Because the US taxes its citizens on the basis of their nationality and not on the basis of their residence, the concept of 'offshore' is not very useful to a US national from a residence point of view. There is an income tax concession for foreign earned income available during non-residence, but beyond that the tax position of an individual US citizen is about the same whether they are in or out of the US.

The tax position of a ‘non-resident alien’ is fairly favourable, but the rules determining residence are extensive, and difficult to escape. For taxation purposes, you are considered US resident if you meet either the Green card or substantial presence criterion. Non-resident aliens pay tax on US-source income, but are not liable to tax on capital gains or bank and portfolio interest. Dividends, and other types of interest are charged with 30% withholding tax.

Non-resident US citizens must be aware that tax paid in another jurisdiction may not be reclaimable against US tax if there is no double tax treaty - often the case with offshore jurisdictions.

Residents are liable for tax on their world-wide income, and any US citizen deemed to have expatriated for tax reasons is also liable for 10 years after their departure.

US expatriates, unless they have formally sundered their bond with the US, can gain no fiscal advantage from offshore banking; however, there may be other reasons for wishing to use an offshore bank account, such as asset protection.

Due to the long-time exclusion of foreign banks, classical banking services in Bermuda were provided primarily by the three established Bermudian banks, until the biggest of them, Bank of Bermuda, was taken over by HSBC in March, 2004.

The banks offer a wide range of banking services, however, and have expanded throughout the world, with subsidiaries in the major financial centres. Bermuda laws have traditionally not given any protection to Bermuda depositors or checking account users or savers. However, in September 2010, The Bermuda Monetary Authority (BMA) launched a consultation on proposals for introducing deposit insurance in Bermuda. One of the features proposed in the paper is a maximum coverage amount of BMD25,000 (USD25,000) per depositor, per institution. This means that in the event of a local bank failure, individuals with bank accounts with that institution would be reimbursed for all their deposits combined up to a maximum of BMD25,000.

A number of foreign controlled financial advisories and securities firms have been established, and can provide financial services such as electronic brokerage, international dealing and trading,and securities issuance and custody (they cannot, however take deposits). Basic personal banking services are provided exclusively by the two main local banks, a phenomenon which is something of an exception for an IOFC.

There is no income tax, capital gains tax, purchase or sales tax in Bermuda. (There are taxes on property and customs duties, which can be significant for immigrants.)

US citizens can therefore make tax-free deposits in Bermuda; the problem is that rates are not likely to be competitive with those obtainable elsewhere. This is evidently a result of the lack of banking competition on the island, but also because of the very high fees charged to the banks by the Government. These, together with employment taxes levied on the labour-intensive banks ensure high cost ratios and expensive services.

Banks in the Bahamas must be licensed under the Banks and Trust Companies Act 1965. The Central Bank of the Bahamas applies stiff criteria to incoming banks in order to exclude money laundering and criminal activity.

Legislation enacted in 2000 in response to pressure from the OECD increased the degree of Central Bank supervision over the banking and trust sector.

The Bahamas is one of the world's top ten international banking centers, with 300 licensed banks from more than 30 countries, and a total asset base nearing $1 trillion. Capital ratios average over 10%. The country's improved legislation and regulatory structure, its highly-skilled workforce, and its stable government have attracted some of the most prestigious financial institutions from around the globe. About half of licensed banks are incorporated locally, and more than half offer trust services alongside banking activity.

Evidently, private banking is a major component of the Bahamian banking industry: asset protection rather than tax avoidance as such is the driving force, so that the stability of the Bahamas alongside stringent banking secrecy and its sophisticated investment environment are very attractive to wealthy individuals, particularly those from the US where the Bahamas have a very good reputation.

n June 2004, Bahamian Attorney General Alfred Sears told an IMF conference that the country’s Central Bank was taking a tough stance on the licensing of banks and trusts, in order to bring its shell bank rules into line with international standards. Mr Sears observed: "One conclusion that can be clearly drawn from this march towards increased supervision and an increasingly strict regulatory environment is the attrition rate in the number of banks and trust companies registered in The Bahamas, a decline that is largely explained by the attrition of the managed banks."

