Offshore banking often gets a bad reputation. The media puts offshore banking in a bad light, regularly reporting on the negative side of it, and that makes many people assume that offshore banking is illegal.
The truth of the matter is that offshore banking isn’t illegal, and while some people choose to use offshore banking illegally, you can protect your assets legally using this method.
What is Offshore Banking?
In offshore banking, a person or entity uses a bank account in a foreign country. There are many reasons why someone would want to use an offshore bank, namely protecting their assets from the 'bad guys,' accessing investment opportunities overseas, reducing taxes, and many other reasons.
Offshore banks are regulated under an international banking license, granting exciting opportunities for those who want to safeguard their assets. For example, if you live in the United States, you might want to put your assets in an offshore bank located in a jurisdiction such as Mauritius.
However, why would someone take the extra miles for the sake of asset protection? Why the 'paranoia'? Read on, as we’ll cover some of the reasons why you might want to use an offshore bank next.
Why Consider Offshore Banking?
Many financial and legal advantages might lead you to decide that offshore banking is for you. In fact, these same reasons have led countless others to the same decision.
For instance, some people and entities will want to choose an offshore bank to keep their financial information private, while others will choose an offshore bank in search of a tax haven. Still, others will opt for offshore banking to ensure easy access to their deposits.
Others move towards offshore banking as a way to protect their assets against financial instability and even government seizure of assets; it happened in the past, and it definitely will happen again in the future.
When you choose offshore banking, the benefits are great. Your government can’t post a risk to your savings, and when you use multiple jurisdictions, then you’ve got an excellent currency diversification in your portfolio. This leads to financial independence.
It’s important to consider that western banks tend to be less stable, and they keep less cash on reserve. In a crisis, could you get your assets out? The odds are that you couldn’t, and that’s one reason why many decide to find reliable offshore jurisdictions.
Some offshore jurisdictions are incredibly stable, and many encourage offshore deposits with easy account set up, deposits, and transactions. Many transactions can be completed online.
Offshore banking gives you more options. However, despite the upsides mentioned above, foreign banks' upsides are still unrecognized - even carrying a lousy reputation. Why is this so?
Why Does Offshore Banking Have a Bad Reputation?
It’s important to note that the media typically covers stories related to bad offshore banking. If someone wants to cut corners with offshore banking and do something terrible, then they do have that opportunity. If they get caught, they’ll face serious consequences. It’s because of this opportunity that exists to do wrong that offshore banking has a bad reputation.
Illegal activities
These rules are in place to stop people who want to evade taxes, as well as those who want to launder money. Crime and drug rings are among the top groups who use offshore banking for illegal means. Statistics show that anywhere between $800 billion and $2 trillion is moved offshore each year in money laundering schemes alone.
Offshore jurisdictions know about those issues, and many of them are responding by tightening down on their regulations. Therefore, there are many rules entailed in offshore banking today.
Rich vs. poor
Then enter the rich vs. poor issue.
It's said that those who use offshore structures - typically HNWIs (high net worth individuals) - are stealing from the poor. The missing dollar means less tax, and less tax means fewer funds for the less fortunate ones.
The thing is, with the corrupted governments of the world, as we know it, it's questionable that tax dollar is spent wisely on building infrastructures, etc. While some countries are doing their job well, most don't. What about your 'stolen' money through inflation? What about the confiscation and capital control?
It seems that there are more questions than answers available, and the most natural thing the media and everyone involved in the 'game' is scapegoating someone and that someone is the offshore jurisdictions and everyone who use offshore strategy.
So, is it Ethical? Is it Worth Doing?
We hear a lot about how scared people are to invest in offshore banking. They just don't want to get themselves into trouble. Especially in the US, messing up with the loopholes could deem your action socially unacceptable, even could land you to jail. As mentioned above, the media blows this fact out of proportion.
Yes, it is ethical
The ethicalities of going offshore can be measured by answering these questions yourself.
Is it ethical to store your assets in and pay taxes to a jurisdiction that treats you fairly? Is it ethical to secure your wealth in a place that helps you protects your wealth, and make sure the wealth is distributed to those you want to receive - including your family and charitable causes? Is it ethical to make sure that you can put your assets into good use, instead of trusting those into someone incapable?
How can take responsibility for protecting your assets deemed as unethical? How can enjoying low tax and high return with financial institutions regulated by the statutory laws unethical?
Yes, it is worth doing
Many people wonder how offshore banking can be worth it when there’s so much at stake. The truth of the matter is that offshore banking is a fantastic system if you use it correctly. However, you’ve got to ensure that all documentation is done correctly.
Ensure that you are familiar with the regulations necessary for compliance in the offshore jurisdiction you choose. When you follow the rules, offshore banking is perfectly legal, and it gives you the means to better protect your assets against economic and government turmoil while giving you a higher level of currency diversification and financial strength.
If you’ve wondered whether or not offshore banking is worth it because of the possible implications, ask yourself this: are you willing to follow the rules? If so, then yes, offshore banking is a must-use in your wealth planning and protection.
If you're still unsure about the whole ethical thing with going offshore, you can consult with us to learn more about the possibilities offered by offshore asset protection.
FEB
2019
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