Offshore banking is tempting for investors because it involves placing funds into a financial institution located outside of the depositor`s country of residence. This is such a widely used practice because of the typically low tax jurisdiction.
On top of the tax perks, investors with offshore accounts can enjoy more privacy, low or virtually no taxation, easy access to their deposits and protection against the local economic or political instability.
Offshore banking has been associated with underground dealings such as money laundering, tax evasion and organized crime, but offshore banking does not, in fact, prevent a person`s assets from being subjected to a personal income tax on the interest earned. There are also other regulations one may want to consider before taking the offshore plunge.
Regulations
Offshore banking is monitored by a variety of international bodies, one of these being the International Monetary Fund (IMF). International banks are required to remain in accordance with the international standards laid out by offshore banking regulations as well as to maintain what is known as capital adequacy. This is the ratio of the bank`s capital to its perceived risk.
Efforts to increase the transparency of international banking really increased following 9/11, although initiatives to beef up the rules and tighten the reins have been in effect since the late 1990s. Some of these regulations are as follows:
According to the KYC regulations, a bank must obtain identification data on a customer to verify that customer`s identity. This includes knowing their current address, obtaining a recent photograph and knowing the employment status as well as the purpose of the account of both the primary account holder and any joint or mandate holders.
In the event of a non-individual, the bank must verify the legal status of the legal entity as well as any authorized signatures. The bank must also know the identities of the account controllers. KYC is mandatory and applies when opening a new offshore account or subsequent accounts, when changes are made to mandate holders, signatories, or beneficial owners, or whenever the bank feels that it is necessary to obtain more information from an existing customer.
Anyone considering diversifying their portfolio with an offshore account should take advantage of the free financial advice offered by the expert advisers at simplyfinance.co.uk
On top of the tax perks, investors with offshore accounts can enjoy more privacy, low or virtually no taxation, easy access to their deposits and protection against the local economic or political instability.
Offshore banking has been associated with underground dealings such as money laundering, tax evasion and organized crime, but offshore banking does not, in fact, prevent a person`s assets from being subjected to a personal income tax on the interest earned. There are also other regulations one may want to consider before taking the offshore plunge.
Regulations
Offshore banking is monitored by a variety of international bodies, one of these being the International Monetary Fund (IMF). International banks are required to remain in accordance with the international standards laid out by offshore banking regulations as well as to maintain what is known as capital adequacy. This is the ratio of the bank`s capital to its perceived risk.
Efforts to increase the transparency of international banking really increased following 9/11, although initiatives to beef up the rules and tighten the reins have been in effect since the late 1990s. Some of these regulations are as follows:
- Banks are required to report any suspicious activity that may be perceived as money laundering to the local authorities even if there are banking secrecy rules in place. As a result, cooperation between international police authorities has increased and the anti-money laundering efforts have paid off.
- The names of any U.S.-source investment recipient are passed along to the IRS.
- The European Union has enforced the sharing of banking information between jurisdictions so that tax information can be known. This includes the UK offshore islands.
- The USA PATRIOT Act that followed 9/11 authorizes the United States to seize any bank`s assets if it suspects that the bank is holding assets belonging to a suspected criminal.
According to the KYC regulations, a bank must obtain identification data on a customer to verify that customer`s identity. This includes knowing their current address, obtaining a recent photograph and knowing the employment status as well as the purpose of the account of both the primary account holder and any joint or mandate holders.
In the event of a non-individual, the bank must verify the legal status of the legal entity as well as any authorized signatures. The bank must also know the identities of the account controllers. KYC is mandatory and applies when opening a new offshore account or subsequent accounts, when changes are made to mandate holders, signatories, or beneficial owners, or whenever the bank feels that it is necessary to obtain more information from an existing customer.
Anyone considering diversifying their portfolio with an offshore account should take advantage of the free financial advice offered by the expert advisers at simplyfinance.co.uk
