Commonly referred to as a CD, a Certificate of Deposit can be used as a
short or long term investment. Domestic banks offer FDIC (Federal
Deposit Insurance Corporation) insured Certificates of Deposit with
higher rates of return than other investment options. The bank retains
money for a specified period of time with the promise to repay the
principal and interest to the depositor at the conclusion of the
investment term.
Depending on the amount of money you invest, and the particular terms
of the bank you choose to invest with, you may choose to invest your
money for a period as short as one month to six years. There is usually
a penalty for withdrawing money from a CD prior to the maturity date.
Banks will also require a minimum deposit to open a Certificate of
Deposit.
OFFSHORE CERTIFICATES OF DEPOSIT
International Certificates of Deposit vary slightly from domestic CDs.
International Certificates of Deposit can also be referred to as
Offshore Certificates of Deposit or Eurodollar Certificates of Deposit.
When obtaining a Certificate of Deposit from an offshore bank, the
investor signs an agreement with the bank in which the bank agrees to
pay a fixed interest rate in exchange to use the money during the
specified time period.
Similar to domestic banks, offshore banks will differ on the minimum
amount required to use as a deposit for a CD. Often the amount required
for an Offshore Certificate of Deposit will be much higher than what is
traditionally required from domestic banks.
There are several advantages to having a Certificate of Deposit from an offshore bank. The advantages include:
1. Higher interest rates. Unlike domestic banks, offshore banks are not
government regulated and are free to compete against each other for
better rates. Depending on the country you choose to bank in, interest
rates can be as high as ten percent.
2. Another advantage to having an Offshore Certificate of Deposit is
the income tax benefits. If you choose to open a Certificate of Deposit
in a recognized tax haven such as Panama, you will not be taxed on
interest earned because that particular government does not impose
interest on income taxes.
3. A third major advantage to an Offshore Certificate of Deposit is the
anonymity and confidentiality offered to protect your assets. Depending
on the jurisdiction you choose to obtain your Certificate of Deposit,
the bank may be forced to adhere to strict secrecy laws which protect
your money from creditors and divorce. Also, since offshore banks are
outside the jurisdiction of domestic courts those wishing to sequester
your funds for whatever reason will be unable to do so.
INSURANCE ON OFFSHORE BANK ACCOUNT CD
Unlike domestic banks, an offshore bank cannot offer Certificates of
Deposit which are FDIC insured. Rather, these banks have their own
methods of insuring investment money which guarantee that at any given
time the bank has enough money in its reserves to cover all deposits
made.
For example, in Panama all banks are required to report each month to
the BNP (Banco Nacional do Panama) to ensure they have enough reserves
to cover deposits made. Compliance officers are assigned to the banks
to make sure depositor's funds are not misappropriated. Additionally,
offshore banks will often maintain large insurance policies to cover
depositor's funds for amounts over what is normally covered by the BNP.
EURODOLLAR CERTIFICATES OF DEPOSIT
Eurodollar Certificates of Deposit are issued in London according to
the rates listed on the London Interbank Offered Rate (LIBOR). This
interest rate is calculated on a daily basis by the British Banker's
Association. Several countries that rely on LIBOR for calculating the
rates for Certificates of Deposit are England, the United States,
Switzerland, and Canada. Eurodollar Certificates of Deposit, while
being issued outside the United States, are still denominated in
American currency.
When choosing to open an International Certificate of Deposit, it is
important to consult with a financial advisor. Your advisor will be
aware of minimum deposits required to open the account, any penalties
for withdrawing money early, the stability of the bank you choose to
invest with, and the denomination your money will be kept in. Your
advisor will also help you choose the appropriate length of time to
keep your money tied up in a CD to offer you the best return of
investment.
Rocco and his team of bonded professional attorneys, CPAs and
accountants help affluent individuals and companies retain control of
their domestic and foreign/offshore assets, protect their assets, build
& preserve their wealth and financially structure their money to
reduce capital gains taxes, estate taxes, inheritance taxes, avoid the
probate process and decrease income taxes.
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Rocco Beatrice, CPA, MST, MBA, Award-winning trust & estate-planning expert
71 Commercial Street #150 Boston, MA 02109 tel: 508.429.0011 fax: 508.429.3034
Click here for more info: http://www.UltraTrust.com, http://www.ultratrust.com/finance/international-bank-commerce.html
Disclaimer: All information on this site is provided for informational purposes only! By no means is any
information presented herein intended to substitute for the advice provided to you by any health care or other professional
or organization.
