OFFSHORE BANKING Offshore banking or Offshore banks refers to the many banking and investment institutions available in countries and jurisdictions other than the depositor’s home country. While technically any bank can be considered an Offshore bank when it meets the above criteria, the term is generally reserved for the banking instituti ons located in what are consider low-regulati on, low-taxation “haven” jurisdictions. Since their origin, offshore banks tended to be unfairly portrayed by both media and the home jurisdictions alike--the accusatio ns have ranged from tax evasion to money laundering, but careful examination of the true purpose of the offshore banks, and an unbiased examination of where illicit funds are truly held or “laundered” sheds light on the situation . Other false accusations have centered around criticism of unsafe environmen ts, poor regulatio n, etc. Again, these could not be further from the truth. Most Offshore banking jurisdictions of any repute have very sophisticated, stable banking regulations , and because it is in their best interest to attract and keep d epositors , these regulations are geared towards meeting the needs of the depositor. Many of these jurisdictions rely on foreign capital held in their banks as their primary economic factor, and as their only source of foreign investment.
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4. Protection against local political or financial
instability
5. Protection from lawsuits
6.Asset protection7.Simplicity
REGULATION OF OFF SHORE BANKS:
In the 21st century, regulation of offshore banking is
allegedly improving, although critics maintain it remainslargely insufficient. The quality of the regulation ismonitored by supra-national bodies such as theInternational Monetary Fund (IMF). Banks are generallyrequired to maintain capital adequacy in accordance withinternational standards. They must report at leastquarterly to the regulator on the current state of thebusiness.
Since the late 1990s, especially following September 11,2001, there have been a number of initiatives to increasethe transparency of offshore banking, although criticssuch as the Association for the Taxation of FinancialTransactions for the Aid of Citizens (ATTAC) non-governmental organization (NGO) maintain that theyhave been insufficient. A few examples of these are:
• The tightening of anti-money laundering regulationsin many countries including most popular offshorebanking locations means that bankers are required,by good faith, to report suspicion of moneylaundering to the local police authority, regardless of
banking secrecy rules. There is more internationalco-operation between police authorities.
• In the US the Internal Revenue Service (IRS)introduced Qualifying Intermediary requirements,
which mean that the names of the recipients of US-source investment income are passed to the IRS.
• Following 9/11 the US introduced the USA PATRIOTAct, which authorizes the US authorities to seize theassets of a bank, where it is believed that the bankholds assets for a suspected criminal. Similarmeasures have been introduced in some othercountries.
• The European Union has introduced sharing of information between certain jurisdictions, andenforced this in respect of certain controlled centers,such as the UK Offshore Islands, so that taxinformation is able to be shared in respect of interest.
Joseph Stiglitz, 2001 Nobel laureate for economics and
former World Bank Chief Economist, told to reporter LucyKomisar, investigating on the Clearstream scandal:
"You ask why, if there's an important role for a regulatedbanking system, do you allow a non-regulated bankingsystem to continue? It's in the interest of some of themoneyed interests to allow this to occur. It's not anaccident; it could have been shut down at any time. If yousaid the US, the UK, the major G7 banks will not deal with
offshore bank centers that don't comply with G7 banksregulations, these banks could not exist. They only existbecause they engage in transactions with standardbanks."
In the 1970s through the 1990s it was possible to ownyour own personal offshore bank; mobster Meyer Lansky had done this to launder his casino money. Changes inoffshore banking regulation in the 1990s in the form of
"due diligence" (a legal construct) make offshore bankcreation really only possible for medium to largemultinational corporations that may be family owned orrun.
Weakened Bank Secrecy :
Since starting to survey offshore jurisdictions on April 2,
2009, the Organization for Economic Cooperation andDevelopment (OECD)) at the forefront of a crackdown ontax evasion, won't object to governments using stolenbank data to track down tax cheats in offshore center.The recent sharing of confidential UBS bank details about285 clients suspected of willful tax evasion by the UnitedStates Internal Revenue Service was ruled a violation of both Swiss law and the country’s constitution by a Swiss
federal administrative court. Nevertheless, OECD hasremoved 18 countries, including Switzerland,Liechtenstein and Luxembourg, from a so-called "greylist" of nations that did not offer sufficient taxtransparency, and has re-categorized them as “white list”nations. Countries that do not comply may facesanctions. A notable exception is Panama, whose canal iscurrently needed by all Western nations, provides it witha unique type of immunity to international pressure.Given the enlargement of the canal to accommodatelarger shipping, it is unlikely in the foreseeable future thatPanama would likely succumb to international pressuretoward transparency.
and economically stable jurisdictions found their way to
these offshore financial centers and this practice
continues today. Although an abbreviated and perhaps
oversimplified version of history, these are,fundamentally, the roots of the modern offshore banking
industry.
