Why set up an Investment or Bank offshore?
There are any number of reasons why people choose to establish an offshore account, whether that be for privacy, security, future planning, or protection of their assets. Depending upon your circumstances there are any number of offshore corporate structures that might satisfy your requirements, however, many people assume that they can simply open an offshore personal account in their name and be protected by the privacy laws and confidential banking policies of any given offshore jurisdiction.
The problem is that every time you decide to make a transaction, your name will be tied to the account. Gone are the days of anonymous numbered accounts. Any incoming or outgoing payment from the account will have your name associated with it on the bank-to-bank routing instructions. To ensure such details remain private a company, foundation or trust is used to open up an offshore account, rather than using your personal name. Though you remain the signatory on the account (which can remain confidential through our third party signatory services) and known to your bank, your account will be anonymous to the world, so long as you bank in a country that does not have tax information sharing agreements with other foreign governments.
By using a company, foundation or trust, your name will not have to be used on any payment transfer, and will be limited to appearing only on the inter-bank payment instructions and nothing else. Using 'corporate shield' has many advantages that protect and keep ones personal assets secure, even if you only plan on using it for banking and investments. The company or foundation becomes a separate legal entity with its own life and rights under law giving the foreign-based company strong asset protection features. Companies formed in jurisdictions, such as Panama, have corporate laws that ensure and protect the assets and name of those who wish to guard ones assets from financial predators. Read the Panama Corporation section for more details of an example.
Anyone can form a company, for any legal purpose, whether it is for business or personal use and does not necessarily need to be used for operating a specific type of business, as there are many different types of offshore vehicles that allow for a wide range of uses. For instance, if an individual is needs something for personal use, the use of Private Interest Foundations or any number of Trusts are used for any number of personal activities and are especially efficient when they are used in conjunction with an IBC as a main shareholder.
Please see our offshore banking section for more specific information on opening bank accounts, including different types of accounts, best countries and paperwork requirements.
Professional Signatory Account Management
Professional Signatory Account Management is an option for those that do not want to be a signatory on a corporate, foundation or trust account and prefer to use a professional, such as a lawyer or accountant to act in a fiduciary capacity. The reason for this is that some countries require extensive reporting of any accounts with which one has signatory control over; the penalties for non-reporting are quite high and are being enforced more aggressively in the wake of the UBS case.
For many clients, the reporting of such accounts defeats the very purpose of having the offshore accounts in the first place. Those individuals who do not want to take the risk of non-compliance (again we recommend not take such risks) can use Offshore-Protection.com’s Professional Signatory Account Management Services, which keeps you at ‘arms length’ from the assets while still giving you the ability to make decisions on their deployment.
Visit our professional management page for more information.
Bank Account linked vs. 'Pre-Paid' Debit Cards
Debit cards have become a very popular way to access offshore funds. Having a debit card linked to your account can be a great convenience, but can be dangerous since your privacy can be compromised because the card can be sourced back to your bank account to which it is linked. Similarly, if the card is stolen, the account could be compromised depending on how alert the bank is in their security.
A much better option is to use non-linked pre-paid debit card that can be conveniently funded from your bank account for a small fee, but cannot be linked in any way to the bank account itself because the two are completely different and maintained by different banks. These cards are referred to as 'stored value cards' that act as a personal numbered account that can receive funds from third parties, as well as funds from your own account(s). Once the card is loaded with funds it is used like any other credit/debit card through ATM withdrawals, online transactions or store purchases.
What is Offshore Investing?
The concept of an online discount brokerage with low transaction fees is unheard of in privacy and tax haven countries. Expect to pay at least double what you are used to paying in transaction fees, domestically. However, the brokerage firms with whom we assist clients in opening up accounts have all the latest online trading platforms available. Just about anything you can do with your domestic brokerage account you can do with your offshore account, but more importantly, if you structure things properly, you will have absolute privacy and will be able to compound your profits free of taxes. Those advantages for most people are well worth paying the higher transaction fees.
It is important to remember that, when opening a non-bank brokerage account, they will require funds to only be remitted in (or sent out by them to you) from a personal account under your name or a bank account under the same company/foundation/ trust name. Since you will not want to use a personal account, as a general rule, to send or receive funds from the brokerage account, a bank account operated by the same entity will be mandatory. Some offshore banks offer their own in-house brokerage accounts. Except for a few notable exceptions, these are inferior in service, fees and online trading options to the dedicated non-bank brokerage firms.
If you are a U.S. person, you will find that there are many investments that are closed to you, because many companies chose not to go through the SEC registration regulatory hassle. Since they are only available through an offshore brokerage account, a corporation- or foundation-owned brokerage accounts in a jurisdiction like Panama is the ideal answer. You will have access to a wide variety of investments that cannot be sold in the U.S. For example, many of the highest performing mutual funds, mostly known as unit trusts, are not available to U.S. investors; however, when you invest through an offshore brokerage account owned by an offshore corporation, foundation or trust, they are.
Please be aware that no client or other reader should act or refrain from acting on the basis of any matter contained within the Offshore-Protection.com website without first seeking appropriate legal or other professional advice concerning your particular circumstances. It is important that you be familiar with your legal, financial and tax obligations within your respective country as both corporate and tax law vary from jurisdiction to jurisdiction.