Does IB close accounts associated with low tax jurisdictions?

[abotarga]

I've heard a few people recently say that their IB company accounts have been shut down because their companies are located in Seychelles or Belize. It seems like IB may have gone through a de-risking phase.

I've been trading with IB for a couple years under a US LLC company account. My account is configured for pass-through taxation to my place of tax residency.

I'm working with some tax attorneys and considering transferring ownership of my company to another entity that I own instead of owning the LLC directly. But with the recent IB account closures I'm a little worried about doing anything that may trigger red flags due to being associated with a country they don't like, and then consequently IB closing down my account.

Has anybody else had problems with their IB account being closed due to being associated with a low tax jurisdiction? In theory there shouldn't be any problems with a US LLC being owned by a foreign entity; anybody have experience with this type of setup within IB?

 

[ZBZB]

They shut down accounts in Panama but a quick move to BVI solved the problem.

 

[ElectricSavant]

I wonder why IB views accounts in low tax jurisdictions a liability to them? Is it true?

ES

 

[abotarga]

They shut down accounts in Panama but a quick move to BVI solved the problem.

Maybe BVI would be the safer route to go then instead of Panama, Seychelles or Belize.

 

[ZBZB]

Maybe BVI would be the safer route to go then instead of Panama, Seychelles or Belize.

read the other thread here on this issue.

 

[abotarga]

read the other thread here on this issue.

What thread?

 

[Metamega]

https://www.elitetrader.com/et/threads/ib-terminate-our-relationship-with-you.146225/page-10

That thread he meant perhaps? It’s had some activity recently starting at page 9.

 

[abotarga]

Reading through that thread re-gains me a little more confidence. It seems like they are mostly targeting non-US persons due to a recent fine by the US gov. And Panama is blacklisted. Other jurisdictions seem to be okay. I think wrapping the company in a US LLC may be fine because it's already subjected to US regulations.

 

[abotarga]

I asked IB support and they told me:

IB has no current issue on the opening of an account from Seychelles or Belize as those jurisdictions are still permitted, however IB reserves the right close accounts at any time, and at its own discretion.

 

[IamTheCasino]

I asked IB support and they told me:

IMO, Id go with a territory that has a low probability of being shut down in the future as best as you could. And it sounds like Belize (and most non 1st world areas) would be on that short list of the next round of shutdowns. Ireland perhaps or BVI as already mentioned. Maybe there are others too.