The last secrets of offshore banking

The word “offshore” conjures images straight from a le Carré novel: sun-bleached Caribbean islands, briefcases stuffed with unmarked bills, men in wraparound sunglasses deflecting questions about provenance. The reality of international banking in 2025 is something else entirely—and considerably more interesting.

The Death of Secrecy

The age of financial privacy ended, with surprising specificity, on May 9, 2013, in Luxembourg. That afternoon, finance ministers from the world’s leading economies signed a directive mandating automatic exchange of tax information. Today, virtually every bank on the planet—from Zurich to the Caymans—dutifully reports client data to home-country tax authorities.

This revolution, known as CRS (Common Reporting Standard), now encompasses more than a hundred jurisdictions. Poland’s Ministry of Finance receives detailed reports on accounts held by Polish residents worldwide: balances, interest payments, the works. The paradox is that this very transparency has legitimized offshore banking. A foreign account is no longer a tool for tax evasion; it’s a legal instrument for diversification and asset protection.

Alongside this new transparency, the map of viable jurisdictions has undergone dramatic contraction. Places that seemed obvious choices for non-residents just a few years ago have either vanished from the realm of possibility or become so difficult to access that they’ve lost all economic logic.

Fallen Stars

In 2020, financial advisors routinely recommended Cyprus, Malta, and Panama as affordable alternatives to Switzerland. No one anticipated how quickly these jurisdictions would become virtually inaccessible to the average foreign client.

Cyprus has undergone the most complete transformation—from relatively easy jurisdiction to veritable minefield. Cypriot banks now demand not merely standard documentation but, crucially, proof of genuine economic substance. A company registered in Cyprus must actually be managed from Cyprus, with local staff, physical offices, and key decisions made on the ground. Remote account opening, once routine, now borders on impossible. Entire economic sectors—forex, gaming, cryptocurrency, affiliate marketing—face near-automatic rejection regardless of documentation quality.

Malta remains theoretically accessible, especially Malta residency program,  but practice diverges sharply from theory. Enhanced due diligence, multi-stage verification procedures, and approval processes stretching across months have stripped Malta of its principal advantage: simplicity and speed. For anyone who can endure such procedures, heading straight to Switzerland or Singapore makes better economic sense.

Panama’s story is more dramatic still. A country that spent decades cultivating its tax-haven reputation now reportedly rejects up to ninety-five per cent of non-resident applications. The problem isn’t merely tightened compliance procedures; it’s reputational stigma—the lingering taint of the Panama Papers and everything they came to symbolize.

Similar fates befell Belize and the Seychelles, jurisdictions once marketed as “tax havens for the merely affluent.” Their presence on the European Union’s blacklist has effectively neutralized their utility for European tax residents.

This radical reshaping wasn’t accidental. The E.U. systematically wields its blacklist as policy lever: countries refusing to implement economic-substance requirements, automatic tax-information exchange, or public beneficial-ownership registries face a suite of “defensive measures” rendering them practically useless for E.U. residents.

Where Tradition Meets Innovation

After eliminating the unworkable options, a narrower but more reliable list of functioning jurisdictions remains. Switzerland, despite every prediction of its demise following the 2008 banking-secrecy crisis, has not merely survived—it has flourished.

Swiss banks currently manage a record 3.4 trillion francs, a sum exceeding Italy’s GDP. This dominance didn’t emerge from nothing. When Hitler rose to power in 1933, the Swiss parliament enacted the famous Article 47 of the Banking Act, elevating banking secrecy to criminal-law status. A banker who disclosed client information could go to prison.

Decades later, in 2008, everything began unraveling. Bradley Birkenfeld, a UBS employee, handed the American IRS a list of four thousand U.S. clients hiding assets. UBS paid seven hundred and eighty million dollars in penalties, and the Swiss business model lay in ruins.

Switzerland’s response was uncharacteristic: rather than defending an obsolete model, it reinvented itself. Today, Swiss banks compete not on secrecy but on expertise. LGT Bank employs specialists with doctorates in behavioral economics who analyze the decision-making psychology of ultra-wealthy clients. Julius Baer maintains a department of forty geologists evaluating rare-metals investments. This isn’t banking anymore—it’s financial haute couture.

The Little Giant

The Principality of Liechtenstein comprises just sixty-two square miles inhabited by forty thousand people—fewer than a single Warsaw district. Yet it manages assets exceeding five hundred billion francs. How?

The secret lies in a unique combination: membership in the European Economic Area (which Switzerland lacks), the Swiss franc as currency (which other E.E.A. countries lack), and an AAA credit rating—the highest possible. It’s like holding three aces when everyone else has two.

LGT Group, the principality’s largest bank, remains the property of Liechtenstein’s prince. In 2025, Prince Hans-Adam II is eighty years old, with a fortune estimated at seven billion dollars, much of it in family-bank shares. This is one of the world’s last true banking dynasties—LGT’s board includes princes and princesses who treat the bank’s reputation as they would their own name.

Opening an account in Liechtenstein is almost ceremonial. A personal visit to Vaduz—a capital on the scale of a small county seat—is required. In historic buildings, meetings sometimes last several hours. The bank wants to understand not just financial history but values. VP Bank, the second-largest institution, rejects roughly forty per cent of applications—not for insufficient funds but for “cultural mismatch.”

