A friend told us about a local Costa Rica bank with ties to a Panama bank, making it simple to open a Panama bank account. Everybody knows if you want privacy in banking, you go to Panama.
What everybody doesn’t know is that, these days, not only does Panama put your life under a microscope, they even want to see your tax returns! That’s comforting. We’ve opened zillions of bank accounts in the states: no one has ever asked for a tax return. I guess this is Panama’s twist on privacy: show them your most private confidential information, let them keep it on file in case anyone asks to see it and maybe you’ll be allowed to put your money there. They won’t tell. Honest.
Not only that, my "private" banker flat out asked me if I paid my taxes. Huh? Color me cantankerous, but his question raises a host of my own questions:
- Why does he ask?
- Does he ask everyone? Was I unwittingly wearing my Paying Taxes Sucks t-shirt?
- Is it presumed that a U.S. citizen wanting to open an account in Panama must be dodging taxes?
- Is that any of their business?
- If I didn’t pay my taxes [and I pay every penny I owe which is zero these days… one of the perks of not having an income], would there be some consequence for the bank?
- Why else would they ask?
- Are Panama banks now an enforcement arm of the I.R.S.? [Probably. An unintended consequence of the free trade agreement recently signed between Panama and the U.S., and soon to be signed here, thank you very much.]
- If there is ever any hint of impropriety on my part, like wearing that t-shirt again, if I were audited or someone were to try to lay claim to my pitiful sum… would Panama seize it on that agency or person’s behalf?
At least in the U.S., you are presumed innocent until proven guilty. For most of us anyway. Unless they really really really think you are guilty in which case you probably are and the U.S. can suspend habeous corpus – oh wait, they already did that. Anyway. This is America, for God’s sake. Oops, can’t say God and America in the same sentence. But, in America, if you haven’t done anything wrong, you have nothing to fear. Right?
And presumed innocent except for the presumption of guilt for the presumed terrorists in Guantanamo. And any other pathetic presumed participants in the WOT, not to mention the WOD… but those items really have nothing to do with me. Right?
Well, here in Central America, there is no such presumption and no beating around the bush about it either. Grab first, ask questions later… Suddenly, I’m thinking my $2 is still safer in the U.S. Since privacy is apparently unavailable anywhere and keeping it under my mattress makes it more likely to be spent by a certain person living in my house, why not get the most interest and security I can find? That’s looking like a U.S. bank.
Um, I’m open to suggestions here.
I’m wondering why banks make it so difficult and demeaning to open an account. I mean, you’d think they were doing US a favor! Banks make TONS of money off of our money: for every $1 I have sitting in a bank, that bank can loan $7 at up to 34% (via loans and credit cards). Plus closing costs and fees. And according to Mr. Bernanke’s Q&A yesterday, banks are trying to be able to loan more on my dollar… because, you know, they are hurting. Poor widdle banks.
But you’d think they’d be bending over backwards to get our money instead of enthusiastically turning us away in the name of the WOC. [WOC is the War On Crime. Since there is no Wikipedia link yet, I’m going to claim authorship and define it: the WOC encompasses the drug war, the war on terror, tax transgressions, muggings, plagiarism and leaving empty ice trays out on the counter. And everything else.]
A few years before we left the states, before expatism occurred to us, we had driven up to central Florida to open a savings account at an A+ rated bank. There were no A+ rated banks in our town. But, because this was after 9/11/2001 and because we didn’t have an address in that town, they refused to even talk to us.
We had money then. We had a Key West address. We owned property, phone numbers that were over 20 years old, passports, birth certificates, SS#s, fingerprints… the whole nine yards. But if we didn’t have an address in that town, we were suspect. Of what, I can’t imagine… can you launder money by transferring it from your personal account to another personal account with a paper trail? Talk about money laundering for dummies. Is laundering money illegal if it’s your money and you got it legally? Probably. If it’s not yet, it will be soon.
Why do I want privacy? Hard to explain "why" to anyone who has to ask. I guess it’s kinda like sex: if you haven’t been scr-wed yet, you can’t even imagine it.
I know I mentioned it earlier, but much of what you say today factored into why I dumped banks years ago. I have been very happy with the credit union I’ve been a member of for thirty some odd years. At least with a credit union I am part of the decision making process, no matter how small that may be.
Also, there are some online banking intstitutions you might want to investigate. Jon de Haai, in his blog mentioned one that he tried out. It’s calle Bank of Internet USA and here is their URL:
It may turn out to be a viable option.
