What is offshore banking? And is it really that bad?

Offshore banking has always been surrounded with an aura of mysticism with rich and often criminal people hiding their assets on a far away island where no taxes are being paid. The media is full of stories where offshore banking and criminality are tightly associated and in the movies it is always the bad guys who are using offshore accounts. For a bad cause of course. Personally, I cannot remember one single movie where the good guys where the ones using an offshore company or an offshore bank account.

But is this a correct description of offshore banking? Is offshore banking really that bad?

The definition of offshore banking and an offshore bank

The term ‘offshore banking’ originates from Europe and the Channel Islands; a couple of islands that are situated in the English Channel between England and France. The Channel Islands were by definition ‘offshore’ from England and the rest of the United Kingdom. In the beginning the term offshore had nothing to do with taxes, it was simply a description of something that geographically was not situated on the main land of UK and an offshore bank was a bank being situated ‘offshore’ on the Channel Islands.

An offshore bank can simply be defined as a bank located outside the country and jurisdiction of residence of the depositor. By definition a Spanish citizen living in Spain but having his or her saving on an account in Portugal is managing his or her savings offshore.

However, this definition cannot be said to be the common one. The common definition does include other requisites as well. Even though there are several definitions of offshore banking the following should probably be accepted by most people working in the offshore banking industry.

An offshore bank can generally be defined as a bank that:

• is located in a jurisdiction outside the jurisdiction of residence of the depositor,
• the jurisdiction where the bank is located is a low tax jurisdiction, and
• the jurisdiction where the bank is located does have strong secrecy laws.

Is offshore banking really that bad?

By definition there is nothing illegal or bad with offshore banking or an offshore bank. As stated above an offshore bank is simply a bank that is located in a low tax jurisdiction with strong secrecy laws outside the jurisdiction of residence of the depositor.

Taking measures in order to avoiding paying taxes is not a crime as long as it is done in accordance with the applicable tax laws. Often the term offshore tax avoidance is used for describing dispositions that are within the limits of the law in order to diminish or completely avoid paying taxes while the term tax evasion is used to describe dispositions that are outside of the law and regarded as a criminal offence.

The fact that there are bank in jurisdictions with no taxes and strong secrecy laws will of course lead to that there are people using these jurisdictions in order to illegally avoid paying taxes but also in order to commit money laundering.

But even though that offshore banks are used in illegal activities it must be remembered that of all the bank transactions taking place offshore it is only a very, very small fraction that can be considered being associated with criminal activities. The vast majority of transactions is completely legal and plays an important role in the global economy.

When watching Hollywood movies and even reading the newspapers it is easy to believe that offshore bank accounts are being held only by drug barons, terrorists, tax evaders and other criminals. Nothing could be further from the truth; offshore banking and offshore bank accounts are being used by anyone from most of the companies on the Fortune 500 list to small business owners and expats that have moved abroad in order to enjoy their retirement.

Thus, offshore banking cannot be considered as something ‘bad’. It has existed for a long time and plays an important role in the global economy and the global growth. Offshore banking facilitates international business and money transactions and is also giving good and necessary competition to the ‘non-offshore’ banking systems that definitely needs more competition, not less.

When discussing offshore banking and criminal activities the focus should be on the criminal activities and not on offshore banking in general. Offshore banking and offshore banks are here to stay and will continue to play an important and vital role in the global economy.

Robert Pavlik has been working as a business lawyer since the mid 80s. He is specialized in offshore solutions with focus on offshore banking and offshore company formations. He continuously writes legal articles for different magazines and other publications around the world.

Article Source:http://www.articlesbase.com/banking-articles/what-is-offshore-banking-and-is-it-really-that-bad-1272915.html

Are There Differences between the NCUA and FDIC?

I was reviewing our logs and noticed that someone had come to Jumbo CDs, looking for the answer to, “What is the difference between FDIC and NCUA Insured?”

Boy, did I feel silly because I didn’t actually have the answer on our site. After all, it is an important question for people investing their money into banks and credit union CDs.

And the answer is, there is really no difference as far as federal protection. Both cover your bank accounts (CDs, Savings, Checking, Money-Market) up to $250,000 through 12/31/13. If the Gov’t doesn’t extend that it will revert back to $100,000. Both cover your IRA accounts assuming they are in a bank account and not a securities account up to $250,000. That was a permanent change made in 2004. IRAs are insured separately then your regular bank accounts.

Both are federally guaranteed. The FDIC oversees and insures banks and the NCUA oversees and insures credit unions. However, the NCUA is currently in far healthier shape. Not that I believe the FDIC won’t be able to meet its obligations, you just don’t here about the NCUA having to bail out too many credit unions.

