Why Go Offshore Banking?
Going offshore has many benefits: protection from political and currency risk, the ability to privately store precious metals, protection from lawsuits, financial privacy, unnecessary taxes and regulatory advantages.
Political Risk
Keeping all of your eggs in one basket is not a good idea. Keeping all of your assets in one country is not a good idea either. Regardless of which country a person lives in, there is no guarantee of never-ending political stability. Countries go to war. Regimes take away rights and freedoms. Ethnic, religious, political or economic groups can be oppressed and have their property confiscated. While no one hopes such things will occur, it is always better to be safe than sorry. Being safe means moving some assets to a different country where they will be shielded from unwanted political developments in your home country.
Currency Risk
Given the borrowing and spending habits and monetary policies of modern governments, there is no country that is immune from the risk of having its currency lose value. Understandably, citizens of many countries are concerned that the value of their currency could plummet. If your home currency loses value quickly, you could find yourself poor overnight. Steady rates of inflation also decrease the value of a currency, albeit at a slow pace. Holding some foreign currency may provide a hedge against the loss of value of your home currency.
Buying and holding multiple foreign currencies offshore is simple and convenient. Virtually all offshore banks offer account holders the ability to hold multiple currencies in the same bank account. For example, a client may hold USD, CHF and GBP (United States Dollars, Swiss Francs and British Pounds Sterling) simultaneously in an offshore bank account. Once an offshore bank account has been opened and funds have been deposited into it, some or all of the funds may be exchanged for foreign currencies and held in the account.
Offshore brokerages also offer the ability to hold multiple currencies in the same account as well as purchase foreign stocks directly through foreign stock exchanges. For example, an offshore brokerage account may hold USD, CHF and GBP simultaneously. The same brokerage account may be used to purchase shares of Swiss companies on the Swiss stock exchange, or Brazilian companies on the Brazilian stock exchange, etc.
**Buying or holding foreign currencies entails risk of loss and should only be undertaken if the client understands the risks involved.
Buying and Storing Precious Metals Offshore
Holding precious metals offshore provides double benefits: a hedge against inflation and currency devaluation combined with offshore privacy. Because of these benefits, offshore financial centers are ideal locations for storing precious metals.
Many offshore banks and brokerages will buy and hold precious metals for their clients. Once an offshore account has been established, the account holder directs the bank (or brokerage) to purchase the desired amounts and types of metals. The bank will purchase the metals and store them securely. Once the client decides to sell, the bank will sell the metals and deposit currency back into the client's account.
For maximum privacy, the offshore account that will hold the precious metals should be opened in the name of an offshore company. This ensures that the precious metals will be held in the offshore company's name, not the client's personal name. This creates additional privacy for the client. For a more detailed explanation of how using an offshore company increases privacy.
**Buying precious metals entails risk of loss and should only be undertaken if the client understands the risks involved.
Protection From Lawsuits
Tens of thousands of lawsuits are filed PER WEEK in the U.S. alone. Juries award ever-increasing sums to successful plaintiffs. Ex-spouses, ex-business partners, disgruntled employees or predatory attorneys may file suit if they believe a potential defendant is an attractive target. Losing such a lawsuit could cause a lifetime's worth of savings, investments and real estate holdings to be lost. In light of this, placing assets offshore is a wise and effective means of protection from ruinous lawsuits.
Financial Privacy
Financial privacy has become a thing of the past. Every transaction made at a bank or ATM, by law, must be recorded and filed. Credit agencies maintain enormous databases of sensitive information that is used and shared by other organizations and agencies. Asset collectors routinely advertise their ability to locate bank accounts, brokerage accounts, real estate and business holdings. Should asset collectors find substantial wealth, the individual or corporation becomes an easy target for a lawsuit.
Unless deliberate steps are taken to ensure privacy, sensitive and confidential information could easily get into the wrong hands. Placing bank and brokerage accounts offshore will keep them off the asset collector's radar screen. Credit agencies don't have access to foreign account records or transactions. Domestic property may be titled in the name of a foreign corporation or trust. This ensures that asset collectors can't find it. By taking advantage of these methods, an individual or corporation becomes a smaller target, and the likelihood of being sued is reduced. Utilizing offshore tools to protect privacy could mean the difference between keeping, versus losing, what is rightfully yours.
Regulatory Advantages
Domestic businesses and operations are often plagued by excessive regulation and unnecessary taxes. Valuable resources are diverted away from the productive processes in order to monitor compliance with a myriad of restrictions. Offshore jurisdictions are intentionally business-friendly and have regulations that are straightforward, simple to understand and inexpensive to comply with. Moving a business offshore and enjoying a more pleasant business climate may require nothing more than forming an offshore corporation and transferring assets from the domestic corporation to the foreign one.
