Are Offshore Accounts Legal? Yes, If Done Properly

October 6, 2023
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8 min read

With a global economy comes global financial and business resources. As a US businessperson, you probably work with and employ a lot of people, many of whom have operations and accounts in countries other than America. At this stage in your business’s expansion, you may be considering offshore banking, investing, and asset protection.

There’s just one problem – when you think of “offshore” banking, your mind usually conjures images of shady backdoor deals and major litigation leveled at executives in handcuffs. Thanks to this association, you might wonder whether offshore accounts are really legal.

Offshore accounts are legal – you just need to know how to set them up properly. Let’s take a closer look.

What Does “Offshore” Really Mean?

“Offshore” just means that the account or vehicle in question is in a country other than your own. Full stop. That’s it.

Say you're an American citizen and entrepreneur with millions of dollars to invest and save for asset protection purposes. If you set up a legitimate bank account in, say, Switzerland, that's an offshore bank account. There's nothing sketchy, shifty, or suspicious about that activity whatsoever.

Offshore only means that a bank account or vehicle is in a country other than the one in which you have citizenship status. So, if you're an American, an offshore bank account is any bank account in a country other than America. If you're an Italian, it's the same thing, but for Italy.

If you run your own business as an entrepreneur, you've probably encountered plenty of other entrepreneurs and start-up capitalists who come from other countries. If they still have citizenships in their home countries but they operate in America, guess what? They're operating offshore businesses.

The first step to becoming comfortable with taking advantage of offshore banking and financial resources is getting over the negative connotations attached to the word "offshore." 

Given That, Are Offshore Accounts Legal?

Yes! Offshore accounts are legal, provided that you set them up correctly and use them legally. It’s the exact same thing for domestic accounts.

After all, you can’t set up a business bank account in America, then use that business account for criminal activities and expect to keep it and the assets you store inside it. The same is true for any offshore account.

Say you set up a bank account in France. If you follow the laws of France and the US, you’ll be set! There’s no reason to avoid offshore banking, investment, and asset protection opportunities whatsoever, especially as a high-net-worth individual with millions of dollars to protect and invest.

Offshore accounts are only illegal if you don’t follow the rules of their host jurisdiction. 

For instance, if you set up a new Swiss bank account, then you abuse the bank account, you don’t report the bank account to the Swiss tax authorities, or you do something else blatantly illegal, of course the bank account will get closed down.

Again, that’s not because the bank account is offshore. It’s because you deliberately violated the rules surrounding that offshore bank account. 

There’s a reason that successful, wealthy individuals have offshore accounts and activities all around the world; it’s because they have the knowledge and expertise to use those offshore resources legally.

Why Does Offshore Have a Negative Connotation?

It is true that major news cases in the past have come to light detailing how one investor or business owner or another got into legal hot water for illegal investing, money laundering, or fraudulent transactions. 

In many of these news cases, the anchors will go on and on about how the accused individuals stashed their ill-gotten money in offshore accounts.

Here’s the thing. Those illegal activities got those criminals into trouble because the activities were illegal, not because the criminals used offshore bank accounts! 

The connection is irrelevant. The criminals may have used offshore accounts for one reason or another, but the offshore status is not the reason that those criminal businesspeople committed their crimes.

Over time, offshore has unfortunately developed a negative connotation in the minds of many Americans and business owners. But if you completely ignore the financial opportunities that have come about from a globalized economy, you’ll also hamstring your business and asset growth potential.

The Inherent Complexity of Offshore Banking

Just because offshore banking is legal doesn’t mean it’s necessarily easy. In fact, offshore banking is more complex compared to banking only in your domestic jurisdiction.

This makes a lot of sense when you think about it for just a second. Whenever you participate in offshore banking, business operations, asset protection, and investment, you no longer have one set of laws and regulations to consider. Now, you have at least two.

For example, say you have a business in America, and you want to expand to the UK. You already know the business laws in the States. For example, you can hire foreign workers for your US-based company so long as they have visas.

But what about the UK’s business and labor laws? How many foreign workers can you hire from the UK before you need to set up a business in the UK? What are the tax laws like, and when do you need to pay taxes to the UK government?

If you want to avoid tripping over legal wires or getting into trouble, you’ll need to know, understand, and adhere to the laws of both countries. This is true for business, banking, and any other foreign operations you might be considering.

Things Get Even Trickier with Offshore Asset Protection

Note that this point is especially true when it comes to offshore asset protection. Many high-net-worth individuals such as yourself set up foreign asset protection trusts (APTs). By setting up an asset protection trust in a jurisdiction with stronger defensive and privacy laws compared to the US, you can protect yourself from litigation from aggressive creditors or lawsuit plaintiffs.

But simply setting up a trust in a foreign country is not enough to defend your assets, especially in the long term. You have to consider things like:

  • The laws of that foreign jurisdiction and how they interact with US laws
  • The bank you use for your trust in the foreign jurisdiction and if it has any subsidiary or connected branches in the US
  • The legal precedents for trust protection in your foreign jurisdiction
  • And more

So, while offshore asset protection is oftentimes an excellent strategy, it has to be set up properly – and by expert advisors like those at Dominion – to be worth your time and your money.

Offshore Banking is Still Worth It

Despite the added complexity that offshore banking brings to the table, it’s very much worthwhile. With offshore banking, investing, and asset protection, you can take advantage of jurisdictional advantages, benefits, defenses, and much more.

You’ll also be able to use offshore banking to grow your business operations. You’ll have access to a broader workforce, be able to spread your brand to a bigger market, and see other major benefits as your business grows and grows.

At some point, offshore banking is a necessity once you reach a certain asset level. If you have tens of millions of dollars you need to save and invest, looking into offshore banking is an inevitability. It’s the only way to protect your assets in perpetuity and to make sure that those assets continue to earn you money in the most efficient way possible.

Is Offshore Banking Worth It for Everyone?

That said, offshore banking isn't necessary or even worthwhile for low to medium-net-worth individuals. Due to the added complexity and expenses involved with offshore banking and investing, this kind of activity is only worth it if you are a high-net-worth entrepreneur or other serious professional.

If you only have a few million dollars to save, for example, it's not necessary to look into offshore asset protection trusts under any circumstances. 

Similarly, if your greatest collection of money is your retirement account, offshore banking isn't just unnecessary – it may even be actively harmful to your retirement fund thanks to the fees and resources you’ll need to expend to make sure you get everything right.

And make no mistake, getting everything right is key. To participate in offshore banking successfully, you need a trusted team of advisors and experts working for you, managing your assets, and making sure your paperwork is airtight.

You Need Expertise for Successful Offshore Operations

Because offshore banking of any type is inherently complex and difficult to get right, it only pays to undertake this next step in your asset growth with Dominion. At Dominion, we have the comprehensive expertise and legal resources necessary to help you:

  • Set up an offshore banking account for business purposes and more
  • Set up asset protection trusts, especially foreign asset protection trusts for long-term wealth protection
  • Set up and manage business operations in multiple countries, which is necessary if your entrepreneurial enterprise is ever going to scale into a worldwide brand
  • And more

There’s no reason to wait. Contact us today and we’ll get started discovering what you need and how we can help you get it.


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