Mirror of Justice

How to Open an Offshore Bank Account: 8 Considerations Before you Start

July 19th, 2009 at 02:52am Under Banking Law

Offshore banking is becoming increasingly popular as more people recognize exactly how they could benefit from an offshore bank account and because the set up process is straightforward. If you’ve ever wondered whether you could benefit from an offshore bank account, or you’re considering opening an account but you’re not sure which one to go for, this guide has been written with you in mind. Generally speaking anyone is free to open an offshore bank account. In fact, offshore banking has been widely used for many years by both individuals and organizations worldwide. Specifically an offshore bank account can also be of benefit to some expatriates residing in low or no tax countries as any interest earned on offshore bank deposits is paid without the deduction of taxation.

What is Offshore Banking?

Simply defined, an offshore bank account is an account held in a bank that is located outside your country of residence.

Asset Protection Structures

If you’re going to go out now to get your offshore asset protection started, consider the best offshore banking structure: The foundation/corporation. A foundation is an offshore asset protection tool that can be used in the form of a trust. A foundation can hold all your assets and have a bank account, but a foundation can not conduct business. When a foundation owns a corporation, which owns a bank account, this is the only powerful privacy protection offshore structure you will ever need. So if you have your offshore corporation within a foundation, you can conduct your business through the offshore account and plan your income taxes accordingly.

Panama has a number of unique attributes that make this a great asset protection jurisdiction for corporations, foundations, banking and stock brokerage accounts. It is also known as one of the world’s greatest haven for keeping and securing the cash assets of corporations, businessmen and individuals.

Tax Considerations

Most countries have no restrictions on where your business interests, investments or bank accounts are located; it is simply your responsibility to report any income you earn to the appropriate tax authority. You will need to establish a suitable structure in a tax friendly country to gain access to some of the better opportunities available, which is reason enough to go offshore for some even ignoring the tax benefits. Any business that is conducted outside of Panama is not taxable through Panamanian income tax.

Offshore Banks

Virtually all offshore banks want to receive some form of evidence of the account signatories’ identity. Many offshore banks, but not all, request that letters of reference from another bank is provided by account signatories. Some offshore banks go even further: they demand that a bank reference each be given by all directors and shareholders of the company. Sometimes an introduction by a party known to the offshore bank (such as an existing customer) is accepted instead of a reference. A fair number of offshore banks still happily open company accounts without any references at all. Some offshore banks provide their own resolutions for the directors to sign.

Internet Banking Security Concerns

You can shield your internet movements using an anonymising service. Privacy, on the internet, is created by technological means. In fact, the internet has become the global, no barriers, free market.

Privacy

Most (maybe all) traditional jurisdictions are no longer suitable for asset protection, privacy and confidentiality. When a foundation owns a corporation, which owns a bank account, this is the only powerful privacy protection offshore structure you will ever need.

Jurisdiction

Usually such an account is located in a low tax jurisdiction and offers certain financial and/or legal benefits to the holder of the account. If you believe that an offshore bank account structure could benefit you, the next step is selecting the right bank, the right jurisdiction and of course the right account type. There are jurisdictions where banks are under legal obligations to seek references, and there are banks that request references despite any legal obligation to do so. Policies vary greatly across offshore banks and jurisdictions, so make a choice that is acceptable to you.

Belize

Offshore banks in Belize provide their customers with various services including internet and international banking services. You don’t have to worry about confidentiality though; Belize banks will strongly protect any information you provide. The government has created banks secrecy laws which provides harsh penalties for anyone who would violate the secrecy provisions, except when a client is under a criminal investigation in Belize.

Panama

Panama has a number of unique attributes that make this a great asset protection jurisdiction for corporations, foundations, banking and stock brokerage accounts. Any business that is conducted outside of Panama is not taxable through Panamanian income tax. Panama is the most secure banking jurisdiction today, because Panama backs up its strong bank secrecy laws with real life enforcement. Other jurisdictions like Belize (mentioned above) have been known to be lax in their enforcement. Its one thing to have strong banking secrecy laws and its quite another to enforce them.

