Offshore Investing

An investor's access to information, or a consumer's rights, is considerably different when investing in a foreign company or opening an offshore bank account. It's important to understand the specific protections offered by each country before entering into any purchase agreements or contracts.

In this article, we're going to be discussing offshore investment opportunities.  As part of that discussion, we'll start with a quick warning about fraudulent offers.  Next, we'll talk about some of the logistical problems, including dealing with agencies located in different time zones.  Then we'll finish up with the four key advantages offshore investing offers.

Investment Opportunities

One-time Presidential hopeful John Kerry sent $25,000 offshore around 1983, as evidenced by documents uncovered by the Boston Globe.  But John Kerry is no ordinary investor; no doubt he made an informed decision before placing his money in offshore bank accounts.

Unfortunately, even in a world where access to information seems endless, individuals that are used to the protections offered here in the United States might be surprised at those offered in other countries.

Fraudulent Offers

Ten years ago, it was common to receive an email with a subject line: OFFSHORE INVESTMENTS ARE TAX-FREE AND CONFIDENTIAL.  A quick investigation would reveal the offer was associated with locations known for their low tax rates, which are often referred to as tax havens.

There are many con-artists ready to persuade investors to move their money "off shore".  The federal government frequently records 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.  When in doubt, don't hesitate to engage the services of a financial planner, accountant, or attorney.

Money Laundering

The federal government also recognizes the opportunity offshore banking operations present for money laundering.  Many high profile 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 industry itself as the first line of defense.  Federal banking regulators may review a bank's efforts to prevent, or detect, money laundering in their account activities.

Logistical Considerations

There is no doubt that working with someone located in a foreign country can present some very real logistical problems. 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 overseas, but it hasn't solved the language barrier too.

Advantages of Offshore Investing

The Securities and Exchange Commission offers information to investors looking for international opportunities.  The key to success is working with agencies located in countries offering protections similar to the ones found here in the United States.  Several of the better known advantages this type of investment has to offer are listed below:

  • Tax Sheltering
  • Diversification
  • Confidentiality
  • Protection of Assets

We're going to finish this article 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 are designed to promote a healthy investment environment that attracts outside wealth.  This offers the knowledgeable investor an opportunity to shelter money from taxes.


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 centralized governments.  As a result of this movement, investors have a more diverse set of options from which to choose.  They are no longer limited to domestic opportunities.


Many countries have enacted laws establishing strict corporate and banking confidentiality.  There are serious consequences if this confidentiality is breached.  However, the laws of foreign countries will often 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, and foundations.  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.

About the Author - Offshore Investing (Last Reviewed on October 14, 2016)