How to Locate an Offshore Account

We’ve talked quite a bit in recent posts about what to do if one spouse is suspected of hiding assets. One place that money can be put away is in an offshore account.

An offshore account is not necessarily illegal. In fact, some business owners use these accounts to earn capital gains tax-free. Offshore accounts do not have to contain millions of dollars, either. Some banks allow customers to open an account with as little as $300.

How to locate a spouse’s offshore money

While offshore accounts and foreign investments are not illegal and can be a wise business move, hiding assets from a divorcing spouse or the IRS is not ethical.

A forensic accountant can usually find inconsistencies in financial records. In some cases, a spouse may need a letter rogatory to gain access to offshore account information. Letters rogatory are documents requesting information or evidence from one court (in the U.S.) to another (in Switzerland or the Bahamas, for example). In the case of an offshore account tied to a divorce, the court in Switzerland or the Bahamas would order the bank that is under its jurisdiction to supply information regarding any account affiliated with the spouse. Letters rogatory can be used by divorce attorneys as a discovery tool.

Shell companies and divorce

In some divorce cases, a spouse has sought to hide assets by creating a shell company. The spouse will then hire a “straw” person to be the shell company’s director. This way the spouse’s name and identity are not connected to the shell company. The offshore bank account is then opened not with the spouses’ name but by the straw director in the name of the shell company. The spouse can then easily transfer money into the account for later use. Common countries for people to open offshore accounts include the Cayman Islands, Singapore, Switzerland, Nevis, Belize, and Germany.

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