Similar to offshore companies, offshore banking is really
just the practice of banking in another country; however,
the term is generally associated with "tax haven"
jurisdictions characterized by low or zero taxation on
interest, dividends, royalties and foreign derived incomeas well as having some degree of banking confidentiality.
Over time this term has evolved to include other
onshore ン popular banking jurisdictions such as
Switzerland, Austria, Lichtenstein, Luxembourg and more
recently Asian jurisdictions such as Singapore and Hong
Kong These jurisdictions gained considerable popularity
for the same reasons as the small island offshorefinancial centers: they implemented sound banking
practices codified in law and regulations guaranteeing
confidentiality, low taxation and security.
OFF SHORE FINANCIAL CENTRES:
In terms of offshore banking centers, in terms of total
deposits, the global market is dominated by two keyjurisdictions: Switzerland and the Cayman Islands,although numerous other offshore jurisdictions alsoprovide offshore banking to a greater or lesser degree. Inparticular, Jersey, Guernsey and the Isle of Man areknown for their well regulated banking infrastructure.
Some offshore jurisdictions have steered their financialsectors away from offshore banking, as difficult toproperly regulate and liable to give rise to financialscandal.
List of offshore financial centers:
Offshore financial centers include:
• Antigua and Barbuda • Bahamas • Barbados • Belize • Bermuda • British Virgin Islands • Cayman Islands • Channel Islands (Jersey and Guernsey)• Cook Islands • Cyprus • Dominica • Gibraltar is no more an offshore centre since 30 June
2006. No new Exempt Company certificates arebeing issued from that date.
• Ghana • Hong Kong • Isle of Man • Labuan, Malaysia • Liechtenstein • Luxembourg • Malta • Macau • Mauritius • Monaco • Montserrat • Nauru
For over 25 years OCRA Worldwide has been assistingclients to establish and administer offshore andinternational bank accounts and has developed usefulexpertise in identifying and working with suitable offshore
banks and international banks.
Most importantly, OCRA Worldwide is not an offshorebank, we are a licensed international and offshorecorporate and trust services provider. However, asignificant percentage of the companies and trusts weadminister establish accounts with international andoffshore banks rather than domestic banks because often
their characteristics include:
• Familiarity with offshore and international business.• Worldwide investment and business perspective.• Tax-efficiency.• Confidentiality.• Lack of foreign exchange controls.• Access to special investment opportunities.
The objective of our website is to advise potential clients
of the "basics" and to provide answers to the more
common questions relating to offshore banks and
establishing and administering an offshore bank account.
Offshore Bank Account Opening
Procedures & Maintenance
All the offshore and international banks we work with
• Certified proof of identity of owners, directors,account signatories and all parties connected withthe offshore company.
• Acceptable proof of identity would normally include a
passport copy certified in a prescribed manner by anofficer of the bank, a notary or an authorized OCRAWorldwide Manager.
• Proof of residence of all parties associated with theoffshore company. Acceptable proof of residencewould typically include an original bank statement orcredit card statement.
• Information relating to the expected annual income
or asset base of the offshore company, the numberof transactions per month, the geographic spread of the proposed business and the amount of moneythat will be left on deposit at the bank.
• A detailed description of the proposed businessactivity, often supported by documentation such asbrochures, copies of contracts, audited accounts,business plans and details of trading partners or
investments.• Documented evidence relating to source of funds,
e.g. if a million dollars is to be paid into an offshorecompany's account, the bank will seek to obtaindocumentary evidence relating to the source of suchfunds in the form of a bank statement, contract orsimilar.
• An initial meeting with potential bankers possibly
with an OCRA Worldwide Manager. Some banksrequire clients to visit them on an annual basis.• In addition, enhanced due diligence will be
undertaken if the affairs of the offshore company arecomplex or if it, or any party connected to it, isassociated with what banks or regulators perceive to
requirements and precedents relating to the dutiesof directors and trustees relating to their obligationsto exercise effective management and control over acompany's or trust's assets and affairs. Put moresimply, would any reasonable businessperson, awareof the duties and liabilities of directors or trustees, beprepared to act as a director of a company or act asa trustee, if they did not control the company's or
trust's bank account?• If our clients were to exercise control over bank
accounts it could be perceived that they arecontrolling the affairs of the company or trust eventhough they may not be officers or trustees.Statutory authorities in high tax and other areasoften seek to apply "the management and controltest" to assess whether the profits/income earned by
an entity controlled in a low tax area should be taxedas if they were resident in the high tax area. There isan inherent possibility that if we allowed clients tocontrol bank accounts, then a regulatory authoritymay deem that our clients are effectively managingand controlling the company or trust in theircountries of residence or more radically may seek topierce the corporate veil or judge a trust to be a"sham".