Copyright 2013 John T. Reed
A reader followed my advice and example to open accounts in Australia, Canada, and Sydney—all in one continuous trip! I get tried just thinking about such a thing. My comments are in red.
I thought it may be of some interest to yourself, or perhaps, even to your readers, to hear about my experience opening bank accounts overseas in keeping with your advice (to protect against hyperinflation). I apologize beforehand for the relatively long length of this email. Trust me. We appreciate the detail. Also, I appreciate the fact that you are a good writer, otherwise I would have had to do a lot of rewrite.
I started off by emailing your listed contacts for Australia/Canada and googling various NZ banks to make inquiries. The NZ banks asked me why I wanted to set up accounts with them. I answered, filled out all the forms they required (in addition to Mr. Blumenthal's and Mr. Curran's forms) and mailed them in. Got prompt responses from all banks (NZ, Australia, Canada) once they received my information. Like I have said repeatedly, they seem to have better people on average and give better service than average U.S. banks
I travelled to Auckland, leaving at night from LAX on Sat, Nov 9th and arrived in Auckland at 0800 on Monday Nov 11th. 13 hour flight wasn't too bad as I was able to doze off half the time. One note: at NZ airlines at LAX they took me to their back office to print out my departure [from New Zealand to Australia] ticket on Emirates airlines to show to the customs officer. They said that for the visitor's visa (available to U.S. citizens) this is one of the docs to show. And indeed, the NZ customs officer did look at it once I arrived. [You also need a prearranged ETA to enter Australia—not sure if this is what he is talking about.]
NZ customs was very particular. After arrival, I handed my customs declaration form to the customs officer and she asked me why I was in NZ just for a day. [My wife and I did not notice NZ customs being particular. But we were there for eight days visiting friends. Opening bank accounts was maybe two hours of the eight days. Don’t know if we even mentioned it because it was so secondary.] I told my business (opening a bank account); she asked me why I wanted to do that here and I gave her some of (your) reasons. She looked at me like I had just announced I'd come from Mars, marked my declaration sheet and sent me on my way.
At the next customs checkpoint I was sent into the 'F' queue which is where they examine your luggage and ask travellers (whom I presume 'raise red flags' to the initial customs officer) more questions. That particular queue took about an hour to get through. [We did not have to do that. Looking suspicious is not wise when dealing with customs anywhere. In this case, the one-day stay was the resaon but he still got greatly delayed because of it.] The customs officer I got was fairly nice, he questioned me about my motives again and said it was very unusual for people to stop in NZ for just one day. [I would add it is masochistic. NZ is not only far from the U.S. It is far from Australia. Going to NZ for one day is very grueling and expensive per hour of being in NZ] I broke out the email correspondance between myself and Westpac NZ and ANZ NZ and he actually read through it all. He seemed satisfied to see the physical address of the bank I had made appointments with and the fact I actually had appointments scheduled there. Also at NZ customs there was a man who was being filmed answering questions about the contents of his luggage as the customs officer went through each item to verify his statements.
After getting through customs I asked the info desk the best way to get to my intended address. It was slightly colder outside than I had anticipated. [There are only two: bus or cab. We took the bus.] Getting to my appointments on the airport bus was super easy; Auckland is large by NZ standards but in the U.S. would be considered just a fairly larger town. Due to the customs holdup I was half an hour late getting to my appointment but the migrant bank officer still saw me. After I explained why I was late he told me about how NZ customs are among the toughest in the world.
So, I opened up an account with Westpac NZ and another with ASB. [Those happen to be two of my banks there, too. I once asked my Westpac NZ guy if I could tell my readers about his contact info. He said he would get back to me but never did. So I did not ask ASB or the third smaller bank I have there. I also went to the Migrant department at Westpac. Good change it was the same guy. It was at Te Ara Tahuhu Walkway in Auckland.] Westpac NZ, from what I understand, was originally a different NZ bank which Westpac ended up acquiring, thus causing the name change. It is, however, a more or less totally different entity with banking rules and regulations different from its Aussie counterpart. [They are jointly owned by chartered and regulated by each country’s government like BMO in Canada and BMO Harris Bank in the US.]
It didn't take long at all to open up either account in NZ. I attempted to walk into another branch, ANZ, while over there but the bank official said all their appointments were totally booked for two days. [I do not recommend ANZ.] There appeared to be about 4-5 major banks, both for NZ and later (as I observed) for Australia. In Auckland all the banks had big 'migrant' sections. The population in Auckaland looked 40-50% Asian immigrant, so I imagine the banks are very used to dealing with new arrivals and 'non-resident' accounts, which made it a fairly easy process for me personally.
