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Offshore Certificates of Deposit (CD's)

Offshore bank deposits (certificates of deposit, or "CD's") are one of the most widely chosen offshore investments because they offer fixed, guaranteed, monthly income to the investor.

How a CD Works

A certificate of deposit (CD) from a reputable offshore bank is the most secure offshore investment available. An investor signs a deposit contract with the bank, in which the bank guarantees the investor a fixed annual interest rate (normally the interest is paid on a monthly pro-rated basis) in return for the use of a specified sum of the investors money for a specified time period. Once that time period expires, the investor has the option to either renew the deposit contract, or take the money back.

Advantages of Offshore Bank CD's

1. Higher Interest Rates: Interest rates for offshore CD's are normally higher than the interest rates offered by domestic banks (in the US, Canada, UK, Australia, etc.) because offshore banks are less regulated and are more free to do offer credit and invest as they wish. Domestic banks are highly regulated, and are restricted from certain types of credit policies, or investing in certain types of funds, currencies, etc.

2. No Interest Income Taxes: Offshore banks do not with-hold any of the interest paid to the depositor as domestic banks do. Domestic banks are forced by the government to with-hold a certain percentage (normally about 30%) of your interest payments for interest income taxes. Offshore banks in tax havens (such as Panama) do not tax investors on interest income because their governments do not impose interest income taxes.

3. Asset Protection: In an offshore bank, your funds are more secure from an asset protection standpoint. Offshore banks are forced to adhere to strict banking secrecy laws, therefore making it virtually impossible for any creditor, ex-spouse, or anyone trying to attack your assets, to locate your offshore funds. Plus, even if they did manage to locate your offshore funds, it would be impossible for them to sequester (freeze) those funds because they are in an entirely different country that is not under the jurisdiction of the courts of your domestic country.

Interest Rates

Interest rates of offshore bank CD's range depending on the jurisdiction, the specific bank, the deposit term, and the deposit amount.

Generally, depending on the specific correspondent bank, we are able to obtain up to 8.5% annual interest rates for offshore bank CD's with banks in Panama. Please note that banks in Panama require a minimum of US$10,000 for CD investments.

*Quoted rates may; change without notice, vary depending on the LIBOR (London InterBank Offering Rate), and be subject to minimum deposits and/or minimum balance requirements and/or certain terms for CD's.


For investments in CD's, we generally recommend banks in Panama for the following reasons:

1. Panama banks pay the highest interest,

2. Panama banks are the most stable, and offer the most security,

3. Panama banks deal in USD (it is the circulating currency).

More About Panama Banking Security

Panama banks can pay higher interest on bank deposits for the following reasons: Panama is home to the second largest international trade zone in the world (Colon Free Trade Zone) and the Panama Canal. Here, businesses from all over the world buy, sell and ship goods, and therefore these same companies constantly need letters of credit, loans, etc. from banks in Panama to manage their ongoing business transactions. Therefore, banks in Panama receive a wide range of international clientelle and charge them higher rates for loans, letters of credit, etc.

Panama's banking infrastructure is of the best in world, being home to the second largest banking center in the world next to Switzerland. In some offshore jurisdictions, such as Cayman Islands, Bahamas, ST. Vincent, Vanuatu, Nevis, ST. Kitts, etc., one can establish an offshore bank with as little as US$100,000. Unlike banks in other offshore jurisdictions, Panama has high banking standards requiring a minimum of US$15 million dollars in capitalization in order to establish a banking license.

Panamanian banks do not carry FDIC (Federal Deposit Insurance Corporation) insurance as banks in the United States do. However, Panama has a similar banking insurance program through a banking division of the government of Panama called the Superintendencia de Bancos, which is operated through the central clearing bank of Panama, (BNP/Banco Nacional de Panama).

All banks in Panama are required to hold a reserve account of a certain percentage of the entire banks deposits (varies according to the size of the bank) with the government bank of Panama (BNP - Banco Nacional de Panama). As the banks receive deposits on a monthly basis, they must submit a report to the BNP and adjust the deposit balance accordingly.

The BNP also monitors each banks credit policies to ensure that no irregularities exist, and that depositors funds are not being misappropriated. Each bank has compliance officers that monitor the banks activities on a daily basis. In addition, most banks maintain a private insurance policy, through large international insurance companies, protecting depositors funds for additional amounts over what the BNP protects.

If you are interested in establishing an offshore bank account or investing in an offshore bank CD, please contact us for the most up to date information about the banks we are recommending, current interest rates, and set up procedures.


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