Offshore bank accounts and secrecy

Many online poker players ask whether they should open an offshore bank account. Some are worried about their local government learning about their online gambling activities from their financial records (see our Dangers section) and seek some measure of secrecy in a foreign bank. Others hope to evade paying their full share of income taxes. In either case opening an offshore account is probably not worth the trouble.

Banking secrecy has been eroded quite a bit in the last decade. After 9/11 especially, the US pressured banking havens to open up their books. The ostensible reason is uncovering terrorist funding channels and drug money-laundering. An added benefit is the greater difficulty of tax evasion.

• Secrecy Associated with Offshore Banking is Evaporating. Excerpt: "The convergence of recent events involving offshore banks, tax haven jurisdictions, terrorism and concerns over financial transparency, has now made it extremely perilous to rely on bank secrecy to avoid disclosure of offshore financial information to U.S. government agencies, particularly the Internal Revenue Service (IRS)."
• Offshore privacy and bank secrecy in practice. Excerpt: "Credit cards linked to high-profile offshore banking havens have equally been used to track down people who supposedly spend more than might be reasonably expected from their income -- the conjecture being that anyone with money offshore must have something to hide."
• Is Your Offshore Account Private. Excerpt: "Near-anonymous credit cards are often arranged through the use of a nominee-administered offshore company and a bank that needs no more than a name and a signature for corporate cardholders. Note, however, that where the cardholder is also the actual beneficial owner of the underlying offshore company -- and mostly he is -- such a structure must be formed so as to successfully resist the leakage of personal information under any beneficial owner disclosure legislation."
• More links from Offshore Fox.com
• The Very Long Arm of US Law. Ways in which the Patriot Act has forced foreign banks that do business with US banks (that is, most any foreign bank) to follow transparency rules to make money-laundering more difficult.
• MoneyLaundering.com. Lots of information about keeping on the legal side of the law, though some of the articles are for subscribers only.
• Offshore Banking is not Evil gives a libertarian viewpoint.
• Adkisson Analysis - Offshore Planning, which includes the article Hiding Money Offshore & Secret Bank Accounts explaining the risks of opening an offshore account with an unreputable financial institution.

In addition to the above, you should be aware of US Treasury regulations that require you to file a form declaring all your foreign accounts if their total value exceeds $10,000 at any time during the year. If you file US income taxes, you must also declare the accounts on Schedule B. See our section on Form 90-22.1 for details.