Our global mobility provides huge benefits… broadens our horizons and enriches mankind through global trade. Yet being global also creates some problems… one of them is banking.
This site recently posted a message about Ecuador banks that began with, “I do not trust Ecuador Banks.”
This is not a slight on Ecuador. This statement is a comment on the realities of trying to maintain control of one’s own wealth in an era where almost all governments are increasing control over money.
The banking article was followed by another article stressing the importance of diversification in Ecuador Diversified.
Here is a reminder of the importance of this information. A couple of years ago I purchased a block of buildings in Ecuador planning to resell them. I am according to plan selling them now and recently received a payment.
My attorney wrote this to me:
They deposited funds in my account last Wednesday to pay for the condo and asked me to send to you. There is a 2% tax on money going out of Ecuador which was recently established, plus bank commissions. I will wait for your instructions to wire these funds to you.
There previously was a 1% tax but it has now been increased to two percent. This increase is not a big deal but a step in the wrong direction and a reminder that we should never trust any one country, currency or banking system.
I just sent our Ecuador Living subscribers an alert about one more Ecuador banking problem. Ecuador Living subscribers click here.
Hence my mantra to have what I call a “Six Point Command Posture” which is to:
Live in one country
Bank in a second country
Invest in many countries
Earn in two or more countries
Use a company incorporated in a fifth country
Take a second residence
Where to Bank
Knowing where to bank is a growing problem… especially for Americans. Non Americans should read this article any as you’ll see that you are not exempt from this problem either.
Americans are being crushed between a rock and a hard spot.
The Rock. Many US banks will no longer accept Americans residing overseas because they have a foreign address. This has been caused by the US Patriot Act. Banks have to know their clients so they refuse to accept (or keep) clients with overseas addresses, even Americans who have banked with them for decades, but change their address. The following banks have been sited as closing accounts with just 30 days notice of long term customers just because they took on a US address: Ameriprise, Bank of America; Bank of New Hampshire; Citibank; Citizens Bank; Edward Jones, St. Louis; E- Trade; Fidelity Investments; INGDirect; JPMorganChase; Morgan Stanley; National City Bank in Riverview, Michigan; Provident Bank, Maryland; Smith Barney; T. Rowe Price; USAA Federal Saving Bank; Vanguard mutual fund; Wachovia; Washington Mutual; Washington Mutual Investment, Spokane; WellsFargo; Zions Direct.
The Hard Spot. At the same time the IRS has created a set of regulations that discourage non US banks from accepting Americans.
Many Swiss and British based banks will no longer accept Americans.
Here’s an excerpt from a 13, June 2009 Telegraph article entitled “Lloyds Bank hit by Obama tax purge” by By Louise Armitstead: Banking group drops American customers in UK ahead of costly proposals to stamp out tax evasion Lloyds Banking Group is ditching American customers based in Britain pending a crackdown on international tax evasion planned by President Barack Obama.
This week American private client account-holders at Lloyds’s received letters informing them of an “important change in policy regarding clients who are resident, domiciled or linked to the United States by property or asset holdings”. They were told the bank had “no choice” but to “cease acting as your investment manager.”
One letter sent to Bank of Scotland’s portfolio management division, which is now part of Lloyds, said: “The USA has a mature regulatory environment governed by its Securities and Exchange Commission. These regulations mean that we are not licensed to manage portfolios for US clients.”
The letter added: “Unfortunately we cannot offer an equivalent service from within Lloyds Banking Group.” Clients have been advised to transfer their assets.
One recipient, who has lived in the UK for over 25 years, said: “After all this time, I’ve suddenly been told I must take my money elsewhere and I don’t understand why. Now I’m scared that other banks won’t take me on either.”
The Brits are no the only group shedding US account holders.
A July 12, 2009 USA Today article entitled “Some foreign banks drop U.S. clients because of UBS flap” by Kevin McCoy explains how other banks have booted Americans as well. An excerpt says: The closely watched Justice Department court fight to get the names of 52,000 suspected American tax evaders from Swiss banking giant UBS has prompted some other foreign banks to drop U.S. clients they once welcomed, tax experts said Monday.
Eager to avoid a similar struggle with federal prosecutors, banks including Credit Suisse and HSBC in recent weeks have notified American clients they must close their offshore accounts or transfer them to the institutions’ U.S.-based operations, where tax reporting requirements are far stricter.
