Offshore banking has already been linked to the informal economy[1] and organised crime[2], tax evasion[3] and money laundering; [4] Legally, however, offshore banking does not prevent assets from being subject to income tax on interest. Apart from some people who meet rather complex requirements (e.g. eternal travelers), the tax laws of many countries (e.g. France and the United States)[5] do not distinguish between interest earned in local banks and interest earned abroad. Persons subject to U.S. income tax, for example, must, under penalty of perjury, declare any foreign bank account — which may or may not be numbered — that they may have. Offshore banks are now required to report their income to many other tax authorities, although Switzerland and some other jurisdictions maintain bank secrecy regimes that may be more difficult to manage. This does not make it legal for the taxpayer not to report income or evade tax on that income, and many CFOs have recently been important colleagues for onshore tax authorities and law enforcement agencies against wrongdoers. In the wake of the 9/11 attacks, there have been many calls to strengthen international finance regulation, particularly when it comes to offshore banks, CFOs, cryptocurrency, and clearing houses such as Luxembourg-based Clearstream, which are a potential hub for large illicit cash flows. Most crimes affecting the banking system are due to circumvention of regulations and controls.

HNWIs should also consider private banks and their accounts. What happens if someone sues you or a government official falsely accuses you of a crime? In both cases, there are ways for your opponent to freeze your bank account. Litigation is far too cumbersome to be conducted alone. There are rules of procedure that defy natural logic. How can you prove that you are innocent without the money to hire a lawyer? If you have money hidden abroad, put yourself in a position of strength. You now have a reserve of funds to hire a lawyer to come to your own defense. While most business owners only consider market and financial risks, your own government`s risks can be just as damaging to a business from a tax perspective. The same is true for people whose savings may be at risk due to government intervention and changing economic conditions.

Bank deposit taxes, capital controls, bail-in, and nationalizations of retirement savings are just a few of the many threats to your money in a local bank account. Tax evasion is illegal no matter where you try it, at home or abroad. It is wise to expect more bail-ins (as we have seen in Cyprus), taxes on bank deposits (as we have seen in Spain), pension nationalisations (as we have seen in Poland, Hungary, Portugal and Argentina) and capital controls (as we have seen in Cyprus and Iceland), among other destructive actions. And these are just a few recent examples. After all, the quality of a bank depends on the jurisdiction in which it is located. Keep your funds in an offshore LLC, especially if you have an offshore asset protection fund. This way, you keep your offshore bank account in an asset protection structure. An offshore escrow service provides the best asset protection available for liquid assets. A recent study suggests that banks in the United States are only the 40th safest in the world. In other words, there are many more safe banks outside the U.S. than inside the U.S. Don`t let the FDIC lull you into a false sense of security.

I hate breaking it with you, but the FDIC is backed by the most indebted country in the world; the country whose credit rating has been downgraded by Standard & Poor`s. Which countries have a higher credit rating than the United States? Here they are: With the rise of CFT (anti-terrorist financing) and AML (anti-money laundering) compliance measures around the world, the offshore banking sector has been subject to changing regulations in most jurisdictions. Since 2000, the Financial Action Task Force has established the FATF blacklist of “non-cooperative jurisdictions” (NCCTs), which it considers uncooperative in the global fight against money laundering and terrorist financing. The practice is not just for the rich. Some foreign banks only take $300 of your money and open an account. Like banks around the world, they set their own account minimums and other conditions for customers abroad. It is possible to own your own personal offshore bank that is in a different regulatory class than those that provide services to the public, so they are really only used by medium and large multinationals or large family offices. An account with a foreign offshore bank is often referred to as an offshore account.

Typically, an individual or company maintains an offshore account for the financial and legal benefits it provides, including, but not limited to: Keep in mind that you are not immune to U.S. taxes if you earn or hold money abroad. The IRS requires Americans to file the IRS FBAR Form and report any money over $10,000 held in foreign accounts. There is an exclusion from foreign income tax for the money you earn abroad, but the rest is taxable. The name indicates that an offshore bank account is an account opened in a country other than your country of residence. Banks that offer offshore banking services are subject to international banking laws and offer less regulation and more privacy compared to bank accounts established in the United States. The United States passed the Foreign Account Tax Compliance Act (FATCA) in 2010 and offshore banking has been more restricted since then. These offshore banks are almost always more responsible custodians of your hard-earned savings. Also, things are different than in the banks in your home country. I talk about this in much more detail on our page on offshore companies, but in short, opening an offshore bank account could mean that any income earned (e.g. from accruing interest) is not taxed at all or at a small percentage.

Offshore banking is a great way to get higher interest rates with multi-currency accounts and more. However, in order to obtain this additional protection, the open person must renounce direct control over the funds from which he would benefit through direct possession of the offshore account. In addition, an offshore LLC or trust is much more expensive to set up and maintain. There will be none of that here. That`s because tax avoidance is illegal around the world. Some banks allow you to open an account online, while others require you to show up in person. Almost all banking systems in Western countries are fundamentally unhealthy. They have exploited themselves to the limit. The promises of insolvent governments are all that support them. Even worse, most of these banks only hold a tiny coin of cash to meet customers` withdrawal requests. This means that in the event of another Lehman-type financial shock, you may have trouble accessing your money.

To seize a debtor`s foreign financial account, a creditor would first have to domesticate the United States. Judgment abroad where the account was opened. Then, the creditor would have to hire a foreign lawyer to enforce the new domestic judgment against the debtor`s foreign bank account.