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What makes a good offshore bank?

Offshore Q&A » Offshore banking » Question 4

The following are some of the issues to consider when selecting an offshore bank:

Offshore bank secrecy

First and foremost, a good offshore bank should protect your privacy. This point is not as obvious as it seems.

Bank records are considered private, to a greater or lesser extend, in virtually all countries, offshore and onshore alike. Attitudes vary though.

For example, the issue of bank secrecy is unlikely to rank high in the mind of your local banker. Walking into your hometown bank and quizzing the staff as to the confidentiality of your account will raise an eyebrow at best. A review of your account by a compliance officer might follow. ("Why is he/she so worried about secrecy? What does he/she have to hide?")

A good offshore bank, in contrast, must be much more accommodating.

While effective legislative provisions -- i.e. strong bank secrecy laws -- are imperative, they are not nearly enough. You need a banking haven -- and a bank -- with an established and accepted tradition of secrecy. Your offshore bank must understand that privacy ranks high on the list of client priorities. To put it another way, your offshore banker should not shy away from openly discussing the issue with clients, and should be willing to assure clients of the bank's committment in this regard.

A good offshore bank will fight your corner if the confidentiality of your account should ever be tested.

Efficiency and quality of
customer care

A good offshore bank is an efficient and customer-friendly bank. Forget call centres, busy phone lines, or voicemail. Expect your calls to be answered by your account officer -- a real person familiar with you and your needs.

Expect your instructions to be acted upon promptly. If a payment needs to be made in 24 hours and you ask that it be so, then it should be so. If you need funds at short notice, your offshore bank should go out of its way to make it happen. This is the essence of traditional private banking services.

Note that the new era of e-banking solutions -- or Internet based account management -- has prompted many banks to radically alter their business model and cut back on the personal touch. An excellent offshore bank will offer a combination of the old and the new.

Also beware some of the new breed of European "private banking" departments which, in return for a set of inflated banking fees, offer little more than a cup of coffee in glass-fronted designer offices. A fake Rolex watch is a fake Rolex watch, even if bought in Switzerland. Be sure to get the real thing.

Stability of the offshore bank
and jurisdiction

This is the bottom line. Either go for a well-known, established offshore banking jurisdiction, or at least look for a haven with prudent regulation regarding financial solvency of banking institutions.

Admittedly, potential instability was more of a concern in the nineties when many countries willingly granted bank licences to inexperienced and/or not especially solvent entrepreneurs. Lessons have been learnt and regulation has become much more stringent across the whole industry since then. Nevertheless, you should still exercise a degree of caution, especially if you are new to offshore banking.

A single-branch bank in an offshore haven you haven't really heard of before probably isn't the best home for your money. Common sense dictates the same is true about banks that rely on the Internet alone to attract clients.

If unsure, get impartial professional advice or do a few background checks yourself. How long has your prospective offshore bank been in business? How do they compare in terms of size to other banks in their jurisdiction? What is their network of correspondents like?

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