“Overall, the international banking community, and particularly the offshore banking community, has been very friendly to American account holders,” said William Sharp, a tax law specialist at the Sharp Kemm law firm in Tampa. “That changed in the past couple of months as a result of the UBS case.”
The Dutch were early in dropping American clients.
ABN AMRO, a huge, Dutch based, international bank gave all clients with U.S. passports within 30 days notice in 2008 and then closed their accounts because of the high costs to comply with U.S. regulations.
Expect this problem to get worse! Beginning in 2010 stronger US reporting rules will force even more overseas banks to stop accepting Americans. They simply cannot afford to fill all the obligations.
Americans should not feel totally alone…nor should non US investors feel totally safe from being shut out of a banking center.
According to the British Times Newspaper, Barclays Bank used the US anti-terror laws to shut down the personal bank accounts of British citizens who were working for Iranian owned businesses.
The bank enforced anti-Iran sanctions under the US Patriot Act. Accounts of Iranian owned companies that operated completely legally in Britain were shut. But Barclays went much further. They amazingly shut down accounts of directors of these companies and even more amazing they shut the personal accounts of ordinary staff members, including clerical officers, computer engineers and bank tellers, just because they worked for an Iranian owned company.
Here is an excerpt from a June June 6, 2008 Times of London article entitled, “Barclays bank rejects customers to comply with US terror law:” Barclays began the account closures in February, shortly after reports from industry sources that US Treasury agents had been touring the City of London putting pressure on financial institutions to withdraw from any form of business that might have Iranian links.
One source told The Times that City banks had been warned that they would lose access to the US market if they continued to deal with Iranian businesses. Barclays has extensive business interests in the United States.
Case study: Cast out in the supermarket
Chris was doing the shopping in Tesco when Barclays rang to tell him that his bank account was being closed. Later that evening his wife was told that her Barclays account, which she had held for 25 years, was also being closed.
Chris, 46, works in IT for Bank Saderat, and his wife is in the accounts department of Melli Bank. Both institutions are Iranian-owned. “They said it was because of sanctions but I knew there were no British sanctions on the banks. I asked them if they were responding to US laws and they said they didn’t have to give me a reason,” he said.
The couple opened new accounts with one of Barclays’ rivals but they had difficulty transferring standing orders, especially Chris’s child-support payments. He said: “I know that UK banks are being pressured by America to stop all dealings with Iran but what impact will it have to shut an English bloke’s account with an English bank? The Iranians won’t give a monkey’s. What upsets me is the lack of respect Barclays have for their customers.”
This last comment hit me strongly… the lack of respect many of the big banks have for their clients.
This is one reason I have enjoyed banking with Jyske Bank in Denmark for more than 20 years. Jyske is big and well managed enough to be very safe, but small enough to provide genuine care and attention to the individual.
This is why I was not surprised that a number of years ago, Jyske made the decision to spend a lot of time, energy and money to comply with US law so they could continue to serve US as well as non US investors around the world.
This shift though has created some confusion. For example a Reader from the Netherlands sent me this note: Hello Gary, Since beginning of this year we are subscribed to your newsletter. In your articles we read that it is possible to go to Jyske Bank and start doing multi-currency for about 30,000 dollars. We were very enthusiastic about this philosophy and asked the Jyske Bank for information. However we were very surprised when we got information back including the message that we have to start with $150,000 euro. Can you help us and maybe clarify the misunderstanding about this starting amount? Thank you very much in advance!
The services and minimums required by Jyske Bank Private Bank (JBPB) for non US investors differs from those offered by Jyske Global Asset Management (JGAM) who serves US investors.
Jyske Global Asset Management (JGAM) offers Americans managed accounts, advisory accounts and IRA services to US clients.
JGAM’s managed accounts provide Americans with access to international investments in all currencies, traded on all stock exchanges.
There are two levels of managed accounts for US investors:
Mutual Fund Managed Accounts, $50,000 to $200,000. Accounts from $50-200,000 are mainly invested in mutual funds and ETF`s in order to get the appropriate diversification.
Individual Investment Managed Accounts from $200,000 up are mainly invested in individual securities as trading costs are not prohibitive for this size of account.
There are two forms of advisory accounts for US investors.
