The Myths Surrounding Offshore Bank Accounts

As we discussed in the start of this series, People have many misconceptions about the offshore Bank Accounts. They are depicted in the movies as owned by villains and mostly for illegal purposes. Similarly the campaigns by tax authorities also depict offshore accounts as if their only purpose is money laundering and tax evasion. We will discuss some of the myths below regarding the offshore bank accounts and try to articulate the true picture behind the myth:

1.       Legality of an Offshore Account: One of the popular myth mainly becoming popular due to the misinformation spread in the campaigns by the local authorities has led many people to believe that holding an offshore bank is illegal. There is no country n the world, which bars its citizens to open an offshore account. Offshore account is one of the most popular tools used by almost all businesses to manage their finances. Even though an offshore bank can be used for an illegal purpose, however most of the offshore accounts are opened and maintained legally and to get the best value out of legal activities.

2.       Tax Evasion: It is widely considered that offshore accounts are used for tax evasion. While many cases, which do hold the attention of the media regarding the offshore accounts, are related to tax evasion, the actual number of accounts actually used for tax evasion is quiet small compared to the total account opened. While tax evasion is illegal, tax avoidance is legal. Many offshore banks have taxation consultants on their panel who structure the financing of the individual in order to save the maximum amount of tax.

3.       Security of Funds: A concern with offshore accounts is that keeping money in a far off island or a land locked country can restrict access to the funds and the security of the wealth may be at risk. The truth is that all offshore jurisdictions are connected to the world through Internet infrastructures including fibre optic cables and satellites. The access to the funds is as far away as the nearest phone or computer. Secondly, most of the countries offering offshore accounts are stable politically and economically and lay great stress on the security of their investors. Offshore accounts are actually used for protection of assets!

4.       Offshore Banking is for the Rich: Only wealthy people can take the advantages of an offshore account which require high investments: While it is true that in some regions, private offshore banking is only accessibly to the few, most of the offshore banks now provide services to the middle class for protection of their assets. These services are low cost and do not require a very high minimum balance whereas almost all the advantages of an offshore bank are granted.

5.       Privacy: on the other hand of the spectrum are those who are misinformed into believing that privacy of information means that no information is to be shared for opening an account. The numbered accounts initially worked on the proposition that no data be required from the account holder. However those days are long gone and for most countries, the requirement for initial information is quiet comprehensive even though the information is not shared with the third parties. Numbered accounts in the new world merely mean accounts where the information of the account holder is only accessible by certain office staff. The information of the account holder however remains within the bank and the account holder and many countries and institutions have taken strong steps to ensure the privacy.

6.       Account opening: It is hard to open an offshore bank account and the physical presence of the person is required. While the information for opening an account has become more comprehensive, the process of opening an account is not hard at all and does not require physical presence in most countries. The account can be opened by using an agent and the official means of communication for sending documents.

There are other myths and concerns associated with the process of managing and running the account however a proper advice on those cases and queries varies from case to case and therefore it is normally considered best to engage an agent or a consultant to plan the opening of an account with you.

This article is brought to you by the DeltaQuest Group. For more information regarding Offshore Banking and the Opening of an Offshore Account, please visit My Offshore Accounts.