PERSONAL FINANCE-FIN101

Presented By:
Victor B. Guevarra
 What is an Offshore Banking Unit ?(OBU)

 An offshore banking unit (OBU) is a bank shell branch, located in

another international financial center (or, in the case of India, a
Special Economic Zone). Offshore banking units (OBUs) make
loans in the Eurocurrency market, when they accept deposits from
foreign banks and other OBUs. Local monetary authorities and
governments do not restrict OBUs' activities; however, they are
not allowed to accept domestic deposits or make loans to residents
of the country, in which they are physically situated. Overall
OBUs can enjoy significantly more flexibility regarding national
regulations.
 BREAKING DOWN Offshore Banking Unit (OBU)

 OBUs have proliferated across the globe since the 1970s. They are
found throughout Europe, as well as in the Middle East, Asia and
the Caribbean. U.S. OBUs are concentrated in the Bahamas, the
Cayman Islands, Hong Kong, Panama and Singapore. In some
cases offshore banking units may be branches of resident and/or
nonresident banks; while in other cases an OBU may be an
independent establishment. In the first case the OBU is within
direct control of a parent company; in the second, even though an
OBU may take the name of the parent company, the entity’s
management and accounts are separate.
 Some investors may, at times, consider moving money into
OBUs to avoidtaxation and/or retain privacy. More
specifically, tax exemptions on withholding tax and other
relief packages on activities, such as offshore borrowing, are
occasionally available. In some cases, it is possible to to
obtain better interest rates from OBUs. Offshore banking
units also often do not have currency restrictions. This enables
them to make loans and payments in multiple currencies, often
opening more flexible international trade options .
 History of Offshore Banking Units

 The euro market allowed the first application of an offshore

banking unit. Shortly afterwards Singapore, Hong Kong, India
and other nations followed suit as the option allowed them to
become more viable financial centers. While it took Australia
longer to join, given less favorable tax policies, in 1990, the nation
established more supportive legislation.
 History of Offshore Banking Units

 The euro market allowed the first application of an offshore

banking unit. Shortly afterwards Singapore, Hong Kong, India
and other nations followed suit as the option allowed them to
become more viable financial centers. While it took Australia
longer to join, given less favorable tax policies, in 1990, the nation
established more supportive legislation.
 In the United States, the International Banking Facility
(IBF) acts as an in-house shell branch. Its function serves to make
loans to foreign customers. As with other OBUs, IBF deposits are
limited to non-U.S applicants.
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 HOW IT WORKS ?

