Offshore Banking Accounts The Safety Factor

Safety First

Stay Afloat

Offshore banking accounts offer first and foremost asset security. Privacy and anonymity have faded into the background as matters of priority. It should be clearly stated immediately that having an such an account is perfectly legal. The days of anonymous, numbered accounts are long gone and there is no association with shady characters sailing close to the wind. Many governments do look with some suspicion at accounts held in known tax havens but there are many alternatives to having accounts in such places. 

The privacy afforded to customers by nearly all banks was reduced considerable after 9/11 when money laundering for the purpose of terrorism as well as for drug dealing was more seriously attacked. Even so overseas accounts offer to the average individual who cares to live outside of his country of citizenship the first level in asset protection. More complex financial structures can be devised depending the extent of the funds that need protection, the sources of income and the risks involved. It is always best to keep things as simple as possible. Offshore simply means somewhere other than where you are living.

Offshore Banking Accounts - The Customer's Needs

In most Western democracies the government can very easily take money from a bank account. If you are perceived to owe taxes then the government can swoop on your bank assets and it will be for you to prove your innocence. As the people of Ireland, Cyprus and Greece among others have discovered it is only necessary for the country itself to get into financial strife for your funds to be seized.It also easier for other creditors to attack your funds if they are held in the same country. An overseas facility moves your money one step away from such problems. At the very least a court order would be necessary to get access to your funds. You would likely become aware of moves in this direction and thus have the opportunity to take evasive action by just moving the money. More than one account in different places increases safety.

What You Want

It is vital that foreign facilities are opened in a places that are economically and politically stable. If it is possible business in the places that you choose should be conducted in your native tongue. There are other politico-geographical reasons why some otherwise suitable venues may not be a good idea. For anyone living in the European Union and banking in the Isle of Man it would be less than helpful so far as the limited privacy that is available is concerned. Banks in the E.U. have the legal responsibility to report as required to governments in the Union. For anyone else many countries in the EU satisfy the stability criteria.

It is sometimes felt attractive and comfortable to open an account at a small bank. The hope is often to enjoy a more personal service. Unfortunately, although this may be the case, a small organization may in fact be just a sub-branch of a larger concern. There can be difficulties if the larger bank begins to impose conditions and restrictions on the smaller firm. Simple wire transfers also become more complex. Put in the vernacular of a vaudeville comedian, it is always better to deal with the organ grinder rather than his monkey.

Such privacy as a bank will offer its non-resident clients will fail in the event of the production of a court order issued because of criminal activity. This. for most people, is not a huge concern. What is a worry is the way that the definition of a crime is changing. It was once the case that tax evasion was a crime but tax avoidance was not. For practical purposes this distinction no longer exists.

Getting a credit card with some accounts is not easy. However, most reputable large banks will offer a debit card, usually bearing the Visa or Master Card insignia. Such a card can be used to purchase air tickets or pay for hotel bookings. There is just no credit free period for payment. Funds are debited to the account immediately. A prepaid credit card is also a possibility from some banks.

Another advantage of foreign accounts is the ability to have multi-currency (one account allowing deposit and withdrawals in a number of currencies) or multiple currency (a number of different accounts in various but specified currencies) accounts. Thus currency hedging is a possibility. This provides another degree of safety and flexibility.

More Hooks Than Fish in the Sea

Don't Get Caught

It is important not to get "caught" by one of the multitude of companies offering to open accounts for you. The costs indicated for such a service vary from a few hundred to a thousand or more dollars. You will get nothing more than an application form which you will have to complete and take to the bank. Opening an offshore account is a simple process which the average person can do alone. Often it can be done without visiting the bank in person. It may be necessary to call at the bank if more complicated services are required concerned with company formation and trust accounts.

What Do You Need

Who Are You?

    As with a passport or visa application you will need proof of identification. The requirements are similar:-

  1. A notarized copy of your passport or drivers license
  2. A recent utility bill
  3. Either a bank reference letter or bank statements (often the bank to which you are applying for an account will not issue one of these letters. A letter of authority for the bank to refer to a bank with which you do business will usually suffice.)
  4. Either a personal or professional reference
  5. A document that requires your specimen signature

For a company account the following will also be needed:- 

  1. Notarized copy of Certificate of Incorporation and Certificate of Good Standing
  2. Notarized copy of Memorandum of Articles of Association/Incorporation
  3. Corporate resolution detailing authorized person(s)

The minimum deposit can be as low as $500 or as high as $50,000 or more.


Sorry, but...

Citizens or residents of the U.S.A. will encounter increasing difficulty in opening and maintaining foreign accounts owing to the provisions of the Foreign Account Tax Compliance Act (FATCA). This Act imposes onerous reporting requirements for the I.R.S. by banks on all Americans with accounts in excess of $10,000. Banks achieve compliance and therefore the right to do business in the U.S.A. by not having U.S. citizens or residents as clients.

Still Good

Worth Having

Offshore accounts still offer a good deal of privacy and certainly some protection and flexibility. Everyone living abroad should have at least one such account. British pensioners using a QROPS facility should certainly look at an offshore banking account.


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