The overseas banking industry is a billion-dollar business. Its no surprise that during the last decade, criminals have discovered ways to circumvent and exploit the system, ultimately giving the offshore world a bad reputation. This article looks at the many benefits associated with overseas banking; and how this has left the industry open to abuse.
The IMF defines Overseas Banking as “the provision of financial services by banks and other representatives to non-residents”. So, of course there are ways to structure this arrangement for both business entities and individuals to meet their requirements legitimately and lawfully, with access to the additional benefits that some local or onshore banks can’t provide.
A Secure, Alternative Economy
Countries everywhere can be at risk of threats and instability for any of the following reasons:
- Economic or market fluctuations.
- Political changes.
- Religious groups.
- Ethnic or cultural groups.
- Natural disasters tend to occur in more tropical climates.
The more a jurisdiction is open and vulnerable to such instabilities, the less secure funds and investments being held and made in that country are.
Therefore, having an overseas account in a country that is less prone or vulnerable to instability provides security and peace of mind to the depositor or investor.
Centralised Access to Funds, Regardless of Timezone
Using local services has no end of benefits, and overseas banks can provide some of the highest banking services to their clients in terms of the banking tools and personalised client services. Singapore and Hong Kong are leading jurisdictions for using the latest technology for their banking services in Asia.
For individuals who travel frequently, the 24hr banking services typically offered in Singapore can allow for peace of mind when in different time zones.
Having access to an overseas bank account provides a stable and centralised location to store funds for easy and cheaper access from any location around the world.
Reduced Tax Liability
Depending on different legislation of the host jurisdiction and the jurisdiction of the account holder’s residency; the laws can work in favour of reducing the tax liability in the form of double taxation treaties and agreements between different countries when applied to a depositor’s funds.
For a comprehensive list of double taxation agreements, click here.
Why Have These Benefits Been Taken Advantage of?
Previously, before schemes in Europe were launched such as the Anti-Money Laundering Directive and global schemes such as the BEPS (Base erosion and profit shifting by the OECD) certain countries namely British Overseas Territories, and Ireland had legislation that was easy to circumvent. Naturally, this attracted the attention of crooked investors and fraudsters and the overseas territories didn’t have the necessary precautions in place to avoid such mismanagement of the economy.
Nowadays, expect full disclosure with any offshore banks, many countries are operating the automatic exchange of information with many others set to follow suit. Anyway, an overseas account is most probably not for you if any of your company activities indicate being placed into a high-risk category. These types of accounts have stricter KYC and compliance procedures and increasingly this is becoming the global standard.
Offshore bank accounts are not just for businesses, individuals with dual-nationality or multi-coastal lifestyles also use and benefit from them commonly. With certain overseas banks and lenders allow clients to open an account online from their country of residence; for jurisdictions with stricter regulations, these are usually opened with the help of an agent or representative.