United States Offshore Bank Account

United States Offshore Bank Account

The information below provides details about the United States banking system, and details on opening a United States offshore bank account. You will find details on the laws and regulations that govern the banking system, as well as a list of local and international banks that operate in the United States.

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The United States Banking System

With nearly 90,000 branches and 371,000 automated teller machines (ATMs), US banking system is the largest in the world. As of September 30th 2004, US banks had US$9.88 trn in assets and US$5.98 trn in total loans. US banking is more diverse than in most Western countries. Despite ongoing consolidation, vigorous competition exists within the vast banking community, which includes financial holding companies that operate nationwide, dominant regional banks and smaller independents. Large foreign banks also continue to expand in the US market.

Federal Reserve

The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded. Today, the Federal Reserve’s duties fall into four general areas:

- conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates;

- supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers;

- maintaining the stability of the financial system and containing systemic risk that may arise in financial markets;

- providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system.

A network of twelve Federal Reserve Banks and their Branches (twenty¬ five as of 2004) carries out a variety of System functions, including oper¬ating a nationwide payments system, distributing the nation’s currency and coin, supervising and regulating member banks and bank holding com¬panies, and serving as banker for the U.S. Treasury. The twelve Reserve Banks are each responsible for a particular geographic area or district of the United States. Each Reserve District is identified by a number and a letter. Besides carrying out func¬tions for the System as a whole, such as administering nationwide banking and credit policies, each Reserve Bank acts as a depository for the banks in its own District and fulfills other District responsibilities.

Member Banks

The nation’s commercial banks can be divided into three types according to which governmental body charters them and whether or not they are members of the Federal Reserve System. Those chartered by the federal government (through the Office of the Controller of the Currency in the Department of the Treasury) are national banks; by law, they are members of the Federal Reserve System. Banks chartered by the states are divided into those that are members of the Federal Reserve System (state member banks) and those that are not (state nonmember banks). State banks are not required to join the Federal Reserve System, but they may elect to become members if they meet the standards set by the Board of Governors. As of March 2004, of the nation’s approximately 7,700 commercial banks approximately 2,900 were members of the Federal Reserve System – approximately 2,000 national banks and 900 state banks. Member banks must subscribe to stock in their regional Federal Reserve Bank in an amount equal to 6 percent of their capital and surplus, half of which must be paid in while the other half is subject to call by the Board of Governors. The holding of this stock, however, does not carry with it the control and financial interest conveyed to holders of common stock in for-profit organizations. It is merely a legal obligation of Federal Reserve membership, and the stock may not be sold or pledged as collateral for loans. Member banks receive a 6 percent dividend annually on their stock, as specified by law, and vote for the Class A and Class B directors of the Reserve Bank. Stock in Federal Reserve Banks is not available for purchase by individuals or entities other than member banks.

Supervisory Function of the Federal Reserve

The Federal Reserve has responsibility for supervising and regulating the following segments of the banking industry to ensure safe and sound banking practices and compliance with banking laws:

- bank holding companies, including diversified financial holding com¬panies formed under the Gramm-Leach-Bliley Act of 1999 and foreign banks with U.S. operations;

- state-chartered banks that are members of the Federal Reserve System (state member banks);

- foreign branches of member banks;

- Edge and agreement corporations, through which U.S. banking orga¬nizations may conduct international banking activities;

- U.S. state-licensed branches, agencies, and representative offices of foreign banks;

- non- banking activities of foreign banks.

Although the terms bank supervision and bank regulation are often used inter¬changeably, they actually refer to distinct, but complementary, activities. Bank supervision involves the monitoring, inspecting, and examining of banking organizations to assess their condition and their compliance with relevant laws and regulations. When a banking organization within the Federal Reserve’s supervisory jurisdiction is found to be noncompliant or to have other problems, the Federal Reserve may use its supervisory authority to take formal or informal action to have the organization correct the problems. Bank regulation entails issuing specific regulations and guidelines governing the operations, activities, and acquisitions of banking organizations.

Anti-Money-Laundering Program

To enhance domestic security following the terrorist attacks of September 11, 2001, Congress passed the USA Patriot Act, which contained provi¬sions for fighting international money laundering and for blocking ter¬rorists’ access to the U.S. financial system. The provisions of the act that affect banking organizations were generally set forth as amendments to the Bank Secrecy Act (BSA), which was enacted in 1970.

The BSA requires financial institutions doing business in the United States to report large currency transactions and to retain certain records, includ¬ing information about persons involved in large currency transactions and about suspicious activity related to possible violations of federal law, such as money laundering, terrorist financing, and other financial crimes. The BSA also prohibits the use of foreign bank accounts to launder illicit funds or to avoid U.S. taxes and statutory restrictions.

The Department of the Treasury maintains primary responsibility for issu¬ing and enforcing regulations to implement this statute. However, Trea¬sury has delegated to the federal financial regulatory agencies responsibil¬ity for monitoring banks’ compliance with the BSA. The Federal Reserve Board’s Regulation H requires banking organizations to develop a writ¬ten program for BSA compliance. During examinations of state member banks and U.S. branches and agencies of foreign banks, Federal Reserve examiners verify an institution’s compliance with the record-keeping and reporting requirements of the BSA and with related regulations, including those related to economic sanctions imposed by Congress against certain countries, as implemented by the Office of Foreign Assets Control.

Financial Institutions Operating

Largest banks of the USA:

J. P. Morgan Chase & Company (New York, N.Y.)
Bank of America Corp. (Charlotte, N.C.)
Citigroup (New York, N.Y.)
Wachovia Corp. (merged with Wells Fargo)
Bank One Corp. (Chicago, Ill.)
Wells Fargo & Company (San Francisco, Calif.)
Suntrust Banks, Inc. (Atlanta, Ga.)
HSBC North America Inc. (Buffalo, N.Y.)
Bank of New York Company, Inc. (New York, N.Y.)
State Street Corp. (Boston, Mass.)
Keycorp (Cleveland, Ohio)
BB&T Corp. (Winston-Salem, N.C.)
Bank One Corp. (Columbus, Ohio)
PNC Financial Services Group, Inc. (Pittsburgh, Pa.)
ABN Amro North America Holding Company (Chicago, Ill.)
Fifth Third Bancorp (Cincinnati, Ohio)
Citigroup (Sioux Falls, S.D.)
MBNA Corp. (Wilmington, Del.)
Comerica (Detroit, Mich.)
Southtrust Corp. (Birmingham, Ala.)
M&T Bank Corp. (Buffalo, N.Y.)
Wells Fargo & Company (Minneapolis, Minn.)
National City Corp. (Cleveland, Ohio)
ABN Amro North America Holding Company (Troy, Mich.)
Amsouth Bancorporation (Birmingham, Ala.)
Regions Financial Corp. (Birmingham, Ala.)
Charter One Financial, Inc. (Cleveland, Ohio)
National City Corp. (Indianapolis, Ind.)