 For example, let's assume that Bank XYZ is an

American bank with a branch in Bermuda. As on
offshore banking unit, the Bermuda branch does not
accept deposits from anyone except other foreign
banks, and it will make Eurocurrency loans.
 10 Reasons Why You Need an Offshore Bank
Account Today
 Reason #1: Dilute Your Political Risk
 Today, the biggest threat to your savings isn’t market risk. It’s your own government.
 There’s no doubt government poses an increasing risk to your savings. Governments are
sinking hopelessly deeper into insolvency. Predictably, they are turning to the same
desperate measures they’ve used throughout history.
 It’s only prudent to expect more bail-ins (as we’ve seen in Cyprus), bank deposit taxes
(as we’ve seen in Spain), retirement savings nationalizations (as we’ve seen in Poland,
Hungary, Portugal, and Argentina), and capital controls (as we’ve seen in Cyprus and
Iceland), among other destructive actions. And these are just a few recent examples.
 If you think these kinds of things can’t happen in your country, think again.
 According to Judge Andrew Napolitano:
 …people who have more than $100,000 in the bank are targets for any
government that’s looking for money to shore up its own inability to manage its
finances.
 A big part of any strategy to reduce your political risk is to place some of your savings
outside of the immediate reach of thieving bureaucrats in your home country. Setting
up a foreign bank account in the right jurisdiction is a convenient way to do just that.
 That way your home government can’t easily confiscate, freeze, or devalue all of your
money with a couple of taps on the keyboard. If your home government imposes capital
controls, an offshore bank account would help ensure you could access your money
when you need it most.
 In short, keeping some of your savings in the right foreign bank can largely protect you
from madness in your home country.
 Reason #2: Sounder Banking Systems and Banks
 Almost all of the banking systems in Western countries are
fundamentally unsound. They’ve leveraged themselves to the hilt. The
promises of insolvent governments are all that back them. Worse, most
of these banks only keep a tiny bit of cash on hand to meet customer
withdrawal requests. This means, in the event of another Lehman-style
financial shock, you could have trouble accessing your money.
 Many people put more thought into what reality show they are going to
watch on TV tonight than which bank they choose to be custodians of
their savings. Many don’t even realize they have other practical options.
 There are banks in stable jurisdictions with low debt that don’t gamble
with customer deposits (i.e. your money). Many of these banks are much
better capitalized, keep more cash on hand, and are otherwise much more
conservatively run than those in the U.S.
 These offshore banks are almost always more responsible custodians of
your hard earned savings.
 Reason #3: Asset Protection
 Maybe you think it’s just other people who live on the lawsuit firing
line…and you live somewhere else. Think again.
 The Legal Resource Network reports that 15 million lawsuits are filed
in the U.S. every year.
 That works out to a new lawsuit for one out of every 12 adults each
year…year after year. Unless you’re exceptionally lucky, sooner or later
your turn will come. You’re not going to like it.
 It’s no fluke that 80% of the world’s lawyers, over 1.2 million of them,
work in the U.S. That’s where the action is. Your money is the trophy
they’re competing for.
 While there is no such thing as 100% protection, a foreign bank account
can help make you a less attractive target.
 An offshore bank account also protects you from overzealous
government agencies armed with the summary power to freeze your
assets. That’s because their reach doesn’t extend beyond the U.S.
 If you ever find yourself in a wrestling match with a government agency
or a frivolous lawsuit, a foreign bank account give you resources you can
count on.
 Reason #4: Currency Diversification

 Holding foreign currencies is a great way to diversify your

portfolio risk, protect your purchasing power, and internationalize
some of your savings.
 Chances are, though, your domestic bank offers few, if any,
options for holding foreign currencies.
 Offshore banks, on the other hand, commonly offer convenient
online platforms for holding foreign currencies.
 Reason #5: Higher Interest Rates for Your Deposits

 In what amounts to a war on savers, the European Central Bank

and the Fed have manipulated interest rates to near historic lows.
These artificially low interest rates effectively transfer wealth
away from savers, who would otherwise enjoy higher returns on
their deposits, to borrowers.
 In fact, if you live in the West, there’s a good chance the interest
you’re earning on your savings isn’t even keeping pace with the
real rate of inflation.
 If you look abroad, though, you can find banks that pay
significantly higher interest rates than what you’d find at home.
 Reason #6: Ensure Access to Medical Care Abroad
 If you’re unable to receive timely treatment in your home country,
an increasing possibility with the disastrous Obamacare, you may
want to access medical care abroad.
 In the worst-case scenario, this could mean the difference between
life and death.
 Suppose, for whatever reason, you cannot get the medical care you
need in your home country and you have to go abroad. You would
have to transfer money abroad to pay for it. However, if your home
government has already imposed capital controls, it could be
difficult or impossible to pay for the medical care you need.
 This is where having a foreign bank account, which isn’t hostage
to capital controls in your home country, can help ensure you can
always pay for the medical care you need.
 Reason #7: The Ability to Act Quickly

 When it comes to international diversification, it’s always better

to be a year early than a minute too late. Once a government has
imposed capital controls or levied bank accounts, it’s too late to
protect your money.
 If you don’t already have one, you should open an offshore bank
account now, even if it’s a small one. Just having one available,
regardless of how much money you initially put in it, gives you
meaningful benefits. It gives you the option to act quickly and
transfer more money abroad in the future, should the situation
warrant it.
 Reason #8: Maintain Limited Privacy

