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Offshore numbered account:
What is it?

Offshore Q&A » Offshore banking » Question 7

Offshore numbered account has become a fairly wide term over the past decade, and it has become increasingly difficult to correctly define its meaning across the variety of offshore jurisdictions. Nevertheless -- whatever the banking haven, whatever the bank -- the term "numbered account" always carries with it a sense of increased privacy for the account holder.

Many people will be familiar with the famed Swiss numbered account. Although the traditional Swiss numbered account no longer exists, Swiss banks still offer numbered accounts. Confusing? Let's look at the history of numbered accounts.

Until 1992, it was possible for an attorney to open a Swiss bank account on behalf of a client, without revealing the client's identity to the bank. Effectively, the bank had no idea whose money it handled. The same practice continued in Liechtenstein until 1999.

Because the bank had no information as to the account holder's identity, there was no way to refer to the account except by its number -- hence the term numbered account.

But the meaning of "numbered account" has shifted since the disappearance of this practice. Nowadays, we wouldn't call the original Swiss numbered account "numbered". We would go further, and use the term "anonymous bank account" to describe the fact the the account holder was unknown to the bank.

The Swiss have kept the term numbered account, not least because it makes good marketing sense. But these days, a Swiss numbered account is never anonymous; Swiss banks are required by law to know the identities of account holders.

Nowadays, the term numbered account usually suggests an account where the bank takes additional steps to protect the account holder's identity. A typical numbered account, in Switzerland or elsewhere, will offer some or all of the following features:

  • The bank's computer records deliberately omit the account holder's name, or any other details that might reveal the account holder's identity. A numbered account is referred to under a number (or a code name) only. Consequently, most bank employees have no idea who such an account belongs to. The identity of the account holder is only known to senior bank management.
  • As a result, no paperwork produced in relation to the account, such as account statements, will give any clue as to the account holder's identity should it end up in the hands of a third party.
  • The account number alone, or a code name (if available) is sufficient to route wire transfers into the account. This protects against paper trail as sending banks do not learn the name of the recipient.
  • Outgoing payments made from a numbered account do not give the name of the account holder away either. Most banks just indicate "one of our clients" or similar as the sender.
  • Third-party investment products are purchased in the bank's name and not in the name of the account holder.
  • Mail is typically held for collection, and should your banker ever need to reach you, he/she will intentionally disguise the purpose of the call if ever speaking to a third party or leaving a message. You do not need to worry about seeing your Swiss bank's letterheaded paper coming out of your office faxmachine, either; a discreet hand-written note is the norm.

Although Switzerland perhaps deserves the credit for the term "numbered account", there are other places to go for the kind of discretion outlined above. Banks in Liechtenstein, Switzerland's tiny neighbour, as well those in Austria, also open numbered accounts, as do banks in many offshore tax havens around the world.

Most banks expect a significant deposit from anybody asking to open a numbered account, as well as an annual maintenance fee. Is it worth it? Opinions vary.

Some offshore professionals claim that numbered accounts are past their sell-by date and are used as a gimmick by bankers to convince depositors that their funds are safe from prying eyes.

It is certainly true that a numbered account helps protect against paper trail and any incidental release of information. However, it is also true that numbered accounts are subject to the same legislative provisions as standard accounts. A court action -- if successful -- will still result in the account holder's identity being revealed. This is in contrast to an anonymous bank account, where a bank can never reveal the account holder's identity simply because it doesn't know it.

It should be noted that an account opened in the name of an offshore company will provide benefits similar to those of a numbered account. In the case of a numbered account, your name is deliberately detached from the account, or replaced by a code name. In the case of an account in the name of an offshore company, your personal name is replaced by the name of the company. The discretion achieved is much the same.

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