As a general guide it is often more discrete to establish your offshore structure in a location far from your residential jurisdiction. Panama has a number of unique attributes that make this a great asset protection jurisdiction for corporations, foundations, banking and stock brokerage accounts. Some call Panama the Switzerland of Latin America but this is not fair, Panama is far better than Switzerland and any other jurisdiction. With regard to reliability and stability make sure to investigate the laws and regulations for each jurisdiction you are investigating. Stable governments help to keep investor trust which in turn further adds to the credibility of the banks in that jurisdiction. Some offshore jurisdictions, such as Panama, have rock solid privacy laws governing banking while others such as Switzerland no longer protect their clients in the same fashion as in the past.

Panama Offshore Banking & Banking Secrecy Laws

July 15th, 2009 at 08:52pm Under Banking Law

Panama is one of the most popular places for offshore banking. Numbered accounts no longer exist in Panama, instead Panama has what are known as bearer share corporations and those corporations own a bank account.

These corporations are difficult to find out the real owner because when ownership is transfered no records of the sale need to be kept or registered. The person that physically holds the share certificates is the owner of a bearer share corporation and any associated bank accounts which offers a great deal of privacy.

Of course there has to be someone as a signatory on the company bank accounts but within every corporation there can be more than one person with signing authority. Being a signatory on an account is not proof that the corporation funds are your funds.

Technically, the owner of the bank account is the corporation and not the people with signatory privileges. The banking secrecy afforded by law in Panama is what draws foreigners to Panama to set up their corporations and bank accounts.

Lets Take a look at some of those laws:

Article 74 of Decree 238 makes it so the banking commission of Panama can’t conduct an investigation on personal banking clients. Additionally, if it uncovers any information during normal operations they aren’t allowed to reveal that information to any person or authority. They may only do so if they are subpoenaed by a Panama court. Violators of this law are subject to another law which imposes fines or jail time on the guilty party.

Article 65 of Cabinet Decree 238 regulates the manner in which the National Banking Commission can gain access to banking information and documents. The law states that they may only inspect the banks general books and that they may not single out individual bank accounts. That law covers both deposits and securities at the bank, and this to can only be broken by a court order.

Article 170 states that any person with access to confidential banking information through either occupation or activity, that uses this information without the consent of the involved parties, in a way that causes someone damages, they can be punished and possibly imprisoned. That sentence can be anywhere from ten months to two years, it may include monetary fines and they will also be barred from practicing their profession for a two year period.

Regardless of where you bank today there are three reasons that can lead to your banking secrecy being violated. Those three reasons are severe criminal activity such as terrorist funding, money laundering and drug smuggling.

In Panama tax evasion is not considered a serious crime. There is no court in Panama that will allow your banking secrecy to be violated for tax related violations unless a case is brought that can show this money was also involved in a serious crime.

Panama is a member of the mutual legal assistance treaty. In a post 911 world it is now a requirement that all countries that transit funds in and out of the United States must be a part of this treaty. When you analyze this treaty it does not threaten any of the strict secrecy laws set fourth in Panama.

The following are the basics of the treaty. The investigation can only be conducted if the offense that is to be investigated is a crime in both countries. If a country wants information they have to prove they have no other alternative method of obtaining it and they must also show they can not go fourth with legal action without the information. When information is requested it has to be specific. They can’t just be fishing for information.

They must also first file a criminal case in its court system on a national level, which ensures that smaller cases are not covered under the treaty. If another country meets all of the conditions, the request is pushed through diplomatic channels and then Panama must consider the information request.

Panama values its banking secrecy laws and they may ask for more information before they break the laws they hold with such esteem. It is not uncommon for Panama to deny an information request since they need to feel the matter is serious on their end to bring action against a person. They are allowed to deny any request that meets the outlined guidelines.

Panama does not in any way shape or form participate in any tax treaties. They also do not acknowledge tax related investigations as criminal situations. Panama will not divulge a person’s personal information to a foreign entity for tax related issues unless formal litigation is brought before a Panama court and the judge approves the request. This is only granted for serious crimes. Tax evasion is considered a civil matter in Panama. In Panama you must commit a serious crime to risk your financial privacy.