Offshore Banking for the Average Joe

Because of its appeal to drug and human traffickers (not to mention terrorists and Bond villains) offshore banking is often seen as a shady, illegal and immoral activity that would never be practiced by law-abiding folk. The reality of it, though, is that offshore banks provide a valuable service for people who legitimately want to protect their money, and it’s not only the super-rich who can access these protections.

True, certain people use offshore banking for the questionable purposes of avoiding taxes and regulation in their home countries, but for people in countries suffering from political or economic instability, offshore banking may be the only way to protect one’s assets, which could be subject to nationalization or devaluation in the event of a financial or political crisis.

Similarly, the question of privacy can be very important for legitimate reasons other than to simply avoid taxes. Entrepreneurs and investors need to protect the confidentiality of their investments as intellectual property; If they can’t keep their financial dealings secret, they will suffer less profit as others get in on the game in which they are experts.

But for the Average Joe who worries about the government’s increasing role in managing financial firms (set to increase significantly after this summer’s financial reform bill) or who is looking to conduct some business abroad, how can offshore banking benefit all those without million-dollar balances? Whether it's beind used by a private individual or someone looking to start a small business, offshore banking involves risks and rewards like anything else.


Offshore banking, in a nutshell, means putting your money in any of the many banks outside your country of residence. While the simplest expression of the process could involve, for example, an American with rental property in Spain who opens an account in a Spanish bank to collect rent payments and deal with the property’s finances, the similar regulatory environment in the U.S. and Europe mean that such an arrangement would yield no real benefit other than simple convenience.

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