While I was in Auckland I also dropped off my application for an 'IRD' [Inland Revenue Department = US IRS] number off at a local post office. This was also super-easy: I'd printed out the application while in the States and just walked up to the counter to the post office and submitted it. The post offices are all marked green and in downtown Auckland there looked like there was one on every street. The reasons why I wanted to apply for an IRD number was that I wanted to be able to tell the NZ govt that I was a 'non-resident migrant' for tax purposes. If you don't, migrants who open accounts will have their interest taxed at around 33%, while if they can show the bank their IRD number received from the NZ govt their interest is taxed at just 10%. [Well that explains it. I got charged 10% at Westpac but 33% at the other two. I thought the law must have changed. I need to get that fixed. Thanks.]
In Australia 10% tax is applied to your interest no matter what; the bank takes it off your interest payments so one presumably won't even notice it. [And you do not have to fill out a tax return in either Australia or NZ. They just take it and your done.]
I had a nice afternoon in Auckland then took a 3-hour flight to Sydney in the evening. I don't remember being questioned by customs, so I don't think I was. I probably told the first customs officer that I was sight-seeing for 4 days (which was also true) which was more 'par for the course' as visitors to Sydney went I suppose, because I remember making it through without trouble. I believe I checked both 'personal' and 'business' as reasons for visiting on the customs form. [Q.E.D.]
I had a great 4 days in Sydney. Way too much to see there. It is extremely expensive though: it reminded me of those sort of cities like Tokyo, London, and NYC where one can end up spending money like water just trying to get around and see the sights (or at least that's my impression of things!--I've traveled around the world fairly extensively and been to all three cities). [Told ya. But there are tricks to it which I also told you like my staying in a super location because my San Francisco Marine Club has a reciprocal arrangement with the Royal Autooabile Club of Sydney. Also, I learned to eat in the somewhat hidden food courts where the local office workers eat, not in the tourist restaurants. New Zealand is not so expensive.] For accommodations I got one of those 'random hotel' deals from Expedia where you pick a hotel 'in the blind' to see what you get for a (relatively) cheaper rate. Worked out well. Their train/subway system is easy to use and its like NYC where there are tons of cabs everywhere. [Buy a transit pass at the airport for the whole time you will be there when you first arrive. It works on trains, buses and ferries.] Also a good bus system from what I understand (I myself did not end up using any buses over there). One can probably stay more cheaply than I did: there are various 'backpacker' hostels and so forth; I however wanted something more comfortable.
Sydney is also teeming with immigrants: by my observation around 40% as well, so, many of the bank branches there had migrant sections. I did see Caden Blumenthal for a few minutes the first day I arrived but was helped instead by his colleague who was sort of taking over his spot. My impression was however that it didn't even matter that much whether I had anything arranged beforehand. The reason I say this is because, right after I finalized my Westpac accounts and made an initial deposit with cash, I walked out onto the street and walked in to two other Australian banks down the street: ANZ and CountryWide [I don’t know them.], with no prior preparation. Just walked in and within two hours I had two other Australian bank accounts. They just needed to see my passport and that was that. At the two banks I'd say 90% of the customers there at the time were Asian immigrants, so, again, I think all the banks there are fairly used to this.
The other two Australian banks offer slightly different terms than Westpac did. All in all the savings accounts all offered at least 3-4% interest (heaps better than what we currently get in the U.S.) but their savings accounts had slightly different setups. Readers might find a particular sort of 'savings setup' more congenial (or not) depending upon their individual circumstances. My view is, even if I don't really utilize them, its a good 'nice to have' option. To take advantage of the interest rate, of course I'll probably mostly use one Aussie bank and one NZ bank, but, in my view, why not have more options with one's banking? [The answer might be if your total deposits are small you are a nobody in each bank. Also, you have to print out the statements each month and there is some housekeeping like the tax issue and one of my banks (ASB NZ) started charging me for our ATM cards which we never use. I only have one bank in Australia and Canada because they have federal deposit insurance; three in NZ because they do not.]
I took a flight out of Sydney at noon on Friday and arrived at Vancouver 0800 on Friday. [Jesus H. Christ! What a glutton for travel punishment! Arriving before you leave has to do with the International Date Line.]
