Many of us living in the Middle East experience a very comfortable lifestyle. We don’t particularly have to worry about crime or natural disasters and with a large expat community to make us feel at home, it is very easy to forget we are living under very different terms than we are used to.
From time to time we are given reminders of these differences. Most recently a British national was sentenced to life in prison for spying in the UAE after a court case that lasted less than 5 minutes. Fortunately for him he has been pardoned by the Sheik as part of a larger group of prisoners who have received pardons for the 47th National day.
Whilst this story made it to the forefront of the news there are many more that we do not hear about and these are usually the ones that we would understand are far more likely to happen to us. Here are two stories from our clients that highlight why offshore banking is so important:
Client 1: John
‘I was driving back from work along the same route I always do. As I crossed a traffic light-controlled intersection another car smashed into me. I knew the light had been green for me, but the other driver insisted that I was in the wrong and that his light had been green. This was obviously frustrating, but I was told that it would be investigated and that there was CCTV that would show the truth. This all sounded like a typical procedure as it would be done back home in the UK, so I wasn’t overly worried. However, as it became a police investigation I had my passport taken and to my surprise my local bank accounts were frozen. The investigation lasted 6 months. All my money was in my local bank accounts as I had never thought that could be a problem!’
Client 2: Sandra
‘I run a business in Singapore and came to the UAE to set up an office in Dubai. I needed money here to cover all the costs, so I deposited 1 Million AED into a local bank account. The teller gave me a receipt of deposit and I thought nothing more of it. An administration error on their side resulted in the money never showing up in my account and the bank said there was no record of it at all. I am now having to go to court to try and resolve this.’
Sure, we may not have a million Dirhams anyway, but the point remains the same, it makes sense to keep your money in the safest place possible.
Is offshore banking expensive and how do I set it up?
The first thing to understand is that you should use a bank that is truly offshore. Many local banks offer ‘offshore bank accounts’ in Jersey and the Isle of Man but whether these could still be blocked like John’s was in the example above, is a grey area.
Offshore bank accounts do not need to be expensive but usually require a minimum balance to be maintained. Typically, this is anywhere between 3000 – 7000 USD depending on the bank. It wouldn’t be advisable to use this account for your day to day expenditure as there can be costs associated with cash withdrawals or currency conversions. The below illustration shows the ideal set up in order to utilise an offshore bank account.
If you have not yet set up an Offshore Bank Account, visit our services page here to find out more.