Offshore banking is establishing a bank account outside of one’s country of residence. The purpose is often for asset protection, tax savings (depending on the country of the account holder), financial privacy and estate planning. Because 96% of the world’s lawsuits occur in the United States, many US people have sought out jurisdictions beyond their borders to secure their wealth in safer climes.
Occasionally, news headlines discuss offshore banking. Positive news sells fewer advertisements than negative news, so much of the focus tends to be on the seedier side of offshore banking: foreign dictators hiding illicit gains, nefarious businessmen secretly socking away ill gotten profits, tax dodgers, etc. In addition, some of the stories have to do with regulations put forth by the United States government. Regulations have been in place for years to control tax evasion, proceeds to fund terrorist activities and money laundering from drugs and other illicit sources. Naturally, the federal government needs to take action when dealing with such accounts.
While these regulations are meant to impede illegal activities, the government regulators are not concerned with individuals who want to utilize offshore banking as part of an asset protection plan. Using offshore banking along with international entities such as LLCs and trust is becoming more and more common as the threat of lawsuits increases.
What policy changes are enacted and where they are focused often depends on the country. The United States attempts to monitor the activity of certain countries that it sees a greater potential for terrorist and criminal threats, and is less likely to monitor countries with which it has friendly relations.