Opening an offshore bank account:
Paper and privacy

Bank reference, please!

A bank reference letter is increasingly needed when opening an offshore bank account. Is this a hidden threat to our privacy?

OFFSHORE-FOX.COM
with Alex Hanson

(Part 2 of 7)

Asking your high street account officer to to issue a bank reference letter specifically addressed to your new offshore bank completely defeats one of the principal aims of banking offshore -- privacy. It would not be much of an overstatement to say that you might as well tell the world about your offshore account in a newspaper advertisement!

Many offshore banks nevertheless do insist that reference letters carry their details as the recipient, and many offshore providers continue to introduce unsophisticated clients to them, obscuring the real issue here with talk of their responsibilities in the war on money laundering.

Then there are those bankers who will accept reference letters addressed "To whom it may concern." Of course, such documents are preferable -- at least you are not giving the details of your new offshore bank away to your local bank, and so potentially to your onshore authorities. However, even "To whom it may concern" references give rise to a number of issues.

			While commonplace in everyday commerce, even non-specific bank reference letters give rise to a number of issues today.

While non-specific reference letters have always been commonplace in everyday commerce, bankers have most recently been tutored in their possible use to "covertly" open offshore bank accounts. In our new upside-down world, a request for a non-specific bank reference letter may indeed raise a red flag.

Non-specific letters clearly give away the fact that you don't want the issuing banker to know the addressee. This may raise undue suspicion ("what does he have to hide?") and be a sufficient reason for your account officer to take a closer look at your affairs -- or even file a Suspicious Activity Report.

Moreover, your offshore bank may well call the issuing bank to verify the reference -- fakes are not unknown -- if your account opening documents end up on the desk of some overly-diligent bank clerk. Of course, you will not be told if this happens -- and if it does, you are far worse off than if you had asked for the reference to be addressed to your offshore bank to start with.

Your local banker, perhaps already suspicious of your need for a non-specific reference, will learn where his letter went ("offshore!"). What's more, he might wonder why the offshore bank felt the need to verify it. Did they also think something was amiss? Your chances of being reported have suddenly increased quite dramatically -- even though you've done nothing wrong.