 Americans who have an aggregate of $10,000 or more in

foreign financial accounts at any time during the year must
report it. However, if the aggregate total of your foreign
financial accounts remains under $10,000 for the year, and
you are not using a trust, LLC, or other structure, you don’t
necessarily have to report it. Always consult with your tax
advisor on these matters.
 Reason #9: Peace of Mind

 An offshore bank account is like an insurance policy. It helps

protect you from unsound banks and banking systems and the
destructive actions of a bankrupt government. It also makes you a
hard target for frivolous lawsuits and ensures you can pay for
medical care abroad. Knowing that you’ve taken a big step to
protect yourself should give you more peace of mind.
 Reason #10: Maximize Your Personal Freedom

 Having a foreign bank account gives you more options. More

options means more freedom.
 It’s a crucial step in freeing yourself from absolute dependence on
any one country.
 Achieve that freedom, and it becomes very difficult for any
government to control your destiny.
 Is Having an Offshore Bank Account Legal?
 Despite what you may hear, offshore banking is completely legal.
It’s not about tax evasion or other illegal activities. It’s simply
about legally diversifying your political risk by putting your liquid
savings in sound, well-capitalized institutions where they are
treated best.
 It’s no secret that it is becoming harder and harder to open a
foreign bank account. Soon it could be impossible. This is a strong
incentive to act sooner rather than later – even if you don’t plan to
use the account immediately.
 Even if your home government doesn’t slap on capital controls or
confiscate deposits, you’re no worse off for having moved your
savings to a safer home. In fact, you’re far better off for the
reasons described above. Obtaining an offshore bank account is a
prudent step that makes sense no matter what.
 Offshore Banking Guide

 Be sure to check out our comprehensive offshore banking guide

where we share our favorite banks and offshore banking
jurisdictions. It includes crucial information on the limited
jurisdictions that still accept American clients and allow them to
open accounts remotely with small minimums.
 The New York Times best-selling author Doug Casey and his team
describe how you can do it all from home. And there’s still time to
get it done without extraordinary cost or effort, but you need to
act quickly.
 It’s an A-Z guide with information you won’t find anywhere else.
And, for a limited time, we’re giving it away for free.
 Offshore Bank Account Costs

 Most people establish offshore bank accounts for asset protection

from lawsuits and for financial privacy. You don’t buy a drill
because you want a drill. You buy one because you want a hole.
So, we not only need to ask, “What is the cost to establish and
maintain an account offshore?” We also need to ask, “What is the
cost of, asset protection and financial privacy?”
 So, for asset protection and financial privacy, the first rule is not
to open the account in your own name. Open it in the name of an
offshore corporation, LLC or trust. If your name is Pat Smith and
you are wiring money from from the bank down the street to an
account offshore held by “Pat Smith,” the wire transfer trail leaves
a longstanding record that you have an account offshore. That is
why offshore bank accounts are generally opened under the name
of companies or trusts.
 This increases privacy, because wire transfers in and out as well as
other offshore banking transactions are conducted under the name
of a company, not the individual. The setup fee for opening an
offshore bank account is between $350 to $1,250 depending on the
bank and the jurisdiction. An offshore company typically runs
between $1,585 and $2,495. So, the total is usually $1,935 to
$3,745 for both.
 How Many Offshore Banks are There?

