and spearhead new ones. No other market research report provides both the comprehensive analysis and extensive data that Co-Branded and Affinity Credit Cards in the U.S. offers.

Plus, you’ll benefit from extensive data, presented in easy-to-read and practical charts, tables and graphs.

How You Will Benefit from this Report

If your company is already doing business in the co-branded and affinity credit card market, or is considering making the leap, you will find this report invaluable, as it provides a comprehensive package of information and insight not offered in any other single source. You will gain a thorough understanding of the current market for co-branded and affinity credit cards, as well as projected markets and trends through 2011.

This report will help:

Marketing Managers identify market opportunities and develop targeted promotion plans for co-branded and affinity credit cards.
Research and development professionals stay on top of competitor initiatives and explore demand for co-branded and affinity credit cards.
Advertising agencies working with clients in the banking and retail industries understand the product buyer to develop messages and images that compel consumers to use co-branded and affinity credit cards.
Business development executives understand the dynamics of the market and identify possible partnerships.
Information and research center librarians provide market researchers, brand and product managers and other colleagues with the vital information they need to do their jobs more effectively.
Co-branded debit cards

Three Distinct Types of Offshore Bank

In general the banks we work with, like all offshore banks, specialise in some or all of these three distinct offshore market segments:
Private banking: catering to rich individuals, including their personal investment companies, foundations etc Small commercial/retail offshore business: for those who don’t have sufficient balances to qualify for private banking International commercial banking: for international businesses requiring trading services
Allow me to explain in more detail...
Private Banking
Although private banking is not a simple business, there is a very simple model to keep in mind: "keeping rich people happy". The definition of private banking varies but is generally understood as investment management offered on a personal basis by a bank to an individual with disposable wealth of more than, let’s say, $1,000,000.
Private banks were originally so called because they were owned by wealthy private individuals. Under Swiss law these bankers were personally liable for the obligations of the bank. If a bank failed, bankruptcy was not an option. It was disgrace and jail. As a result, no old line private banks ever failed.
With globalization and the need to serve customers abroad, almost all the old ‘private banks’ have now been bought out and are subsidiaries of bigger international banks. Though, if you have the cash and the desire, there are a few true private banks remaining. Some of them are so discreet and private that to this day they don’t even have a nameplate outside their offices. Needless to say, you won't find then listed in this report either! But if you have over a million or so to invest, fill out the referral form and we can make suitable introductions.
Anyone can get a personal private banker assigned in an elite private bank with about €300,000 opening deposit. When we say walk in, you will of course need an introduction, identification and references.
Private banks offer all kinds of accounts, from simple cheque and deposit accounts to complicated commodity and swap operations, and even – yes – investments in sub-prime mortgage-backed securities.
Private bankers normally prefer to be approached and considered as objective financial advisers or family confidants rather than as an investment salesman. They are wealth managers, accustomed to dealing with the wealthy, and their services don’t come cheap.
Consequently private banks may not be the most effective choice for a reasonably sophisticated investor who wants to play an active role in the management of his investments. However, if you just want to stick a million in a safe haven, visit once a year on vacation and follow your portfolio on a monthly basis, then private banking is just what you need. You can expect and demand above-average returns and an extremely high level of personal service.
Family Office Services
A family office is a typically a private company or foundation that manages investments for a single wealthy family. The company's financial capital is the family's own wealth, often accumulated over many generations. Traditional family offices provide personal services, like managing household staff and making travel arrangements. Other services typically handled by the traditional family office include property management, day-to-day accounting and payroll activities, and management of legal affairs.
More recently the term "family office" or multifamily office is used to refer primarily to financial services for relatively wealthy families. Family office services are an extension of private banking. More and more private banks are offering what are, effectively, outsourced family offices. If you have a few million upwards to invest, you might want to ask about family office services offered by your offshore bank. Who knows, you could find such services very useful.
Small Offshore Commercial Business
Numerous offshore banks offer services to expatriates as they perceive such business to be relatively risk free, easy to manage, and profitable. In essence, expatriate services encompass managing accounts for people resident outside their home countries who may be employed, self-employed or retired. The focus of expatriate banking providers is online banking, call centres, and the provision of "packaged" investment products.
