Buy Your Own Offshore Bank
W A S H I N G T O N, Mar. 1 -- The latest in personal finance: Now you canhave your own offshore bank for only $9,999, in eight weeks or lessand without a background check, ads on the Internet entice.
The offshore status of the banks means their foreign owners maybenefit from tax breaks, exemption from currency controls andconfidentiality.
Senate investigators see the ads as a new money-launderingdanger because the "personal" banks may offer links to accountsat American institutions. They say many large U.S. banks haveunwittingly become conduits for dirty foreign money.
The new banks licensed by Montenegro, for example, are touted asoffering correspondent accounts at the national Bank of Montenegro— which in turn is said to have accounts with major banks inSwitzerland and other countries.
Correspondent banking, a lucrative activity in which banksprovide each other services such as moving funds or exchangingcurrencies, allows banks to conduct business in countries in whichthey have no physical presence.
Senate Probe
The Senate investigators found in a yearlong inquiry that manybig U.S. banks have failed to take adequate steps to preventlaundering of money from drug trafficking and other illicitactivities through their correspondent bank accounts. A report onthe subject, by the Democratic staff of the Senate PermanentSubcommittee on Investigations, was released in early February.
The panel, part of the Senate Governmental Affairs Committee,was opening three days of hearings today. Witnesses includeexecutives of U.S. giants Citibank, Bank of America and Chase Manhattan as well as officials at the Justice and Treasury departments.
"The hearings will show … why U.S. banks should not extendthe lifeline — a correspondent bank account — that keeps thesebanks in business," Sen. Carl Levin of Michigan, the subcommittee's senior Democrat, said Wednesday.
Several U.S. banks have said they have tightened controlsagainst use of correspondent accounts for moving dirty money.
Popular Reads
ABC News Live