Ben Todd | Jun 2, 2017 | 0
How To Open an Offshore Bank Account In The Cayman Islands
The fairy stories about the Cayman Islands are not as true as you may think. Movies and TV shows have convinced people that Cayman banks are full of drug money and are funded by tax cheats, but the truth is that the Cayman Islands are transparent tax neutral jurisdictions. You cannot hide money from the government in the Cayman Islands, but you can exploit US tax loopholes and use legal investing methods to accumulate wealth, or pay less tax.
The Caymans Are Not A Tax Haven
There are more companies with Cayman Island bank accounts than there are people walking around the Islands themselves. The Islands are only small, but they represent the sixth largest offshore banking centre with 212 banks, with 40 of the 50 world’s most successful banks having branches there.
With all these banks kicking around, it is no surprise that people think the Cayman Islands are a tax haven, but they are not; they are a tax neutral place. It is a British territory, and it was King George the 3rd that decided the Cayman people should never pay taxes, which is why the residents do not pay income tax, wealth tax or capital gains tax.
The Cayman banks are bound by law to share all their information with the US and European governments. They are on the OECD white list as a UK territory for their faithful application of tax laws.
But You Can Still Hide Money
Can you hide your income in various accounts in the Caymans? People have and do, but keep in mind that the bank regulations will require such banks to give up your privacy if governments come asking. As such, trying to hide money in the Cayman Islands may not be the best idea. This article is not really about creating tax havens or hiding money, so you’ll need to look for specific articles about that.
Keep in mind there is a very fine line between legally pursing tax avoidance (through various offshore bank account schemes) and tax avoidance. One is legal and the other is illegal with jail penalties for things like fraud and tax evasion.
How to Stash Your Money in the Caymans Like a Tax Dodger in Six Steps
If you want to stash/hide your money in the Caymans, here’s the basic steps.
Keep in mind: these are all perfectly legal steps on paper, assuming you declare your offshore income / investments to your local government.
But should someone seek to hide money, it’s possible; these six steps are the usual steps that both tax avoiders (legal) and tax evaders (illegal) pursue.
We don’t recommend you pursue tax evasion, but we are giving you the general guidelines on how people seek to avoid paying taxes, or at least, legally seek tax avoidance (less taxes on their investments which is legal).
Step 1: Choose a Bank in the Caymans (or other country)
You’ll have to choose a bank in the Caymans or another country that offers Offshore banking with a reputation for secrecy and few questions asked (far more difficult now in the 2016 climate than it was five or ten years ago).
Keep in mind not all banks are the same. International type banks that have branches back in the US and European countries will likely have stiffer regulations imposed on the sharing of information. If you want to, um, keep a lower profile, you would be advised not to choose a bank with such ties. There are certain banks that have a reputation (such as the Ugland House in the Caymans)
Step 2: Create a Secret Identity to Hide Behind
The next step that someone who is seeking to, dodge taxes, would be to create a secret identity — a corporation, a trust, or other such entity to hide the true identity behind. For an additional layer of secrecy, such people hire front-people called ‘nominee’s that are listed (at least on paper) as the shell corp or trust as the ‘director.’ This is completely legal.
Step 3: Open an Offshore Bank Account
The next step involves opening a bank account. In the case of the Caymans, you would choose a bank with loose ties to international banking for extra security. Someone who wants even more anonymity will often register the company in a different offshore locale than where the bank account is created. For example, an Irish company opens an offshore bank account in the Cayman’s. This creates another legal barrier between the two entities and makes it more difficult to discover who owns what and who is actually behind the company that has the bank account. Note, this is all completely legal.
Many banks will want to know the source of incoming money, however, to prevent money laundering.
Step 4: Move the Money Into the Offshore Account
While creating Offshore accounts is completely legal, the legal problems start when you move money from your home country into the offshore account. This is where many loopholes and grey areas exist and where you really need proper legal advice on how to best do it. If you want to stay on the legal side, you will declare all money you move to the government and your purpose will be for tax avoidance. There will be records on the money an you’ll be declaring this to the tax man. If you are seeking tax evasion, then this is where you don’t declare it. Technically, you can ‘legally’ move money in such ways to hide it, but this is a real grey area and you should absolutely seek out a tax lawyer and other expert advice before you commit to this.
Step 5: Invest the Money
You can invest money in your offshore account into various schemes: property, stocks, bonds, mutual funds, and more. If you don’t intend to declare your investment income (which is absolutely required by law), this is where you basically hide your profits. All investment earnings are out of sight of a the tax man at this point.
One of the LEGALLY acceptable reasons for having an offshore account are because you pay less (or no) local taxes on investments without being taxed like you would back home. Depending on your home country and the offshore bank country, you may be able to earn more money due to less or no taxes on the investments, at least until you declare those investments back home. This is called Tax Avoidance, and is perfectly legal, as long as you are working within your home country’s legal tax framework involving offshore accounts.
For those who are trying to avoid paying taxes completely on their investments, this is called tax evasion and is illegal. The difference is that you won’t pay any tax money on those investments (you won’t be declaring these to your home country’s tax man).