Although the service offered should be professional and online banking excellent, the relationship between the bank and client could not be characterised as personal or in any way similar to the relationship between a client and a top-flight private bank.
Be careful: Some banks try to get away with providing this level of service but calling it private banking. HSBC is one.
International Commercial Activities
Many of our readers are interested not just in investing, but in doing active business offshore. In such circumstances an offshore bank that specialises in private banking or expatriates will not be suitable. Our commercial clients seek similar services to an onshore commercial bank and will require access to some or all of the following services:
Cash management Foreign exchange and treasury services
27 | P a g e
International trade - letters of credit, documentary collections, cross-border guarantees and global correspondents Bulk cheque clearing Risk management tools to cover foreign exchange risks, interest rate risk etc Financing Payment, receivables and payroll solutions Selling solutions: e-commerce and merchant services Expertise in specific fields such as energy, aviation, shipping, aircraft financing or real estate.
The Selection Process
OK, time for the next step. You have done your research and have found some banking ‘possibilities.’ They look fine to you, and you appear to be acceptable to them. With that first hurdle over, you need to apply some more selection criteria. When choosing an offshore bank, there are two main factors you must take into account (besides of course privacy which we have already covered):
Stability – is it a well established, solvent bank?
Quality of Service – are they fast and efficient?
Stability
Due diligence and KYB (“Know Your Banker”) is essential. There’s no point in jumping out of the frying pan into the fire.
There is no reason to save your hard-earned cash from your taxman or ex-spouse or other leeching types, only to have it disappear into a virtual black hole when your offshore bank closes its doors. Neither do you want your investment manager to churn away your money on “hot” deals that never pan out, but that bring him fat commissions.
These days with the internet, it is relatively easy for anyone to set up a bank. You need a licence, but jurisdictions you barely knew existed, like Montenegro or Somalia, will for a fee, provide all comers with a valid government-issued banking licence. Try to avoid banking in these high-risk areas as they attract far too many con artists and dreamers. Before investing any money, make sure the bank you are investing in is run by professional bankers and by some Eastern European teenager with good web programming and design skills, who just decided last month that it would be profitable to be a bank president.
Most financial houses seem solid until they collapse unexpectedly. The Marc Harris Organisation in Panama attracted many clients. Marc Harris is currently serving a long jail sentence in Florida. Swedish-run Bank Crozier of Grenada and St Lucia also seemed highly professional. Paritate Bank in Latvia impressed a lot of people with innovative products, flexibility and good customer service. Now they are all defunct. They all sank, taking with them their clients’ money. (Actually Paritate is back up and running again, but the old investors never did get their money back).
Another thing to consider when reviewing internet sites of banks in exotic locales: Any bank anywhere that appeals to shady characters will be (sooner, rather than later) shut down by regulators. You don’t want your hard earned money to get mixed up in such ugly messes. So stay away from banks that explicitly encourage you to hide your money.
It is almost unheard of for big banks in civilized, well-regulated first world countries, like the UK or Luxembourg, to be corrupt from top to bottom. But, of course, even the unlikely can happen! That is exactly what did happen not so many years ago with the Bank of Credit and Commerce International (BCCI) which was registered in the UK and Luxembourg.
The bottom line is that due diligence is important. Most offshore banks are highly reputable, stable, well managed and professional. It’s the ones that are not who grab the headlines. But it’s important to ask questions until you are entirely comfortable, and to ask for second opinions (from people who know what they are talking about) if you don’t feel totally confident in your own offshore knowledge. Don’t believe everything you read on the net or in a glossy brochure.
Quality of Service
“Different strokes for different folks,” they call it. You would be surprised how quality service means such different things to different people. To some, it might be a friendly old Swiss banker who will buy you lunch, give you a nice golf umbrella and chat for a few hours. He will want to learn all about your financial, business and social situation.
Other people may prefer a banker who just does as he is told and never suggests that you have any personal meetings. You may prefer it if your banker doesn’t even know what you look like. Maybe all you want is a good internet interface so you can wire money in or out in the middle of the night if you want to, with super smooth technological efficiency.
Some people love it that their personal banker knows and trusts them enough to move six or seven figures based on a single phone call or email. This would shock other of my clients who want to log in first through a five step encrypted security system with three passwords plus a one-time code generator operated by a 6-digit PIN in order to give instructions!
Buying banking services is like buying any other services. You can look at websites and brochures, talk to the people. How fast and efficiently do they respond to phone calls and emails? That is always a good indicator. I have dealt with banks who will reply to emails in a foreign language within five minutes if you e-mail them in the middle of the night, and others who simply absolutely never reply to email, or who specify on their websites that they will respond “within five business days.”