I also got the 'work over' from customs at Vancouver. The customs officer asked me my purpose in visiting: I told her I intended to open a bank account at BMO. She immediately got a suspicious look on her face and asked me why. I told her I wanted to diversify out of US currency. She put on this 'yeah, whatever' look on her face and asked me "don't you realize you can also diversify by buying Canadian stocks and bonds too, right?" like I was an idiot. [Do not buy any country’s bonds. I have no excitement for stocks unless you are in a US IRA and do not want to get out of it Canadian and Australian stocks do not excite me. There is economic contraction contagion in stock markets; generally not in foreign exchange markets which are valued by which countries “print” too much money.] I just smiled and said, "yes, I'm doing that too." She said "okay." marked my sheet and sent me to the 'red flag' queue where I waited for awhile. The second customs officer who questioned me also looked at my address where I had my appointment with James Curran. When he saw it he said, 'ah, BMO,' then asked me why I wanted a Canadian bank account. I gave him several reasons. He asked me if I had international equities and I said yes. He then let me go. I took the train to downtown Vancouver and got my accounts set up. [I have been to Canada multiple times, once just for part of a day, but neither I nor my wife ever got all of this treatment. Maybe this reader looks Middle Eastern. I’m blond. ;)]
One interesting note while I was at Canadian customs: next to me at the Canadian customs line they were really giving the workover to some girl who'd been on my flight to Vancouver from Sydney. She had a lot of cash and couldn't explain really well what she did or what her annual income was or how she got her various cell phones. Eventually it came out that she 'danced' in Kings Cross (a semi-seedy section of Sydney) for income and that guys gave her gifts. The officers asked her if she used drugs and she said she used cocaine on a recreational basis. She was probably a prostitute. They were pretty intense with her, but it was noteworthy to my mind that the female officer there explained that it was not particularly their concern what she did when where, but they had to determine whether she was trying to facilitate anything illegal across the Canadian border.
Upon returning to the airport at Vancouver and my going through US customs at the Vancouver airport, the U.S. customs officer asked me where I'd been and why. I told him all the details of my travels and that I'd been opening overseas bank accounts in xyz. Again, got a suspicious look and proceeded to start fishing around about my job and what I did. I told him I was active duty military and he started asking me what my MOS was. I told him I was a Navy officer and that we don't have a MOS (the enlisted Navy has 'rates' which is sort of the navy equivalent of the Army/USMC MOS). Then he kept asking me about my MOS and how many bags did I have and what color. He did let me through after a few minutes though. [I recommend readers review my article about crossing borders at http://www.johntreed.com/questions-from-border-officials-when-entering-a-country.html]
All in all, my overall impression of all my 'mandatory' disclosures of what, as a U.S. citizen, I was trying to do as far as set up foreign bank accounts were met with in my opinion with various levels of incredulity among anyone I had to mention it to. [I got a little of that but infinitely milder. I suspect my matter-of-fact manner probably is part of it. One Canadian border guy said he assumed I did this all the time. It was my third visit to the country in my life! But all my research was probably making me look confident and practiced at it.]
Including the Aussie/NZ bank officers I talked to, although of course they probably have some sort of customer checklist to gauge whether I'm a legit customer or no. I'm certainly not crying about it: as you say in your web posts I am not doing anything illegal. It has been interesting though, when talking about this with friends and even some family, how different my viewpoint is from theirs in regard to these things. I suspect that most people in general are fairly ignorant as to the basics of economy and economic history and that, coupled with an almost lifetime exposure to constant media hammering/railing against evil "offshore accounts" via movies like 'Wall Street,' 'The Firm,' various movies about drug kingpins and the like make the average person suspect one's motives in setting up offshore bank accounts.
Another example, when talking to one Australian friend, he advised me that his "mate" in an English hedge fund is of the opinion that USD value will go up in relation to other currencies because the U.S. will be energy independent soon and that Ben Bernake said that the US will taper off the QEs (also read the same thing about 'tapering off' in various AUS/NZ financial advisory pamphlets I picked up at banks over there) and that the AUD will drop down to 85c to the dollar due to Australian exports to China dropping off and this and that.[Whatever. I am not interested in any of that; only in whether the AUD and NZD and CAD are less likely to hyperinflate if and when the USD hyperinflates] The concept of "fire insurance" for currency is really, I think, a foreign idea to most people. As I have read about 1/3-1/2 of the books in your bibliography for your hyperinflation book it is not so foreign to me, but it was kind of striking to see how most people see the US currency as some sort of infallible entity. I know you have probably addressed this before but it was interesting to deal with it in real life. [Useful idiots. The day they stop seeing it that way is the day it will be much more costly and difficult to move your money to other countries. Glad you took care of it, as I did, when we still could.]
I had to borrow someone's phone in order to call overseas to set up my accounts, so, in my opinion it would behoove anyone doing this to realize that it's in their interest to be able to call overseas at a moment's notice if they forget their internet password, or whatever. [I discussed our having cell phones we could use there at http://www.johntreed.com/Australia-New-Zealand-visit-Facebook-posts.html]
The banks' websites appear basically functional though simplistic: US users might find some bells and whistles they are used to missing and the account summary screens rather simplistic, as though the Aussie/NZ websites are 10 years behind. [I have not noticed this although I rarely go to a U.S. bank website.]
However the websites, of course, do the job. Also my bank USAA charges a $45 fee to wire money overseas, while my Vanguard brokerage account does it for free. However Vanguard requires me to mail a separate form (for each bank) to their PA office to set up recurring international wire transfers; I imagine this would also be the case for other brokerage firms like Fidelity, Schwab et al.
At any rate, those are some of my memories of my trip about two weeks ago. Again I apologize for the length of this email. You probably get this sort of detailed account from time to time but I thought some sections of it might be of interest to you or your readers.