He went on to explain that this policy had been “aggressively” pursued by the Central Bank, leading to a decline in the total number of banks and trust management companies registered in the Bahamas from 415 in 1999 to 284 in 2003, with the number of licenses revoked growing from 14 in 1999 to 29 in 2003. Sears also noted that this was achieved without a significant impact on the numbers of people employed in the country’s financial services sector.

Exchange controls in the Bahamas apply only to the Bahamian dollar, and there are no capital or exchange controls for non-residents.

The majority of Bahamian taxes are levied in relation to events rather than residential status. Non-residents are liable for taxes on any developed or undeveloped real estate they may own on the islands, and customs duties are quite high on the majority of imported goods.However, there is no income tax, capital gains tax, purchase or sales tax, VAT or capital transfer tax, and because direct taxes are not levied, there is no need for double taxation treaties between the Bahamas and other countries.

US citizens are therefore in theory able to bank tax-free in the Bahamas. However, since the entry into force of the IRS's 'Qualified Intermediary' regime (from January 1 2001), they will be able to avoid deduction of US withholding tax in the Bahamas only if they have presented adequate tax documentation to the bank concerned. What's more, under the US Foreign Account Tax Compliance Act, an American who holds more than USD50,000 in a depository or custodial account maintained by a foreign financial institution is required to report on any such account under this legislation. Under this law, foreign financial and nonfinancial institutions to withhold 30% of payments made to such institutions by US individuals unless such institutions agree to disclose the identity of the individuals and report on their bank transactions. The law also denies a tax deduction for interest on non-registered bonds issued outside the United States. The law applies to payments made after December 31, 2012.

Deposits can be made in a number of major currencies in the Bahamas, but the best interest rates are likely to be offered in the US dollar, which has a dominant position in the country's financial structure.

The Panamanian banking industry grew during the last quarter of the 20th century into a regional banking centre for Latin American and the Caribbean, due to a variety of factors including the absence of exchange controls, the rapidly increasing volume of trade being conducted through the country (and through the Colon Free Zone in particular), liberal banking legislation and tight secrecy provisions. At the end of 1997 more than 100 banks were licensed in Panama, from more than 20 countries and with assets of about $23bn; however the country responded to international pressure by tightening up on banking regulation, and a number of banks closed their offices in 2000 and 2001. By mid-2005, 80 licensed banks remained, of which 30 had international licences. Assets amounted to $7bn.

By 2007, the banking sector had rationalised further as foreign giants sought a piece of Panama's fast-growing services economy.

Panama introduced a new and comprehensive banking law (which covers local trust companies as well) in February, 1999, replacing one that had been in place since the 1960s. The National Banking Commission that previously issued licenses was replaced by a Superintendency which comprises a Board of 5 Directors and a Superintendent. In addition to increased investigative powers, the new law tightened general controls and regulations, and brought the country’s supervision more in line with the regulatory standards found in European and American banking centres.

Although confidentiality was enshrined in the new law, a prima facie case proving funds are illicit will open criminals to exposure. Banks must conform with stringent monitoring and vetting procedures; each bank has a compliance officer who is responsible for ensuring that controls are applied.

Residence is assumed if an individual is present in Panama for more than 180 days in any tax year, but for taxation purposes, no distinction is made between residents and non-residents.

The territorial basis of taxation applies to individuals as it does to business entities, so that individuals pay income tax on Panama-source income. 'Panamanian-source' means, that the services rendered are deemed to be provided within Panama - if a Panamanian entity pays an employee for services rendered abroad, tax will not be due.

However, a fiscal reform package introduced in 2005 which took effect from 2006 in most respects has changed the rules in some ways:

According to the updated Paragraph 1-A of article 694 of the Fiscal Code, income derived from personal services such as wages, salaries and other personal remunerations will be treated as originating from a source located within Panamanian territory – even though such personal services may be physically and actually rendered both within and outside Panamanian territory – if the individual taxpayer resides in the Republic of Panama for at least 70% of the calendar days of any given year. Other income (dividends, pension payments and interest, for example) is not covered by the new rule.

Deposits can be made in a number of major currencies in Panama, but the best interest rates are likely to be offered in the US dollar, which has a dominant position in the country's financial structure.