Offshore private banking has a bad name. We, the public, have been party to numerous media frenzies of late, naming and shaming the ‘dodgy’, ‘corrupt’ and ‘downright selfish’ wealthy elite, apparently under whose giant thumbs we all live our lives in servitude and misery!
From the former Icelandic Prime Minister, Sigmundur Davíð Gunnlaugsson to ex-Prime Minister David Cameron, to Mr Putin himself, some big names have been dragged through the mud, for example, following the Panama Papers leak.
But is all this negative press justified?
Nobody is arguing that those who have broken the law or taken advantage of their position to disenfranchise the common man shouldn’t face punishment, but it seems that merely the admission of owning offshore private bank accounts draws cries of “tax evader!”.
It is important to dispel the myths.
If you’re an expat, using an offshore private bank account can be beneficial for many reasons. Reducing tax liability is just one of them, and for someone who does not benefit from government spending at home, not paying tax there is not the epitome of evil.
Here are some false claims and some simple truths.
Myth #1: "It’s all about tax evasion."
- This is very much the media message – which increased in ferocity as the recession bore down in a very real sense on those at the bottom of the pyramid.
As and when a case of tax evasion hit the press, knocking the likes of British comedian Jimmy Carr off his perch (momentarily) and, in a whole other league, ex telecoms boss Walter Anderson who admitted to hiding $365 million worth of income, ‘offshore bank accounts’ suffer the collateral damage.
The truth is, an offshore private bank account can legitimately help lower your tax bill. Legally and fairly.
Myth #2: "Offshore banks are based in only the most corrupt far-flung island nations."
- Banks exist all over the world, serving people, who strangely enough, are also spread fairly liberally around the world!
Some offshore banks are based on beautiful islands in the Caribbean which are generally well regulated, despite their lingering reputation.
Others are based in places like Switzerland, Singapore or the Isle of Man – that’s part of the UK, subject to English Common Law, 30 miles off the Cumbria coast! These places constitute some of the most stable and highly respected jurisdictions in the world.
Private banking with an offshore bank is normally equally secure, or even safer than banking in your old home country.
Myth #3: "Offshore accounts are only for those with enormous transferable sums."
- Not so. Anyone (providing they can offer the requisite proof of identity, address and are not engaged in money-laundering) can open an offshore private account with as little as $500.
Offshore accounts are offered by private banks which don’t necessarily require you to have enormous sums of cash.
The truth is, offshore private banking is rarely as exclusive as you might think.
Myth #4: "Offshore private banking is illegal."
- No – it’s not. This is the obvious myth to unravel and cast aside.
Although, as with every bank account, the proceeds of crime sometimes end up in them (anti-money laundering laws and international agreements have helped to make this much more difficult), offshore private bank accounts themselves are not illegal.
Nor is the concept of keeping your money safe – for example, if you work in an unsafe jurisdiction.
Benefitting from multi-currency holdings or investing securely on a low-cost investment platform isn’t illegal either.
Offshore private banking is not only legal, but is a fair and transparent method for many people to protect their financial futures.