Transcription
350,000 euros. 40 days, one email. This is about banking today.
This is Mik Geronès from First Class Citizen. I hate taxes and I'm going to show you how you can create a system that is fully legal and can improve your banking.
We are talking today about, let's call it James, a leading super yacht management company in St. Barts, 16 years in there. Ultra high net worth individuals. You know, St. Barts, New Year's Eves, Jeff Bezos, the best of the best, crème de la crème de la crème. They go to St. Barts and spend money like there's no tomorrow.
This case, this business is doing 3 to 4 million dollars a year and he has an income tax rate of 0%. So, tax optimized. However, he came to us for [music] banking. He holds a US O-1 visa. That means that if he crosses 120 days, well, the US, the IRS is going to tax his Caribbean income.
He runs 10 to 15 US credit cards and every account is in his name. That's the first problem. Second, the accounts he has for his business are not optimized, like you're going to see in a second. Paying a credit card and laundering money look identical to an algorithm.
So, what he was actually doing and what caused the whole problem. Number one, a client pays in euros. He pays for his super yachts in St. Barts, takes the money into his personal account, first of all, because his US LLCs had US dollar accounts but not euro accounts. So, he took it on his personal account, converts it inside Revolut to US dollars. This takes 60 seconds and then he sends these US dollars to Chase and then with Chase he clears his.
He repeats this at high volume in peak season and it's 100% legal. The accounts and the accountants and everything, it it's completely legal. However, what the algorithm saw, large inbound money coming in in euros, hundreds of thousands in euros in one transaction, then immediate conversion in a second, then in no time he's sending the money outside. So, from Revolut that is Lithuanian to Chase [music] in the United States.
High frequency, repeated again and again every 2 3 days with different super yacht bookings. The pattern is the problem, not the legality. It's how the machine, the algorithm understood this. He was doing completely fine. You can, too, but you need to understand that now it's not humans reviewing things. It's machines reviewing it, and in the future, AI. Fintech is not the right type of banking that you need to scale.
And I told him, "How did you do it, you know, all this time running multi-million dollars and running it Revolut and Wise? How do you go to sleep with peace of mind, you know?" And he's like, "Yeah, but I had Chase, and Chase is a good bank." And he's like, "I know, but we need something more robust." And wait for it because at the end you're going to see what account we recommended to him. Four different options. You're going to see it in a second.
But first of all, we need to understand [music] what was the the the final scenario that boom crumbled everything. What happened is that in January his French fintech account asked for a balance sheet in 10 days. It was like, "Hey, prove that you're not laundering money. We give you 10 days or you need to close the account." What happened is that he asked his accountant, and he said, "I need many more days than 10 to get this done." So, they closed the account.
Then, he moved everything because they said, "Okay, move the money out and we're going to close the account." He moved the money out to another fintech bank in US dollars, US account. And what happened? It was the same account, the same Revolut. He had two different Revoluts. He sent it to another Revolut. A couple of days later, same issues. So, what happened here is relying from a French address Revolut to a US address Revolut still caused the same problem.
And he explained me on the consultation, "Well, I have till June 24th, and they're closing my account otherwise." And I said, "Well, what else can we do? What other banks you have?" He says, "Well, I have a physical bank in St. Barts, but when I want to move money, I wanted to move 35,000 dollars. What happened is that they told me I need to go to the branch for anything beyond 3,000. Can you believe this? Running a super yacht company with ultra high net worth individuals, and he needs to go to the branch every time he wants to move more than 3,000 dollars. So, imagine for 350,000 he had to move, I was pretty tricked.
So, well, what's the situation? If he's using Chase and moves everything to Chase, then every time that he wants to convert euros to dollars, the exchange rate is terrible. If you use Chase, you've ever done this conversion, I've done it, I said never again. You could lose $40,000 just in transaction fees from euros to dollars if you send euros to Chase and Chase, of [music] course, keeps it in dollars. So, that's not an option.
We need something with a better FX rate. Then, we could wait in the local bank, but as I said, in person, everything above 3,000. He told me, I messaged the branch manager on Tuesday to move 35K in the past, and by Friday, still no reply. So, 70,000 wire, and he also told me, previously, I gave it a chance, and 70,000 euros, the wire took 10 days, unacceptable.
And then, option C, it's another fintech. Where's like two fintech closed? Well, what if I send it to Wise? What if I send it to any other fintech banks, N26, you name it? Well, same algorithm, same triggers, most likely a closure email coming soon. So, we wanted a long-term structure, and these are the steps that we followed.
Wise business, we use a fintech again, but just like a bridge, because Wise has this Belgium IBAN, and you can send me before 24th of June, because they were closing the Revolut account the 24th of June. Euros held natively, no conversion, no FX loss. And then, we move this to a Swiss bank. Because Swiss banks accept multi-currency, euro IBAN, USD Swift, and Swiss francs. [music] Very stable currency, very stable country. As you know it, it's where the wealth is stored for decades, >> [music] >> they have modern platforms, relationship managed accounts, open in two to four weeks, and banking that reads context. They understand ultra high net worth, what HNI means, not like other accounts like Revolut, N26, all of these that are more useful for freelancers that open their account from whatever country, start making their first money online.
So, another option that we proposed is Julius Baer in parallel, one of the oldest private banks in the world. However, minimum half a million, which [music] he already clears with his net worth, with his savings from previous years. Six to eight weeks, a relationship manager who picks the phone at 6:00 a.m. That means that whenever you need it, they take care of you because you are a private client, because you have money. If you have money, welcome, sir. We love you, right? These are the banks in Switzerland.
Explanation that ends the questions. So, we needed to present a business registration, two years of accounts, sample invoices, a reference letter, and a plain true explanation of the fintech closures, basically [music] explaining this thing of the algorithm. And then, when you present these to the right bank, and you come from a referral, in this case, us, institutional banks understands it, and then they open the account.
The banking was the problem, what killed him. And you cannot expand, you cannot grow and scale a business if your banking, how you receive the money, the blood of your business is not working properly. And he talked to five of New York's best tax attorneys, and [music] they are not optimized for euros. They knew about American laws, they knew about Chase, but they knew less about St. Barts, and they knew even less about Belgium IBANs, IBAN system, Switzerland, and all of this. So, this would be proposed banking that matches your structure.
So, if your transactions keep triggering fintech flags, they ask you for documents again and again, or you got accounts closed, reach out to us. Check down below, and we can introduce you to bankers, specifically even in this case, the Swiss bank accounts that if they have, for example, a half a million dollar threshold for a random person, they contact them through a referral, we can lower it to 300,000 or 250,000 euros as the opening. So, if you see some information online, you're like, "Hmm, I'm not still there yet." Contact us, we might have a way to introduce you to the right person. So, if you want this tailored to you, you want to book a time, a call with us, a discovery call, you can do so in the description down below.