An international bank is a financial entity that offers financial services, such as payment accounts and lending opportunities, to foreign clients. These foreign clients can be individuals and companies, though every international bank has its own policies outlining with whom they do business.
According to Punch, there are some hazards in international banking. Getting answers to the following questions will show how sound or safe an international bank is.
Is the bank in a country on the verge of economic collapse? Is the bank in a country notorious for its corruption? Is the bank known for efficiency and smart investments or for poor customer service and federal bailouts? Again, do your homework.
Just as domestic currency can change value, so can a foreign currency. If you invest your money in a foreign bank, and then the value of the foreign currency plummets, you lose money.
Furthermore, if you make a bunch of money through an international investment, your profit may be greatly reduced when you convert the money to your less-than-booming home currency.
To address this issue, many international banks encourage account-holders to keep their money in interest-bearing accounts and other investments. Customers can use the money they earn on such accounts to conduct business abroad.
Many international banks will keep an eye on your account activity because of rising international concern about money laundering, terrorism and tax evasion. If you’re moving massive amounts of money around quickly, you will raise a red flag. Criminals and terrorists love to launder money through international banks, passing their questionable funds through foreign accounts, many of them anonymously held, until the legal trail is lost.
Tax evaders often use international banks to set up companies and trusts whose sole purpose is to hide money and erase its relationship with the owner.
Be careful with the offshore banks you do business with – don’t be collateral damage in the wars against tax evasion, money laundering and terrorism.