Monday, 10 August 2009

Are deposits safe offshore?

Are offshore bank accounts safe? Offshore bank accounts may offer attractive interest rates and possible tax advantages to help grow your savings, but you need to know your offshore savings are safe. How safe are offshore bank accounts is a frequently asked question in light of the mystique surrounding offshore banking and the global financial crisis which has claimed many victims.

When looking for a safe offshore bank account for your savings, consider these three main factors:

  • Ensure the offshore bank you choose is authorised by regulatory body of the country or jurisdiction in which it operates. For example, the Jersey Financial Services Commission;

  • Ensure the country or jurisdiction you choose is economically and politically stable and well regulated. For example Jersey or the Isle of Man; and

  • Ensure the offshore bank you choose is strong and one you trust.

Offshore banking is simply banking in another country to that in which you are domiciled. Many UK high street banks such as HSBC, NatWest and Lloyds offer safe offshore bank accounts through international divisions of their operations, so your savings are as safe offshore as onshore.

Many offshore banking centres now operate their own depositor protection schemes similar to the UK’s Financial Services Compensation Scheme which guarantees savers with regulated institutions 100 per cent of their deposits up to £50,000. For example, the Isle of Man operates the Isle of Man Compensation of Depositors Regulations 2008; Guernsey has the Banking Deposit Compensation Scheme (Bailiwick of Guernsey) Ordinance, 2008, and Jersey is about to introduce its own scheme.

So ensure your offshore bank account is safe and your savings secure: choose a strong bank with which you are familiar and trust, ensure it is authorised by the local regulatory body and choose a stable, well regulated country.

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