It goes something like this
American citizens are unique in the sense that even if they hide in Antartica they are still liable to send $ to Uncle Sam, no other country in the entire World does that (Surprise #1)
Because of that you are tied to Uncle Sam forever whether you like it or not (unless you give up your citizenship and EVEN THEN there is a lot of fine print)
On the other hand any bank that deals with US needs a ‘friend’ in the US (a corresponding bank)
Ever since 9/11 (and before that for other reasons) corresponding banks demand their offshore ‘partners/friends’ to screen their customers (know nicely known as KYC or know your customer) , furthermore having US customers the corresponding banks (the bank in the US) imposes a lot of compliance/reporting requirements to the bank in panama /etc
So for the bank itself…..having US customers is a pain in the neck as its a problem to them on the paperwork/liability front
Banks in Panama are usually on the headlines for being the shelter of tax evaders/money laundering etc so they are totally on the defensive
To make things even more interesting the whole ‘offshore secret account’ is now more than ever at the hands of anyone with a computer (in the past this was something from a James Bond movie to most US citizens), the IRS has discovered that many of its slaves (oops I mean citizens) have offshore credit cards and therefore avoid the US financial system altogether, recently the IRS has started issuing subpoenas to get the records directly from any/all credit card issuer in the World if they have reason to believe that some tax dodgers use them. And since VISA/MC/Amex etc are all US companies ……..well the big guys tell the small guys down here “give them the info now”
by the way, your $ might be safe in the US bank, the problem is that lately the $ is not looking very safe
I am banging my head on the wall by not moving to a full 50-50 split USD/Euro in my savings
As long as they keep printing money for the WOT, giving 300k ARM loans to anyone that can put an ‘x’ in the contract etc, it can only go further down
Paul, you did mention the credit unions earlier and thank you for reminding me! I am going to check them out next week. I like the idea of being a shareholder in my bank and having some say in what’s going on.
Wolfie – thanks for all that. Didn’t know about the cc companies, but of course! We thought about buying gold as store of value: no matter what happens with the price, it will always be gold. Like real estate, as long as you buy it right and can afford it, it will always be shelter. but you can’t take gold out of costa rica… so having it might be good but you can only spend it here. Plenty of people here want it though… I don’t know. Over everything else, it seems the safest value. My husband will enjoy your comment… do you read his blog? http://www.the-extremist.com? You might enjoy his writing… see you!
In April I opened an account at Scotiabank Alajuela and they required two letters of recommendation from banks + my latest tax return. I know someone who did the same at the Scotiabank in Heredia last month and for some reason the letters were enough – no tax return was necessary. Hmmm.
When I opened an offshore account (not in Panama, too close to home) ….they asked me for
certified copy of passport
bank statements of the last 6 months
and a letter from my employer basically stating that they employ me and how much they pay me
out of all those the thing that got tricky is of course the utility bill as everything in CR is under a different name
I have the feeling that they might ask more from customers in certain locations like the European Community (as the bank is in the islands of the English Channel) or the US
About the gold out of CR , why couldnt you take it? the problem with gold AFAIK is mostly convenience, its pretty heavy 🙂
About the blog THANKS, more fun stuff to read, one more reader for your husband’s blog 🙂
It is church and state. Not to mix the corruption of the two. We can rest easier here that you left the U.S. Less need for law enforcement and banking laws.
I understand the ideology behind separating church and state. I even agree with it. But the band-aid of, for instance, taking God out classrooms when there shouldn’t even be compulsory education… well, it just ain’t going to fix the educational system. It’s all smoke and mirrors to keep from having to address the real problems.
Law enforcement and banking laws will both continue to grow exponentially. Until there are no choices, only strict obedience to the Nanny State. Maybe I’ll come back then. It’ll be nice not to have to think.
to the guy/gal who wrote in about opening an account at scotia in alajuela: different branches of the same bank can require different stuff, oddly enough. And it depends on the banker. Maybe you looked suspicious to them – really. were you twirling your mustache? that is a dead giveaway! Maybe you still have an income? that might trigger a tax return question… Maybe s/he thought it was required by the bank. I don’t think it was personal that my banker asked me. they wanted something to verify where my savings came from and that’s the definitive document… Or maybe I look suspicious.
Wolfie: it’s actually a law here that you cannot transport gold out of the country. I’m sure that’s for a big “exportable” amount. You’d only need a 5 or 6 coins to finance a nice weekend in Manhattan… I thought of making a chain to wear around my neck. I’d always know where it was…
It is the first time I ever hear of such a law, there has been historically gold mines in certain areas. Do you have a link to that?
If I put all my jewelry into a pathetically small bullion….I WILL take it out if I want to
nm I found a law to that effect but it appears that it is to the effect of mines that extract gold and send it out
the problem with a bullion might be that it will be a nice eyesore in the metal detector and I am sure it will get bunches of attention
I hear you can simply buy gold and held it on reserve with the guys that sell it
not sure why I am even typing this……like if I have any $ to think of gold LOL….gonna break my piggy bank and count my colones right now
This was for a bank in CR related to one in Panama, right? Would it be the same in Panama itself?
It is such pita dealing with banks, especially since they profit from us so much.
Banana banks, and cuckoo-clocks banks, may like to know about their clients’ bad habits to blackmail them just a little.
-Ehr, sorry Sir Customer,we had to increase the cost of the account monthly report, but after all your money should have gone to the taxman, then… –
-Ehr, sorry Sir Customer, may I suggest you to buy some of our bonds? After all your money comes from a train-robbery.-
In Italy (EU), EU citizens aren’t asked any data when they open an account, (leave alone any question about tax, profit and salary). Unless rules changed recently, non-EU citizens must explain why they are transferring money in Italy,(I wanto to buy a house, a pizza-house, so on).
Perhaps this might be helpful:
You can hold your $$$ in CD’s or high-interest savings accounts in a variety of currencies, if you’re interested in betting against the dollar. It is, nonetheless, a U.S. Bank.
If that’s not enough in the way of privacy, then maybe this:
I follow a few blogs from some folks down in Uruguay (where, by the way, you will definitely consider moving if you start learning anything about it!!) and this is their company. From what I understand, “banking privacy” in Uruguay is still an operating principle, not just an advertising slogan.
Hope this helps,
j.p. in Ohio
Hey Wolfie: There are several places online that you can buy gold and they warehouse it for you, most notably E-Gold. But the US is busting E-Gold’s ba–s… the powers that be don’t want another “bank” and that’s how they see these warehousing operations. You might be right about the gold that is mined here is the only gold that can’t be exported. Don’t think gold sets off a metal detector. I’ve never seen anyone remove a necklace at the airport or going into a high school in the states – that would be the test site!
Hi Arp – I’ve heard that it is getting so tight everywhere… they want to know where the money came from mostly. I think they wanted to see my tax returns to see a “verification” of my income, so that if my tax return said I made $50k a year and suddenly I was depositing $100k a year… red flag. But, you know, I don’t even think they have the wherewithall to keep tabs…
Hi Strudel, I wonder if that will change in the next few years. Banking is changing so fast everywhere… “Know Your Customer”, know all about them.
Thanks, JP. We tried Everbank and Netbank (Ever just bought Net) but you have to have a physical US address to open an account. OR send in a notarized copy of my original SS card. I visited the gov site and talk about jumping thru hoops. We gave up on those. But I will check out the Uruguay site. I’ve been hearing about Uruguay…
I wanted to share with you my experience at the bank today. I wasn’t really aware of all the tiny details we go through to accomplish seemingly simple things like opening a savings account. I mean, we are letting the bank handle OUR money and still sometimes it feels like you are doing a criminal act. I went to BAC San Jose today to open a new savings account and I was baffled by all the paperwork and strange questions, like, how much money will I input into my account and how many times a month will I take money out . I was afraid of writing anything as I am really not sure (can I write that in the form?). Then they did not accept my utilities bill (the same one I used for my HOME LOAN, go figure!). I’ve never understood the utilities bill requirement as you can give them any even if your name isn’t on it. After that I put my signature down several times (a few times on the SAME sheet). Had to re-sign a couple because I could not make it the same as my cedula. After all this signing and staring from the bank clerk I still did not have my bank account, have to go back with my utilities bill. I understand that maybe for new customers it makes sense for the bank to be a little cautious but I get paid through BAC San Jose (since 6 years ago), I have 2 of their credit cards, 2 debit cards and I already have 2 savings account (I want to open another one for tracking purposes). I was opening the account at my in-house agency (there is an agency at the building where I work) and still was treated like I was a new Quintavalle !!!!
Manrique, I hear you. BAC San Jose was the first bank to ask for my tax returns to open an account! And I just read an article in Tico Times about how much trouble Banco Popular is in because they don’t have that software that tracks who is making deposits over what they say they are going to make! So if you say you are going to deposit $1000/month into your account and you actually deposit $2000/month, this software picks it up and your name is highlighted as a drug or t-rist suspect… Nice. I’m giving up on banks. Still considering the credit unions that Paul suggested… we’ll see. Yes, opening an account – even in the US – you feel guilty until proven innocent!