Then, too, nothing is forever. If you receive poor service or hear any rumours you don’t like, you can pull out immediately. At least you should be able to. That’s something worth checking too!
Understanding the Products on Offer
Products offered by banks around the world are broadly the same, though they often go under different names. However, there are products you might come across in the offshore arena that you may not be entirely familiar with, or you may not have known that such wondrous possibilities existed!
Here are a few definitions and explanations:
Safe Deposit Boxes
A safe deposit box is a locked box reserved for you in the vault of your bank. It’s a place where you can keep small, high-value items. People typically use safe deposit boxes for documents such as physical stocks or bonds, or for small, high value goods that they want to keep safe... like valuable coins, jewellery or a stash of microchips. You might keep these items for pure investment purposes – say gold bullion or uncut diamonds – or for more sentimental reasons (your great-grandmother’s wedding jewellery for example).
Typically you will keep the keys to the box, while the bank controls access to the vault where all the boxes are located. Normally the bank does not keep a duplicate key... so if you lose the key you will have to pay for a specialist locksmith to come in and break open the box, then you’ll have to buy the bank a new box too. Needless to say this is expensive, so do take care of your keys!
Multi-Currency Accounts vs. Multiple Currency Accounts
Different banks (and different countries) maintain different accounting systems.
Multi-currency accounts are quite common in offshore banks. These are very flexible in that they allow you to keep many different currencies in the same account. You have just one account number, but when you look at your statement on the internet you will see different balances... X amount of US dollars, Y amount of Euros etc. If you send a transfer to a multi-currency account, the bank will typically keep the deposit in the currency received, rather than converting it to any particular default currency.
Other banks also allow you to hold balances in different currencies, but operate on a different system – a separate account number for each currency. This means that, if you wish to operate in a number of different currencies, you need to maintain multiple accounts. The net result is basically the same, but you will have a series of account numbers and you must take care not to confuse them. For example, if you send US dollars to the Euro account number, the bank will assume you want to convert that balance to Euros and will do so without informing you.
Precious Metals Storage
Many Q Wealth members have invested in assets like gold and silver and have made huge returns on their money over the past few years as commodity prices have shot through the roof. Perhaps
strangely, however, if you ask the average banker how to buy gold, they don’t know – so they will tell you it is not a good investment. You have to be insistent.
Some banks offer a basic service where you can buy gold and simply store it in your safe deposit box. This certainly works, but may not be the most practical way of handling it. Why? Because each time you want to buy or sell, you have to visit the bank personally. Only you have access to your box. Fine if it’s around the corner, but not if it’s around the world.
There are various other practical ways of buying gold such as Perth Mint Certificates or Exchange Traded Funds.
However for the purposes of this report and understanding offshore banking products generally, suffice to say it’s important to understand the difference between allocated storage, and unallocated – also known as pooled storage. Both these systems are used by private offshore banks.
“Allocated” means that a certain piece of metal (specific gold bars, coins or whatever) belongs to you. The metals are stored in the bank’s general vault, rather than in a specific safe deposit boxes, but they are specifically allocated as your assets. For practical purposes, therefore, you can instruct the bank to buy and sell on your behalf without you having to travel there.
“Unallocated” or “pooled” storage means that the bank simply has X amount of gold in its vault, and allocates so many grams, ounces or kilos to your account as part of a book-keeping exercise. But the banker cannot in this case take you down to the vault and point out your specific gold bar. Again you can instruct the bank to buy and sell on your behalf.
Allocated storage of course is better, but pooled storage tends to work out a lot cheaper in terms of the actual fees the bank charges for taking care of the metals in its vault.
Numbered Accounts
Numbered accounts (or pseudonymous accounts, which are the same but are known by code words instead of numbers) are not all that different from normal bank accounts. The usual account records, such as statements and what regular bank staff can see in their computers, omit reference to the customer's name or other identifying information, replacing it with a code number or the pseudonym. The relationship between the code number or pseudonym and the actual customer is known only to a few senior managers within the bank.
It is important to emphasize that the bank has an obligation to know the true identity of both the account holder and its beneficial owner. There is no such thing as an anonymous account.
