Hey Guys, I've been interested in learning more about offshore banking. I know that, unlike US banks, offshore accounts work on the honor system that you will file your taxes according to your country's laws, whereas domestic banks report for you. What countries are best? Luxembourg, caymen, swiss, singapore? I understand that the caymens are very often busted by US feds looking for drug dealers and very often your accounts are found there as well, in which case if you have hidden money then you are fucked.
Also, in which cases are these accounts considered legitimate in the eyes of US law and in which cases are they not? In what countries does the US have less power to learn of your account? And, how likely is the IRS to discover any undeclared funds in different accounts in different countries? General info on this and how to start one would be appreciated. Thanks.
"If men are not angels, then who shall run the state?"
The first thing you need to consider is...why are you interested in offshore banking?
Is it for tax evasion purposes?
Asset protection?
Flexibility for moving out of the country?
The reasoning would really determine whether it's worth it for you. For most people, it's a matter of asset protection and diversifying their holding companies so that they aren't over-exposed in too few areas. However, as you can imagine, the added expense in creating and maintaining an offshore account could easily outpace the value of what you're protecting. This of course means, you usually need to have a pretty substantial amount of assets before getting into offshore accounts makes financial sense.
There's a book on asset protection written by a CPA/attorney that is made for the layman that goes into this as well as most forms of asset protection: Lawyers are Liars. It's a bit rough around the edges, since I believe it was his first foyer into book writing, but the info is there. There'a chapter on offshore accounts.
Also as you may have heard, some countries are getting fed up with the IRS and other US agencies constantly bugging them and creating all these hoops they have to jump through that they are beginning to just say "f- it" and not do business with US citizens.
As far as US laws allowing government to see what you have and such, I'm not sure of the specifics, but as you might guess, they're trying for more power all the time:
Swiss Legislators Sell American Tax Evaders Down the River to Bailout Big Bank
U.S. Probes 8 Offshore Banks for Aiding Tax Evasion
Bloomberg News Cheers Swiss Banks for Ratting Out Their Customers
Swiss Bank Stands Up to DOJ
Switzerland Buckles Before the Empire
Switzerland as a Wimp
For more info along these lines, SovereignMan is a pretty nice little blog.