How the bank reference letter can be a danger

[dotbloup]

Several bank accounts ask for a bank reference letter. At the beginning i thought it was just part of paperwork and then i understood it could be dangerous. I do think it is always better to go for agents, companies, jurisdictions that don't ask for a bank reference letter.

I understood it when i asked my personal bank representative for a bank reference letter. She started to ask me, "let's meet" and i would like to know more about who asked for it. So, i decided to stop here and said it was not necessary anymore but i became aware of this issue. Stupid me, i thought she would accept to write a generic bank reference letter but she didn't want to do it. Plus, she wanted to meet me in a face to face meeting for the bank reference letter.

So i have listed in my mind the dangers related to the bank reference letter:

• If you tell your personal bank representative about your business activities, someone at your bank or several people will know that you have an offshore business.
• An intern or a contractor may decide to tell this to the local tax authority of your fiscal residency. This case happened in Luxembourg & Switzerland already.
• The bank representative may expect you to transfer dividends from your offshore bank to your personal bank account. This would have been the case for me.
• Those types of transactions can be monitored by your personal bank. If there were not aware that the offshore bank is your bank, it could have been return on investments, offshore salary but in this case they know it is your offshore bank.
• Your bank representative will be aware of a link between yourself and an offshore bank.
• In many countries, all requests from a customers are saved in the system of the bank. If you are audited by your local tax authority they may find this request of a bank reference letter

What is your thoughts about it? Is it the same in your country?

 

[ImKing]

It can be a danger if you ask your current bank to send you such a letter. However, you can ask your current offshore bank to provide a bankers reference letter and then open a new account, offshore, so you can avoid anyone to trace it.

 

[negon]

The bank representative may expect you to transfer dividends from your offshore bank to your personal bank account. This would have been the case for me.

I would just tell them to shut up! They have no reason to expect that. Also most banks in Europe have started to charge negative interest means you have to pay to have money on your account! This opens actually the doors for new potential customers for offshore banks that don't charge this Negative interest rate!!

Read more about Negative Interest rate here Negative Interest Rate Policy (NIRP)

 

[Flycatcher]

Offshore companies aren't the only instances where bank reference letters are required. I could imagine that I could go and ask for a general bank reference letter so that I would increase my chances of renting an apartment, citing overly careful landlords who want to ensure their tenants have their finances in good affair.

Problems told by @dotbloup are worth to consider if anyone asks for a bank reference specifically addressed to them.

It's also worth noting that whoever you give the bank reference letter to may very well contact your bank, and by that time you'll also have problems.

 

[dotbloup]

i want to repeat it my personal bank in Europe said we want for who we write the bank reference letter.

Flycatcher, you are totally right taking into account that they add their email addresses and phone numbers on the bank reference letter.

 

[negon]

Problems told by @dotbloup are worth to consider if anyone asks for a bank reference specifically addressed to them.

Well, at a certain point I would simply just fake it!

 

[JohnLocke]

It's also worth noting that whoever you give the bank reference letter to may very well contact your bank, and by that time you'll also have problems.

I agree, but banks can anyway send internal request to each other also cross boarder wise. So what will stop an offshore bank to send that request if they really want to know about that some person?

 

[adoffshore]

nothing will stop them. I believe they don't do this unless something shady is going on or they have doubts!

 

[moneymaster]

• Your bank representative will be aware of a link between yourself and an offshore bank.

Why do you think that can be a problem? Do you think they will report it to somewhere that I own a bank account in another bank? need to know please?

 

[dotbloup]

Why do you think that can be a problem? Do you think they will report it to somewhere that I own a bank account in another bank? need to know please?

100% of the last cases (Panama papers, LuxLeaks, SwissLeaks) are originated from Interns or consultants who worked for big banks. It does not come from Tax authorities. Do you know what those people sell listings or information. In Germany, if you have tax information about someone you can sell it to the tax authorities.

 

[suzy]

100% of the last cases (Panama papers, LuxLeaks, SwissLeaks) are originated from Interns or consultants who worked for big banks. It does not come from Tax authorities. Do you know what those people sell listings or information. In Germany, if you have tax information about someone you can sell it to the tax authorities.

Totally agree.. you need to have some real agent that you trust and know that is not doing company formation on mass like the guys advertising on ADWords, rest assured that these guys are already under monitoring by different governments and NSA and may even leak information about beneficial owners of offshore corps to the authorities.

I have a believing that some of the major offshore company formation service out there working as an honey pot for the governments and that's how they find out that you have a offshore corp and account!!