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Onshore versus Offshore

Societies have long argued over the legitimacy of offshore business activity.

The debate has raged since at least 1934, when the Swiss Banking Act was born. The debate has been not only longstanding but emotional—as emotional as the topic of money itself.

Offshore: Perceived Negatives
Most of us have heard the most serious allegations against offshore practices. (Indeed, the critics’ voices on both sides of the fence can be loud, their language inflammatory.) At their most heinous, offshore practices are reputed to undermine the mainstream global economic system with a parallel, underground economy. The offshore model, fierce opponents say, encourages legalised tax evasion, enabling “foreign tax cheats” to flourish.

Offshore’s Defenders
Defence of offshore practices is as plentiful as its criticism. Renowned British economist John Kay, for example, sees the implied link between tax havens and the global financial crisis as spurious. Kay points out that offshore centres didn’t cause the financial crisis; onshore, regulated banks did. To Kay, focusing on tax havens simply diverts attention from the true causes of the crisis.

The Call for More Insight
In 2008, this century’s most fateful financial year to date, World Bank President Robert Zoellick said that studying “the development impact of off-shore financial centres would be a valuable contribution” to the ongoing question. The implication here is: more analysis of the issue can lead to a clear resolution.

United Bank’s Position
In fact, United Bank’s leaders have a history of favouring onshore landscapes. Specifically, Gregory Elias, United’s Chairman, in 1992 personally initiated the idea of transforming certain offshore environments (Curaçao, for example) into onshore centres.

Why has United historically favoured “onshore”?

Because the arguments for going onshore are so compelling:

Going onshore allows countries to become white-listed and improve their reputations.

Changing over to onshore allows governments to generate greater tax revenues, and so societies can benefit.

The image of offshore investments will improve when they’re brought onshore, and so investors benefit.

And greater regulation boosts transparency, so in the end, everyone benefits.