Typically the way numbered accounts work these days is that you will have a numbered account and a regular account in the same bank. Numbered accounts cannot be used for regular transactions such as wire transfers or checking. So when you want to make a deposit or withdrawal, your private banker will personally carry out a cash transaction at the counter between the two accounts. In the accounting records, the transaction will appear on your personal account as a cash deposit or withdrawal, so there will be no direct link to your numbered account.
Of course, within reason and subject to normal limits, you can carry out cash transactions directly on the numbered account.
Brokerage Accounts
A regular bank or ‘cash’ account is simply used for depositing and transacting in a currency such as pounds, dollars or francs. Your brokerage account, however, can be used for buying stocks, funds and other investments on the world markets. The brokerage account may be stand-alone, or may be linked to your offshore bank account in the same institution. Either way, you will typically have to transfer funds from the cash account to the brokerage account before you can buy stocks.
Plastic Cards
Almost all offshore banks will offer you the option of linking some kind of plastic payment card to your account. This may be anything from a hole-in-the-wall cash card through to a premium travel and entertainment card like the Platinum American Express or Diners Club. The most common brands, of course, are Visa and MasterCard, and there are even more variations on these cards than there are banks.
You personal banker will be happy to explain the range of cards available and what are the principal differences between products like debit cards, deferred debit cards, secured credit cards and so on.
What your banker will not explain, however, is that you may well be able to enhance your privacy by obtaining a card from a completely different bank.
Why? Because the moment you use a card issued in your name by your principal offshore bank, you are creating a permanent electronic trail in the systems of the card network operator (for example Visa). So your banking records are no longer exclusively held by your offshore bank. The card networks typically process data all over the world, exposing it to numerous jurisdictions where investigators might be tempted to go on fishing trips.
Anonymous Cash Cards
Like numbered accounts, anonymous cash cards do still exist, but there is a lot of hearsay and legend surrounding them. Here are the facts.
By anonymous cash card we refer to a plastic card which, together with a PIN code, can be used for withdrawing cash in automated teller machines around the world. It can also be used sometimes in merchants such as supermarkets, but acceptance is generally limited to certain locations. It’s anonymous because, unlike normal credit and debit cards, there is no name printed on the card nor encoded on the magnetic strip.
Anonymous Cash Cards
Like numbered accounts, anonymous cash cards do still exist, but there is a lot of hearsay and legend surrounding them. Here are the facts.
By anonymous cash card we refer to a plastic card which, together with a PIN code, can be used for withdrawing cash in automated teller machines around the world. It can also be used sometimes in merchants such as supermarkets, but acceptance is generally limited to certain locations. It’s anonymous because, unlike normal credit and debit cards, there is no name printed on the card nor encoded on the magnetic strip.
It is not 100% anonymous, however. You do have to show ID to obtain such a card in the first place, and you also have to comply with all regular know your customer and due diligence rules. There are also strict withdrawal limits. These restrictions are necessary to make sure the card issuing bank operates legally and to ensure that the cards are not abused by money launderers.
There is one very, very big advantage to the anonymous cash card. That is when you use it internationally, the transaction is processed only based on the card number. The card network operator does not know who you are. The due diligence information (like passport copy) that you have provided is stored safely offshore in the card issuer’s office, away from prying eyes and protected by strict banking privacy laws. This is in stark contrast to regular international debit cards which have names not just printed on the card but also embedded in the magnetic strip so the name can be captured electronically.
Another advantage of the anonymous cash card is that should it fall into the wrong hands, the loss is minimal. Without the PIN (which hopefully you have stored only in your head) the card is useless. There is no chance somebody could empty out your offshore account before you notice the card is missing. And, because it’s a stand-alone card, there is no chance that somebody could find out even the country, let alone the actual bank, where your principal offshore account is held. All you have to do is make one phone call and the card can be cancelled and replaced.
Finally, another advantage is legally avoiding reporting requirements. Anonymous cash cards do not class as a bank account. They are regarded as pre-paid products, something between the electronic equivalent of a traveller’s cheque and a pre-paid phone card. So if your country requires you to report offshore accounts, you don’t need necessarily need to report an offshore anonymous cash card. Note: this report is prepared for a global readership. Some countries may have differing rules in this regard. If you are not sure about the reporting requirements in your country of residence, please check with your local tax authorities or a professional qualified in your jurisdiction.
You might be wondering how, if the card is not linked to your principal bank account, you can withdraw money from it? Simple: it is a prepaid product. You prepay, by means of an offshore wire transfer, an amount you are likely need over the period you determine. You can keep these transfer amounts relatively low so they remain under the radar.
Pre-paid debit cards