Offshore
Banking in the 21st Century; Moving Money by the U.S. Patriot Act |
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Online Special
Contribution |
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By: Daniel
MacMullin, B.A., L.L.B. |
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Published:
August 23rd, 2007 |
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| Offshore Banking in the 21st
Century; |
| Moving Money by the U.S. Patriot Act |
| By: Daniel MacMullin, B.A., L.L.B. |
Managing Director: IFG Trust Services, Inc. |
Equity Development Group, Inc. |
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Published: Thursday, August 23rd, 2007 |
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As many people have already surmised there have
been substantial changes in the realm of international banking, since the events of
September 11th and subsequently the introduction of the Patriot Act in the United States
of America. These changes have impacted how international banks do business and, also, how
people (should) choose their banks. |
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There was a time when a query on the internet regarding offshore banking resulted in
locating a great multitude of small private banks, operating from jurisdictions all over
the world, promising a full range of banking options under complete confidentiality. The
jurisdictions in which these banks operated ranged greatly regarding regulation and
credibility. Often these banks were nothing more than internet websites that maintained
large omnibus accounts at larger institutions which were often based in Switzerland. |
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Offshore Banking in the 21st Century; Moving
Money |
by the U.S. Patriot Act, By: Daniel MacMullin |
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An “omnibus account” is an account that is operated within one institution
"A", the large bank, for the benefit of "B", a private internet based
bank, for the benefit of "C" the clients of "B". "B" would
be responsible for segregating out the funds held in the account with "A". In
this type of arrangement "B" would be able to offer banking services to it's
clients by piggy backing on the services offered by "A". "B" would be
able to rely on the |
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| correspondent relations of "A" to give their clients access to
U.S. dollar accounts etcetera. In many cases "A" had no knowledge of the clients
of "B" and relied entirely on "B" to complete due diligence on their
clients, in other extreme cases "A" had no idea that "B" was even
operating as a bank. |
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The most obvious concern with such an arrangement, prior to 9/11, was the issue of private
banks disappearing in the middle of the night simply by shutting down their website and
disappearing with “funds on deposit.” Clients of these private banks would find
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