How Safe is Offshore Banking?

Caye International Bank

Safe Offshore Banking BelizeFor a number of reasons, offshore banking is a popular option for individuals and businesses around the world. Banking offshore can provide greater privacy, it can help you reduce your rates of taxation, and it can diversify your portfolio.

Despite these and other benefits, a lot of people still wonder whether offshore banking is safe. That’s a perfectly reasonable question. Fortunately, the answer is that offshore banking is safe. However, there are some ways that you can help ensure your financial safety when you bank offshore. 

Your Personal Assets May be Safer if You Bank Offshore 

There are many ways to define safety. If you want to protect your personal or business assets, then keeping them in an offshore bank account could be the safest option out there.

If someone decides to sue you for a major or minor reason, they can do a domestic search to determine your discoverable assets. However, your offshore assets won’t appear in those search results. Sometimes, lawsuits are completely frivolous. If this is the case, potential lawsuits can be avoided once an individual realizes that many of your assets are kept overseas. 

In many offshore locations, privacy is a given for account holders. This even pertains to the government in some cases. If your domestic assets are frozen because of a divorce or a criminal case, for example, the United States government won’t be able to seize or freeze your international assets kept in offshore banks.

Although no one wants to think about the potential for a legal battle or a frivolous lawsuit, it is safer and wiser to be prepared. 

Your Financial Future is Safer if You Diversify Your Holdings

Another context in which to think about safety is through a financial lens. Many people assume that if they place their assets in domestic bank accounts, that their financial future is secure. While you might have found a secure domestic bank account, that doesn’t guarantee your financial safety.

Any investor knows that diversification is a critical part of any financial portfolio. Yet far too many individuals still keep all of their assets in the same country or in the same format such as a savings or checking account. 

The reality is that there is no such thing as a completely safe investment or bank. Any time that you place your assets in a new place, you’re accepting a certain level of risk. However, there are some ways to reduce your vulnerability in these situations. One of the most effective is to diversify. This means embracing industry diversification, investment diversification, and geographic diversification. 

While rare, it is possible for banking systems to decline or economies to struggle. When this happens, those who can be the most financially secure are those who have assets maintained overseas. By banking offshore, you can find your holdings to be financially safer and more secure than those of someone who hasn’t take the time to properly diversify their assets. 

Offshore Banking is Perfectly Legal

It is also worth considering the legal aspects of offshore banking. Unfortunately, there are still a number of myths surrounding offshore banking. It is important to recognize that opening an offshore bank account isn’t illegal. It is safe for you to do, and there is no legal reason why this can’t be an option for you.

Of course, you won’t be safe from criminal proceedings if you abuse the system or abstain from paying taxes, but that doesn’t apply to the overwhelming majority of offshore account holders. 

Due to FATCA, or the Foreign Account Tax Compliance Act, banks and American account holders need to disclose the assets held offshore. This is a relatively straightforward process, especially for the individual or the business owner. By complying with FATCA, you can rest assured that your offshore banking is completely above board. There are many, many reasons to bank offshore, and many people opt to explore these options for financial security. 

Some Offshore Destinations are Safer Than Others 

Many prospective clients are justifiably concerned about the safety of certain banking jurisdictions. Although offshore banking is, as a whole, a safe option, there are certainly some countries that are safer than others.

It is important to recognize that no two jurisdictions are the same. The safety of banking can depend on a country’s government, stability, legal system, and currency, among many other factors. 

Belize is routinely ranked as one of the world’s safest offshore banking destinations. Belize boasts a democratic government with a history of safe and fair elections. This stability is one reason why the nation’s banks are so trusted.

In addition, the legal system is easy to understand and accepted by the world community. Belize’s legal system is based on English Common Law, so it is familiar to most people who have lived, worked, or banked in places like Great Britain, Australia, or the United States. 

To top it off, Belize has a currency that is tied directly to the United States dollar. This ensures that there is no rapid inflation or deflation, because any changes would first be apparent in the United States currency. Although no currency is completely immune, it is fair to say that the United States dollar is less likely to wildly fluctuate than many other currencies found across the globe. 

Some Offshore Banks are Safer Than Others 

Finally, the safety of offshore banking truly does boil down to the reputation and quality of the individual bank. Even in a secure and stable jurisdiction like Belize, not all banks are equal.

Prospective clients should start by considering the stability of the bank. In particular, that means the percentage of liquid assets the bank keeps on hand at any given time. Banks with a high liquidity ratio tend to be more stable than banks with a very low liquidity ratio. 

Next, look up the bank’s history, origins, and reputation. It is increasingly common to come across a bank with just an online presence and limited reviews. The bank might be brand new, or it might be less than a year old. It almost all cases, it will be best to leave your assets in the hands of a bank that has years of experience and a good reputation both domestically and internationally. 

No banking choice can be 100% guaranteed. However, for peace of mind and a more stable financial future, offshore banking should be part of your asset diversification plan.

Trust Experienced International Banking Experts

Caye International Bank headquartered on the beautiful island of Ambergris Caye in Belize, is an incredibly safe and secure option for expanding your financial portfolio. For more than 15 years, the banking professionals at Caye International Bank have been helping others just like you with their asset diversification plans.

Contact the financial experts at Caye International Bank today to discuss the many services and options available to you.

 

This article is copyright © 2019 

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About this author:

Luigi Wewege

Luigi Wewege is the Senior Vice President of Caye International Bank, published author of The Digital Banking Revolution, has co-authored economic research which was presented before the U.S. Congress and currently serves as an Instructor at the FinTech School as well as a Speaker at the Silicon Valley Innovation Centre. He holds an Italian MBA with a major in International Business, as well as a BSBA with a triple major in Finance, International Business, and Management - cum laude from the University of Missouri-St. Louis.

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