
Free shared knowledge/information space created for people like you by people like you!		Add To Favorites

Submit Article \| Feedback/Contact \|
Home >> Finance/Business >> Other

Finance/Business :: Other

Top 10 Offshore Banking Myths

Today offshore banking is a hot topic of much interest to many living in countries where litigation and confiscation of assets from various sources is a problem. This has caused a large amount of people in various jurisdictions to move their money offshore. We will explore the 10 Largest Myths pertaining to Offshore Banking.

Introduction – Today offshore banking is a hot topic of much interest to many living in countries where litigation and confiscation of assets from various sources is a problem. This has caused a large amount of people in various jurisdictions to move their money offshore. We will explore the 10 Largest Myths pertaining to Offshore Banking.

Definition of Offshore Banking – Offshore banking is a term that used to pertain to using a bank in a Caribbean island jurisdiction. Today the term applies to one using a bank in a country other than their own. The offshore jurisdiction of today could be a land locked country or an island tax have country. If the offshore bank is in another country than the country of domicile for the individual then the bank can be labeled an offshore bank.

Offshore Banking Myth #1 – The offshore banking jurisdiction is the most important element to look for.

Not true. The laws of the jurisdiction are of course important and vary from country to country and are vital but one must look to the bank itself. The soundness of the bank is most important because what good does it do you to have an offshore bank account in a bank located in the greatest privacy jurisdiction in the world if the bank fails. So a very financially sound offshore bank in a jurisdiction with weak privacy laws would be better than a really financially weak offshore bank in the best privacy jurisdiction. Of course certain countries monitor their banks better than others like Panama is top notch in this department.

To learn more about Panama as an Offshore Banking Jurisdiction go here:

http://www.panamalaw.org/attributes.html

Offshore Banking Myth #2 – All offshore banking jurisdictions are about the same.

Not true. One must see if the country has tax treaties with other countries. Tax treaties are where the fishing expeditions come from. One must gain a knowledge of the offshore banking laws in the particular jurisdiction being considered. Many has been offshore banking jurisdictions have changed their once favorable offshore banking laws since 9/11 and are basically doing business with people who do not take the time and trouble to check the offshore banking laws for the country in question. For instance Belize does not have any banking secrecy laws written in statues. Switzerland has modified their laws to suit the EU. Many of the Caribbean island offshore banking jurisdictions have given in to EU and American pressure and being afraid of losing their cruise ship business have changed their bank secrecy laws for the worse.

Offshore Banking Jurisdictions additional information by country is included at the links to the right.

Offshore Banking Myth #3 – No Offshore bank will ever reveal information about the bank accounts or banking clients.

The truth is offshore banks will reveal some information in some cases. This varies from case to case and country to country. Panama will cooperate in four categories of crimes: terrorism, money laundering, narcotics trafficking and child pornography. Countries have what is called MLAT (Mutual Legal Defense Treaties) that call for the release of information under certain defined circumstances. Most offshore countries have Tax Treaties that call for the release of other information to other countries in the treaty. Panama has no tax treaties with other countries and is most unique in this respect being the only offshore banking and incorporation jurisdiction without any tax treaties. In Panama all tax offenses are considered civil offenses. As a general rule the MLAT treaties require that the crime being investigated by the requesting country must also be a crime in the country the information is being requested from.

So offshore banks will under certain circumstances release information about the bank accounts they have. Again, one must select the right country not only the right offshore bank.

To learn more about MLAT and Tax treaties click here:

http://www.panamalaw.org/mutual_legal_assistance_treaty.html

Offshore Banking Myth #4 - Offshore Banks are regularly Licensed Banks.

No so.

Most offshore banks hold an offshore banking license from the jurisdiction they are in. These licenses allow them to conduct full banking activities, just not with any resident of the country they are located in. In some countries they are also prohibited from conducting business with any corporation or trust formed in that country as well. If this is going to scare you I do not know what will. The offshore jurisdiction issues a license to an offshore bank that does not let them bank with anyone in the country. Not too reassuring huh. In Panama our law firm only introduces clients to banks with full banking licenses that are allowed to do business with the residents of the country, have branches, drive through tellers, etc.

Offshore Banking Myth #5 – Offshore banks that are part of a large international conglomerate will compromise your privacy.

Not so.

The general line of unfounded thought is that if the international bank has a branch in the USA or EU it can be compelled to reveal banking records from the offshore country where it also has a bank. If you are in an offshore country like Panama this would be unlikely to happen. The bank in Panama is a separate corporate entity from the banks in other countries. The bank in Panama would have it’s own Panama banking license and would be bound by Panama banking secrecy laws. It would be a violation to give access

To employees located in another country not bound by Panama bank secrecy laws. Of course some jurisdictions that used to be secure with their banking laws are no longer secure. Again this is a matter of knowing your jurisdiction and bank. At times clients of our law firm ask us to get them a bank account with a bank that does not have any operations outside of Panama and this is of course a request we can readily accommodate.

Offshore Banking Myth #6 – Offshore banks will create numbered bank accounts.

Not really.

