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Offshore Banking Misconceptions

Last Updated (Tuesday, 30 November 1999 10:00) Thursday, 10 April 2008 13:44

If one were to read the normal information available through media outlets they would think anyone who uses offshore banking is a criminal. One only hears about offshore banking in the media when a criminal is apprehended. There are many legitimate reasons to bank offshore that don't involve drugs or money laundering. This article will attempt to debunk the common misconceptions about offshore banking and help the reader gain a better understanding of the industry.

The first misconception about offshore banking is that it is very difficult and expensive to set up so only rich people need to consider it. There are cases where setting up an offshore bank account can be difficult, especially if you are not utilizing the services of a legal firm to help you with bank introductions. But if you do a little research and are able to find a firm that has experience setting up accounts in the jurisdiction where you want to bank then it is actually a fairly easy process to complete and not expensive at all. You can even get an account without visiting the country in many cases.

The second misnomer about offshore banking is that every offshore banking destination has the same features and services so it doesn't matter which one you use. This is simply false, if you want banking secrecy and rock solid privacy protection many of the Carribbean Islands no longer offer this type of protection. Their laws say this is true but in practice they are not enforced like they should be. Panama on the other hand has a solid reputation for banking secrecy and privacy with laws that punish offenders with jail time.

A great many people also fear that establishing offshore companies or bank accounts is an illegal act for citizens of the United States. This is a false belief that prevents many from investing offshore. It is not illegal for United States citizens to invest offshore. As a matter of fact, there are many large companies that are based in the United States that have switched part or all of their company offshore in order to receive more of the tax benefits offered from these jurisdictions.

Generally, the same people that believe offshore incorporating and banking is illegal for United States citizens also seem to believe that offshore investing is a crime that is only used for tax evasion. This widely regarded myth is untrue and is what leads to many people not investing or frowning upon those that do. Offshore incorporating and banking simply can help to reduce your taxes in a completely legal fashion. It also provides a measure of protection for your assets, as these jurisdictions focus on privacy and anonymity and will not release your personal and financial information to anyone.

Of course, it's not in a government's best interests to advertise offshore banking as a method to reduce your tax load because they want to keep all of your money in their economy and help maintain their positions of power. Rest assured those very same people are utilizing offshore banking to their advantage right now. There are some rotten apples that take advantage of the offshore banking industry to perform crimes but this does not mean offshore banking is for criminals.

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