 According to Quora, there are an estimated 14,600 banks in the

world as of this writing. However, very few banks will open
accounts for foreigners, especially those from the US, UK, Canada
or Australia. Plus, there are a wide array of service levels from
stupendous and satisfying do downright unpleasant. Will your
money be safe? Can you trust the bankers? Think about it. This is
your money. You want a pleasant and safe banking experience
right off the starting line.
 There are a number of super safe, banks that provide great service. But
there are too many banks our there to find the right one by bumbling
around the Internet. The best way to find out is to ask someone who has
been there before, especially someone who has established offshore
accounts for thousands of people. So, hire an expert. It will be worth the
small investment to get it right the first time. If you want free
information there is a number and form on this screen.
 Opening an Account

 Offshore banking requires an application, due diligence and

an initial deposit to activate your account. The application is
usually straightforward. It has your name, address, telephone
number, a rough estimate of how much you intend to deposit
and withdraw and other information.
 Sure, you want privacy. But you don’t want so much privacy that
someone pretending to be you could walk into the bank and
withdraw your cash. So, due diligence, such as a notarized copy of
your passport, an original utility bill and reference letters are
needed. They need to know that if someone calls, emails or walks
into the bank to ask for the money that it really you. Your
information will be confidential. But you want the money to go to
you, not someone who says they are you. That is a big reason why
identity documents are needed.
 It is an economic stability factor when one’s countrymen think of
their banks as safe and secure. This is a universal principle. So, the
international community comes together every year in Basel,
Switzerland to come up with international banking standards.
How much debt should a bank be able to take on in comparison to
bank assets? How much cash should be kept on hand? What steps
need to be taken to keep criminal proceeds and terrorist funding
out of the system?
 Due Diligence

 So, another reason that due diligence is required is that they want
to welcome the “good guys” and keep out the “bad guys.” You may
want privacy. But you also want your money safe and accessible.
Therefore, you don’t want the bank you have chosen to be shut
down and your money frozen by the international regulators
because you shared a bank with the reincarnation of Osama Bin
Laden. Bankers don’t just ask for identify documents because they
are nosy. They want you and the other depositors to be safe.
Moreover, they don’t want to lose their banking licenses by
carelessly accepting bad guys into the system.
 Why They Don’t Make Exceptions

 Doing all of this due diligence that international standards require

is not free. It costs money. So, that is why opening an account
offshore involves a setup fee. The bank is not going to risk losing
their license and skip the due diligence process and know-your-
customer (KYC) regulations because you say you are a nice guy or
nice gal.
 The bank will not bypass the regulations because you call the on the
phone with fire shooting out of your mouth. They will not make an
exception because you are jumping up and down like a screeching
monkey because they are taking too long or asking for too much
information. Banks get audited regularly by local regulators to make
sure all of the boxes have been checked for each account setup. So, don’t
expect the to give you a wink and a nod and pat you on the head
because you are too lazy to go get a passport or reference letter from
your bank. They are not going to risk losing their license for you. They
would rather just move on to the next customer who goes with the
program.
 Offshore Banking Fees

 Monthly maintenance fees can run from $20 to $100, or so. Wire transfer fees are
usually from $25 to $75. If you want an account where you can invest in the stock
market there are institutions where you can trade on your own. There are also
institutions where you can have an experienced money manager make investments for
you, with your approval. Money managers usually charge a tiny percentage of the
money being managed. Naturally, the types of fees and the amount charged vary by
institution and may be inside or outside of the ranges mentioned here.
 The interest rates paid on deposits, monthly fees and types of accounts vary. Most
offshore financial institutions have competitive rates in order to attract depositors. The
interest rates paid offshore tend to be higher than domestic institutions. The process of
establishing the offshore bank account will incur processing fees, courier charges and
some small miscellaneous costs, for things such as notary charges, etc.
OffshoreCompany.com has helped thousands of people open private offshore financial
accounts, companies and corporations and can assist with those needs today.
 Opening and Using Swiss Bank Accounts
 According to Swiss law, nonresidents of Switzerland who would like to open a
Swiss bank account must be at least 18 years old. Other than that, there aren't
a lot of restrictions. Your account can be in almost any currency, although most
choose the Swiss franc, U.S. dollar, Euro or Sterling, and there is often no
minimum balance required to open an account. Once you've started making
deposits, however, there is a minimum balance you have to maintain that
varies from bank to bank and by type of account.
 Choosing a bank and an account
 The Swiss bank you choose to deal with depends on what types of investments
you want to make and the type of account you want have. One thing to keep
in mind is unless you don't care about the privacy aspect of a Swiss bank
account, you shouldn't choose a bank that has a branch in your country. Bank
branches have to follow the laws in the countries in which they're located --
not where the corporate bank office is located. For example, a Swiss bank
branch in the United States has no greater privacy capabilities than a regular
U.S. bank does.
 Earning interest

