Offshore Certificates of Deposit (Offshore CD)

Offshore certificates of deposit (bank deposits, time deposits, or “CD’s”) are one of the most popular offshore investments because they offer fixed, monthly income to the investor.  Offshore Banks and offshore Credit Unions both offer offshore CD investment products.

How a CD Works

A certificate of deposit (CD) from a reputable offshore bank or credit union is the most secure offshore investment available.   An investor signs a deposit contract with the bank or credit union, in which the bank or credit union provides the investor a fixed annual interest rate (normally the interest is paid on a monthly basis) in return for the use of a specified sum of the investors money for a specified time period.  Once that time period expires (matures), the investor or depositor has the option to either renew the time deposit contract (CD), or take the money back.

Advantages of Offshore Bank CD’s

Higher Interest Rates: Offshore banks and offshore credit unions pay more competitive interest rates on offshore time deposits because:

a. Offshore banks and credit unions operate in tax havens where banks and credit unions either pay very little or no income taxes, so they can pass these tax savings back to their depositors in the form of higher interest rates,
b. Offshore banks and credit unions operate in low cost jurisdictions (employee salaries are lower), thus have lower operating costs, so they can pass these savings back to their depositors in the form of higher interest rates,
c. Offshore banks and credit unions are less regulated, thus have lower operating costs, so they can pass these savings back to their depositors in the form of higher interest rates.

2. No Interest Income Taxes or Reporting: Offshore banks and credit unions are not required to with-hold any of the interest paid to the depositor, nor are they required to send out any interest income filings or reports to any government agencies, because the laws in these jurisdictions do not tax interest income from banks or credit unions.

3. Asset Protection: In an offshore bank or credit union, your funds are more secure from an asset protection standpoint.  Offshore banks and credit unions are forced to adhere to strict banking secrecy laws, therefore making it virtually impossible for any creditor, ex-spouse, or anyone trying to attack your assets, to locate your offshore bank accounts.  Plus, even if they did manage to locate your offshore accounts, it would be extremely difficult if not impossible for them to sequester (freeze or seize) those offshore bank accounts because they are in an entirely different name (they would be in the name of an offshore corporation or offshore foundation) and in a different country that is not under the jurisdiction of the courts of your domestic country where the lawsuit was filed.

Interest Rates

Interest rates of offshore bank CD’s range depending on the jurisdiction, the specific bank or credit union, the deposit term, and the deposit amount.  Offshore credit unions tend to offer better rates than offshore banks, primarily because credit unions are non-profit organizations, they have tax-free status, they have lower overhead than banks, and they charge higher interest rates on their loans to their members.

CD rates for offshore banks are currently in the range of 3% to 6%, depending on the particular bank, the amount and term of the deposit.

CD rates for offshore credit unions are currently in the range of 6% to 9%, depending on the particular credit union, the amount and term of the deposit.

Certain credit unions in Panama are currently paying as much as 8.25% interest rate on 5 year CD’s with US$100,000 to US$200,000, and up to 8.5% interest rate for deposits above US$200,000 (the interest is simple interest, paid monthly, not compounded).  Contact Us for an introduction.  We can assist you to setup an account with a Panama credit union in 1 business day.

Panama credit unions are also offering “retirement savings” accounts, which pay 9% interest (compounded) for 5 year terms, with no minimum deposit, however, you must leave the principal and interest in the account for the entire 5 year term, otherwise, if you withdraw the funds early (prior to the 5 year term), you lose the interest.

Please note that most offshore banks require minimum deposits from as low as US$10,000 to US$100,000 for CD investments, depending on the particular bank.  Offshore Credit Unions, however, generally require minimum deposits as low as US$500 for offshore cd’s.

*Quoted rates may change without notice, may vary depending on the LIBOR (London InterBank Offering Rate), and may be subject to minimum deposits and/or minimum balance requirements and/or certain terms for CD’s.


For investments in CD’s, we generally recommend banks and credit unions in Panama for the following reasons:

1. Panama banks and credit unions pay the most competitive interest rates,

2. Panama banks and credit unions are the most stable, and offer the most security,

3. Panama banks and credit unions deal in USD (it is the circulating currency) and many also deal in EURO currency.

More About Panama Banking Security

Panama banks can pay higher interest on bank deposits for the following reasons: Panama is home to the second largest international trade zone in the world (Colon Free Trade Zone) and the Panama Canal.  Panama is the most popular jurisdiction in the world for ship or maritime vessel registrations and domicile.  Here, businesses from all over the world buy, sell and ship goods, and therefore these same companies constantly need letters of credit, loans, etc. from banks in Panama to manage their ongoing business transactions.  Therefore, banks in Panama receive a wide range of international clientele and charge them higher rates for loans, letters of credit, etc.

Panama’s banking infrastructure is of the best in world, being home to the second largest banking center in the world next to Switzerland.  In some offshore jurisdictions, one can establish an offshore bank with as little as US$100,000.  Unlike banks in many other offshore jurisdictions, Panama has high banking standards requiring a minimum of US$15 million dollars in capitalization in order to establish the most basic banking license.  In addition, the banking regulations in Panama are very strict with high fines for banks that do not comply.

Panamanian banks do not carry FDIC (Federal Deposit Insurance Corporation) insurance as banks in the United States do.  However, all banks in Panama are required to hold a reserve account of a certain percentage of the entire banks deposits (varies according to the size of the bank) with the government Bank of Panama (BNP – Banco Nacional de Panama).  As the banks receive deposits on a monthly basis, they must submit a report to the BNP and adjust the deposit balance accordingly, which is used as a “reserve”.

The BNP also monitors each bank’s credit policies to ensure that no irregularities exist, and that depositors funds are not being misappropriated.  Each bank has government appointed compliance officers that monitor the banks activities on a daily basis.  In addition, some banks maintain a private insurance policy, through large international insurance companies, protecting against fraud, theft, etc.

Strict privacy laws protect offshore banking in Panama, and there are no taxes on interest income, making it very popular with those looking for a secure, well legislated offshore jurisdiction for offshore banking.  Panama has strict privacy laws that govern the disclosure of Panama’s offshore banking information, in fact, it is a criminal offense for anyone to reveal confidential information relating to Panamanian banking activity with crimes severely punishable.  This makes offshore banking in Panama popular with those seeking a greater degree of personal security and privacy.  Naturally enough, these laws do not protect those involved in criminal activity, and Panama adheres to international anti-money laundering rules.

If you are interested in establishing an offshore bank account, or offshore credit union account, please Contact Us for the most up to date information about the banks we are recommending, set up procedures and requirements.

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