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Opening an Offshore Bank Account

Updated on April 26, 2013

Choosing an Offshore Banking Account

Offshore banking is one the areas of finance that remains steeped in mystery for many.

In popular culture, the US film industry has done its part to create an aura of criminality surrounding the offshore bank account. The holder of an offshore account is variably either a terrorist, kidnapper, arms dealer, narcotics trafficker, or corrupt politician.

The reality, however, is that offshore banking accounts, often opened in legitimate tax havens have been a vital part of international financial planning and tax minimization almost as long as there have been taxes.

Furthermore, while the media has done its part to try to villainize those that would attempt to reduce their domestic liabilities and tax burden, the offshore bank accountand offshore banking services are more popular than ever among international corporations and are vital in their overall tax avoidance strategies.

And yet, it's "different" for the individual.

Ironically, at a time when interest in financial privacy is growing, the list of available locations that actually observe any semblance of bank secrecy laws is shrinking. Recent turbulance in both the banking and financial world, and the geopolitical strains have given high-tax regimes the excuse they were looking for to go after low tax havens and offshore financial centres.

As demand for truly private offshore banking services is growing, the available supply is shrinking. In addition, generally speaking only those who can consider themselves accredited investors, and high net worth individuals receiving wealth management and asset protection services have been exposed to the benefits of opening a personal offshore bank account, or incorporating their offshore company in a tax haven and opening a corporate offshore bank account in a jurisdiction with bank secrecy laws intact.

So how do you go about choosing, and then opening, an offshore bank account?

Well, the short answer is that it's different than the rules for choosing an "onshore bank" - or it should be - and below I will attempt to explain why:

In the past, the rules were very similar. You wanted a large, well-capitalized bank with a long history of operations preferrably in a well-known tax haven or offshore financial centre.

Under this scenario, a few of the most well known offshore banking jurisdictions received most of the business. In Europe, Swiss Offshore Banks (and swiss offshore banking) received the lion's share of non-resident account deposits along with some other well known EU havens, such as Austria, Andorra, Monaco, Liechtenstein, San Marino, and Gibralter.

In the United Kingdom, the channel islands, including the Isle of Man and Jersey and Guernsy were popular destinations for offshore accounts, and in the Caribbean many of the UK dependencies received most of the offshore accounts. These included, of course, the Grand Cayman Islands, the Bahamas, and several of the other better establish islands with long standing offshore banking industries.

However, in the last several years, this has all changed. High profile offshore financial centres have come under increasingly intense attack -- first by the US and the Internal Revenue Service (IRS) and treasury, later by the HMS in the UK and lastly by the European Union (EU) tax authorities with an incredibly public case blowing up most recently between Liechtenstien and German nationals avoiding taxation by stashing deposits there.

The truth is, nowadays, believe it or not, you want to look for a banking jursdiction that is not so well known. The OECD and several of the economic unions publish "blacklists" of countries who have proven less than cooperative in their sharing of information on their banking clients with the respective governments tax authorities of the client's home countries.

In fact, even Switzerland lately has given up and begun sharing interest earned information with governments of the EU for all EU resident depositors -- and even this has not appeased the high tax countries in the EU who want Switzerland placed on a black list.

The truth is, you want one of the few remaining countries who respect bank secrecy and will not raise suspicions when dealing with these countries. Two such countries that I'm most familiar with are Panama and Uruguay.

Panama and Uruguay both have some of the strongest bank secrecy laws in the world and penalties for breaking their bank secrecy laws involve prison and fines. In Uruguay, the only way that the veil of secrecy can be broken for a foreign depositor is if a real crime has been committed in attaining the monies -- and that crime has to also be a crime in uruguay. Tax evasion does not fit under this rule, and thus is not a reason that bank secrecy can be broken.

Panama supports a better infrastructure for international business and more flexible offshore company offerings, however, it is getting increasingly harder to open a non-resident bank account in Panama. Some of the better strategies involve using a formation agent to create an offshore trust or offshore corporation in another country and an offshore banking account in Uruguay or Panama. There are a few companies that will even allow you to open your offshore banking account entirely online without needing to visit the country in question.

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    • profile image

      Ninabella 

      3 years ago

      wachovia is great, they are there for you when you need help with anything. they know there stuff. one time i had a huge ckciheng account problem and they fixed right up and found some extra cash (: check it out. i love it (:

    • profile image

      Pat 

      3 years ago

      This is very inspiring. thank you for taking the time to describe about offshore banking and make it available to us all.

      http://www.offshorepremium.com/

    • profile image

      Max 

      6 years ago

      Which company on the net opens a sepa bank account offshore in europe? I do not have time to visit europe so prefer online banking, with offshore critieria

    • profile image

      offshorebanker 

      7 years ago

      @mrtruststore -- the requirements to report any foreign account with more than 10k USD have been in place for years. however, corporate accounts that you control as an officer -- not own -- are not reportable.

      also, keep in mind that reportable does not mean illegal. they are still perfectly useful for legitimate tax minimization or asset protection strategies...not recommended for someone looking to evade taxes illegally.

    • profile image

      offshorebanker 

      7 years ago

      @mrtruststore -- the requirements to report any foreign account with more than 10k USD have been in place for years. however, corporate accounts that you control are not reportable.

      also, keep in mind that reportable does not mean illegal. they are still perfectly useful for legitimate tax minimization or asset protection strategies...not recommended for someone looking to evade taxes illegally.

    • MrTrustStore profile image

      Randall Kaiden 

      7 years ago from Oxnard & Santa Clarita, CA

      Interesting hub but what about the relatively new requirement in the US that you must report those bank accounts to the IRS? Does it make all of the above mute for US citizens?

    • profile image

      grandrapid 

      7 years ago

      Trillium Financial Services specialize as

      Accountant Grand Rapids

    • profile image

      chetan 

      7 years ago

      Dear Sirs

      One of our client is interested to open fresh account

      in prime bank who are having the arrangement

      of sending swift and receiving swift messages.

      He is resident of India.

      He will provide letter from his bank in India that he is

      holding account to prove his identity.

      The reason of opening account is that he is receiving

      BG issued by IDEA Bank - Uk and swift on their behalf will be sent by Guarantee Trust bank - UK.

      The total amount of Bg will be Euro 10 Billion.

      It will be in tranches of Euros 250 to 500 Million.

      He wants his bank to accept swift MT 760.

      Thereafter he wants to block the instrument and issue MT 799 to his provider.

      What would be swift charges ?? Please confirm.

      Thereafter he wants his bank to take confirmation from the Funding Entities bank that they are RWA to issue MT 103 upon receipt of MT 799.

      Accordingly he is getting BONDS issued by MONARCH Bank - Uk amounting to US $ 879 Million.

      which will be processed as stated above.

      Kindly advise if you can manage.

      What would be amount required for opening the account

      What would be the formalities

      Will it be possible to open account on line

      Will the bank to be nominated by you agree to send and receive swift and what they would charge per swift.

      Further details after hearing from you

      WHAT ARE THE FORMALITIES AND PROCEDURES ?

      Thanks

      Chetan

    • Kind Regards profile image

      Kind Regards 

      8 years ago from Missouri Ozarks - Table Rock Lake

      offshorebanker, Great hub that's full of useful information and very easy to read. Thanks! Kind Regards

    • offshorebanker profile imageAUTHOR

      offshorebanker 

      8 years ago

      cheekygirl,

      yeah, the channel islands etc are still doing a TON of offshore banking.

      if you are a brit and especially if you are a brit who was smart enough to expatriate (not a resident in the UK) there are a LOT of places you can do your banking including the channel islands.

      for better or worse, the hub was originally (kind of) focused on the US taxpayer. For them, even if they are non-resident, any offshore account with over 10k USD at any point in the year must be reported and they must claim their taxes for any interest or other gains (through investments) placed by the offshore account.

      This sucks even for those that are trying to play above board, as it paints a pretty direct line to your supposedly 'safe' offshore assets.

      Guys selling offshore to americans who are trying to play straight and look legit tout the "asset protection" benefits of holding assets offshore, but it's really just one more layer, and at times the downside of putting your money in a shaky institution or country outweighs all the asset protection an offshore jurisdiction that has made up its mind it'll play ball with the onshore governments can outweigh any positives.

      to that point, i had a friend in Uruguay who lost over 1MM in one of the icelandic banks which was operating in either Jersey or isle of man (forget which). they were still dithering over whether the deposits would be protected and how much of them would be so....in the meantime, he's been stuck for years without his money.

      oops.

    • profile image

      offshore banking 

      8 years ago

      yeah, i took the anglo irish plug to be some online advertising which seemed strange that they'd find this little old hub in the mad universe of the web.

    • Cheeky Girl profile image

      Cassandra Mantis 

      8 years ago from UK and Nerujenia

      Great hub and some excellent information here. Yes, countries are clamping down on tax havens in other states, but look harder and you'll find that the UK still does a lot of offshore banking still, despite the clamp downs.

      Oh, the comment above about Anglo Irish Bank should be treated carefully - it is now totally owned by the Irish Govt and the plan is to wind it down as it got into some very strange speculations that resulted in its demise...

    • offshorebanker profile imageAUTHOR

      offshorebanker 

      8 years ago

      yeah, so good questions regarding the swiss. since i don't think i'm allowed to change an existing hub, i'll cover all that in my next installment of this hub.

    • profile image

      offshore asset protection 

      8 years ago

      so what are your thoughts/comments regarding the dust up we had between switzerland and the u.s. in the ubs case? is swiss bank secrecy as we knew it dead and buried or are they just playing 'possum for the u.s. authorities, press, tax payers and general public?

    • offshorebanker profile imageAUTHOR

      offshorebanker 

      8 years ago

      i really need to update this hub because the information presented gets out of date so quickly.

      rather than update this hub directly however, i think that i will create another hub that 'augments' this. like a version 2.0 :)

    • profile image

      Offshore Savings 

      8 years ago

      Excellent hub, great resource. I recently did a bit of research into offshore banking and found that Anglo Irish Bank won the award for best offshore savings provider at the 2009 Moneyfacts awards.

      http://www.angloirishbank.co.im/

    • profile image

      swiss bank account 

      8 years ago

      nice article covering lots of fields in the Swiss banking business..

    • brawnydt profile image

      brawnydt 

      9 years ago

      Good hub. I'm making a few hubs about offshore banking as well. Lots of good info, thanks!

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