The biggest difference is credit unions overall, are in better shape then banks. We have dealt with countless bank closures the last two years. There has only been a handful of credit union closures. And the reason is the foundational difference between a credit union and a bank. At a credit union, everyone is a member and has one vote, no matter how big their deposits are. The credit union exists to extend the lowest loan rates and highest savings rates it can to its members. Credit Unions are non-profit organizations. Because of their non-profit status, they are limited in what they can invest in. Most of their investments are in boring things like CDs ( :O) ), Gov’t bonds, and treasuries. They are limited in who and what they can lend to. Both of these drastically lower the risk of having problems.

Now, I don’t want my banker friends to get mad at me. Usually, small community banks operate much like credit unions in that they put the people first. However, a bank is a for profit organization. Usually, a small group of investors has put their capital into the bank and they want a return on their money. The pressure for higher returns leads banks to make riskier decisions. And over the last two years we’ve seen the result of that.

So when it comes down to it, there is no difference in your insurance protection between FDIC and NCUA insured accounts. If either a bank or credit union fails that is federally insured, you will get your money back.  But, there may be differences between the credit union CD Rates

Chris Duncan is a FINRA Registered Representative. He specializes in helping clients find the highest and best CD rates nationwide. His clients include individuals, financial institutions, corporations, and public agencies. Looking for good CD Rates for $100,000 or historical CD Rates, come on by.

Article Source:http://www.articlesbase.com/banking-articles/are-there-differences-between-the-ncua-and-fdic-1267450.html

NRI & NRO Deposit Accounts with Online Banking in India!

Finances have always been of utmost importance and handling it with complete responsibility can be quite a task. At the end of it all, you need growth, sustainability and security for your money. When you are in a far-off land and you need to be connected with your homeland financially, then the bank you choose plays a crucial role in your wealth management. NRI Accounts in banks offer you a lot more than just parking space for your hard-earned money. They have on offer a bouquet of services including financial planning, investments, lockers, etc.

The government of India introduced the rules for holding a NRI banking account in the year 1970. Within that purview, individuals leaving their country have found great convenience in maintaining their finances. Non-resident Indians can open any of the below mentioned accounts with their Indian bank:

NRE (Non Resident External Accounts)
It is an account by way of Savings, Current or Fixed Deposits in Indian rupees. The funds in this account are fully repatriable.
NRO (Non Resident Ordinary Accounts)
This account can be opened in the form of Savings, Current or Fixed Deposits in Indian Rupees. The only difference in this account is that the funds cannot be repatriated. However, the interest accrued over the deposits and investments is repatriable.
FCNR (Foreign Currency Non Resident Accounts)
All funds in this account are easily repatriable. You can only open a Fixed Deposit with this account in five major currencies of the world. The currencies are – US Dollars, Pound Sterling (GBP) and Euro.

While all these facilities are available to you readily, it is not necessary to authorise an individual back home to handle the transactions. You can have complete control over your banking transactions right from your desk in a foreign country. Online banking lets you do it. With just an internet connection, you can stay attuned to your finances from across seven seas.

Listed here are some of the functions that can be performed with ease online.
Financial transactions such as account to account transfer within the same bank or other bank accounts, crediting accounts
Electronic bill payments
Purchasing and / or selling investments
Applying for loans till its full execution. Repayment, interest and more

What’s more, you can perform a number of non-operational functions through Online Banking, some of which are mentioned below:
Checking account statements online, finding out about new products, etc.  
Assistance from the bank staff for banking queries and feedback.

The N420 billion Nigeria Bank Stimulus: Some Economic and Financial Implications

THE N420 BILLION NIGERIA BANK STIMULUS: Some Economic and Financial Implications

Written By: Shafii Ndanusa MBA, ACCA, FAAFM

Nigeria and in fact the entire world economy has in the last five weeks witnessed the spectacle of the unfolding drama in the nations’ banking and financial landscape. A major stabilizing decision that was taken in the wake of the Central Bank of Nigeria’s intervention is the injection of some four hundred and twenty (420) billion Naira into the five hitherto unhealthy commercial banks.  This rather humane and socially-responsible action itself has elicited a wide range of reactions from a cross section of the populace. Although, there appears to be some balance of reporting in terms of those who favor and those who oppose the CBN intervention. My personal view is that Nigeria is a developing country. More than ever before, this is the time Nigerians should pay great attention to facts, truth and objectivity. Based on the above criteria, people should then decide where to pitch their tents in matters of critical national importance. The era of primitive sentimentality, blind accusations and ill-informed contemplation clearly belongs to the dustbin of history.

