Non-Resident Business Banking: One Question To Increase Your Success

[Tax Cow]

Beloved Comrades,

Regardless of the business you're in, the correct question to start with is "how (and if) I can be worthwhile for the bank?"

Today, the US high street banks are by orders of magnitude more open to banana republic offshores than their counterparts in the EUEA. I pay low 3-figures for my medium/high risk accounts each year, even with the top 5 US banks. All but Chase have accepted my offshores and onshore shell LLCs without a slightest of a connection to the US.

Just several years ago, when the US had zero interest rates, no high street bank except WF considered my offshores. Even if applied with the UK Ltds.

Is it a coincidence that the EU banking scene in the early 2010's was flooded with high risk appetite options from Cyprus, Latvia, Estonia, Poland, Romania, Switzerland, Belgium, Czech RP, but not any more? Did the US or the EU have higher interest rate policy back then?

If you want a reliable account with a high street bank in the EUEA today, expect to use FX services at lousy rates. Expect to put 6 figures in bank's own trashy ETF or wealth management service which costs money to lose money. Expect to lock up 6 figures in a negative yielding savings account. If you don't like any of the options, expect to pay 4-figures in annual account management fees.

Enjoy the banking climate!

 

[Gediminas]

Thank you @xzars for a very well written post!

 

[Nesso]

Beloved Comrades,

Regardless of the business you're in, the correct question to start with is "how (and if) I can be worthwhile for the bank?"

Today, the US high street banks are by orders of magnitude more open to banana republic offshores than their counterparts in the EUEA. I pay low 3-figures for my medium/high risk accounts each year, even with the top 5 US banks. All but Chase have accepted my offshores and onshore shell LLCs without a slightest of a connection to the US.

Just several years ago, when the US had zero interest rates, no high street bank except WF considered my offshores. Even if applied with the UK Ltds.

Is it a coincidence that the EU banking scene in the early 2010's was flooded with high risk appetite options from Cyprus, Latvia, Estonia, Poland, Romania, Switzerland, Belgium, Czech RP, but not any more? Did the US or the EU have higher interest rate policy back then?

If you want a reliable account with a high street bank in the EUEA today, expect to use FX services at lousy rates. Expect to put 6 figures in bank's own trashy ETF or wealth management service which costs money to lose money. Expect to lock up 6 figures in a negative yielding savings account. If you don't like any of the options, expect to pay 4-figures in annual account management fees.

Enjoy the banking climate!

Good informations, could you point me to a physical bank (no need to be a major) in US which can accept to open remotely a business account for a NM LLC with 2 non US citizens nor residents shareholders? The activity is related to e-commerce luxury goods. You can pm me if preferred. Thanks in advance.

 

[curiousmarv]

I have the feeling that AML restrictions goes nuts inside the EU. The main and biggest reasons for that are the Luxleaks, Panama papers (and all other leaks I've forgot... thinking of footballer Ronaldo currently) and jurisdiction within EU (and also outside, see OECD BEPS) changed substantially which enforced national banks to put more rules and pressure on the normal banks. It's new EU law nowadays.
So yes, EU was more open in the past but some very wealthy people used that open system way too much!! Just one example: So much money was illegally washed within Cyprus (many billions) from Russians oligarchs that USA put extreme pressure on Cyprus which changed the whole banking sector in this country. Nowadays they block your account even when you receive €100 in your company (no joke).

I wonder only why USA was not so open in the past... I think they've never feared OECD or did that attitude changed in the recent years?

 

[Tax Cow]

@therealmarv

Banks were fined for AML-related stuff in early 2000s too. But since there was a counter-force (profits to be made from accepting dirty funds), many banks kept going against the state. Only when the interest rates tumbled below zero they started going against the customer, siding with the state.

@Nesso

They want to see your mug . Get an EIN for your NM LLC remotely, and then book a flight to NM

It's important that you go to a branch in the state where your LLC is formed. Many banks can't accept your out-of-state LLC correspondence address. That problem can be solved with an in-state mail-forwarding address, but it's just another complication you might want to avoid.

@Gediminas

Ty for kind words

 

[curiousmarv]

Nevertheless it's super interesting. Never thought myself that the interest rate could be one of the big reasons for openness or restrictions in the banking sector!

But should not it be also easier to get loans/financing then too for foreign companies? <- because this is still super hard for the small-middle sized companies.

 

[SaintVince]

Also have issue traveling to us, difficult to get visa. I was thinking to do a NM LLC and get mercury account.
if There are any other banks that can set up account without visit to us please let me know

 

[Tax Cow]

@therealmarv

The way I see it, banks just don't lend to SMEs any longer. Some small banks do, for a short-while, until they grow out of that phase. Even domestic SMEs suffer.

Banks are in the business of benefiting from prolonged status-quo and stagnation. They're almost worthless at medium and high risk business lending. If you're a bank with hundreds of millions, even billions to allocate, the SME debt notes of 25K-100K each just aren't a time-efficient way to do it.

For their bond portfolio, the largest EU and Japanese banks follow this in a zombie-like fashion:

1. Wire funds to a brokerage platform
2. Convert that toxic EUR or YEN to positive-yielding USD
3. Buy USD-denominated debt of blue chip companies, maybe some US treasuries too

Just one asset manager can deploy 9-figures within a day. How long would it take to put those funds in use as carefully evaluated 5-figure SME loans? There's no state guarantee for those.

