Real Banana Republics Offer Tax Haven

British protectorates such as the Cayman Islands, Bermuda, Anguilla, British Virgin Islands and Turks and Caicos have long been favored tax havens for American businesses. They’re also outside the jurisdiction of U.S. bank laws.

Other countries such as China’s Canary Islands or the Netherlands’ Antilles can do the trick, too. But British protectorates are preferred because of Great Britan’s stability and their proximity to the U.S.

The two main risk factors involved in foreign banking are the lack of Federal Deposit Insurance Corp. coverage and cross-border risks such as asset seizures or government overthrow.

The benefits of using offshore banks, such as the Cayman Islands affiliate of Arvest, include competitve interest rates for commercial accounts and 24-hour electronic accessibility. Arvest’s Prime Sweep Account interest rate is based on the seven-day “All Taxable Average” rate, or about 1.75 percent in early April.

Interest is calculated daily and paid monthly.