It's not relevant anymore, opening a bank account offshore to avoid taxes. The global scrutiny on offshore banking means that you – legal or illegally, ethical or unethically – won't enjoy as much privacy and secrecy as before.
However, despite the fact that it's getting more challenging to open an offshore bank account, there is a growing urgency for people living in certain regions to take their assets overseas and secure them in an offshore bank account.
Here's the number one reason : Safety
Safety – and survivability – are the concerns that are not exclusive to doomsday preppers only. The truth is, safety and survivability – to an extent - should be the concern of everyone of us.
The rising political temperature, the economic turmoil, and the derivative bubble that many predicted will burst soon are some of the reasons why people flee their home countries for safety – at least they flee their wealth overseas for safety.
If you think that you are well taken care of, in good or bad times, here's the cold, hard truth: You can't rely on any one else to take care of the future.
Not the company you work for, not your relatives, not your broker, not your Government. It's so last season.
Today, you need to equip yourself with the right financial education, in such a way that you can take the right actions concerning finances, which converge into one, single issue: Your financial well being.
That is why more and more people are taking their assets offshore. That is why that more and more people are taking the extreme measure, giving up their citizenship to move overseas along with all they have.
That is why US$21 trillion – US$32 trillion is secured in offshore jurisdictions (source) The figures might be not that accurate, but one thing for sure, the size is enormous.
Economical/political uncertainty transfers wealth outward
If you think that the above only happen on “some countries,” think again – here's one example: The United States. The U.S. Is one of the world's highest debt-to-GDP ratios, rank 6th with 101.5%. The debt figure itself is astounding: US$17.6 trillion.
As explained in this article on Forbes, debt-to-GDP ratio is important because it compares a country's debt to its economic output. When a country's economy slows down, the Government will continue to borrow, either to meet its obligations or to stimulate its economy. As we all know it, debts are supposed to be paid when they due, and a poor debt-to-GDP ratio means a country is not able to pay its debt.
If you and I can't repay our debts, we know the outcome: Bankruptcy. Now think about what will happen on a national, or even a global scale.
Safety indicator: Banking sector
Banks are some of the most important supplier of credit to organizations and individuals. They help the economic wheels to turn, with trillions of dollars flowing through the banking system on daily basis.
When banks in a country are not performing well, it's easy to assume the overall economic performance of that country is poorly performing, too. And to make it worse, the safety of your assets can be compromised.
Want an example? During the political turmoil in Ukraine, citizens can't make any transactions with local banks – let's just say that their bank accounts are frozen until the stability is restored. I don't know how about you, but having your assets locked by the banks means a bad thing.
So, we could draw a conclusion that safer banks mean safer assets. Let's dig a bit deeper using a good indicator: The world's to 50 safest banks 2014.
The top ten list is dominated by Germany (4 banks,) followed by the Netherlands (2 banks,) France (2 banks,) and Switzerland and Luxembourg with one a piece.
Did you know what's interesting? There is one major country that is nowhere to be found in the top 38: The United States.
There are 5 U.S. Banks in the top 50 list, but those rank 39th,40th, 45th, 47th, and 48th. To me, it's not a good indicator for the economy.
And combine that fact with the poor debt-to-GDP ratio, I now can understand why there is an increasing number of U.S. Citizens who want to open offshore bank accounts and transfer their wealth overseas.
So, are people transfer their assets overseas for tax benefits? I don't know. However, there is one undeniable reason why people would want to do that: It's for safety reason.
And you can't blame them for doing so.
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