Advisory Accounts for US Residents. Accounts for US residents are available and provide access to investments in currencies, commodities and US listed securities.
Advisory Accounts for Americans who are resident outside the US. US citizens who are resident outside the US (proof of residence is required) have access to investments in currencies, commodities and all international investments in all currencies, traded on all stock exchanges.
The minimum required to start an advisory account is $25,000.
Because the minimum annual fee is $1,000 JGAM recommends an initial deposit of minimum $50,000.
IRA accounts are managed accounts with more conservative investments than those in a normal managed account. IRA accounts require a minimum investment of $50,000.
Jyske Bank Private Bank offers the following services to non US investors.
Non US Clients can open accounts with minimum deposit of Euro 150,000 (approximately 220,000 USD), or equivalent in another currency.
JBPB works with six profiles:
Income profile. A low-risk profile, invested in currency accounts (cash) and/or traditional bonds.
Stable profile. A low-risk profile, invested in bonds (incl. high- yielding bonds), a small equity part.
Balanced profile. A medium-risk profile, invested in equities and bonds (main emphasis on bonds).
Dynamic profile. A medium-risk profile, invested in equities and bonds (main emphasis on equities).
Growth profile. A high-risk profile, invested mainly in equities and a lesser share in bonds.
Aggressive profile. A high-risk profile, invested almost exclusively in equities.
There are six managed strategy funds (available only in Euro) for investors who want managed services with minimum deposits of US$ 220,000. These six funds are based on the principles of asset allocation and match the investment profiles above so all investors can attain risk diversification, risk management with even a limited investment.
There is a full Discretionary Portfolio Management service for investors who want managed services with US$ 350,000 and above. This service is also based on the six strategies above. Jyske Bank will invest and manage the clients portfolio in close cooperation with the Bank´s experts and their network of international partners. These strategies are offered in EUR, USD, GBP, DKK and SEK.
Investors, who do not want managed services, and have accounts of US$ 220,000 or more, can wish to engage in an active dialogue with their advisers and be very involved in the decision-making process. based on the client’s investment profile. They can invest in currency accounts in a large number of currencies, all tradeable equities and bonds, mutual funds and commodities.
Here is one huge feature I like very much about both JBPB and JGAM… No Jyske employees in management, advisory services or any employee receives any kind of bonus pay. This eliminates any temptation for hidden agendas to exist. Employees have no incentive give any advice or take any action that is not in the client’s best interest.
Technology has given great mobility to our wealth. This mobility is good for the individual and the global economy… but governments do not like this as they wish to control our finances. The tension created by this struggle between the individual and the collective has created a never ending thrust and counter thrust of regulations and adaptions to these rules. It is harder to maintain a diversified global portfolio than it used to be… but the effort is still worthwhile.
The greatest asset of all is the ability to earn wherever you live, which brings everlasting wealth.
This is why we offer our course Tangled Web… How to Have an Internet Business.
A clear mind and healthy body are also a vital assets… plus a second language is a powerful diversification tool.
This is why I am giving everyone who enrolls in our North Carolina or Ecuador International Business & Investing seminar in October or November our “Tangled Web… How to Have an Internet Business Course” (offered at $299) free.
Here are comments from a reader about the way we help: Thank you for your inspiration and information outlining foreign banking and retirement. Your comments and suggestions are welcome for planning the steps to evaluate the early stages of living abroad.
Sept. 17-21 Ecuador Super Thinking + Spanish Course
Sept. 23-24 Imbabura Real Estate Tour
Sept. 25-28 Ecuador Coastal Real Estate Tour
Join us with Jyske. Learn more about global investing, how to have an international business and diversification in Ecuador at the seminar.
October 16-18 Ecuador Southern coastal tour (early sign up before Sept. 1, $499 per person).
Oct. 21-24 Ecuador Import Export Tour
Oct. 25-26 Imbabura Real Estate Tour
Nov. 6-8 IBEZ Ecuador Seminar
Nov. 9-10 Imbabura Real Estate Tour
Nov. 11-14 Ecuador Coastal Real Estate Tour
Attend any two Ecuador seminar or tours in a calendar month…$949 for one. $1,349 for two.
Attend any three Ecuador courses or tours in a calendar month…$1,199 for one. $1,799
Read the full articles: