Offshore Banking Myths
It is a sad fact that the common perception of offshore bank accounts
is locations to store drug money, illict earnings from crime, white
linen suits, action-packed movies and sensationalised tabloid
stories. Unfortunately for many, this warped view of offshore and
anonymous banking is what has made many entrepreneurs and
business professionals falter when the suggestion of banking offshore
has been mentioned. Sadly, instead of understanding immediately
the benefits of offshore asset protection and banking tax
havens, they have avoided investing offshore so that they are not
associated with this.
Fortunately, in today’s markets and contemporary thinking, this dodgy,
unpleasant view of offshore banks is becoming rather dated and
obsolete. This is offshore banking myth number
1.
The simple truth is that tax havens, also known as offshore
financial centres (or OFC’s), were founded for the purpose of
providing offshore asset protection, asset growth and lower taxation
(Read the history of offshore banking). Additionally, these offshore banking institutions pride themselves in offering an excellent
service and superb discretion for individuals and companies, whether
large or small, from all over the world. Although not as
glamorous or as exotic as portrayed on celluloid, offshore banks and
offshore financial centres can present tangible solutions to a variety
of situations. These include:
- Asset protection from impending legal action.
- Throwing off the burden of taxation in the domiciled jurisdiction
- Protection from political turmoil
- Shielding from economic instability
Moreover, an offshore bank account can also offer asset
protection from situations such as divorce, poor market conditions and
extraneous legal action, which is so often a reality and feature of
everyday life.
Offshore Bank Accounts, Money Laundering and Other Criminal Activity
It would be clearly untrue to say that no illicit funds find their
way into Offshore Bank Accounts: if there is a loophole through
which the criminal mind will slide, then it will take full
advantage. Although the OFC’s have desperately tried to rid
themselves of the stigma of money laundering and hiding criminal gains,
there are cases where this is exactly the case. Criminals will
take advantage of legal structures to protect assets, the same as
regular, law-abiding citizens. However, it is interesting to note
that it is the case that precisely those financial centres thought to
be least likely to fall prey to the (legal) depositing of illegal money
have, indeed, been found to have had vast sums of criminal gains pass
through them. It is surprising to note that the United States, in
fact, has been found to have had an estimated half ($300 billion!) of
all the money laundered within the world pass through one or more of
its states. Of course, the United States is not the only
jurisdiction that has been subjected to this illegal activity:
the UK and Germany, in particular, have also fallen prey to this
criminal dealing.
So, although the OFC’s or tax havens are, in fact, perceived to be the home of criminal underworld financing, the reality is that it is actually the high-tax jurisdictions – like the US – which have the vast majority of these funds laundered through its territories, with the offshore financial centres, although not exempt from this, represent a much smaller percentage overall. This is offshore banking myth number 2.
Naturally, as one would expect, these superpowers are very keen to surpress this information as they are highly embarrassed by these figures and are not averse to the OFC’s taking the blame for this transiting of illegal monies.
Learn more about why you should bank offshore, how to setup an offshore bank account and offshore bank account security from one of our offshore advisers. Contact The Offshore Company UK today.