Offshore Banking Information

Jersey...HSBC...Switzerland...Chase Fleming...Luxembourg...Guernsey... the Isle of Man. The list of banks and offshore centres sometimes seems interminable. Victoria Hartley explains how to navigate your way safely around the complex world of offshore banking

Oh the choice! If you are a private investor planning to set up an offshore bank or building society account, then the first thing you are likely to experience is bewilderment. There are hundreds of allegedly reputable banks out there, all offering slightly different retail products and
services, all offering varied interest rates.

And, as if that were not enough, investors also have to decide in which jurisdiction to domicile their cash. Depending on how you define it and who you talk to, there are around 50 centres that offer preferential tax rates to international investors.

Offshore Banking Information - Reputations And Advantages

Intermediaries will usually tell you that an excellent product should be the starting point for any banking decision. But banks and building societies claim the institution’s brand and reputation are essential. Both have a point, of course, but the jurisdiction’s regulatory regime (and its service reputation) are vitally important to you, the investor.

John Aspden, chief executive of the Isle of Man’s Financial Supervision Commission, says: “Nowadays, the business of finance is all about reputation and status. There is clear recognition that if a jurisdiction is well regulated, it will attract other financial businesses and consumer interest. There is no question that since the FSC was set up, growth has ensued on the Isle of Man.”

Offshore Banking Information - Malcolm Corrigan

He adds: “People have busy lives, and often they need sophisticated banking services. But, despite the fact they want more and more, they need an uncomplicated approach to that service.”

Just in case you think such comments are merely those of UK-dependent centres and banks promoting themselves, then you should be aware of what has been happening in the Caribbean. The United Nations has just published figures claiming that US$60 billion (out of a global total of US$600 billion) was laundered last year in the Caribbean alone.

Offshore Banking Information - Licences Were Revoked

At the same time, the Central Bank of the Bahamas confirmed that one licence, that of Suisse Security Bank & Trust, had been suspended with a view to revocation.

Of course, you can look at this sort of thing in two ways. You could argue such licence revocations are the actions of tough regulators who are not afraid to punish unprofessional bankers. Then again, you must also ask how the problem got so bad in the first place.

As an honest international investor, it is essential you do not place your funds in a centre that could become embroiled in money laundering scandals, or where the regulatory regime is weak and allows
irreputable banks to trade.

Offshore Banking Information & OECD

As a very rough guide, centres like Luxembourg, Switzerland, the Channel Islands, the Isle of Man and Bermuda have impressive reputations among the international investment community, while centres such as Cayman, Mauritius and Liechtenstein are not so well regarded.
Another thing you can do is check Standard & Poor’s, which rates individual jurisdictions’ creditworthiness.

Offshore Banking Information - Tony Shah

Another sensible thing to do is to go for brand of bank. A good, well-known bank will not stay in a centre with a bad reputation for long if it believes there is a chance of its brand being damaged by association.
In some people’s eyes, the Bahamas is not in the top tier of offshore centres, but then again JP Chase Fleming, a highly reputable organisation, is located there.

Offshore Banking Information - Alan Watson

“They are powerful jurisdictions, however, and I think it’s been a little too easy for them for too long. Administration processing is too slow there, and sometimes we get client reports that are over a month old.” “In Switzerland, on the other hand, if you’re arranging a mortgage as an English speaker, you will get the offer promptly and in English, and if you’re German, the offer arrives in German with equal swiftness. These places really compete.”