##Is “Offshore Banking” *Really* Dead?##

In a word; “no”, but tax evaders will find, if they have not already done so, that non-compliant structures offshore (as well as onshore) will come under increasing scrutiny. In a post “9/11” and Enron environment, regulatory bodies worldwide have turned up the heat on such scofflaws.

Given current attitudes, why would an individual flaunt the rules, particularly in a U.S. context, when there are still so many international planning opportunities available, totally *within* the ambit of the Law?

The following may be axiomatic but,

* “If one operates within the letter and intent of the Law by providing the requisite reporting and income inclusion where appropriate, the IRS should have no issue with such planning; whether offshore or onshore.”*

In other words, as there are still material benefits for doing certain transactions and structures offshore, provided the taxpayer obeys the rules and gets the proper advice, why tempt fate by abusing the system? Going forward therefore, there should be a premium for such advice.

The irony is that quality legal advice has always been available but certain prospective clients are guilty of being “penny wise and pound foolish”; that is, not willing to pay to get proper legal and banking advice. Sophisticated planning requires sophisticated advisors.

But how does a layman discern good service providers from bad? To begin with, only deal with reputable firms. In this sense, bigger does not necessarily mean better, as there are many small “boutique” law firms, and banking institutions that do excellent work.

Any quality professional firm – legal, banking, investment, insurance or otherwise – should be able to provide references. Ask for them. Although much of what these firms do is of a confidential nature and thus they are unlikely to provide names of individual clients, most competent advisors have likely dealt with and/or received client referrals from other professional organizations whose identities are less confidential.

The basic tenet for doing things internationally is that if it is illegal in one’s home country it is *usually* (but not always) the same case offshore; such is the level playing field between onshore and off-shore. The converse of this likewise typically is true. Consider that it is not inherently illegal to have an offshore bank account, any more than it is to have a bank account in New York. The point is of course, that it *is* illegal not to report income earned by either of these two accounts; as we all know, U.S. residents are taxable on their worldwide income regardless of where the assets are located.

The same principles apply to things like international trusts, companies, partnerships, insurance polices, yacht registrations and even credit cards – all perfectly permissible at home as well as abroad, provided that the taxpayer complies with the necessary filing and income inclusion rules

***Transparency and compliance.*** New words to live by, and not necessarily feared, as the abolition of bank secrecy is something to be embraced as a means of discouraging those who would utilise international centers for illegal purposes (although history shows that the majority of money laundering occurs in onshore money-centers). Fortunately, “bank confidentiality” is still protected by statute in some countries (as in the U.S. and The Bahamas) and should thus maintain privacy for law-abiding individuals.

Going forward then, the list of viable, compliant products and services that continue to provide material benefits for some, if not most high net worth individuals, *with the proviso that they are set up and maintained properly*, include the following:

* International Trusts
* International Incorporations
* International Private Placement Insurance
* International Yacht Registry and Finance
* International Aircraft Registry and Finance
* “Offshore” Hedge Funds
* International Payroll and Pension Plans

Hence, “international structuring” when done properly will continue to be a viable planning option for advisors and clients alike.