Offshore accounts offer a wealth of opportunities as an insurance against the negligence of an irresponsible banking system that has overextended itself by having low-interest rates, poor capital reserves, mountains of debt practically making a majority of banks insolvent, together with a system of banking governance and policymaking all pieces of a broken system.
Banking in an offshore jurisdiction reduces your risk while and increases your financial freedom giving you flexibility and protection of your cash.
Many people recognize the importance of diversifying your assets, but few people consider diversifying across different locations.
In this article we will discuss a number of benefits you get by banking in a foreign country.
Higher Returns in International Investments
Economic and Political Stability
Generate Higher Interest Rates in an Offshore Bank Account
Sound Banking Systems in Foreign Jurisdictions
Don’t put all your Eggs into one Basket, Diversify Your Wealth
Foreign Banks have Higher Liquidity
Hold Multiple Currencies in Your Account
Asset Protection from unscrupulous lawsuits
Greater Levels of Bank Confidentiality
Many international and offshore funds generate much higher returns through Private Hedge Funds and investment portfolios not readily available to domestic corporate account holders.
Offshore investment accounts open up investments in multiple jurisdictions, regional as well as developing markets.
Spreading investments in different countries and global currencies allow you to play global markets and capitalize on regional trends. When a domestic economy enters a financial recession having offshore funds spreads your risk.
Spreading your assets liberates you from being dependent on the financial continuity of one country and having access to different markets greatly enhances your future financial stability.
There is a lot of political and economic uncertainty in the world. Countries governed by dictators or corrupt autocratic regimes face huge uncertainties that make financial security untenable.
At any given moment, entire savings could be seized, bank accounts could be frozen, investments could be taken just for being a political opponent, high-profile individual, or even an outspoken critic. One does not have to look very far across the world headlines to see that corrupt regimes are still at large.
Living in a high-risk environment, it is only common sense that one would want to have a nest egg stored in a different location for safekeeping.
Even in more 'democratic' countries that might not be directly threatening there are still economic and financial uncertainties that one would want to be well prepared for.
Economic downturns are cyclical, and so, in reality, its only a matter of time before any single country faces a crisis of confidence, currency depreciation, capital control, bank system failure, or financial market collapse.
To be prepared is to be forearmed.
If you live in Germany or Japan for example, banks there have negative interest rates. Thats right, negative.
That means not only do you not earn any interest on your savings, but you actually lose money. Both Japan and Germany hover around minus .01% - 1.0%.
That means if you have 100,000 Euro parked in a German Bank, you will have to pay the bank 1000 EUR for the pleasure of you giving them your money!
In foreign offshore accounts, one can expect a much higher interest rate than found your local checking accounts in the US or UK for instance.
Instead of a lousy 0.2% or 0.3%, some offshore banks can get upwards of 3-4%, though this might not sufficient reason alone to bank within the jurisdiction, it does tell you that not all banking systems were created equal.
It is important to make sure your assets are stored in a sound banking jurisdiction. Putting your wealth in a secure, and more importantly, time-tested banking system is extremely important.
To prevent yourself from going down with the ship its important to have your assets spread across different banking institutions, so that if one defaults you have a plan B.
Many banks failed in Cyprus and Greece these last few years showing the already growing cracks in many institutions, as well as in banking systems in Argentina, Venezuela, Hungary, Italy, and Poland all were hit hard by the global financial uncertainty.
The US, despite its global economic superiority, has a very unsound banking system. The US only comes in at 23, 35 and 50, safest banks in the world, and those banks were only small agricultural banks. The large commercial banks didn't even come close.
Foreign banks are much safer alternative, for one, they require higher capital reserves than many banks in the US and UK.
While many banks in the UK and US require roughly only 5% reserves, many international banks have a much higher capital reserve ratio such as Belize and Cayman Islands which have on average 20% and 25% respectively.
Opening an account in a foreign jurisdiction helps to ensure your freedom by being independent from a central authority. Being dependent upon one country or system makes you dependent upon its success.
