The Top 12 Offshore Banking Myths Debunked

Offshore bank accounts are only for spies and criminals and money launderers -- Although no-one can claim that criminals don't use offshore bank accounts, their uses in this regard have been severely limited due to the MLAT treaty. In fact, many fortune 500 companies now bank offshore to protect their assets and to gain competitive tax advantages.

Offshore banking is too complicated for the average Joe -- This is actually true if the average Joe were to do all the legal work himself. Typically an offshore bank account is created in conjunction with an offshore corporation due to many governments taxing worldwide income of individuals. This sounds complicated but a good lawyer will have the entire package done in less than a week.

Only a rich person can afford an offshore asset protection setup -- This is totally false. The basic package, which is adequate for 90% of clients, costs less than $2000 US. The basic package includes an offshore bank account and a Panama bearer share corporation. It has proven time and again to be a very solid protection mechanism for our clients and is very useful for tax planning as well.

Since 9/11 there is no such thing as bank secrecy. -- This is simply false. Several offshore jurisdictions like Panama have bank secrecy laws that impose prison sentences to those who violate your bank secrecy. In addition, Panama also has bearer share corporations that just a private as the infamous numbered Swiss bank accounts.

You have to visit the offshore jurisdiction where the bank is located. -- This is not true. Everything can be done by phone, fax, email, and courier by an offshore banking professional.

The MLAT treaty has ruined the effectiveness of offshore jurisdictions -- This is true for any major criminals. Requests made through the MLAT treaty must be a crime in both countries (Tax evasion is not a crime in Panama for example.) The requesting country must show that it has strong evidence and is not on a fishing expedition. There is a great deal of flexibility in the treaty. The requesting country cannot force co-operation. If a country like Panama doesn't think the case has merit, they can keep asking for more documentation, or simply deny the request. Panama, for example, doesn't like co-operating on minor crimes.

Tax treaties now allow most governments to share information freely -- Sadly this is true for many countries, but it is not true of serious offshore jurisdictions like Panama. Panama has NO TAX TREATIES WITH ANYONE!

Its hard to manage a bank account offshore secretly. -- Today all the major banks allow you to do your banking online using encrypted communications. Offshore banks are no exception. Online banking a common feature of an offshore bank account. In fact, you can even send a bank wire using your offshore bank account. This is a service many onshore banks don't have.

Offshore banking won't protect me in a lawsuit because the court will order that I bring the funds back. -- If you setup your asset protection plan before you get sued you are well protected. Once you donate your money to an offshore foundation, for example, they money is not legally yours to get back. The judge cannot order anything illegal. If legal proceedings are already under way and you move the funds you might be charged with fraudulent conveyance. There are ways to avoid this, but it is beyond the scope of this article.

It's impossible to move money offshore without someone being able to track down where it went. -- Moving money to a secret offshore bank account is done by passing the money through a second offshore jurisdiction. For example, if the money is wired to a bank the Cayman Islands and the money is wired again from the Cayman Islands to Panama, it is impossible for anyone to know the money is in Panama.

I can use my offshore account do do the same things I do with on local personal bank account - This is true except for one feature. You cannot pay bills online in most offshore jurisdictions. Actually some banks have this feature but it will not apply to your local country. International bill payment is not offered by any bank I know of. Also this would likely not be a wise action anyway. Typically money kept offshore is not intended for day to day payments. Having said that, many offshore clients carry a bank card that they can use to withdraw cash anywhere in the world. Of course the bank card does not have their name on it or tie to them.

Americans, Canadians, and Europeans can't own an offshore account legally -- This is totally false. This mis perception is based on the fact that these jurisdictions now require an individual to report his/her worldwide income. Offshore bank accounts almost always come with a bearer share corporation or a foundation, which means the individual does not legally own the money. When the money is paid from the corporation to the individual then it becomes taxable income.

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If you have property or have assets that you don't want to be taken by an ex-spouse or a legal battle be sure to read more of Doug Snarder's work on the Offshore Banking Account and Offshore Asset Protection
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