| Opening an offshore bank account is a matter | | | | individual account holder, and they will be |
| which should be discussed in detail with a | | | | allowed to finance their operations at a much |
| financial advisor such as Estate Street | | | | more reasonable rate than if they kept |
| Partners and possibly a lawyer, depending on | | | | strictly domestic accounts. |
| your individual circumstances and reasons for | | | | |
| wanting the account. There has been negative | | | | Since offshore banks are not government |
| press involving owners of offshore accounts | | | | regulated to the same extent as domestic |
| who abuse the bank services to launder money | | | | banks, they can offer a wider variety of |
| or commit other forms of fraud (tax evasion, | | | | investment options to companies and |
| hiding money for divorce purposes, etc). | | | | individuals looking for a higher rate of |
| | | | return than what is typically offered with US |
| CONS OR DISADVANTAGES OF OFFSHORE BANKS | | | | Mutual Funds. |
| | | | |
| Offshore banks also require large sums of | | | | HOW PATRIOT ACT, IRS, QUALIFYING INTERMEDIARY |
| money as deposit, and there can be | | | | REQUIREMENTS AFFECT YOUR OFFSHORE ACCOUNT AND |
| substantial annual membership and maintenance | | | | PRIVACY |
| fees if you don't understand all the terms of | | | | |
| the agreement. A knowledgeable advisor will | | | | One of the advantages of having an offshore |
| help minimize your risk by informing you of | | | | bank account used to be the anonymity that |
| any changes to domestic and foreign banking | | | | was guaranteed with it. Unfortunately, |
| laws. When choosing an offshore bank you have | | | | following the terror attacks of 9/11 many |
| a number of banks to choose from, although | | | | offshore banks are volunteering any |
| the most common and sought after accounts are | | | | information requested by domestic governments |
| in Switzerland and the Cayman Islands due to | | | | if they suspect criminal activity. |
| their size and reputation. | | | | |
| | | | The Patriot Act allows authorities to |
| If you feel that an offshore account is right | | | | actually seize bank accounts and assets |
| for your situation, there are several | | | | reportedly belonging to criminals. The |
| questions you should discuss with your | | | | Internal Revenue Service (IRS) has also |
| advisor when selecting a bank: | | | | initiated the Qualifying Intermediary |
| | | | Requirements which gives the government |
| 1. What services does this bank offer? | | | | access to the names of all individuals |
| | | | receiving US-funded investment income. |
| 2. How will you access your money? (check | | | | Offshore banks are working closer to |
| book, debit card, etc) | | | | authorities to adhere with stricter money |
| | | | laundering legislation, and these banks will |
| 3. Are there fees associated with withdrawing | | | | often volunteer information to police if |
| money from the account? | | | | there is questionable activity in your |
| | | | account. |
| 4. How easy is it to transfer funds, and is | | | | |
| your money secure if the bank goes under? | | | | IS OFFSHORE BANKING TAX-FREE? |
| | | | |
| ADVANTAGES OF OFFSHORE ACCOUNTS WITH GOOD | | | | You should be aware that offshore bank |
| INTEREST RATES | | | | accounts are not tax-free. While you may |
| | | | choose to withhold information from the IRS |
| Many offshore banks offer personal services | | | | in an attempt to escape paying taxes, you are |
| similar to those offered by domestic banks. | | | | under legal obligation to report all income |
| In addition to a regular savings account, you | | | | earned from foreign accounts with the |
| may have the option of a debit or credit card | | | | exception of an annuity. |
| from which to withdraw funds. Some countries | | | | |
| will also sell you a mortgage and offer loans | | | | You may not be forced to pay taxes to the |
| from your offshore account. | | | | offshore bank for interest earned on your |
| | | | deposit, and they may choose not to disclose |
| Since offshore banks are not regulated in the | | | | financial information to the US government. |
| same manner as domestic banks, the interest | | | | However, if it is discovered you committed |
| rate on your loan will be at a much more | | | | perjury on your taxes the consequences will |
| competitive rate than here in the United | | | | far outweigh the immediate benefits of |
| States. The offshore banks are competing for | | | | evading taxes. With stricter laws being |
| business which will hopefully bring revenue | | | | enforced due to threats of terrorist attacks, |
| to their country, and with lower overhead | | | | and the rise in money laundering for drug |
| costs than domestic banks they are able to | | | | rings, it will become increasingly more |
| offer higher interest rates on deposits. | | | | difficult to hide funds in offshore accounts. |
| | | | |
| COMPANY BENEFITS IN OFFSHORE BANKING AND | | | | Consulting with a financial advisor may help |
| LOANS | | | | you avoid legal problems associated with a |
| | | | poorly planned offshore bank account. |
| Large US-based companies are also taking | | | | Ideally, your account should offer |
| advantage of the benefits associated with | | | | competitive rates of return for your |
| offshore bank loans. Companies will be | | | | investments, competitive interest rates on |
| afforded the same rights of privacy as an | | | | loans, security, and confidentiality. |