If you have been around the offshore world for a while, you have probably seen mention of the venerable Swiss Trust Company. The name itself harkens back to a time when private banking, and numbered accounts, proliferated the offshore sector. However, I will explain why you shouldn’t buy one these structures and how it could lead you to be scammed.

Is a Swiss Trust Company Real?

No, it is not. At least not in the sense that it is marketed to you as a quasi-financial institution by offshore marketers. It is simply an aged corporation based in Switzerland and has no secret or additional rights or privileges.

Read on for more information.

A Swiss Trust Company Overview

As a global private banking jurisdiction, Switzerland has always had a definite ‘mystique’. The country was renowned for some of the most private and confidential banking services anywhere in the world. There was (is) a culture of confidentiality, serious fiduciary obligations, and inter-generational banking history that goes back over 100 years.

Subsequently, the nation has featured as the banking place of choice for rogues, scoundrels, and the ultra-wealthy in many Hollywood movies. Who can forget movies like the Holcroft Covenant, with their Swiss banking scenes, or even the Bourne Identity with his accessing of a Swiss private vault.

It is this background that unethical offshore marketers use to sell Swiss Trust Company (STC) structures to the unwary.

The STC is touted as a quasi-financial institution, with a vintage status, which allows the owner to undertake almost all the same banking activities as a licensed bank. The marketers highlight the fact that it is a hybrid structure and is part corporation and part bank.

You will be advised that the STC was once a fully licensed bank or financial company that has now become a vintage shell that you can buy and reconstitute.

The company’s primary selling point is its incorporation date which may go back as far as the early 1900s giving it legitimacy and old-world history. Additionally, you can expect to receive a large list of potential activities that the STC can engage in.

However, the devil is in the detail, and you might be surprised to find out exactly what it is that you are actually being sold.

What Activities Can a Swiss Trust Company Undertake?

The company effectively has the power of any other legal Swiss company. It can transact in a wide variety of businesses and is not restricted to any single operating sector. An STC can also trade in financial instruments and can act as a trustee, consultant, advisor, etc.

However, this applies equally to all Swiss companies and is not really a selling point of an STC. Professional marketers will tell you that an STC can undertake the following activities:

• It can act as a holding company for a bank or financial institution
• It can deal in foreign exchange, equity transactions and other financial instruments
• It can act in the capacity as a trustee, investment advisor, pension advisor, or financial advisor (only if it obtains a license like any other company)
• It can provide worldwide fiduciary services
• It can trade in property and real estate

However, the above activities can be undertaken by ANY appropriately registered and licensed Swiss company so the STC actually doesn’t provide you anything that you can’t already get by simply registering a new entity.

Purported Advantages of an Aged Swiss Company

The purported benefits of an STC are primarily around the legitimacy and credibility of the entity. It is suggested that obtaining an aged Swiss company brings with it an air of history and credibility.

However, the primary problem with this view is the suggestion that the Swiss Trust Company somehow falls within the purview of the financial system. It implies regulation and trustworthiness of the entity, and the truth is that this is simply a registered Swiss company.

Subsequently, there is nothing special about the STC and it most certainly is not a regulated entity within the sense of the Swiss financial sector. In short, you are either regulated or you are not and there is no partial status of regulation in Switzerland.

Additionally, in 2022 the idea that the formation date of a company provides credibility is significantly outdated. As part of any real due diligence for a bank account, or for any significant transaction, you will need to provide your articles of association and corporate documents.

At this point, it will become clear that you simply purchased a dormant company, and any credibility you thought you had will disappear in short order.

Anonymity is another of the key reasons that these entities have been sold over the years. The promoters claim that you can retain your privacy using bearer shares and other, unregistered, ownership claims.

The reality is that, in today’s world, the use of non-custodial bearer shares has almost disappeared completely. Most financial institutions will not want to deal with a company where the ultimate beneficial owners are difficult to identify. The AML risk to the banks in 2022 is simply too high to justify allowing uncertainty for them as to who owns and operates an account.

Subsequently, any anonymity you receive through the use of an STC structure will be exactly the same as any other Swiss company!

The final point of promotion for the trust company is the purported control that it gives you. Marketers often suggest that the STC allows you to place assets anywhere in the world and control those assets and accounts as you see fit.

For once, they are actually telling you the truth. The STC does allow you to open bank accounts anywhere in the world and transfer your assets around. However, so does a standard company in Switzerland or most other countries for that matter.

Subsequently, the suggestion that an STC gives you more control than any other entity is simply just marketing language and designed to fool you into thinking that you have obtained something special with your trust company.

What Does a Swiss Trust Company Cost?

Over the years, I have seen quite a few of these STCs sold for between US$50k and US$250k to unsuspecting individuals. Unfortunately, their prices, as well as their marketing claims, seem to have increased in recent years as people look to quit their lives in the major western nations.

An actual ‘aged’ Swiss company should really only cost you the registration cost and paid-in capital, plus an uplift of maybe 20%. Therefore, these STCs are simply charging you 10 to 20 times the cost of what an aged shelf company should be.

In short, it’s a scam.

What a Minute…isn’t the Swiss Trust Company a Non-Bank Financial Institution?

I can understand why you might think this because of the way these entities are sold and the claims surrounding their use. However, the reality is that they are not a financial institution in any form, and they have almost nothing to do with being a Trust manager or anything else.

The “Trust” companies are nothing but an aged Swiss shell company that someone has kept active on the register for many years. They are not licensed to undertake any regulated activities and cannot operate as a bank or non-bank financial company.

But I’m Being Offered an STC with Swift!

I’m certain that you are being offered a trust company structure with a Swift code. Unfortunately, any company can apply to the Swift network for its own Swift code. This does not make your new company a financial institution.

In fact, it can be quite costly, and you would need to have a fair amount of wire transfer volume to make having your own Swift link worthwhile. In short, it is simply being used as an add-on service to bump up the marketing value of the fake STC.

Final Conclusions

At this stage, I hope you have now come to realize that there is nothing called a Swiss Trust Company under Swiss law. It is a marketing brand designed to sell aged shell companies to unsuspecting people looking for non-bank financial companies.

I firmly believe that the sale of these aged STCs for large sums, along with large unfulfilled promises, is unethical and tantamount to a scam. There is no way that the entity sold to you will ever live up to your expectations of having a trust company or non-bank operator.

Unfortunately, the STC scam catches lots of people out every year and seems to be perpetrated by a select group of ‘marketers’ within the industry. Subsequently, be incredibly wary of doing business with anyone offering these sorts of companies.

If you have been one of the unfortunate few to have purchased one of these entities then I would advise seeking legal advice as to what your options might be. It will depend heavily on who you purchased the company from and where they are based as to whether you might be able to take legal action against them.

Are There Any Real Options for a Non-Bank Financial Company?

Most of the people that I’ve spoken to who have purchased an STC were actually looking for an easy way into the non-Bank sector. Thankfully, there are plenty of options around for those seeking to set up an NBFI without having to resort to the use of STCs.

Ultimately, it very much depends on what you are planning on offering and where your customer target market is likely to reside. It isn’t as simple as simply setting up an offshore bank or EMI and targeting Australia as this will likely bring about swift regulatory action.

Subsequently, it’s something that you need to think through and plan with a specialist advisor before jumping into the deep end. Every jurisdiction, and license, has its advantages and disadvantages and it’s about finding one that fits with your proposed business model.

Feel free to contact us here if you want a confidential discussion of your options.