Maritime International Advisor

Bank Confidentiality and The Liechtenstein Case

In the wake of the stolen bank documents in Liechtenstein, a number of clients have asked us about the security and confidentiality of their bank accounts.
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March 11, 2008 - In the wake of the stolen bank documents in Liechtenstein, a number of clients have asked us about the security and confidentiality of their bank accounts.

Most readers will perhaps know the background: In 2002 a computer disk containing bank account information was stolen from LGT Treuhand AG, a Liechtenstein bank located in Vaduz. LGT Treuhand AG is a subsidiary of LGT, the largest bank in Liechtenstein. The criminal was caught and prosecuted in 2003. It was believed at the time that the disk and all copies had been either returned or destroyed.

Recently, news reports have indicated that the German Intelligence Service, the BND, had paid an alleged criminal between Euro 4 to 5 million for a stolen computer disk containing information on more than 1000 bank accounts. This data appears to be part or all of the data stolen in 2002. Note that this data is only from LGT Truehand, not from LGT, and is information only from 2002 and before. Hopefully, Liechtenstein banks, like most in the world, have improved their computer security since that time.

Maritime International Ltd, in its 18 year history, has never recommended Liechtenstein banks, preferring to deal with other European, Asian, Caribbean and Latin America banks. We have also consistently recommended against using the very big banks, as they are always targets, compared to the highly reputable but medium sized banks. Aside from security, we find they also provide better personal service. In any case, we assume that none of our clients have been affected by this matter, unless they did not take our advice.

The primary problem to be concerned with here is a theft of bank data. In this Liechtenstein case, the stolen data is being used by the German government to investigate possible tax evasion by German citizens in the years prior to 2002. It is however, a serious problem whenever it happens, as stolen data can also be used to steal account holders' funds, use their credit cards, commit identity theft, blackmail, and all sorts of other nasty crimes.

Maritime's Recommendations To Improve Security

Bank security has improved immensely since 2002, but clients are advised to take their own measures, as much as possible, to avoid this problem. Some tried and proven recommendations follow:

  1. Always open corporate bank accounts, NOT personal accounts. While the identity of the company's shareholders must be provided to the bank, this information is much more secure and your name does not appear on stolen transactional data.
  2. Only use Internet Banking on low value bank accounts, not on investment accounts. If you have an investment account, it should NOT be internet accessible. You should keep your transactional funds in an internet accessible account and your investment funds only accessible by fax and phone (with appropriate codes). Note that a recent study by Deloitte Touché found that 78% of the world's largest financial institutions had reported data security breaches in the year of the survey. Identity theft and account fraud accounted for 58%. Much of this was caused by the online banking system.
  3. If you have sufficient funds, you should consider a Trust or Foundation account, where the assets are in the name of the Trustee or Foundation.
  4. Do not use your home address to receive bank statements, mail, etc. Use a mail forwarding facility. Your residential address is of course known to the bank, but this information is more secure than your mailing address.
  5. Always incorporate your company in a different jurisdiction from the country in which you open your bank account. This is an old but obvious asset protection feature.
  6. When you are considering a new bank or thinking of changing your existing bank, consult with the professionals at Maritime International Ltd. We have worked with the world's banks on every continent for 18 years. There are many factors involved in selecting a bank. It must not only meet your needs for banking but also provide privacy and security. This is what we do for hundreds of satisfied clients each year.

We would be pleased to assist you should you need our services. If you are interested in the security of your bank account, we seriously recommend you also read the banking information on the following Maritime International Ltd website links:

We will shortly be issuing an Update on our previous newsletter to you regarding the new taxes being imposed on UK non-domiciled residents, and offshore Trusts owing UK assets.

Watch for our next issue.

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