Learn offshore banking rules
While transferring money to offshore banks in order to avoid paying taxes is illegal, it is not, and nor has it ever been, against the law to transfer money out of the U.S. If you desired, you could move all of your money to another bank anywhere in the world and it would be completely legal, as long as you pay taxes on any earned income transferred. However, U.S. banks and the IRS do try to discourage offshore banking because keeping money in U.S. banks is profitable to the banks. Offshore Banks have specific licenses and regulations that allow them to extend certain privileges to their clients such as confidentiality.
Definitions and Confidentiality
An offshore bank is a banking institution that has obtained a license to operate as such. Contrary to popular belief, just because a bank is in a foreign country, it does not make it an offshore bank. Many offshore banks are located in Tax Havens (these include countries like Antigua, British Virgin Islands, Panama, Mauritius and Liberia) simply because the lack of tax information exchange with foreign countries makes tax-free banking easier. However, an offshore bank can be located in any country, as long as it is established as such. In fact, Swiss Banks have long been known for their banking confidentiality even though Switzerland is not a tax haven.
Country Specific Rules
All offshore banks are regulated in one form or another though the regulations differ depending on the country. The individual regulations shaping an offshore bank lies with the host country, but there are some standards that apply to every bank to manage money laundering and illegal practices. For instance, offshore banks in Switzerland adopted the Money Laundering Law in 1998 which includes rules that involve the banks' legal response towards suspicious accounts. An offshore bank account means less restrictive legislation, not the complete lack of any supervision.
Account Documentation
Although it is commonly believed that offshore banks require very little in the way of information or documentation to open an account for "privacy reasons," there are actually strict regulations regarding backup documentation on all the owners of an account, or corporations and their directors. There is no such thing as an anonymous bank account that uses only numbers. There must be a registered account owner and signatory to the bank account whose information can then be sealed up, and a number issued in its place.
