Offshore banking: the good, the bad and the ugly
With the reveal of operations and hidden accounts on Panama Papers, the topic of offshore banking - specifically, bad purpose offshore banking - has been on the table for a while. People would discuss the pros and cons and whether or not it was a legitimate practice, either for governments or private companies. Truth is, offshore banking has always been part of the financial practice, perhaps even before banks existed as themselves. Saving your wealth away from your location is a way to keep it secret and safe, but with the development of the international bank network and banking operations, there are some extra advantages for offshore accounts.
Discussing the benefits of this practice is, of course, far more interesting than addressing its disadvantages. The controversy about offshore banking centers around whether account holders have legitimate or ilegitimate reasons for doing what they do. If you are interested in this topic we suggest that you check this very interesting article: How to explain offshore banking to a 5 years old.
The most obvious ilegitimate reasons for opening an offshore account are illegal operations. Avoiding taxes by keeping sums undeclared is a typical practice in many countries, and keeping your numbers untraceable for your national government is very useful for that purpose. Also, illegal transactions like selling weaponry or drugs are more likely to be run through this sort of account, and some countries are a paradise for money laundry. The concept here is that some people want their bank operations to remain secret because they have bad things to hide, which upsets many, from civilians to governments, just as this article goes: The big ones get away.
However, not all cases of offshore banking are justified by illegal practices. Keeping your money outside your country can be a very strategic or wise move, depending on the case. Some examples of the good use of offshore banking include transactions involving diplomatic or military secrets, which would threaten national or international security if revealed. Also, offshore money is protected from de facto governments and other figures of ilegitimate power.
Offshore banking also has some financial benefits that we will now discuss.
Why offshore banking matters in a financial crisis
The world is becoming financially unstable, many unexpected things happen and changes occur here and there. Money goes up and down, affected by all sorts of events, from the climate to social phenomenons and military operatives. In the world of today, if you don't know how to surf the change and adapt to different situations in a very short time, you are very likely to sink with all your money. Therefore, successful entrepreneurs and investors, anyone who works in business, must take measurements to ensure the stability as well as flexibility of their activities.
Offshore banking doesn't just help shield your business or your savings from the ups and downs of the market, but it can also let you benefit from them if you make the right choices. Considering to put your money in a bank from an interesting country - such as China - may allow you to benefit from exchange differences or different tax policies. Also, distributing your money offshore can keep it safe from the unexpected events and crisis that occur all the time in today's world.
In times of financial crisis, you will want to protect your assets. In a number of cases, you can make the right move and even take advantage of the crisis, prices dropping or markets suddenly turning upside down may benefit you if you are at the right place, but even if that doesn't happen, keeping your money safe and away from danger is always a very good idea. You can wait until the crisis has followed its course, and then resume your activities.
Should you open an offshore account?
If you run a business or have a sum of money that you want to keep safe, offshore banking may be a good idea, but it really depends on your situation and your interest. If you are considering the possibility, you should consult an expert and ask for tailored advice. Companies like Merchant Advise have been around in the market for a long time and their advisors have enough experience to help you make the best decision with your money.
If the sum isn't very big, perhaps the move isn't worth the effort, unless you live at a economically and/or politically unstable country. However, in this changing world that is becoming harder and harder to predict, offshore banking seems like a good idea to preserve your assets and avoid the tougher effects of a financial crisis were it to happen.