What is a 'Pirate Bank'

A pirate bank is a type of offshore savings account used by wealthy individuals 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. Pirate banks are one method individuals and entities use offshore financial accounts to establish legal, but ethically questionable tax havens.


Pirate banks and 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.

While avoiding taxes is a significant rationale for pirate banks and secretive accounts, it's not the only reason. Simply sheltering assets from oversight and reporting is another. For many investors, it makes perfect sense, even if unethical, to keep the spotlight off of their financial dealings. For instance, imagine the bad PR for a member of Congress who publicly lobbied for gun-control but regularly enjoyed profits from investments in gun manufacturers. In this instance, an offshore investment account would be an effective way to keep opponents and critics from discovering this member's double-talk.

Several recent high profile scandals have exposed the many ways the global elite have been dodging oversight with a rogue offshore financial system. The biggest, with effects still unfolding, was the 2015 Panama Papers episode. The Panama Papers include 11.5 million leaked documents, detailing financial and attorney-client information on more than 214,488 offshore entities. The Panama Papers investigation into the offshore secrets of the rich and famous would go on to win the prestigious Pulitzer Prize. The prize was awarded to the Washington-based International Consortium of Investigative Journalists (ICIJ), together with two U.S. titles, McClatchy and the Miami Herald.

  1. Due From Account

    A due from account refers to an asset account in the general ...
  2. Checking Account

    A checking account is a deposit account at a financial institution ...
  3. Chart of Accounts

    A chart of accounts is a list of each account a company owns, ...
  4. Bank Deposits

    Bank deposits are money placed into a deposit accounts at a banking ...
  5. Accounting Practice

    An accounting practice is a routine manner in which the day-to-day ...
  6. Certified Management Accountant ...

    Certified Management Accountant (CMA) is an accounting designation ...
Related Articles
  1. Investing

    Pros And Cons Of Offshore Investing

    Tax loopholes for investing abroad are shrinking, but there are still plenty of viable prospects. Get the big picture here.
  2. Managing Wealth

    4 Benefits of Owing an Offshore Company

    Four reasons why you might consider incorporating offshore.
  3. Insights

    Panama Papers: What Advisors Need to Know

    Here is how clients may be impacted by some of the issues brought to light by the Panama Papers.
  4. Taxes

    Panama Papers: Searchable Database of All 214,000 Parties Now Live

    Prepare for global mayhem.
  5. Taxes

    Tax Haven Vs. Tax Shelters: Is There a Difference?

    Learn about the difference between tax havens and tax shelters, and how both are used to reduce tax liability or avoid paying taxes altogether.
  6. Insights

    3 Richest Pirates Of All Time

    Most pirates died young and penniless, but these intrepid buccaneers looted enough booty to amass impressive personal fortunes.
  7. Managing Wealth

    Panama Papers Tip of the Iceberg as Congress Aids Tax Cheats & Terrorists

    Never mind the Panama Papers. America has its own ‘State Thieves, Embezzlers And Liars (STEAL) Protection Acts’ that can even shelter terrorists from exposure.
  8. Taxes

    3 Ways Tax Haven Governments Make Money

    If the governments of tax haven countries impose little, or no, income taxes, how exactly do these nations generate revenue?
  9. Insights

    Facebook Now Lets Creators Earn When Their Content Is Pirated

    Facebook is enabling content creators to make money off of content that is pirated and shared on its social network.
  10. Investing

    Cash Is King: The Only S&P 500 Sector With Net Cash (APPL, GOOGL)

    Explore the net cash positions of the largest companies in the technology sector, and discover why carrying large sums of net cash may be a thing of the past.
  1. Why Is Panama Considered a Tax Haven?

    Learn about the offshore tax haven of Panama, and discover the legal and tax structures that make Panama a premier Caribbean ... Read Answer >>
  2. 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 >>
Trading Center