DEFINITION of 'Pirate Bank'

A type of offshore savings account used by a wealthy individual to hide assets, typically to evade taxes and/or commit illegal acts such as money laundering. A pirate bank is different from a traditional offshore account in that it uses advanced technology to make it more difficult to track down the account. The account may also be unnumbered and have a chain of ownership that is difficult to trace.

BREAKING DOWN 'Pirate Bank'

Offshore accounts are commonly located in Switzerland, the Cayman Islands and the Channel Islands and funded electronically via wire transfer. Offshore accounts are associated with greater confidentiality and security, and these characteristics appeal to law-abiding citizens as well as less scrupulous ones. Not all offshore accounts are associated with illegal activity, however, and some banks require applicants to provide extensive documentation to prove their legitimacy before they can obtain an account. Offshore accounts can also legally be used to shield corporations from the higher tax burdens in their home countries.

RELATED TERMS
  1. Offshore

    1. Located or based outside of one's national boundaries. The ...
  2. Offshore Mutual Fund

    A mutual fund that is based in an offshore jurisdiction, which ...
  3. Savings Account

    A deposit account held at a bank or other financial institution ...
  4. No Shoring

    No shoring refers to situations where companies bring business ...
  5. Account History

    All activity within an account, usually since inception. In a ...
  6. Retirement Money Market Account

    A money market account that an individual holds within a retirement ...
Related Articles
  1. Insights

    How To Open And Access An Offshore Bank Account

    You don't have to be a master criminal or billionaire to open an offshore bank account. This article will walk you through the process.
  2. Managing Wealth

    Offshore Banking Isn’t Illegal. Hiding It Is

    If you want to put your money into an offshore account, go ahead. But be aware that it won’t be exempt from taxes.
  3. Taxes

    The Top 10 Caribbean Tax Havens

    Discover relevant tax policy information about the top 10 tax havens located in the Caribbean, including the Cayman Islands and the Bahamas.
  4. Managing Wealth

    When Offshore Banking Makes Sense for U.S. Expats

    For U.S. expats who have trouble opening bank accounts overseas, offshore banking can be a solution.
  5. Taxes

    How New Offshore Bank Rules Will Affect Americans

    FATCA is being implemented in 2013. Here is how it will affect the personal banking and taxes of Americans who hold offshore bank accounts.
  6. Taxes

    Overseas Cash Hoards: Shareholder Boon Or Taxpayer Burden?

    American corporations are holding something in the neighborhood of $1.5 trillion in cash in the coffers of their offshore entities, usually to avoid tax liability. Needless to say, not everyone ...
  7. Investing

    A Guide to Bank Accounts

    Find out which type of bank account suits your specific needs.
  8. Personal Finance

    Handling High-Yield Savings Accounts

    Is this the savings route for you? Read on to find out what these accounts have to offer.
  9. Insights

    Obama Goes After Tax Evasion, Post-Panama Papers

    The Obama administration went after tax evaders and money launderers yesterday by releasing a set of new proposals that make ownership disclosures mandatory.
RELATED FAQS
  1. Why is the Cayman Islands considered a tax haven?

    Find out why the Cayman Islands is considered a tax haven and why this location is so popular among those looking to reduce ... Read Answer >>
  2. Why would you keep funds in a money market account and not a savings account?

    Read about the differences between money market accounts and savings accounts, and see why a depositor would elect a money ... Read Answer >>
  3. Why is Jersey considered a tax haven? (C, CS)

    Learn about the tax haven status of Jersey, an autonomous nation located in the Channel Islands that is subject to the British ... Read Answer >>
  4. Why is Andorra considered a tax haven?

    Find out why Andorra is considered a tax haven and how developments have lessened its appeal due to increased taxation and ... Read Answer >>
Hot Definitions
  1. Agency Theory

    A supposition that explains the relationship between principals and agents in business. Agency theory is concerned with resolving ...
  2. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations ...
  3. Index

    A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is a hypothetical ...
  4. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
  5. Majority Shareholder

    A person or entity that owns more than 50% of a company's outstanding shares. The majority shareholder is often the founder ...
  6. Competitive Advantage

    An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers ...
Trading Center