Note, the global banking entities (and the US) are cracking down on this. Former tax havens are being forced to give up information, so keep this in mind. If you do this, you may not be safe.
Step 6: Spending The Money
This is where a lot of people end up with legal problems. Spending this money back home leaves you vulnerable to tax questions and potentially charges like tax evasion — if you have not declared your offshore investments/earnings to your country’s government. One option to resolve this is to declare your income and pay taxes — this helps you avoid jail time but then you are essentially just paying tax as regular. The other methods of bringing home that money without paying taxes on it involve grey areas and tax evasion. Again, we make no judgements, but you are best off consulting with experts about this.
How to Open Up Your New Cayman Account
With our basic guideline above on how people use the Cayman’s for legal and illegal activity, let’s move on to the next part of this article: how to open your basic Cayman account.
Finding a bank in the Cayman Islands is not difficult thanks to Google, and you may write to your local British embassy if you want a full list of the banks on the islands. Many of the banks have a slew of fees, such as setup fees, transaction fees and account maintenance fees, but there is a great deal of choice, so you are free to shop around.
We encourage you to do your own due diligence, read reviews, and ask around before opening an account with a particular Cayman bank.
Once you have made contact with the bank of your choice, you will be asked for a number of different documents. Usually, you are asked for things such as:
[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][+] A notarized copy of your passport
[+] A wage slip from your job
[+] A second form of photo ID
[+] Financial statements from your bank or a letter of recommendation
[+] Proof of your address
[+] What you intend to do with the money
Things You Should Know
If the money you are depositing seems unusually high, considering your income, current trading, or previous bank statements, you may be asked to prove where the money is coming from. You may need a letter from your insurance company, proof of a sale, or proof of a legitimate transaction.
If you wish to hold money in a different currency to your own, then it protects you from your own currency falling further. However, you will be subject to exchange fees, and there is a chance it may make you subject to foreign tax laws.
Very few reputable banks will take cash deposits, especially if they are in their thousands and/or if you are not a Cayman Island resident. Most banks will expect you to deposit online via wire transfer or bank transfer. Few will accept foreign checks, and beware of banks that claim they do not charge fees to deposit, but then charge fees for wire transfers. Usually, the easiest way to get your money out again is to use a wire transfer/Internet banking to withdraw it from your Cayman Island account into your domestic bank account.
So Which Cayman Island Banks Should You Choose?
The truth is that you are spoiled for choices. There are 212 banks, plus plenty of financial services companies, which means you have a great deal of investing options.
Some of the banks only take on businesses, others only take on wealthy people, and some banks will not accept people from the US. It pays to do your research if you are going to open a bank account or do any investing in the Cayman Islands.
Here are a few banks you may like to consider if you are a US citizen. This is by no means a comprehensive list, especially if you are looking for a business account. Consider this list a good place to start, rather than a list of your only options. We’ve given a list of established Cayman banks.
Note that those seeking to tax evade should look at other bank options than the ones listed here as these are well known banks that cater to international clients. There may be other specific banks that are more suited for those seeking more illicit activities.
Butterfield Bank (Cayman) Ltd.
They undertake private banking, estate and trusts planning, custody services, asset management and lending.
(345) 949 7055
Butterfield House, 68 Fort Street
PO Box 705, Grand Cayman KY1-1107
Caledonian Global Financial Services Limited
They undertake general banking, securities services, fiduciary services, insurance and funds.
Caledonian House, 69 Dr. Roy’s Drive
PO Box 1043, Grand Cayman KY1-1102
Cayman National Corporation Ltd.
They undertake private banking, trusts, investments and wealth management.
(345) 949 4655
200 Elgin Avenue, George Town
PO Box 1097, Grand Cayman KY1-1102
CIBC FirstCaribbean International Bank
They mainly focus on private banking and wealth management.
(345) 949 7300
FirstCaribbean House, George Town
PO Box 68, Grand Cayman KY1-1102
Fidelity Bank (Cayman) Ltd
They undertake private banking, pension plan management, asset protection and financial planning.
(345) 949 7822
Cayman Financial Centre, Dr Roy’s Drive
PO Box 914, Grand Cayman KY1-1103
HSBC Bank (Cayman) Limited
They undertake a number of different services, such as wealth management, deposit vehicles, retirement planning, money market funds, global currency management, managed portfolios, equity funds, customized portfolio construction, and global bonds. You also gain access to HSBC’s network of global advisors.
(345) 949 7755
HSBC House, 68 West Bay Road
PO Box 1109, Grand Cayman KY1-1102
RBC Wealth Management
They have wealth management, brokerage and custody services, and they undertake private banking, trust services and fund administration.
(345) 949 9107
Royal Bank House, 4th Floor
PO Box 1095, Grand Cayman KY1-1102
Scotia Private Client Group
They undertake private banking for things such as lending, financial planning, management advice and investment advice. They undertake private trust formation and trust management, custody foundations and private investments too.
(345) 914 6274
Scotia Centre, 6 Cardinal Ave, #rd Fl, George Town
PO Box 689, Grand Cayman KY1-1107
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