Pirate Bank

AAA

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.

INVESTOPEDIA EXPLAINS '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. Repatriable

    Refers to the ability of an asset to be moved from a foreign ...
  2. Tax Haven

    A country that offers foreign individuals and businesses little ...
  3. Offshore Mutual Fund

    A mutual fund that is based in an offshore jurisdiction, which ...
  4. International Banking Facility ...

    A facility that allows depository institutions in the United ...
  5. Tax Evasion

    An illegal practice where a person, organization or corporation ...
  6. Offshore

    1. Located or based outside of one's national boundaries. The ...
RELATED FAQS
  1. How do I open a Swiss bank account, and what makes them so special?

    Surprisingly, opening a Swiss bank account is not that much different from opening a standard bank account because you have ... Read Full Answer >>
  2. What are some of the well-known no-load funds?

    The capital adequacy ratio promotes stability and efficiency of worldwide financial systems and banks. The capital to risk-weighted ... Read Full Answer >>
  3. How do you calculate payback period using Excel?

    Each financial institution offers similar products for its banking customers, including savings accounts, certificates of ... Read Full Answer >>
  4. What formula can I use to calculate interest on interest?

    Use the compound interest formula to determine the amount of accumulated interest on the principal amount invested or borrowed. ... Read Full Answer >>
  5. Who are the most famous people convicted of insider trading?

    In finance, insider trading refers to the buying and selling of security by a person who has access to material non-public ... Read Full Answer >>
  6. What economic factors affect savings account rates?

    At a basic economic level, the interest rate set on savings account deposits is determined by the relationship between how ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Introduction To American Depositary Receipts (ADRs)

    Investors should look beyond the confines of the U.S. borders to diversify and maximize returns. ADRs are one way to diversify your portfolio and help you achieve better returns when the U.S. ...
  2. Mutual Funds & ETFs

    Protect Your Foreign Investments From Currency Risk

    Hedging against currency risk can add a level of safety to your offshore investments.
  3. Personal Finance

    Pros And Cons Of Offshore Investing

    Tax loopholes are shrinking, but there are still plenty of viable prospects. Get the big picture.
  4. Savings

    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.
  5. Taxes

    Taking A Look At Tax Havens

    These tax-free zones might sound appealing, but the consequences often aren't.
  6. Savings

    Top Premium Checking Accounts of 2015

    Which banks offer the best deals for premium checking accounts – and what do you have to do to qualify for one?
  7. Taxes

    Corporate Tax Rates: The Highs and the Lows

    The United States is No. 2 in the world for its high corporate tax rate. There are ways around paying it, and many nations with lower rates are worse off.
  8. Economics

    Explaining Risk-Weighted Assets

    Risk-weighted assets is a banking term that refers to a method of measuring the risk inherent in a bank’s assets, which is typically its loan portfolio.
  9. Economics

    Understanding Money Laundering

    The process of creating the appearance that large amounts of money obtained from serious crimes actually originated from a legitimate source.
  10. Savings

    Understanding Savings Accounts

    A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.

You May Also Like

Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  3. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  4. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
  5. Rule Of 70

    A way to estimate the number of years it takes for a certain variable to double. The rule of 70 states that in order to estimate ...
  6. Risk Premium

    The return in excess of the risk-free rate of return that an investment is expected to yield. An asset's risk premium is ...
Trading Center