Short Guide to Offshore Banking in 2009

As we continue through recessionary times, 2009 seems a very unlikely year for many of us to consider depositing our savings into an offshore bank account. However, with speculations abound that a brighter financial future may already be in sight, offshore financial centres are earning a cleaner reputation than they ever have done - and deservedly so. With the continued work of the OECD and other developments in the sector, offshore banking could be argued to be more necessary today than it ever has been.

The OECD (or to give it its full title: The Organisation for Economic Co-operation and Development) is made up of a 30 country membership including the UK, the US and more recently South Korea and Slovakia. Amongst other things, the organisation seeks to maintain financial stability, to coordinate domestic and international policies, and to contribute to growth in world trade.
In May this year, the OECD checked off the final countries on its target blacklist of so-called 'uncooperative' tax havens. This means that Andorra, Lichtenstein, Monaco, and subsequently the world (according to an article by Richard C. Morais, Forbes) is now committed to 'a new era of tax "transparency and exchange of information"'. This followed proposed 'pressure on a macro level on offshore centres and large international banks' by those meeting at April's G-20 Summit in order to cut down on tax evasion and the other negative side actions that are often connected with offshore banking.
But if all offshore banks are brought in line with the OECD, won't the whole point of saving offshore gradually become eroded? Not if one takes into account perhaps one of the most well-known tax havens. Switzerland is said to be home to around one quarter of the world's offshore money - and despite pressure from the OECD and investigation by the IRS, the positive aspects of offshore banking still shine through. And, of course, it is often about far more than tax.

According to economist.com, political stability and the efficient running of Swiss banks are one of the reasons they are so popular - a fact proven by the third of accounts held by those who live in low tax countries anyway. Following the troubles felt by UBS, it is worth noting that the majority of account holders did not leave Switzerland, they simply moved banks - and will no doubt move to another offshore centre before moving to a mainland bank. Yet, to further complicate the notion of where they may move to should Switzerland fall from its pedestal - in a recent Forbes list of surprising tax havens, London was listed and consequently described as 'a state within a state'.