We keep hearing stories about rich businessmen and corporations around the world opening up Swiss bank accounts and parking loads of money into international banks. We probably wonder about the amount of money these international banks make out of foreign savings and investments. With new businesses emerging out of different industries and economies, International banking is taking a whole new dimension and rich individuals around the world use such banks to shelter their money from their home country’s income and estate taxes.
According to OCRA Worldwide — international banks tend to offer their services to companies and to fairly wealthy individuals, i.e., people with cash of about $100,000 and counting. A large number of banks are based in countries with low or no income and estate taxes, such as the Cayman Islands, Belize, Panama and the Isle of Man. Swiss banks also offer great opportunities for foreign individuals by allowing them to open up bank accounts in their country.
There are many corporations and individuals that use such international banks to invest in the economies of booming countries and in developing countries, the same way they might invest in domestic ventures or investment opportunities. These banks offer other exciting benefits, for example, some International banks make it easier for a company with an international presence to do business around the world. There is less paperwork and easy regulations to handle while doing business internationally. Also, such banks offer better interest rates than domestic banks, providing a money-making opportunity for customers.
Well, there is a flip side to international banking too. One should do a thorough homework before opening up accounts in international banks. It is always good to keep in mind that the way domestic currency can change value, so can foreign currency. Is the bank in a country on the verge of some sort of civil war or economic collapse? Is the bank known for efficiency and smart investments or for poor customer service and federal bailouts? These are things one should always check and keep in mind while taking the international banking route. Also, due to numerous cases of money laundering and international terrorism, many international banks keep a close eye on account activities. So, if you’re moving massive amounts of money around quickly, you will raise a red flag.
Last but not the least; international banking should be treated as an initiative in itself. It is always advisable to consult seasoned international financial consultants before opening accounts in international banks. Businesses should do a complete check on the regulatory and policies aspect of these banks and make a move, when they feel the time is right.