 

[Tax Cow]

Now the next valid question is "as a EU/JP bank, why not accept simple deposits from risky clients if you can still make a profit with the above 3 steps?"

They don't follow the steps with pleasure. It's the best of bad options. As a EU/JP-based bank, they still have obligations in their home currencies. To justify taking more deposits, particularly from the risky clients, they should hedge the currency risk. The problem is that buying USD-denominated bonds while heding the currency risk is also in negative net yield territory.

EU/JP banks buy USD-denominated debt without hedging currency risks. Although profitable for now, it's a very thin ice that can crack with catastrophic results!

 

[fshore]

All but Chase have accepted my offshores and onshore shell LLCs without a slightest of a connection to the US.
Just several years ago, when the US had zero interest rates, no high street bank except WF considered my offshores. Even if applied with the UK Ltds.

Can you specify what country the offshores are registered in, and are they LLC or also LTD's?
Did you request a EIN for the offshore companies, and did you register as an out of state company doing business in the state where the bank is?
If so, did you get requests to file a tax return with IRS?
Also some states will require a foreign corporation to file a state tax return just by having an address and/pr phone number in the state.

 

[daxbr]

(...)
All but Chase have accepted my offshores and onshore shell LLCs without a slightest of a connection to the US.
(...)

They have recently added whole series of questions regarding company and corporate officers overseas banking connections. Other than that, they are super easy and pay money for doing business with them.

 

[JohnLocke]

If you want a reliable account with a high street bank in the EUEA today, expect to use FX services at lousy rates. Expect to put 6 figures in bank's own trashy ETF or wealth management service which costs money to lose money. Expect to lock up 6 figures in a negative yielding savings account. If you don't like any of the options, expect to pay 4-figures in annual account management fees.

Enjoy the banking climate!

Thanks, it is spot on. You don't have many choices today for your money unless you invest in in Land, Startups, Gold, EFT's and so forth all very risky. And if we believe there will come a new financial crash so it will all be even more difficult.

 

[Tax Cow]

Can you specify what country the offshores are registered in, and are they LLC or also LTD's?
Did you request a EIN for the offshore companies, and did you register as an out of state company doing business in the state where the bank is?
If so, did you get requests to file a tax return with IRS?
Also some states will require a foreign corporation to file a state tax return just by having an address and/pr phone number in the state.

I'll obviously withdraw excessive detail from my answer. I'm a bit old now, but jail isn't my desired retirement destination.

- Offshores and onshore shell LLCs require EINs. There are no high street banks which take either without an EIN. IBCs of British overseas territories with an EIN can apply for US high street banking. With that said, those IBCs are not always the best solution (read on).
- Filing with the IRS (or tax authorities elsewhere) is a good idea since it generates a tax document, and thus a degree of legitimacy. Someone blocks your payment? Show them the tax document and give a brief explanation about the purpose of payment. Those tax documents have become so useful that I file tax returns (and pay some tax) even when I don't have the obligation.
- But why waste money, throwing it at the state? Think of a wolf in sheep's clothing. A NY or CA LLC, a French or German company, which has overpaid some tax for the taxable income it did not receive is one of the best vehicles to penetrate AML checks.
- Amateur veggie washers go for bad rep offshores that have no requirements so they can be lazy, not filing anything, not paying taxes or duties for anything.

By minimum, rethink your desire to not file tax returns. If you want to take a step further and not get harassed by AML checks once a week, a little bit of tax paid can go a long way!

 

[SaintVince]

.
- But why waste money, throwing it at the state? Think of a wolf in sheep's clothing. A NY or CA LLC, a French or German company, which has overpaid some tax for the taxable income it did not receive is one of the best vehicles to penetrate AML checks.

interesting observation.

 

[Tax Cow]

interesting observation.

Interesting is the right word, but definitely not surprising to anyone!

If it woofs like a dog, but has wool like Marx's hair, it's probably one weirdo sheep.

With millions of customers and payments passing by, somewhere must give. Be two or three steps ahead of just another Seychelles guy.

 

[unicorn]

xzars, you seem to have a lot of experience. personally, I don't mind paying some tax. What I do mind, is having to waste time on book keeping and accounting instead of growing a business. I would like to start up but have to start up from scratch. I lost my 2 businesses after an accident that put me years in hospital and thus in poverty as the insurance delays paying damages through court and social security in reality does not exist - it does not even allow to pay medical bills. I paid so much on social security for years but the only certainty that brought me is that you are in the end left on your own. Knowing everything that you know : in today's world, how and where would you get started again if you are on a (very) low starting budget, still on disability, only able to work a few hours per day (and sometimes zero on bad days) but with a niche market with huge potential, where you want to foresee room for expansion down the road as you are extremely motivated to win back everything that you have lost and where you don't ever want to pay another penny to a EU country again ? Where would you go ? Would you wait and register only if you reach a certain turnover ? Would you incorporate a legal entity ? Would you keep sole proprietor until you have reached a certain turnover ?

 

[Tax Cow]

@unicorn

You're at the rock bottom, but you sound like a lunatic who wants to dig a hole with a pocket pickaxe and crawl through a network of s**t pipes to get out (The Shawnshank Redemption). I'll give a bit of though to this tomorrow.

Please copy/paste this as a new thread @ The talk about everything lounge

Send me a MSG once you have the post. No OT in this thread.

 

[JohnLocke]

Thank you for your input @xzars very helpful for all who come around here.