How to Open an Offshore Bank Account

Offshore banking is a thing you hear not hear about normal, everyday, real life. This is for news of caught tax evaders. This is for this season’s plot of Avoiding Murder Punishment .

But the practice of keeping your money in a bank account outside your home country is much more common than using it specifically for criminal activities.

Some people choose offshore accounts for privacy or to facilitate international transactions. Others choose it for economic or political stability.

You? Maybe it doesn’t bother you. And we’re assuming you’re not trying to evade taxes. But you’ve watched enough action movies to know that this is knowledge that you might want to come in handy someday.

When you do a bank offshore, you still owe Uncle Sam.

Offshore accounts are often considered tax havens. If your country’s government doesn’t know about your money, they can’t tax it, right? Wrong, my sneaky sneaky friend.

Keeping money in an offshore account is legal. It is very illegal to hide it.

An offshore fund information is included in Table B. Depending on your amount, situated abroad, and where you live, you may have to file a form 8939 “of foreign financial assets Report” . For example, if you live in the United States and your offshore assets are valued at more than $ 75,000 (for an individual) or more than $ 150,000 (for a joint return) at any time during the year, you need to file a Foreign Financial Transactions Report … Resources.

That’s not all! If your foreign account balances exceed $ 10,000 at any time during the year, you will need to complete a separate registration in addition to taxes. This form, Foreign Banks and Financial Accounts Statement (FBAR), is filed through a separate electronic filing system and is due by June 30 of each year.

If you don’t give Uncle Sam all the necessary paperwork, here’s what’s at stake:

If you must file Form 8938 and fail to do so, you may be subject to penalties: a fine of $ 10,000, an additional fine of up to $ 50,000 for continued refusal to submit a form after notification to the IRS, and a 40 percent penalty for understatement. taxes related to undisclosed assets.

For FBAR, you expect a maximum penalty of $ 12,921 for non-disclosure of transactions if you were reluctant to do so, and 50% of the undisclosed amount (at least $ 129,210) if you voluntarily withhold this information.

There used to be a voluntary disclosure program for people who knew they needed to file reports on their offshore accounts. Between 2009 and 2018, more than 56,000 taxpayers voluntarily opened their offshore accounts and paid $ 11.1 billion in taxes, penalties and fines, according to CNBC, between 2009 and 2018. The IRS closed its voluntary disclosure program in September 2018.

So how do you open an offshore account at all?

Opening an offshore account is difficult, but not difficult. According to the blog The Expat Money Show, popular destinations are Belize, Switzerland, the Cayman Islands, and Singapore. Offshore account hotspots generally have low tax liabilities, greater ease and confidentiality regarding banking practices, and doing business in English.

According to Investopedia, you should be prepared for the following things :

  • Driver’s license or passport
  • Proof of residence
  • Documents confirming your identity, in some cases
  • Bank statements confirming your financial situation
  • Documentation of the source of funds for your offshore account (payment receipts, investment reports)
  • Currency selection

You will probably fund your offshore account using bank transfers, but depending on your bank, you can use a debit card to withdraw money.

Once you’ve got everything set up, all you need to worry about is filling out all of the US tax forms! Everyone loves forms.

But back to the crime

A couple of high-profile cases have dominated the offshore banking and money laundering industry lately, so let’s take a quick look at those situations.

In 2017, 13.4 million offshore banking documents were leaked in the so-called Paradise Papers scandal. Most of the leaked documents concerned Appleby, a Bermuda-based law firm that was building complex corporate structures in small tropical islands (paradise, you know?). The documents concerned many large multinational companies (for example, Nike, Facebook and Apple), as well as major celebrities and politicians. For example, it was discovered that millions of Queen Elizabeth ‘s private property had been poured into the Cayman Islands foundation. Robert Kraft, soccer team owner and massage lover , also turned out to be a billionaire whose offshore accounts were leaked.

As I noted earlier, having an offshore account does not necessarily mean that someone is in trouble. But the Paradise newspapers pointed the finger at some famous people who already had bad plans, which made the overall look very bad overall. The Paradise Papers disclosure is the second largest data breach in the world, according to The Guardian.

Biggest? Panama Papers . The documents in this leak came from the Panama-based law firm Mossack Fonesca, whose clients used shell companies to launder money and evade taxes. The leak involved 12 current or former heads of state, more than 60 relatives and associates of these leaders, and even FIFA . To date, more than $ 1.2 billion in unpaid taxes have been received from involved parties around the world.

The scandal recently appeared on the subscription screen for the hotly contested Netflix film Laundry .


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