The Top 12 Offshore Banking Myths Debunked

Offshore bank accounts are mostly used by spies and criminals -- It would be silly to say that this does not happen, but the reality is that most of the funds kept offshore are deposited by fortune 500 companies shielding their asset base as part of their risk management strategy. I personally know a TV personality that every person reading this knows, and He banks in Panama among other countries to reduce his risk and protect his assets.

Offshore banking is too complex for the average person -- Nothing could be farther from the truth. All the complicated work is done by your offshore professional and only takes about a week to complete. Typically an offshore setup includes a bearer share corporation. The combination of a bearer share company and an offshore bank account is roughly equivalent to the old numbered swiss bank accounts of the past.

Offshore bank accounts are only for rich people. -- A typical offshore package is less than $2000USD to setup. Once in place an offshore bank account and offshore company are the basis for a rock solid asset protection and tax plan.

Since 9/11 there is no such thing as bank secrecy. -- This is simply false. Several offshore jurisdictions like Panama have bank secrecy laws that impose prison sentences to those who violate your bank secrecy. In addition, Panama also has bearer share corporations that just a private as the infamous numbered Swiss bank accounts.

To open an offshore bank account you need to visit the country in question -- This is a falsehood. We open bank accounts regularly for our clients without ever seeing them. Everything is done by fedex, phone and fax.

Offshore banking has been destroyed by the MLAT treaty -- If you are engaging in serious criminal activity this statement is true. For most people just trying to protect their assets this statement is totally false. In fact, countries like Panama, only comply in serious criminal cases, and deny many requests. The requesting country has to show that they already have strong evidence that a crime has taken place AND the activity in question has to be a crime in Panama too. So tax evasion, for example, is not a crime in Panama and so Panama would not entertain MLAT requests for information relating to tax evasion.

Tax information is shared between most countries now -- It is true that many countries have entered into tax treaties, but other more reputable offshore jurisdictions have not. Panama, for example, has no tax treaties with anyone.

Its hard to manage a bank account offshore secretly. -- Today all the major banks allow you to do your banking online using encrypted communications. Offshore banks are no exception. Online banking a common feature of an offshore bank account. In fact, you can even send a bank wire using your offshore bank account. This is a service many onshore banks don't have.

Offshore banking doesn't protect me from a lawsuit because the judge will just order me to bring the money back. -- If you were to open a personal bank account offshore this would be true. However, an offshore bank account is typically owned by a bearer share corporation and or a foundation. In the example of a foundation, if you donated money to the foundation you cannot get the money back. The foundation can only give money to the purposes set in its governing documents. That does not include giving money to you. Basically the money is out of your control legally speaking and so you can't bring the money back.

If I move money offshore, someone will be able to track down where it went -- If you were to wire the money to its final destination directly that would be true. Clients concerned with this usually move the money to a intermediary bank in another offshore banking haven. For example, they will wire the money to an bank in the Cayman Islands, and then rewire the funds to Panama. Someone coming after the money would have to break the Cayman Island's bank secrey to find out the money is now in Panama. This is not likely to happen and you would likely have plenty of time to move the money to a third or fourth jurisdiction. Because authorities know that, tracing money is only done is high profile cases.

Offshore bank accounts can be used to do all the same activities as an onshore account -- This is almost true. The only exception is online bill payment. This popular feature doesn't make sense offshore and to my knowledge no offshore banks offer it. Typically, the money held offshore is not used onshore anyway. Having said that, most offshore banking clients have a bank card that allows them to withdraw funds anywhere in the world. The card only leads back to the corporation which owns the bank account (and would require breaking bank secrecy even to find that out). The corporation is usually a bearer share corporation which means that it's ownership is anonymous anyway.

Americans, Canadians, and Europeans can't own an offshore account legally -- This is totally false. This mis perception is based on the fact that these jurisdictions now require an individual to report his/her worldwide income. Offshore bank accounts almost always come with a bearer share corporation or a foundation, which means the individual does not legally own the money. When the money is paid from the corporation to the individual then it becomes taxable income.

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If you have a business or have money that you don't want to be taken by an angry spouse or a lawsuit be sure to read more of Doug Snarder's work on the Offshore Banking Account and Offshore Asset Protection
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