My favored approach to a lot of issues is to ask questions myself. Perhaps this is because of my willingness and openness to new perspectives of thought and action. To this end, the following is considered pertinent.

1. How is the 420 billion Naira stimulus package being made available to banks? Is it solely in cash or a combination of cash and financial instruments?  Note that attention has to be paid to the impact of cash injection to the overall money supply of the Nigerian economy and its attendant effects on interest rates.

2. Is there any possibility of excess liquidity being created as a result of the intervention? How much liquidity injection can the system comfortably cope with without adversely affecting the local and international value of the Nigerian currencies?

3. What effect could the more money in circulation lead to in terms of Retail Prices Inflation? What additional monetary policy measures are required both in the short and long term to stabilize the undesirable economic effects of this injection?

4. Noting that the 420 billion Naira stimulus was not created as a result of any real economic activity, what measures are required to ensure that the money created is given true economic value through its judicious application?

5. How is the N420 billion being administered by the regulator? The administration system must be transparent, accountable and fair to all the parties concerned. The system itself must also be capable of meeting the stiff and thorough tests of public accountability. Every aspect of the administration must be fully, properly, accurately and completely documented for posterity.

6. What are the rules for access to the bailout funds by the famous five banks? Are the rules fair and competitive? Do the rules encourage performance or over-reliance on the regulator?

7. What close monitoring mechanisms have been put in place to ensure that the bailout funds are not abused by the recipient organizations?

8. What is the short, medium and long term plans for the administrative and operational turnaround of these institution?

9. Regulators are expected to maintain arms-length relationships with operators within their industry. Having radically altered the competition dynamics in the industry, what measures are being taken by the Central Bank of Nigeria, the Nigerian Deposit Insurance Corporation and the Nigerian Stock Exchange to ensure that undue favor and privilege is not given to the five banks taken over? Note that this action is necessary to create an environment of fair play and healthy competition.

10. For regulation to be effective, the regulator must be ahead of the operators in all the key areas of regulatory interest. How much regulatory reform is required in terms of internal systems, structures, skills, staffing and strategy to ensure that future problems are not allowed to escalate before remedial action is implemented?

Mr. Shafii Ndanusa is a Certified Chartered Accountant (ACCA) and Fellow of the American Academy of Financial Management (FAAFM). He wrote from Abuja. Nigeria.

Fixed rate bonds and saving market ‘recovering from recession’

UK savers were badly hit in the worst of the recession, as base rates continued to fall to their lowest level in history – 0.5%, the rate at which they still remain, marking the sixth month in a row.

This caused the UK savings market to crash, forcing those that once lived off their interest returns to to dip into their capital.

However, the low rates mean that home-owners with tracker mortgages would have seen repayments plummet, leaving them with more disposable income.

Although the Bank of England base rate remains at a record low, the savings account market has been kick-started, allowing savers to earn up to 5% – 10 X the current base rate, depending on the savings product they choose.

Barnsley Building Society recently launched a new range of fixed rate bonds, offering rates of up to 5% on its 4 year fixed rate bond on balances between £100 and £500,000. Alternatively you can choose the Barnsley fixed rate bond with a 3 year term offering 4.15%, 2 years at 4% and 1 year at 3.15%.

It may be wise to cap your investments at £50,000 per banking institution, as this is the amount covered by the Financial Services Compensation Scheme. If you have more than £50K to invest and want to ensure your funds fully protected, Halifax is also offering 5% on its 1 year fixed rate bond, so you could spread your savings across the two. The difference with this accout is that it limits the amount you can deposit per month from £100 to £500, so this account may be more suited to somebody that is looking to build up savings, rather than investing an existing nest-egg.

The savings market has also seen an increase in rates on instant access savings accounts, with rates of up to 3.20% and no penalties for withdrawing, so you are free to move your savings around and still benefit from high rates.

If you wish to make use of your Individual Savings Account (ISA) allowance you may be interested to hear that the chancellor, Alistair Darling recently announced that the overall tax-free ISA allowance is to rise from £7,200 to £10,200, with the Cash ISA allowance element increasing from £3,600, to £5,100.

This will come into effect from next month for savers aged 50 and over and from April next year for everybody else.

Halifax is currently leading the ISA market, with its range of fixed rate ISAs, offering rates between 2.40% and 3.75% from terms ranging between 1 – 3 years. To open an account with the Halifax ISA range you must invest between £500 and £3,600, and if you are looking to switch accounts from an existing ISA provider, it offers an account paying 2.60% on balances of £10,000.

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