12 Offshore Banking Myths Busted

By: Doug Snarder

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.

9/11 has weakened bank secrecy -- This is certainly true onshore! Even though pretty much all the offshore countries are now in the MLAT treaty, this has not weakened bank secrecy unless the matter is criminal in nature. Even at that the issue must a crime in both countries. In Panama, for example, tax evasion is not a crime. As such a MLAT request for information based on a tax evasion case would be flatly denied by the Panama government.

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.

Bank secrecy is useless now that all the offshore jurisdictions are in the MLAT (Mutual Legal Assistance Treaty). -- If you are a criminal there is some merit to this statement. If you are not a criminal, but just someone trying to protect your money this statement is false. For an MLAT request to be honored, it must be based on a crime in BOTH countries. If the offshore country doesn't consider the activity a crime, they will NOT comply with the request. A great example is tax evasion. This is a crime in countries like the USA and Canada but in countries like Panama for instance it is not a crime. MLAT requests for tax evasion are simply denied.

Tax treaties now allow most governments to share information freely -- Sadly this is true for many countries, but it is not true of serious offshore jurisdictions like Panama. Panama has NO TAX TREATIES WITH ANYONE!

The authorities will know if I use an offshore bank account -- That is simply not true. E-commerce and banking all over the internet today rely on secure online encrypted communications. The largest banks in the world use it and it is completely secure. It is impossible for anyone to see what you are doing. Companies like findnot.com can add a second layer of security for those who feel they need it.

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.

It's impossible to move money offshore without someone being able to track down where it went. -- Moving money to a secret offshore bank account is done by passing the money through a second offshore jurisdiction. For example, if the money is wired to a bank the Cayman Islands and the money is wired again from the Cayman Islands to Panama, it is impossible for anyone to know the money is in Panama.

I can use my offshore bank account to do everything I currently do with my onshore account. -- There is one thing you can't do with an offshore bank account. You can't pay bills online. This is the only feature lacking from most offshore accounts. This is easily rectified by an good offshore asset protection plan by making a portion of the money available in your onshore account. This also brings up another feature that deserves mentioning. Most offshore bank accounts come with a cash card that can be used to withdraw funds anywhere in the world. The card only traces to the corporation which is often a bearer share corporation (meaning the ownership of it is anonymous)

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 ex-spouse or a lawsuit consider reading more of Doug Snarder's work on the Offshore Banking Account and Offshore Asset Protection
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