Offshore Companies & Banking

In our global financial world there are opportunities to take advantage of offshore companies and banking. The reasons investors do this is for privacy, asset protection and tax savings.

The most popular countries include those using British Common Law legal system. It’s the same system used as the foundation of the United States Constitution. These other countries include the Cayman Islands, Bahamas, Bermuda, Cook Islands, Jersey, British Virgin Islands, etc.

Investor find the legal system as a safety factor because the laws are well understood and their history.

A few investors buy real estate in these countries but most use them for banking or brokerage – liquid assets.

You select a country after little or considerable research then engage a local lawyer or service provider to setup your business organization. All of your personal identifying information is required. This often includes a copy of your current passport and maybe a certificate of residency (lease or deed) to prove your nationality.


These disclosures, more extensive than any Secretary of State are ‘safely stored in foreign government registries.’

Once you have complied with all the rules your new organization is registered in that country. All of your personal details are now in a new database offshore. If you are an American citizen you will now file a FBAR report to the IRS.

With certificate in hand you now proceed to open a business bank account. You might think that after giving all your info to the government that a bank account would easily follow. No. You must repeat the entire disclosure process to the bank, passport photo, etc.

Even after you’ve gone to the trouble and expense of setting up that foreign business, the bank could refuse to open the account. Banks have government eyes watching them all the time. Reporting, oversight, fines, legal action all on standby if a bank fails to comply with government regulations.

And the long arm of FinCEN is everywhere. Banks risk sticking their neck out for you. They just say no thanks.

Once you’re successful getting the account opened, Americans must file FACTA and FBAR reports on time with accuracy. No excuses. Penalties for errors are very expensive.


Banking Option

Rather than use a foreign business organization with all its hassles, just use a business trust to get a bank account. Skip all the government reporting and disclosures. Your trust can still work within the laws of a given country. Use a trustee in that jurisdiction. Eliminate government registration, lawyer fees, etc.


Legal Advantage

Now let’s look at a potential lawsuit against your business. If you have a Bahamian Corporation and you get sued, jurisdiction is the Bahamas. You might think let’s move to another country. It’s very difficult unless you have another company in another country on standby.

Now suppose you had a Business Trust in the Bahamas. Someone attempts to sue your business but there is no agent for service. Then your Bahamian trustee resigns and you hire a new one in Bermuda. Your trust just changed jurisdiction.


Domestic Solution

For less hassles while still anonymous, American citizens can keep everything onshore. Use a Business Trust. Eliminate FACTA and FBAR reporting to the IRS and FinCEN. You might prefer this for three reasons – less paperwork, lower audit profile, and easier access to funds.


Offshore Protection Strategy

  • Citizen – Country #1
  • Investor – Country #2
  • Assets Title – Country #3
  • Residence – Country #4
  • Business Operations – Country #5
  • Banking – Country #6

Summary

While offshore banking has benefits, it is costly and intrusive. It depends upon your circumstances. In most all cases the Business Trust gets you the bank account without the local government registry. Or quietly stay onshore.

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