Diversifying your assets is an important step in ensuring financial security.
If you have all your assets in one basket, all it takes is a push of a button and you could be frozen out of your accounts.
It is essential that you and your assets remain diversified across different accounts and different jurisdictions to ensure you don’t end up in a similar position as thousands of Greeks whose savings were taken by the government to bail out the failing banks.
The quickest way to prevent this from happening is to set up an international bank account in an overseas jurisdiction account that is outside the reach of the government.
Offshore banks are much more liquid than traditional commercial domestic banks in your home country.
Some offshore banks, for example, do not lead out any money and keep 100% of all deposits on hand.
Foreign accounts also allow you to access and move large amounts of funds quicker.
This matters if you are in a position where you need access to emergency funds are you need to transfer funds from one country to another.
Domestic accounts usually hold all of your assets in a single currency. If your entire savings is in a single currency, especially if you live in a country where there are: capital controls (Greece), a fluctuating currency (Argentina) or economic uncertainties (insert your country here), having your assets in multiple currencies is something you can not do without.
Holding all your assets in one currency, is not advisable, especially if your accounts are in a currency that is volatile.
While many domestic accounts limit your ability in holding other currency denominations, accounts in Hong Kong or Singapore, for example, allow you to have upwards of a dozen currencies to chose from all in just one account.
It pays to have a well protected finances. And this is not to defraud the government or hide your wealth for tax evasion, it is for asset security.
Conspiracy theories aside, the fact that its possible of being frozen out of your banks accounts at the touch of a button because some court says your under investigation- is scary.
Without any access to your assets how can you defend yourself in court?
Money and assets that are kept offshore are much harder to seize because foreign governments do not have any jurisdiction and therefore can not force banks to do anything. Local courts and governments that control them only have limited influence.
This is not to say you are 100% immune from criminal prosecution, or that you can hide assets from foreign governments, but are much safer than if your assets were in their back pockets.
Offshore Bank accounts are just creating checks and balances on a system that has gone out of control.
Protecting your wealth from domestic political or economic fluctuations by diversifying your assets across jurisdictions and accounts is financial advice you would find anywhere.
Having a successful business or having wealth, unfortunately, makes you a target. If you are a doctor, lawyer, fund manager, or any type of professional the chances of being faced with some type of legal battle is high. It's not if - it's when.
In the US, there are over 40 million new lawsuits filed every year, with 80% of the world's lawyers living in the USA, that is not too surprising. If you are hit with a lawsuit you can be virtually cut off from all your assets before being brought to trial. It seems that one is guilty until proven innocent.
Anonymous offshore bank accounts are no longer around. Though there are still many layers of security and privacy that can be used to protect your name.
You still can retain much higher levels of privacy than in domestic banks, as many jurisdictions have secrecy laws that require non-disclosure, but not if there is a criminal investigation or if you are suspected of tax evasion.
Because of the numerous Double Taxation Treaties (DTTs), FATF, and the CRS, details of customers are widely shared amongst countries, however, that is only if they are in a reciprocal sharing of information. So be sure to check your countries agreements and if they are a signatory for the Common Reporting Scheme (CRS).
However, properly structuring a personal or corporate offshore account with an offshore LLC, Limited Company or Trust can provide a measure of confidentiality that can not be found in any personal domestic account.
Banks do have an interest in keeping confidential the names and details of their clients as in places like Panama where privacy is militantly maintained, however, Know Your Customer (KYC) rules, the CRS and the OECD have radically reshaped banking privacy.
Opening an offshore bank account held by an offshore company removes your name from being directly affiliated with the assets. Using nominee directors can also be used to create another layer of security that removes your name from the paperwork.
Though this still does not make you completely anonymous it can provide layers of security and privacy that would otherwise not be possible.
It is never too late to establish a Plan B. Your first step toward securing your financial future is to internationalize your assets.
Whether you are looking for greater asset protection, privacy, financial security, economic diversification or freedom from being dependent upon any single state or financial authority offshore banking provides a wealth of benefits that can be had at just a few clicks away.