The offshore numbered bank account was a creation of Switzerland mostly and these came to an end in the 1980’s. They originally were accounts requiring no identity documents and no name. They were operated by acco

7nt numbers and passwords. Due to terrorism and money laundering laws these accounts came to an end. Other countries also issued numbered accounts. There are still numbered accounts in Switzerland but they are not like the old days. The Swiss banks require ID and limit the access to the ID to a few select bank employees and issue a numbered account this way. Nothing like the old Swiss numbered bank accounts. These accounts will of course draw a lot of unwanted attention when wires are sent and received and in some countries the offshore banks will refuse to send or receive wires to such accounts. Panama has solved the problem by having dead anonymous Bearer Share Corporations. These Corporations have no registry or database which records ownership of the corporation. The ownership of the corporation is based on who physically has the stock certificates. There is no requirement to report changes in ownership as well. Panama also has anonymous foundations also with no registry or database to record ownership. So when wires move to and from an anonymous Panama Bearer Share Corporation or anonymous Panama Foundation no one can determine who the natural persons are behind the corporation or foundation because of the Panama Bank Secrecy Laws. A very nice combination of corporate and banking privacy legislation.

For more information on Panama Bearer share Corporations click here:

http://www.panamalaw.org/bearer_share_corperation.html

For more information on Panama Foundations click here:

http://www.panamalaw.org/panama_foundations.html

Offshore Banking Myth #7 – Offshore Banks are fine if they are on a little island

Not true.

One must also take into account weather conditions of the jurisdiction considered. Many of the offshore banking countries in the Caribbean get hit with hurricanes and storms of a great magnitude. This can cause their internet and phones to go out for weeks at a time. I am most sure you would not be enjoying the experience of waiting for a few weeks to see if your offshore bank is still alive and well after their phones and internet get knocked out. The reason the Panama Canal was built in Panama is because Panama has no hurricanes, earthquakes, volcanoes, tornadoes, tsunamis etc. Panama is tops when it comes to an offshore jurisdiction for offshore banking, corporations and foundations.

Offshore Banking Myth #8 – The national currency of the offshore bank is irrelevant.

Not true.

Even if the offshore bank gives you an account in several currencies inquire about the conversion costs. Frequently every time you convert a currency they move you first into their national currency and then into the destination currency. At the end of the day this type of offshore banking conversion expense can be painful. Panama uses the US dollar for it’s national currency so this is the currency the banks operate on with some euro accounts available.

For more information about Panama Bank Accounts click here:

http://www.panamalaw.org/offshore_bank_account.html

Offshore Banking Myth #9 – The US Dollar is not stable enough for use in Offshore Banking.

Think again.

What many do not realize is that a nice low currency on the international exchange helps a country enabling it to sell exports. It helps them with their balance of international payments. It encourages foreign tourism and they bring in foreign currency by converting to dollars. Do you really think the EU could let the USA lower the value of their dollar further? Think about what it would do to the price of US imports in the EU like cars for instance. It would make them cheaper. The EU would need to slap on punitive taxes and the USA would reciprocate in kind hurting their sales of cars in the USA. There is a lot of fatalistic talk of the US dollar falling, true and it has fell but only to a level of comfort for exports.

What about housing prices falling in the USA? Well they were driven up by speculators and now comes the adjustment. A nice drop of 30% to 40% in housing prices will make the houses somewhat more affordable. Can the US fix it’s problems domestically? Probably much could be done if they wanted to do something. They could create tax incentives for business, get interest rates down lower and so forth. On the broad horizon a steep drop in the housing prices makes things more affordable versus constant speculation which would eventually drive the housing prices to the point where a 3 bedroom 2 bath 180 sq meter home would cost $1,000,000 in a small city and $6,000,000 in a major area. A country is better off with affordable housing where housing prices are set by people wishing to live in the house because they like the area, the schools are desirable, the house is close to shopping, airports, hospitals etc. When housing prices are set by people thinking if I buy this house now I can sell it for a 27% profit in two or three years, this is a mania that will end poorly. This is the end of this mania in the USA. They are adjusting not collapsing.

There are still branch banks in rich neighborhoods of South Florida, Southern California, parts of New York city, etc where these branches of US banks have a branch office with in excess of $100,000,000,000 (one hundred billion dollars) in deposits. I mean the little neighborhood branch offices have this much on deposit, of course the whole bank is much larger. There are a lot of people with many millions of dollars in the USA and they tend to congregate near each other in the same communities. We could also talk about all the stock, option future exchanges all working in dollars but then this would go beyond the scope of the article.

So let’s say you are scared of the US dollar and go into Euros and the dollar strengthens back to where it was and you lose 25% of your value? The dollar is already down and it is not likely that the other countries would want to see it go down further since they would suffer in the long run competitively from such a drop. We suggest that one need not be afraid to have an offshore banking account in US dollars but we also offer Euro accounts for those who need them.

Offshore Myth #10 – It is illegal to own an offshore bank account.

Not so.

We are not aware on any jurisdiction that makes it illegal to have an offshore bank account.

Technical, Financial and Legal expert well versed in the fields of offshore banking, offshore corporations, offshore foundations, offshore trusts and offshore credit-cards.

Article Source: www.activehowto.com

Share this article with others. Bookmark it at these sites: