Offshore banking in 2018 — 4 trends to watch out for
The offshore financial services industry faced a challenging year in 2017 thanks to revelations of the tax arrangements of the great and the good in the Paradise Papers, the UK Criminal Finances Act 2017 introducing tougher tax compliance for corporations and a continuing global drive for tighter regulation.
So 2018 doesn’t herald a vintage year for the sector — but regimes that tighten up compliance and adapt to new technologies are still likely to survive.
Here are four offshore banking trends to watch out for in 2018.
A hard Brexit is looking increasingly unlikely for Britain.
But some observers have speculated that one of the major motivations for Britain’s EU withdrawal was impending EU tax evasion regulations set to come into force in 2019.
The transitional arrangements central to a softer divorce mean the UK will still be subject to these regulations — so expect certain political stakeholders to continue to pressure the government to walk away from Europe with no deal at all, enabling Westminster to operate its tax system unfettered.
It’s currently possible under certain circumstances for US courts to grant a creditor permission to recoup funds from an offshore account.
But in 2018 more investors are likely to use cryptocurrencies as asset protection tools.
Digital currencies like Bitcoin are stored on a digital ledger called the blockchain. And accounts containing these currencies are extremely secure, decentralised and outwith the jurisdiction of courts — making them a safe bet for any individual or entity who wants to secure a store of untouchable assets.
Individual workers earning a living outside their native nations will also continue to use offshore bank accounts in 2018.
And avoiding tax might not be the main reason these earners turn away from traditional high street banks — the Foreign Account Tax Compliance Act (FACTA) introduced in 2010 means that banks are forced to share information on foreign account holders.
The administration costs involved in servicing foreign customers are often prohibitive — meaning these individuals have to turn to offshore options in order to receive wages and conveniently pay for rent and utilities.
The offshore industry serves these types of workers in a practical and reasonable manner, but this function rarely hits the headlines.
A Westminster pension fund hit the headlines this year when it was revealed it had invested millions from MPs’ retirement pots in an offshore vehicle in Jersey.
But the reality is that many ordinary workers’ pensions are also invested offshore to protect and maximise their profitability.
And in an era when the cost of living continues to rise rapidly and most of us will have to work into old age, the need to preserve hard-earned funds is greater than ever.
This is an ongoing trend that will continue in 2018 and sheds a little more light on the legitimate ways the offshore banking industry might benefit ordinary workers and savers as well as the financial elite.
Offshore banking is unlikely to ever disappear completely and perhaps more stringent regulation and transparency will see it emerge from the shadows as a legitimate facet of wider financial services.
These four offshore banking trends to watch out for in 2018 will help you evaluate whether banking money offshore is right for you.
Do you use offshore banking services? Share your thoughts in the comments section.