The Disadvantages of Offshore Investment

Offshore investment may be, but is not necessarily, riskier than onshore investment. People making offshore investments (meaning, direct with offshore providers rather than through on-shore and thus regulated re-sellers of offshore investments) must do so with their eyes open. In most cases, and for all but the most experienced investors, this means take advice. Even if you are eventually going to trust your own judgement, or make a deliberately risky investment with money you can afford to lose, there is everything to be said for taking advice from wherever you can get it (other than from the person selling you the investment!)

It is probably obvious that getting information about offshore investments can be difficult. There is a wealth of information available about on-shore investment or about regulated offshore funds marketed on-shore, from the newspapers and from a multitude of other sources. It can be much harder to find out about offshore investments directly. It is also harder to track investments once you have made them, although some traditional difficulties have more or less disappeared with the advent of more reliable telecommunications infrastructures and increasing use of the internet. In addition, almost all offshore jurisdictions now have supervisory regimes which exclude the bandits. However, offshore providers and advisers can still be somewhat laid-back on occasion!

Remember also that a tropical island with a population of 10,000 people and 30,000 international business companies may not leap to push your liability claim against one of its senior professionals through the courts, however grand-sounding its investor protection laws. Caveat emptor is not a phrase that is well understood in Brussels any longer, but it still has resonance offshore.