Who Needs Offshore Bank Accounts- by aihaozhe2

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									Bond villains, corrupt dictators and even Bono can lay claim to offshore bank
accounts. But what about the rest of us? Does anyone really need an offshore bank
account, and how much money do you need to make it worthwhile?

Getting an offshore bank account simply means opening an account outside of your
home country. If you live in America, opening an offshore account in Canada will be
''offshore''. Likewise if you live in Britain, an account in one of the Channel Islands or
Ireland will be classed as ''offshore''. In fact if you have lived in another country for
any length of time it's highly likely that you already have an offshore bank account.

A separate branch of offshore banking involves accounts provided by an offshore
bank ONLY to outsiders. Offshore banks or financial companies operating in this way
are frequently prohibited under the terms of their charter from providing banking
services to citizens of the country in which they are licensed. A typical example may
be an offshore bank in a Caribbean island that offers services to US and European
citizens but is not allowed to offer services to citizens of the island.

Aside from the simple necessity of having a separate account when you live a foreign
country, what is so attractive about offshore accounts? Why is it that rich people have
them?

1) Offshore bank accounts are frequently available in more than one currency. This
makes them extremely valuable to those who work in a different country or travel
frequently. It is also very useful to your average investor as a hedge against dramatic
currency movements. Some investors for example may like to buy into a currency
recognized for its stability like the Swiss franc, to prevent keeping all their money in
one currency such as the dollar.

2) As a hedge against financial instability at home. When most people think of
offshore banks perhaps the notorious ''shell banks'' come to mind. Unregulated and at
times run out of someone's bedroom, the most physical presence some of these banks
may have is a brass plate on a building along with hundreds of similar unlicensed
institutions. However, these days shell banks are increasingly out of favour and
ostracised by domestic banks in western countries. The offshore banks that operate
seriously are well regulated and as safe or even safer than typical domestic banks.

3) Confidentiality. Depending on where and how exactly you bank offshore, offshore
bank accounts can be much more confidential than an onshore account. The reasons
for wanting this privacy are numerous, and most commonly include protection against
threats to your wealth from criminals or frivolous litigation. While swiss bank
accounts and cayman bank accounts are traditionally viewed as the most secretive,
international developments have rendered them less private than they used to be.

4) Access to offshore investments. When people decide to move part of their wealth
offshore, it is often not just a bank account they are looking for. The offshore bank
account is often a portal to other investments such as foreign equity, offshore funds
and financial instruments that give high rates of interest. Some of these investments
may be available completely tax-free, depending on your personal situation.

5) International payments. Sending and receiving large wire transfers abroad can be a
nightmare when using a domestic bank. There are mountains of questions and
paperwork to be dealt with. That's understandable. Domestic bank accounts are really
for in-country transactions and not equipped to deal with large volumes of foreign
transfers - kind of like using a mini metro to go off-road. Offshore bank accounts on
the other hand are specifically equipped to send and receive money from outsider
countries, and make the process as fast and efficient as possible.

There's no point in setting up an offshore account if you do not really need one. If you
could easily do what is required with a simple domestic account, that's the best course
to follow. On the other hand, if some of the ideas above struck a chord with you,
maybe it is a good time to move offshore!

								
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