In this article, we’re answering “Are offshore accounts legal?” The short answer is yes.
However, depending on citizenship and residency, there are certain requirements that individuals who keep money in international financial centers (IFCs) will need to meet.
In this article, we will explain these requirements, discuss the legal benefits of offshore accounts, and answer common questions we receive on the topic.
This article is part of our free series on opening an offshore bank account, which you can access for free by clicking here.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Are Offshore Accounts Legal?
- Benefits of Opening an Offshore Account
- Is It Safe to Bank Offshore as a Non-Resident?
- Frequently Asked Questions
- Ready to Explore Your Options?
Are Offshore Accounts Legal?
Yes, offshore accounts are legal. In fact, while certain offshore financial centers and offshore tax havens are looked down on, many of these jurisdictions play a vital role in international finance.
This role includes facilitating international trade, providing companies with access to multi-currency accounts, and helping to direct investment into international markets.
Additionally, while offshore banking regulations are typically criticized, we typically find that banking regulations are more stringent than onshore banking regulations. This is in part due to the scrutiny that international jurisdictions face, which requires them to be very careful when it comes to account opening.
Likewise, even after an offshore account is open, offshore banks very carefully follow the legal aspects of offshore accounts. This includes offshore account reporting requirements, tax implications of offshore accounts, and international tax compliance.
In fact, reporting and tax compliance are two matters that both offshore banks and individual account holders need to be aware of to ensure compliance.
Again, as mentioned above, offshore accounts are legal. And, so is maintaining offshore accounts in a wide range of jurisdictions around the world as long as both the account holder and the bank meet their reporting and compliance requirements.
Benefits of Opening an Offshore Account
The benefits of opening an offshore account will be different for each person. However, there are a number of key advantages that most people can benefit from. These benefits include the following.
Benefits of Opening an Offshore Bank Account
- Access to strong international currencies
- Strong banking regulation and reputation
- Stable political and economic environments
- Enhanced privacy from local bankers and individuals
- Supports asset protection structures
- More familiar with international client profiles
- And more
Is It Safe to Bank Offshore as a Non-Resident?
Yes, it can be safe to bank offshore as a non-resident. However, it’s important that non-residents assess both the bank and the jurisdiction that they are considering prior to opening.
In terms of banks, this can include an assessment of each bank’s financials, business model, correspondent relationships, and overall reputation. And when it comes to countries, this can include a detailed assessment of each country’s banking regulations, deposit insurance, placement on watchlists, and more.
Which Country Should I Open an Offshore Account In?
The country that you should open an offshore account in will be the best country that you can access based on your client profile, deposit amount, and requirements.
That said, there are certain countries that typically offer a higher quality of service, have stronger banking regulations, and better managed banks.
With this in mind, if you are looking for a stable banking jurisdiction to consider for opening offshore accounts, you may want to consider one of the following options.
- Singapore
- Switzerland
- Liechtenstein
- Isle of Man
- Jersey
- Guernsey
- Panama
Do You Want Our Free Non-Resident Banking Guide?
Sign up here to receive our Free Non-Resident Banking Starter Guide and weekly updates on the best account opening options available:
Frequently Asked Questions
Below are three of the most common questions we receive from people looking to understand if offshore accounts are legal. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
Can the IRS See Offshore Accounts?
Yes, the IRS can see certain information about offshore bank accounts. This is because the United States has information sharing agreements directly with a wide range of jurisdictions, which then require their banks to report account and account holder information related to US clients back to the United States. This arrangement falls under The Foreign Account Tax Compliance Act (FATCA), which became effective in 2018.
How Safe Are Offshore Bank Accounts?
Offshore banks can be a safe alternative to banking onshore when they are operated by strong management teams, in stable banking jurisdictions, and maintain adequate capital reserves. With this in mind, it is always best to review this basic information about banks prior to opening accounts.
Do Offshore Banks Report to the IRS?
Yes, offshore banks that are located in participating countries report to the IRS and other international agencies. This is especially true in the case of US clients, because the penalties for not reporting account and account holder information is extreme.
Do You Want Help Opening Bank Accounts?
If so, you can get access to GlobalBanks IQ in just a few clicks.
GlobalBanks IQ is our flagship international account opening solution. It gives you instant access to the…
+ Expert insights on which banks to choose & why
+ Step-by-step reports to open accounts in the best banking hubs
+ GlobalBanks international bank database & detailed bank profiles
+ Tried & tested banks for high-risk, offshore, & non-resident clients
+ Plus, get YOUR most pressing bank account opening questions answered by our team!
And “yes!” GlobalBanks IQ helps foreigners and non-resident individuals open bank accounts.
In fact, GlobalBanks IQ even helps non-resident, foreign & offshore entities open bank accounts.
Use the link in our menu above to learn more about GlobalBanks IQ. Or, contact us directly with any questions!