 If you maintain your account in Swiss Francs you will earn a

small amount of interest, but will then have to pay the Swiss
withholding tax. For this reason, most account holders that
don't live in Switzerland have their Swiss bank account in
some other currency such as U.S. Dollar, British Pound or
Euro. When you do this, your money can be put into a money
market fund and will earn interest there.
 Opening an account
 While it's usually better to open your account in person, there are
many Swiss banks that will allow you to open an account by mail
or fax. There are also many firms that exist to assist people in
setting up offshore accounts.
 Because Swiss anti-money-laundering law requires you prove
where your money is coming from, many certified documents are
required in order to open an account. These include authenticated
copies of your passport; documents explaining what you do for a
living such as tax returns, company documents, professional
licenses, etc.; proof of where the money you are depositing is
coming from such as a contract from the sale of a business or
house; and all of the typical personal information about yourself
such as your birth date, a utility bill to prove your residence, all
contact information, and, of course, your name. They'll also want
to know what you want to do with the money once you have the
account.
 Opening a numbered account
 Numbered accounts are usually not as easy to open. They typically
require that you physically go to the bank in Switzerland. They also
typically require an initial deposit of at least $100,000 and cost about
$300 per year or more to maintain. And remember, they're still not
anonymous since there has to be a connection at some level between who
you actually are and your account.
 Minimum deposits/balances and fees
 Minimum balances vary greatly by type of account (i.e., a few thousand
dollars to one million dollars or more). And, banks charge differing fees
based on the types of transactions and the account type you have. For
example, on a basic account, international bank transfers (outgoing)
might cost $3 or $4 each. They may also charge $5 to $10 when you
deposit international checks to your account. Annual account
maintenance costs are charged based on the number of entries in your
account statement and are sometimes in the neighborhood of 0.5 Swiss
Francs (i.e., $0.41) per entry.
 Accessing Your Money

 Credit card: Most Swiss banks will issue a credit card with your account that
you can use to make purchases, as well as withdrawals at ATMs around the
world. Cash advances, however, will charge a fee (usually 2.5 percent). Use of
a credit card can also be traced back to your Swiss bank revealing the fact that
you have the account. These credit cards are issued differently from typical
credit cards, however. Rather than pulling a credit report and actually issuing
true credit, Swiss banks require that you make a security deposit that is 1 to 2
times your monthly credit limit depending on the type of account you have. The
security deposit itself is held in a separate account and invested.
 Cash withdrawals: If you're in Switzerland you can walk into your bank and
make a direct cash withdrawal, leaving no record of the access.
 Travelers' checks: Buying travelers' checks is one way of using the money from
your Swiss account and maintaining your secrecy. They're easy to use and
widely accepted, but you will have to pay a 1 percent commission on the
amount of the check.
 Bank transfers: A simple way to use the money in your Swiss bank
account is to request a bank transfer. But, again, you're essentially
revealing the existence of your account, as well as your account
number. To prevent revealing your account number and name, most
Swiss banks will send money from your account in the bank's name
without releasing your identity, but sometimes those types of
transfers aren't accepted outside of Switzerland.
 Checks: Swiss bank accounts do offer checking (except on
numbered accounts). However, if you're after privacy, you're
leaving a trail of breadcrumbs directly back to you. You lose the
confidentiality most people want with a Swiss account and,
therefore, checks are rarely used with these accounts.
 Closing your account

 You can close your Swiss bank account at any time with no
restrictions or cost. You can get your money immediately and
invested money as soon as it is liquidated.