Offshore banking has become popular recently since it has many advantages. Having a bank account offshore is undeniably a good option for offshore workers such as oil rig workers and yacht crew who spend most of the time outside of their country. Also, offshore banking is advantageous for common people as well. When you let an offshore bank handle your finances, you can get additional financial benefits as well as more investment opportunities that onshore banks do not provide. Moreover, offshore banking allows you to access your money from anywhere in the world and as a result; it is perfect for travelers and businessmen alike.
However, due to Panama leaks, offshore banking has gained a negative image. It has become synonyms with money laundering and illegal activity that rich people do in order to get out of taxes. Although, offshore banking is completely legal, it has some disadvantages that can make people rethink their decision of opening an offshore account. This article explains some of these cons of offshore banking.
High Minimum Deposit Requirement
Offshore bank accounts offer a lot of financial benefits and flexible services due to which, they have a high minimum deposit requirement in order to open an account. Even though most average people can benefit from an offshore account, in most cases they will not be able to because they don’t have the kind of money required for offshore banking. Only the wealthiest people can open and maintain an offshore account since they have excessive money they can use. Even though this requirement is common in most offshore banks, it is not universal for all international banks. If you still want to open an offshore account, you will just have to shop around for the bank that has less minimum deposit and balance requirements.
Offshore Banking makes you a Government Target
Offshore banking can protect your assets but it can also make you a target for your government. According to experts, people who have more than $100,000 in their bank account are a target for the government in order to hide its own incompetency. This is especially true when paying taxes; you can lose your money if the government realizes you have more money saved offshore. They can also accuse you of getting out of legal taxes by keeping most of your money in offshore account. It is especially advisable for offshore workers to consult with seafarers tax accountants to get proper understanding of tax rules and regulations because they are different for offshore workers.
Your Money is not Well-Protected
Your get more financial benefits in an offshore bank account as compared to onshore banking but this does not mean that your money is well-protected. If the offshore banks you are doing business with experience any financial crisis, you can easily lose your money. Although, the chances of this happening are really low but your money does not enjoy the protection in offshore banking as it does in onshore banking. The banks in a country offer security and adequate compensation to its citizens in case of financial calamity.