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Offshore Bank Account: 8 Issues Before You Start.

Feb 2, 2008
Offshore banking has become increasingly popular as more people realize exactly how they could feature from an offshore bank account and since the set up process is straightforward. If you've ever wondered whether you could benefit from an offshore bank account, or you're thinking of opening an account but you're not sure which one to opt for, this guide has been written with you in mind. Generally speaking anyone is free to open an offshore bank account. In fact, offshore banking has been widely used for several years by both people and organizations worldwide. Specifically an offshore bank account can also be of benefit to some expats residing in low or tax free countries as any interest earned on offshore financial institution balances is paid without the deduction of taxes.

What is Offshore Banking?

Simply defined, an offshore bank account is an account held in a bank that is located outside your country of residence.

Asset Protection Structures

If you're going to go out now to get your offshore asset protection started, consider the best offshore banking structure: The foundation/corporation. A foundation is an offshore asset protection tool that can be used in the form of a trust. A foundation can hold all your money and have a bank account, but a foundation can not conduct business. When a foundation owns a corporation, which owns a bank account, this is the only powerful secrecy protection offshore structure you will ever require. So if you have your offshore IBC within a foundation, you can conduct your business through the offshore account and plan your income taxes accordingly.

Panama has a number of specific characteristics that make this a great asset protection jurisdiction for corporations, foundations, banking and stock brokerage accounts. It is also known as one of the world's greatest haven for keeping and securing the cash funds of corporations, businessmen and individuals.

Tax Issues

Most countries have no restrictions on where your business interests, investments or bank accounts are located; it is simply your responsibility to article any income you earn to the appropriate tax agency. You will need to establish a suitable structure in a tax favorable country to gain access to several of the better opportunities available, which is reason enough to go offshore for dozens even ignoring the tax benefits. Any business that is conducted outside of Panama is not taxable through Panamanian income tax.

Offshore Financial institutions

Almost all offshore financial institutions want to receive dozens form of evidence of the account signatories' identity. A few offshore banks, but not all, request that letters of reference from another financial institution is provided by account signatories. Dozens offshore banks go even further: they demand that a bank reference each be given by all directors and shareholders of the corporation. Always an introduction via a party known to the offshore financial institution (such as an existing customer) is accepted instead of a reference. A fair number of offshore banks still happily open company accounts without any references at all. Dozens offshore banks provide their own resolutions for the directors to sign.

Banking on the internet Security Serious thoughts

You can protect your internet movements taking advantage of an anonymising service. Secrecy, on the internet, is created via technological means. In fact, the internet has become the international, no barriers, free market.


Most (maybe all) well known jurisdictions are no longer suitable for asset protection, privacy and confidentiality. When a foundation owns a company, which owns a bank account, this is the only powerful privacy protection offshore structure you will ever have to have.


Usually such an account is located in a reduced tax jurisdiction and offers certain financial and/or legal benefits to the holder of the account. If you believe that an offshore bank account structure could feature you, the next step is selecting the right financial institution, the right jurisdiction and of course the right account type. There are jurisdictions where financial institutions are under legal obligations to seek references, and there are banks that request references despite any legal obligation to do so. Policies vary greatly across offshore financial institutions and jurisdictions, so make a choice that is acceptable to you.


Offshore financial institutions in Belize provide their clients with various services including internet and international banking services. You don't have to serious consideration about confidentiality though; Belize financial institutions will strongly protect any information you provide. The government has authored financial institutions secrecy laws which produces harsh penalties for anyone who would violate the secrecy provisions, except when a customer is under a criminal investigation in Belize.


Panama has a number of unique features that make this a great asset protection jurisdiction for corporations, foundations, banking and stock brokerage accounts. Any business that is conducted outside of Panama is not taxable through Panamanian income tax. Panama is the most secure banking tax haven today, since Panama backs up its solid bank secrecy laws with real life enforcement. Other jurisdictions like Belize (mentioned above) have been known to be lax in their enforcement. Its one thing to have strong banking privacy laws and its quite another to enforce them.

As a general guide it is sometimes more discrete to establish your offshore structure in a local branch far from your residential jurisdiction. Panama has a number of unique features that make this a great asset protection tax haven for corporations, foundations, banking and stock brokerage accounts. Some call Panama the Switzerland of Latin America but this is not fair, Panama is far better than Switzerland and any other tax haven. When it comes to reliability and stability make sure to investigate the laws and regulations for each tax haven you are investigating. Stable governments aid to maintain investor trust which in turn further adds to the credibility of the financial institutions in that tax haven. Several offshore tax havens, such as Panama, have bullet proof privacy laws governing banking while others such as Switzerland no longer shield their customers in the same fashion as before.
About the Author
For more information on opening an offshore bank account please visit Offshore Legal
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