William Francis “Willie” Sutton Jr. was a prolific American bank robber. During his 40-year criminal career he stole an estimated $2 million, and spent more than half of his adult life in prison, escaping three times.
In response to a question about why he robbed banks, he famously replied: “Because that’s where the money is!”
Willie would find it odd that these days it is more likely that your own government will be the robber that grabs your bank account.
Since the global economic crash of 2008, the U.S. Internal Revenue Service has searched frantically for ways to generate more revenue to finance government deficits and the U.S. national debt of $18 trillion. Tax collectors in other countries, such as Cyprus, have used a new form of official bank robbery, known as “bail ins,” to finance their debts. The International Monetary Fund advocates confiscation in the form of a wealth tax on all assets.
In America an aggressive IRS public relations campaign has been aimed at what is claimed to be massive tax evasion by U.S. citizens hiding their funds in offshore accounts.
Unlike most other countries that only impose taxes within their territory, U.S. tax law requires all U.S. citizens (including Green Card holders) to file an annual U.S. income tax return to report their worldwide income, regardless of where they live. They are also required to file foreign asset disclosure forms to report their worldwide assets including bank accounts, shares in foreign corporation, and interests in foreign trusts.
But in July of this year banks around the world grudgingly began to comply with a new U.S imperial tax law—the 2010 Foreign Account Tax Compliance Act (FATCA).
Banks were told either go along or lose access to the U.S. and international banking systems. Compliant banks must maintain IRS-required information on Americans’ accounts and their activity. In 2015, banks will start sending this information to the IRS.
This is an unprecedented event. Our government has created an American law that assumes the jurisdiction of the U.S. government extends to every bank and financial institution in the entire world. It also assumes that U.S. tax and reporting laws supersede the laws of every other nation, whether those countries like it or not.
Unthinking naysayers, and greedy domestic American bankers, have used FATCA to try and discourage offshore accounts.
But there are many good reasons for you to have an offshore account.
A foreign bank account can be an integral tool in an aggressive, three-pronged offshore wealth strategy. One goal is to increase your asset value by cutting taxes and maximizing profits. The next goal is to build a strong defensive asset protection structure. The third is using your account for profitable offshore investments.
An offshore bank account located outside the jurisdiction of your home government definitely offers stronger asset protection than a domestic American account. Another major plus; an offshore account is a direct path to better, more profitable, and more diverse investments.
One of the great advantages of an offshore bank account is that it enhances your ability to trade freely and invest in foreign-issued stocks, bonds, funds, precious metals and national currencies not available in your home country.
Another major benefit of an offshore bank account is protection against the declining dollar.
Since the creation of the Federal Reserve in 1913, the value of U.S. currency has collapsed. What was worth $1 back then is worth less than 4.8 cents today; the dollar has lost more than 95% of its value.
Clearly, having an offshore account is becoming a matter of some urgency while you still have assets to convert to more stable currencies. An offshore account has the power to help build your wealth through currency diversification.
Offshore banking is big business worldwide. Estimates are that from $3 trillion to $5 trillion is stashed in nearly 40 offshore banking havens that impose no or low taxes, have less onerous regulations, guarantee privacy, and welcome non-resident clients. Nearly a quarter of the entire world’s private wealth is stashed in Switzerland alone!
The U.S. government howls that tax havens are engaged in “unfair tax competition.” Do they try to imitate tax havens by lowering their own high taxes or reducing spending? No. Instead, they invade the privacy of its own citizens as well as foreign banks.
Don’t let the FACTA scare rob you of increased banking freedom and profits.
Editor’s Note: Get more expat advice on second citizenship, banking privacy and offshore investing in our offshore section, here.