Typical Passbook Accounts
Many jurisdictions offer highly confidential bank accounts, such as the Caribbean and European jurisdictions. The Marvont Group recommends that you should be careful in choosing them and never put your money with a second rate bank or place yourself in a position where you are forced to trust the funds to a different person.
Secret Bank Accounts
Since the time of the notorious numbered and bearer Swiss bank accounts, so much has changed in the international banking. Switzerland has come under much scrutiny through scandals regarding money laundering and holding assets owned by Jewish families confiscated by the Nazis. Consequently, Switzerland is no longer a jurisdiction of choice. But it is still possible to find bank accounts in other European countries that have significant asset protection benefits.
Privacy laws in these European jurisdictions are still strong. Some countries have been slow to respond despite the efforts of the European Commission (EC) to get rid of such accounts. Even if the EC succeeds, the accounts set up before time limits are set by the EC will likely be grandfathered.
A well-connected facilitator is usually required to open a secret account. He or she basically functions on behalf of the leading banks and law firms. This individual will carefully examine the client to make sure that the money is clean and that all taxes due in the United States will be properly paid. Note that sensible offshore banks don’t want to take on the U.S. Department of the Treasury and neither should you.
The facilitator will require a non-disclosure letter and suitable comfort from either an attorney or CPA that the money is clean and that all taxes have been and will be paid. The facilitator will proceed to open the account once these preliminary hurdles are cleared.
There are two types of accounts available called the numbered account and the bearer account.
|Numbered Accounts||Normally, the numbered account requires a minimum of $50,000 as the initial deposit as well as facilitator fees. To open this type of account, the client must go to Europe, meet with the facilitator and together appear in the European bank to set up the account. The services of a local attorney will be required from time to time.
This particular account knows the beneficial owner of funds, but the identity of the individual stays private under bank secrecy laws of the jurisdiction and is known only to three bank officers. There is no governmental reporting requirement, unless a criminal investigation arises. The income from the account is subject to tax, which is about 25 percent, but there is no tax reporting requirement in the foreign jurisdiction. United States reporting requirements are not waived, although the particular identity of the account is not disclosed in the event a tax return is discovered in litigation.
|Bearer Accounts||The bearer account requires a minimum of $7,000 as the initial deposit along with facilitator fees. The client can set up this particular account without traveling abroad. This account has no name, and funds can only be deposited or withdrawn upon presentation of both a password and a bearer bank account book.
In spite of this, local legal counsel (a major firm) is required to transact business on this account as it is not meant to be more than a place to park money, much like a Certificate of Deposit (CD) in the United States. The interest rate on such account is low, and there is tax on the interest. But just like the numbered account, there are no tax reporting requirements at all.
The password is known only to the client, the bank, and the attorney. The bearer bank account book can be retained by the attorney who acts by virtue of a power of attorney and escrow agreement. Otherwise, the book can also be retained by the client.
These accounts’ asset protection advantage is the anonymity of the accounts. The Marvont Group has combined these secret accounts with traditional asset protection trusts using slightly more complex structures.
For instance, it is sometimes sensible to form a tax exempt entity to hold the protected assets. An asset protection trust can hold the stock in this tax exempt entity. Consequently, the stock doesn't appear on the balance sheet of the taxpayer and the income from the assets is likewise of the tax return of the protected client. Normally, the tax exempt entity will pay no tax and should be virtually undiscoverable, although the entity will report the account. Furthermore, it is also possible to set up secret stock trading accounts whereby a major financial institution will affect trades as taught by the trustee of a specially formulated trust which can also interrelate with a traditional asset protection trust.
Lastly, we would like to point out that a secret bank account shouldn't be utilized to hide money from the IRS. It is only an effective tool to keep the assets away from the reach of creditors.