I know you have known Offshore banking as illegal practice; often the media has been reporting on controversial or negative aspects. Many people think that rich and elite people use offshore banking for the purpose of Money laundering and tax evasion.
Others also believe that businesses and big corporations are using offshore accounts to hide their money and avoid paying taxes.
At some point the two statements may be true, but here we do not have any evidence to justify the beliefs.
In the real situation, offshore banking does not have to be illegal. It’s absolutely legal for an average person to open and maintain an offshore bank account. Businesses and individuals who bank offshore do so in a part of the world outside their home country.
The process of opening and maintaining an offshore account is not hard and complicated as most people think. Each offshore bank has its own requirements, the best thing is to do some research to find the specifics relevant to your situation.
The first thing to understand is banking offshore is not that much different from banking onshore.
In most cases, the fundamentals of opening an offshore bank account are similar to opening an account with your local bank in your home country.
The best thing to keep in mind is that; you have to look professional, have a good reason why you want to open an offshore account and have all the particulars about your situation.
To open an offshore account in a jurisdiction of your preference, an offshore bank will require your personal information such as: your name, date of birth, address, citizenship, and occupation.
What you have to understand about offshore banking is that, there are several types of bank accounts and there are several different ways to go about opening them.
Offshore private banking is normally within reach to those with higher incomes. This is due to the costs of opening and maintaining offshore accounts.
Although, simple savings accounts can be opened by any individual and maintained with normal charges similar to their local home banks.
It’s feasible to obtain an expansive financial service from offshore banks, most banks have the following services for offshore clients:
- Savings accounts
- Deposit taking
- Corporate administration
- Fund management
- Foreign exchange
- Investment management and investment custody etc.
Occasionally, an individual or company will maintain an offshore account for the financial and legal advantages it provides to his assets.
As opposed to your onshore bank, offshore banks offer the option of the currency in which you wish to hold your funds. This can be a highly valuable feature of an offshore account, especially if one’s domestic currency is unstable or expected to depreciate.
The most popular offshore banking institutions are in jurisdictions with a history of political and economic stability.
This can be an advantage for individuals and businesses residing or located in countries where there is a risk of economic and political instabilities; and they may be fearing that their assets may be frozen, seized or disappear.
Some countries that have become common areas of offshore banking according to offshore company includes:
Singapore – Best Country for the Wealthy
Switzerland – Best Country for Asset Protection
Nevis – Best Country for Companies
Belize – Best Country for High Interest Rates
Germany – Best Country for Safety
Cayman Islands – Best Country for Tax Benefits
Where to open and maintain an offshore account depends on an individual or business situation.
For instance, if you are a business or global entrepreneur, you need to know what kind of business are you running, what kind of minimum deposit do you have and how much cash are you churning.
Whatever may be best for everyone may not be best for you because they simply won’t work.
For most wealthy individuals, the best place to bank is multiple places; they want redundancies for any kind of offshore bank set up because they never know when the offshore bank is going to close down their account.
Offshore bank accounts are most often funded electronically through international wire transfers. Normally, domestic checks are not accepted in foreign jurisdictions
Offshore banks offer their clients a variety of ways to withdraw funds. To maximize the convenience of using their services, many offshore banks issue a debit card that allows you to easily access your funds anywhere in the world.
Operating an offshore account is sometimes very risky than maintaining a domestic bank account. For example, in the banking crisis which swept the world in 2008, people with savings accounts lost money that was not insured by the country in which they were deposited.
Another problem with offshore banking is access to information. Offshore jurisdictions are often remote, and therefore costly to visit, so physical access and access to information can be difficult.
This problem has been eased by Fintech and disruptive business models in financial services.
The adoption of online banking by many banking institutions has really make it easy for one to access information and banking services from any part of the world.
One of the many benefits of holding an offshore banking account is that, they are usually located in jurisdictions that have laws that provide substantial asset protection, provides tax havens and confidentiality benefits to the bank account holder.
You may also choose to use offshore banking in a country that has favorable tax treatment. Some parts of the world allow you to invest your money while earning income on that money tax-free.
Offshore banks can sometimes provide access to politically and economically stable jurisdictions. This will be an advantage for residents of areas where there is a risk of political turmoil.
Offshore banking can help developing countries source investment and create growth in their economies. Also, it can help redistribute world finance from the developed to the developing world.
With the increased access and financial stability, having an offshore bank account offers you some of the most strict privacy protection measures in the world.
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