Anonymous bank accounts sound like something secretive and mythic. But they actually exist, although they are very different from what they once were.
For over a century, the rich, powerful, and well-connected used anonymous bank accounts to do all sorts of things.
The accounts were also used by dictators, intelligence agencies, and even the occasional cheating spouse. Some people used them for privacy, others to avoid taxes and others for clandestine activities.
Although this type of account has always carried negative connotations, the intention is not always negative. Some people have good reasons to consider anonymous accounts.
Many have used anonymous accounts to protect their assets from corrupt governments and illegal confiscations and seizures in their home countries.
Until the 1990s, Swiss numbered accounts were synonymous with anonymous bank accounts. The bank didn’t know who the ultimate beneficial owner of the account was because your name wouldn’t appear anywhere.
You would set up a company with bearer shares and have lawyers open a corporate account. In seconds you would have an anonymous bank account that couldn’t trace back to you. But that’s not how it is now.
Here’s a close look at the current state of anonymous banking, why people still want them, the different types of anonymous bank accounts that exist today, and what you should watch out for when dealing with an anonymous account.
What is an Anonymous Bank Account?
Anonymous bank accounts are also called numbered accounts. They are a type of account where the identity of the account holder is replaced by a multi-digit number or code. The client’s name is only accessible to the client and a small circle of senior staff at the bank.
Anonymous accounts are often confused with standard offshore bank accounts. But the two are very different.
Traditionally, the name and code number of the client were written on an index card, and then it would be placed in the bank’s safe. It would only be accessible to the banker and his boss.
Like other accounts, the client could let the money sit there and do nothing or grow it through investments.
With anonymous accounts, it was the account holder’s responsibility to report the account to the appropriate tax authorities.
If the owner failed to declare the account, it was nearly impossible for tax authorities to find out if it existed. Meaning the owner wouldn’t pay taxes on their account, and the money would grow over time.
What Anonymous Accounts Look Like Now
The secrecy of anonymous accounts was bound to have skeletons in the closet. And everything changed when an American bank, UBS, was busted helping people evade taxes. Governments around the world responded by rolling out the CRS in 2014.
The American scandal was later followed by the Panama Papers leak in 2016, which heightened the urgency for global information-sharing procedures.
Governments demanded transparency, better compliance, and more tax revenue. The result was tougher banking laws, enhanced KYC and AML rules, and new compliance standards unveiled all over. That meant anonymous banking had to change dramatically.
Why Do People Still Want Numbered Bank Accounts?
There are many reasons why people might want to open an anonymous bank account. Some of the reasons are practical, while others aren’t.
Fascination and intrigue with offshore banks
Movies get a lot of credit for their marketing of anonymous bank accounts. They have added to the mystique of anonymous bank accounts. With the kind of glamour these accounts receive in the movies, most people are intrigued about them and are interested in how they work. Most people first learn about anonymous accounts from movies and are interested in jumping in on the fun.
True privacy and desire to be anonymous
This might sound like a foreign concept for people from safe and comfortable parts of the world. But for individuals in corrupt countries and a weak rule of law, letting bank employees and government officials have access to your private bank information or monitor your account transactions could be the end of you.
It could make your family more vulnerable to blackmail, extortion and kidnapping, among other unpleasant experiences. In such cases, being anonymous has benefits, especially if you have an insane balance in your bank account.
An anonymous account could save you a lot of trouble and legal expenses if you’re in a litigious country known for frivolous lawsuits and financial predation. Letting bank employees and the government have easy access to your personal information and bank account details makes you an easy target.
This is one of the reasons why most people prefer to set up a company instead of doing business personally, which allows them to operate anonymously.
Product data and personal info
Another reason to want an anonymous bank account is to protect yourself from identity theft and cybercriminals. This is true for high net worth and famous individuals. If your name, personal details and account information are easily accessible and splashed across a bank’s internal systems, you’re vulnerable to cybercrimes and identity theft.
Banks are regular targets of hacks which can result in the leaking of client data and losing money. Such cases of insecurity have driven the desire for anonymity through numbered bank accounts.
Protect assets offshore
Some reasons people still chase anonymous accounts are more traditional, like protecting your robust asset base. This is one of the primary reasons people seek anonymous offshore, Swiss, and numbered bank accounts.
When choosing anonymous accounts for this reason, you have to choose a bank in a country with strong asset protection laws and bank secrecy laws. Times might have changed, but the level of anonymity varies depending on the country and the robustness of its banking system.
When selected correctly, a numbered account can shield your life savings from collectors against fraudulent claims and frivolous lawsuits. It can also protect you from pre-determined guilt. That is why most people keep their money overseas where this protection is possible.
Hide money and avoid taxes
Not all reasons for seeking an anonymous account are noble. That’s why these accounts are also sought-after by criminals. Many people wanting to open anonymous accounts don’t want to pay taxes. That is why most of these accounts are in non-CRS countries.
However, opening an anonymous account in somebody else’s name is tax evasion, which is illegal in many countries. You could end up with serious legal problems.
Also, secrecy in banking doesn’t work the same way it used to. Banks will automatically send your details to tax authorities in your home country.
Is It Possible to Access Anonymous Banking Today?
Anonymous accounts look very different today because banks have CDD, KYC and AML rules that require them to verify the identity of the account’s Ultimate Beneficial Owner (UBO). Additionally, the automatic exchange of information agreements requires banks to report your account information directly to tax authorities in your home country.
This is true even when you open a virtual account, an offshore account, a numbered account or any other method of storing your money.
While numbered accounts still exist, they don’t operate the same way they used to, and they’re not as anonymous as you would like them to be. Nonetheless, some people still seek them out for good and bad reasons.
Which Countries Support Anonymous Banking?
Anonymous banking is possible in various countries. Some are historical havens for high net-worth individuals looking for safe places to stash their money. While deciding where to open your account, ensure you understand the laws and regulations of each country, and you will be fine. By doing so, you can protect assets and privacy within the bounds of the law.
Switzerland is the premier country in protecting banking privacy. In 1934, Swiss lawmakers passed the Banking Law on the secrecy of Deposits. It prohibits banks from disclosing information about their clients’ accounts or transactions.
This law still stands today, meaning Swiss banks can offer customers complete confidentiality regarding their finances.
Although you may enjoy some level of anonymity, the banks are required to report any suspicious activities. Also, the costs for running the account are higher for non-residents.
Belize allows its citizens and residents to open anonymous bank accounts in certain situations. Unlike Switzerland, Belize has no laws restricting banks from disclosing customer information about their clients’ accounts or transactions. However, the banks take steps to protect their customer’s privacy by keeping the records offsite and using discreet methods of communication when dealing with non-residents.
The Cayman Islands
The Cayman Islands allow individuals to open anonymous bank accounts if they provide proof of identity and residency documents. Like Belizean banks, some of the Cayman Islands financial institutions employ many additional measures to keep client details secret and safe. These include using encrypted emails for correspondence with non-residents and storing client records offsite.
When considering the Cayman Islands, you should know that high net-worth individuals might be subject to additional taxes when opening an account in this jurisdiction because of recent legislation changes passed in 2019.
Online Anonymous Banking
Several organizations with an online presence are claiming they can provide absolutely anonymous bank accounts. Typically, organizations open an account with a bank and then provide the client with the passwords and code numbers to access the account online.
While this might serve the purpose, it is extremely risky because, for all you know, you might be dealing with fraud. Despite the client being given access, the legal account holder remains to be the facilitating organization. That means they can withdraw all the money in the account and close it, and the client may not be able to do anything about it.
How to Do Untraceable Money Transfers
One of the reasons people seek anonymous accounts is to allow them to move their money without being identified. With secret accounts, you can protect vital financial details like your transaction history and net worth from the public eye and, most importantly, hackers and advertisers that might want to exploit them.
If you have a business with trade secrets that thrives on client privacy, you might want to protect them by executing incognito transactions.
Even on a smaller scale, you might want to transfer money without leaving a trace that can be exploited.
Security is a big deal when transacting online or otherwise. One of the ways to ensure you don’t leave traces is by paying cash. But in this case, the anonymity hinges on trust and the agreement of the parties involved.
How to Send Money Anonymously and Securely
There are other ways you can send money anonymously, even without a secret bank account. Whether the purpose is to keep your benevolence private or safeguard your personal information, you can send money online safely and securely. Here are a few ways how.
Digital currencies are an excellent solution for people wanting to anonymously send money. They grant the sender and the recipient complete anonymity. All they need is the necessary software to transfer the currency back to their desired currency. With handy digital apps like Pay iO, dealing with cryptocurrency and converting them to fiat currencies is much easier now. And you don’t have to be tech-savvy to use the apps.
Anonymous payment apps
Another way to send and receive money is through anonymous payment apps like Paysafecard. This approach requires looking for retailers selling prepaid Paysafecard vouchers. You can then use the Paysafecard 16-digit PIN to pay online without being identified. This method is more prevalent in Europe. To make finding retailers easier, you can use a mobile app to find local retailers.
PayPal and Venmo
These payment services allow you to send money directly and anonymously. Both platforms allow you to send money using an email address which the recipient doesn’t recognize. However, you have to make arrangements for this beforehand.
Before using either platform, you must verify your identity, especially with PayPal, to fully use this payment method. But there’s a way to work around it if you value anonymity that much. You can follow these steps:
- Start by setting up a clean IP
- Create an untraceable PayPal account using an address linked to the paid VPN.
- Add an anonymous debit card to verify the account
With your new PayPal account, you can secretly send, receive and withdraw funds. However, if suspicious activity is reported, it can lead to legal risks.
Prepaid debit cards
Another way to send money anonymously is through these cards that work like gift cards and are often used as gift cards. They are pre-loaded with a specific amount of money. They work the same way as a credit card, but the payment is instantly debited from the balance. They are widely available and can be used anywhere as long as the merchant accepts them.
Disposable virtual credit cards
These virtual payment cards use temporary numbers that are only good for one use and then discarded after. They work like burner phones. They sound like what you would see in a movie, but they are legitimate. Just ensure you get them from reputable sources.
Anonymous accounts aren’t what they once were. Although banks that offer these services do their best to protect the account holder’s details and transaction history, the information is readily available to tax regulators and the individual is known to the bank. If you’re thinking of an anonymous account for the sake of small-scale transactions, there are better, more affordable and more effective ways of transacting under the radar, like using cryptocurrency. You can also use apps like Pay iO to act as a virtual account and help you hold money in different currencies that you can then send around the world.