Asia’s Challenge to Europe

When the Chinese stock market lost forty per cent of its value in a single month in 2015, Singaporean private banks recorded record capital inflows. Wealthy Chinese, Indonesians, and Thais grasped the value of geographic diversification. Singapore became Asia’s Switzerland—except more digital, younger, and hungrier.

Bank of Singapore, owned by OCBC, employs two thousand people speaking twenty-seven languages. Clients from Greater China constitute sixty per cent of the base, but the bank also serves Indian tech magnates, Indonesian plantation owners, and Thai industrialists. Minimum deposits start at two hundred and fifty thousand dollars—half the Swiss price of admission.

Hong Kong, despite geopolitical turbulence, still functions as the gateway to China. HSBC, historically the Hongkong and Shanghai Banking Corporation, manages assets exceeding Poland’s GDP. Accounts can sometimes be opened in two weeks, with minimum deposits starting at a hundred thousand dollars. But there’s a question everyone asks: What happens when Beijing decides to integrate Hong Kong more deeply? This uncertainty is reflected in pricing—account-maintenance fees often run thirty to forty per cent below Singapore’s.

Where Petrodollars Meet Fintech

The Emirates are the newest player in the global offshore league. Thirty years ago, Dubai was a small port primarily engaged in gold smuggling to India. Today, it’s a futuristic city managing assets exceeding six hundred and eighty billion dollars.

Emirates NBD, the largest Emirati bank, offers something unique: multi-currency accounts with instant conversion at interbank rates plus 0.3 per cent—less than competitors charge. For entrepreneurs trading between Europe and Asia, this is transformative. Add zero corporate taxation, and Dubai attracts companies like a magnet.

But there are pitfalls. The account-opening process, despite its digital veneer, requires a personal visit and can take up to two months. Emirati banks, acutely aware of reputational risk, apply one of the world’s strictest compliance regimes.

The Anatomy of the Process

Forget Hollywood scenes where the hero opens a numbered Swiss account by handing a banker a suitcase of cash. Contemporary reality is far more bureaucratic—and far safer for both parties.

The process begins with pre-screening. The bank receives basic information: where you’re from, what you do, how much you want to deposit, where the funds originate. At this stage, twenty to thirty per cent of candidates are eliminated—either they don’t fit the profile or the bank deems the risk too high.

If you advance, document compilation begins. A standard package for individuals includes: passport with apostille, proof of address (utility bills no older than three months), reference from current bank, professional CV, and documentation of source of funds. This last item is the key—and the greatest pain point.

Source of funds doesn’t mean writing “these are my savings” on a form. The bank wants to know: from which specific property sale (notarial deed, wire confirmation), from which exact dividends (shareholder-meeting resolutions, transfers), from whose estate (final court ruling).

After document submission comes compliance review. The bank checks you against sanctions databases (OFAC, U.N., E.U.), verifies whether you’re a politically exposed person, analyzes document consistency. At larger institutions, a compliance committee makes the decision—sometimes five to seven people evaluate a single application.

If you pass, an invitation to a personal meeting follows. This isn’t a formality. The relationship manager assesses you as a person—whether you fit the bank’s culture, whether you’ll be a problematic client, whether the relationship can endure for years. Meetings last one to three hours and cover everything from investment philosophy to children’s retirement plans.

Traps and Red Flags

The most common mistake: choosing a jurisdiction based on prestige rather than needs. A Polish entrepreneur trading with China doesn’t necessarily need a Swiss account—Singaporean or Hong Kong accounts will be functionally superior and half the price.

Second trap: disregarding domestic tax obligations. Holding a foreign account requires annual declaration to tax authorities. Every income type—interest, dividends, capital gains—is subject to taxation at home. Failure to report constitutes a fiscal offense punishable by fine.

Third: improper offshore structures for companies. Establishing a BVI holding without economic substance can result in tax reclassification under CFC (Controlled Foreign Companies) rules. In practice, authorities may treat the foreign company as tax-transparent and add its income to the domestic tax base.

Fourth: relying on outdated information. Jurisdictions that advisors widely recommended just three years ago—Cyprus, Malta, Panama—are now either completely inaccessible or burdened with such reputational and regulatory risk that they’ve lost economic sense. Old articles and online guides still promote them without mentioning the dramatic changes of recent years.

The Future: Between Regulation and Innovation

Offshore banking in 2025 is an entirely different reality from a decade ago. Tax transparency has become the norm, and jurisdictions compete not on secrecy but on service quality, regulatory stability, and technological sophistication. The list of actually useful locations has contracted dramatically, but those that remain offer professionalism at the highest level.

The next wave of change comes from cryptocurrency – bank accounts for cryptocurrency. The OECD is developing a Crypto-Asset Reporting Framework—an extension of CRS to digital assets. By 2026, cryptocurrency exchanges will report transactions just as traditional banks do. Simultaneously, digitization opens new possibilities. Some banks are testing fully remote onboarding using blockchain for document verification. Switzerland’s SEBA Bank offers Bitcoin custody alongside traditional fiat currencies—the first true merger of old and new financial worlds.

For international entrepreneurs and high-net-worth individuals, offshore banking remains a valuable tool—provided it’s used responsibly, legally, and with full awareness of consequences. This isn’t a method for avoiding taxes; it’s a way of professionally managing international assets in a complex, multipolar financial world – professional Family Office. The key to success lies in avoiding obsolete jurisdictions that have lost their utility and concentrating on proven, stable locations offering genuine added value.