Offshore Banking and Investing

Utilizing offshore tools to protect privacy could mean the difference between keeping long estate planning flexibility and loosing it. Individuals and corporations "go offshore" (place assets outside of their home countries) for three simple reasons: privacy, protection from lawsuits, and regulatory advantages.

Tax Neutrality

Often monies are earned from trade or sales overseas either by a single party operating in their own name or through a company organised outside his country of residence. Similarly, groups of individuals or companies from various nationalities often engage in such business together. In these cases, it is beneficial to receive income in a tax neutral environment before distributing profit. Equally important is the growth of capital to finance future activities without the burden of immediate obligations.

Regulatory Advantages

Domestic businesses and operations are often plagued by excessive regulation. Valuable resources are diverted away from the productive processes in order to monitor compliance, and/or the myriad of restrictions and inefficiencies connected with conducting trade and commerce in some domestic environments. This is the second reason as to why money, which earned abroad in tax neutral environment, is often better maintained abroad. Curing this problem can be as simple as moving to, or retaining funds in, a neutral international commercial offshore environment. So called offshore jurisdictions are intentionally business-friendly and have regulations that are straightforward, simple to understand and inexpensive to comply with. Moving a business offshore and enjoying a more pleasant business climate may require nothing more than forming an offshore corporation and transferring assets from the domestic corporation to the foreign one.

Privacy

In most jurisdictions, financial privacy has become a thing of the past. Every transaction made at a bank or ATM, by law, must be recorded and filed. Credit agencies maintain enormous databases of sensitive information that is used and shared by other organizations and agencies. Private Agencies routinely advertise their ability to locate bank accounts, brokerage accounts, real estate and business holdings. The individual or corporation becomes an easy target for a lawsuit.

Unless deliberate steps are taken to insure privacy, sensitive and confidential information could easily get into the wrong hands. Placing bank and brokerage accounts offshore will keep them off the radar screen of those not intended to have them. Private Third Parties and other unauthorized persons do not have access to foreign account records or transactions when held in the appropriate geographical and legal environment. In such an environment an individual can earn investments dollars with tax neutrality. Furthermore all kinds of domestic assets may be titled in the name of a foreign corporation or trust. This insures that undesirable third parties cannot find it. By taking advantage of these methods an individual or corporation becomes a smaller target.

Protection From Lawsuits

Tens of thousands of lawsuits are filed every year in Europe alone. Juries award ever-increasing sums to successful plaintiffs. Mean spirited ex-business associates, disgruntled employees or predatory attorneys may file suit if they believe a potential defendant is an attractive target. Losing such a lawsuit could cause a lifetime's worth of savings, investments and real estate holdings to be lost. In light of this, placing assets offshore is a wise and effective means of protection from unwanted attention.

Safety - will my money be safe with an offshore bank?

The factors to consider include:

1. The political and economic stability of the jurisdiction(s) in which a bank is headquartered, located and regulated.

2. Reputation and substance - Standard & Poor's, Moody's and Fitch rating reports are useful, as are a banks ownership and history. For example the Liechtensteinische Landesbank has a rating of AAA, is more than 140 years old and is majorily owned by the Government of Liechtensteinische. Also, quality of regulation and access to deposit and investor protection insurance schemes ought to be taken into consideration.

3. The business focus of the bank. In general the banks we work with seek to provide services to some or all of these types of clients:

• Private banking clients.
• Expatriates.
• International commercial activities, project finance etc.,

These services are provided from both offshore banking and international locations

Private Banking Clients

The definition of "private banking" varies from bank to bank but is generally taken to mean investment management offered on a personalised basis by a bank to an individual with disposable wealth of more than $500,000 (although some banks do not offer private banking services to clients with disposable wealth less than US$ 1 million). Private banking is normally synonymous with "offshore", although the costs of a personalised relationship generally only begin to be worthwhile to a bank at the $300,000 + level, in order to allow a bank to invest the adminsiatrative respources necessary to produce the superior benefits described above which are achieved from offshore banking. Private bankers generally prefer themselves to be approached and considered as discretionary financial advisers rather than as an investment-provider and advisor to an active party, and consequently private banks may not be the most effective choice for a reasonably sophisticated investor who wants to play an active role in the management of his investments. Therefore, consider Swiss asset management companies who have custodial relationships with some of the largest banks in Switzerland. Strategic Capital Partners Portfolio Management AG based in Zurich (Ramistrasse) is one such company. You get a "one on one" personalised approach with the advantage of having access to the custodian banks products, services and/or research and advice services. An asset management company will not limit you to one set of "branded" products, and fees for custodial and other services can also be lower because asset managers generally have relatively large pools of clients and money under management.