Offshore Investing

If you've been thinking about investment opportunities such as offshore investing, then you need to have the information necessary to make the right decision.  Many countries do not offer investors the same protections as those available in the United States through agencies such as the Securities and Exchange Commission.

In fact, it's practically impossible for law enforcement agencies to investigate and prosecute fraud cases involving offshore investing. Once you've lost your money, it is almost impossible to recover it.

Offshore Investment Opportunities

That's not to say that offshore investing is not a good investment opportunity. After all, one time presidential hopeful John Kerry sent about $25,000 offshore around 1983 as demonstrated by some documents uncovered by the Boston Globe.  But John Kerry is no ordinary investor.  Right or wrong, there is no doubt he made an informed decision before sending his money offshore.

Let's start this topic by taking a look at the federal government's feelings about offshore investing.  Then we will briefly discuss the types of offshore opportunities available to investors.  We'll also talk about some of the logistical problems, including dealing with investments and agencies that are in different geographies and time zones.

Offshore Investing Offers

Maybe you've seen this type of offer in your email box - OFFSHORE INVESTMENTS ARE TAX-FREE AND CONFIDENTIAL.  You investigate the offer and find out that the company behind the email claims to be located offshore or offers an "offshore, tax-free" investment.  In fact, some of the places favored by investors for their low rates of taxes are known as offshore financial centers or tax havens.

When you are taking this kind of offer seriously, you need to get a second opinion from someone that is knowledgeable about the tax implications of offshore investing.  This could be your attorney, a financial advisor, or even an accountant.

There are many con-artists ready to persuade investors to invest their money "off shore".  The federal government gets complaints about these types of companies from people that have lost their money to these scams.  Don't be a victim, make an informed decision.

Money Laundering

You should also be aware that the government recognizes the opportunity that offshore banking operations present for money laundering.  Many high profile money laundering cases have involved the use of offshore accounts, or transactions, to facilitate the movement of illicit funds through the banking system.  The government relies on the banking system itself as the first line of defense.  Federal banking regulators may review a bank's efforts to prevent, or detect, money laundering in their offshore private banking activities.

Working with Offshore Investments

Some of the other problems with offshore investing involve various obstacles. This includes differing time zones, currency exchange rates, and the potentially high cost of information exchange made to offshore agencies.  The Internet has made it much easier to do business offshore, but also makes it easier to fall victim to a con artist.

Advantages of Offshore Investing

If you are still interested in offshore investing, some of the advantages of this type of investment include:

• Tax Sheltering
• Diversification
• Confidentiality
• Protection of Assets

We're going to finish this publication by talking about each of these advantages in the sections below.

Tax Sheltering

Some countries offer special tax incentives to foreign investors. The favorable tax rates in an offshore country are designed to promote a healthy investment environment that attracts outside wealth.  This offers the knowledgeable investor an opportunity to shelter money from taxes.

Diversification

Offshore accounts also give investors virtually unlimited access to international markets as well as all major stock exchanges.  In addition, there are many opportunities in developing nations, including those that are beginning to privatize business sectors formerly in the control of government.  The result of this movement is that investors have a more diverse set of options when they invest offshore.  They do not have to be limited to strictly domestic opportunities.

Confidentiality

Many countries have enacted laws establishing strict corporate and offshore banking confidentiality.  There are serious consequences if this confidentiality is breached.  However, offshore laws will allow disclosure when there are circumstances of drug trafficking, money laundering, or other signs of illegal activity.

Asset Protection

Finally, offshore centers are popular places to restructure ownership of assets.  This opportunity includes trusts, foundations, or even an existing corporation.  Individuals who are concerned about lawsuits, and want to protect their wealth, often elect to transfer a portion of their assets from their personal estates to an entity that holds these assets outside of the United States.

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