Opening an Offshore Bank Account

The decision to open an offshore bank account is daunting for many people. There are so many decisions to be made, and so many factors to be considered.

First, is the account being established by you personally or is it being established in the name of an , an offshore trust, or an offshore corporation?

Each one of these kinds of accounts offers a different set of challenges. The smallest amount of paperwork is attached to opening a personal bank account. However, if you intend to engage in offshore business or offshore investing an account in the name of an entity is preferable. Those choices usually include an

Second, in which offshore centre or offshore jurisdiction is the account is the account to be established?

Technically, there are more than 35 offshore centres. Some are simply offshore havens which sell offshore companies and offshore trusts, while others have grown to become major offshore banking centres, or international money havens. Each offshore jurisdiction has its own peculiarities.

It is important that the services offered by any particular offshore haven matches those that you require. Far too many people try to fit everything into one offshore jurisdiction that has caught their fancy. For example, the Marshall Islands has wonderful company legislation, but does not offer international trusts; and has no banking facilities for offshore companies. Other jurisdictions may offer excellent banking facilities, but not offshore companies. Some jurisdictions only work for certain people. For example, the United States offers tax-free companies, tax free bank accounts, and tax-free investing for all non-US citizens. Therefore it is important that any professional intermediary you use is not tied to any specific offshore haven.

Third, what bank secrecy laws apply in the jurisdictions being considered?

Obviously, offshore tax havens with strict bank secrecy provide a greater degree of banking confidentiality than those with weak bank secrecy laws. Bank secrecy legislation has changed dramatically since the attack on the World Trade Centers in September 2001. Since then, virtually every major offshore banking centre has created exceptions to its bank secrecy laws. Only a hand full of jurisdictions still offer financial privacy and strict bank secrecy. And frankly, that list could change at any time. It is important to research the exceptions to the bank secrecy legislation of any jurisdiction in which you are considering banking. This becomes doubly important if the purpose for which you are opening the offshore bank account is primarily tax avoidance.

Fourth, what kind of account do you require?

The types of accounts vary from things as simple as a demand account (the equivalent of your checking account at home), to savings accounts, call or notice accounts that require a specified number of days advance warning before withdrawing the funds, term deposits, which are also called CDs, and even the more esoteric accounts such as a trustee bank account, or fiduciary account.

Fifth, how likely is it that the banking laws and regulations in the jurisdiction you are considering will change significantly in the near future?

As financial scandals, terrorist attacks, and radical changes in government occur, financial privacy laws come under scrutiny and are almost inevitably weakened. While you cannot plan for unpredictable actions such as terrorist attacks or scandals, you can look at the general direction in which governmental policy, regulations, and legislation is trending. If it is heading away from offshore business, then opening a bank account there is probably a bad decision.

Lastly, there is a hidden challenge brought about by the Patriot Act.

Every bank in the world which has a correspondent account in US dollars must provide the United States government full customer information and account details upon request, in exactly the same way as if the bank were located in the United States--even if the bank secrecy law in their own country prohibits it.