Hedging Against Capital Controls: Opening an Account Overseas

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As financial insecurity and instability rise, hedging becomes increasingly important as a means of capital preservation. One potential hedge is diversifying one’s liquid capital by holding some cash in a “safe haven” foreign bank account.

Thank you Charles, I’d like to say that as we have discussed this service over the past several months I have noticed that very few financial pundits even consider the topic of moving away from troubled banks or economies, but usually regress into discussions about how central planners are currently in the engine room coming up with a solution of sorts.It’ s probably best if I start with the motivation behind this service. I help Americans relocate to New Zealand and typically I make sure all of my clients who visit me in New Zealand, leave the country with a new bank account, even if they want to fund it with a minimal amount so as to limit taxable income. That way, they have the option to quickly transfer funds in the event of any concerns over the US monetary system.

This is one of those services that you would prefer wasn’t ever needed. But as we are seeing in Greece and Spain, it is becoming all too commonplace. The purpose of the account has nothing to do with total return and more to do with having a lifeboat. The bank we us is Wespac Bank and they are among the safest banks in the world at present.

The challenge to opening up a foreign bank account is two-fold. The first challenge is proof of ID. Most banks require that you be physically present to open the account. I have been able to work around this through a few extra steps but in the end, there is no need for air travel to New Zealand provided you meet certain criteria

The second is compliance via Foreign Bank and Financial Accounts Registration (FBAR) as well as compliance issues under the Foreign Account and Tax Compliance Act (FATCA). These two entities leave one with the impression of complexity and risk, but in the end, once you file these documents, (which is what we assist with in our service) there is little else required from you. You just have to let the U.S. Government know you have an account if the value exceeds an aggregate of $10,000 USD during the tax year, and if the value is over $50,000.00 you must file an additional form. We send you all of the info and have a follow-up service to remind you as well.

How does the account work? (Is it like a U.S. checking account?)
It is a regular bank account as if you walked into a local branch within the US. You are provided with an account manager who discusses the banking services on offer. As a disclaimer, we have no involvement in this area nor do we offer financial advice or deal with funds transfers. We simply get your account set up and let the bank do the rest. The banks offer checking, savings and investment accounts, and you can access U.S. ATMs for your funds.

How do I transfer money back and forth between U.S. and N.Z. accounts?
This is usually handled via the SWIFT System via your bank and Wespac. The banks are reluctant to take funds outside of this method as they are attempting to provide full transparency to both the US and NZ Governments.

What currency is the account held in?
Initially any funds transferred in will convert to New Zealand Dollars which are currenty trade at .80 to the US this is up from .40 ten years ago. You can however elect to hold funds in multiple currencies to include USD and I believe the bank is moving toward Chinese Renmimbi Accounts also.

How much will it cost to transfer money / exchange currencies?
While this is not an area I handle, they typically charge between $25.00 to $35.00 for funds transfers. You can negotiate with the bank though for reduced fees if you plan to hold a large balance.

Does the bank issue the required IRS tax documents at year-end?
The US and NZ have a tax treaty between the countries so that you are not double taxed. A year end statement of income earned is provided to you by the bank and it is your responsibility to include this on your US Tax form, much as you would from other financial institutions you deal with. We ensure your account is set up as a non-resident for tax purposes.

I understand being concerned about safety, but why not just buy gold held overseas via BullionVault?
I am very bullish on gold and would hold a larger balance with BullionVault than in a bank account. I also believe gold will likely out perform most paper currencies. Having said that, this account should not be viewed in the same category. It is a lifeboat more than a speed boat, and represents a contingency to a changing financial landscape that still involves banks at the end of the day.What if you need to buy a plane ticket to get out of town? What about smaller items like food or a hotel room?

What is the fee for your service and how do you justify it?
The fee is $149.00 which is about an hour’s time with an accountant and we provide a 30-day money back guarantee. The value is in the convenience more than anything. You dont have to fly 12,000 miles down under and a system has been established to keep you compliant. Additional value comes into play if there are any capital controls or devaluations you anticipate. This is a perfectly compliant approach to avoiding capital restrictions and this window may not be open forever.

Does the IRS look down on this type of offshoring of ones assets?
To be fair, the IRS is not interested in your assets, they are interested in the interest income and capital gains on those assets. This is a 100% transparent account so the IRS understands you are not using this account as a form of sheltering or secrecy, much as you see with other countries.

How long does it take to get an account established?
If you have a passport, between 3-7 days without a passport it takes longer.

Where can I get more information about this?
You can visit my website yieldqwest.co.nz or go directly toexpatyourwallet.com.

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We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: though our financial system seems unsinkable, its reliance on debt and financialization has already doomed it.We cannot know when the Central State and financial system will destabilize, we only know they will destabilize. We cannot know which of the State’s fast-rising debts and obligations will be renounced; we only know they will be renounced in one fashion or another.
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