With much press over the past year and President Barack Obama pledging to “crack down on offshore tax havens”, it is often overlooked why we require and use legitimately the services of an offshore bank account.

There are over 50 or so locations holding themselves out to be offshore financial centres, with the list still growing. Some of the more established and best known are in the Channel Islands (Jersey and Guernsey), Isle of Man, Switzerland, Luxembourg, British Virgin Islands, Cayman Islands, Bermuda, Singapore and Hong Kong.

Historically, these destinations may have been considered as tax havens, conjuring up an image of palm trees, although for today’s global business model, the reality is that an offshore account is simply international banking for an international business or globe-trotting expat.

Whilst in past times a bank manager was a face, online banking and modern telephony (Skype) have changed the way we transact and conduct business. A laptop and internet connection should usually be enough to manage money and, let’s face it, when living overseas, popping in to see your local branch manager often seems a little unnecessary.

Common features of the most developed offshore centres are:

• Politically and economically stable
• Low tax or tax neutral
• High concentration of developed professionals, i.e, Lawyers, Solicitors, Accountants, Insurers, Bankers
• Favourable legal system
• Favourable regulations i.e. confidentiality, investor protection

Choosing where you bank internationally is usually decided by a familiar brand name, recommendations or following your existing local bank offshore without knowing too much about what the offshore centre has to offer.

The larger centres such as Jersey, Guernsey and the Isle of Man offer full banking, trust, investment, insurance, funds, share dealing & company formation, to name a few facilities.

In choosing an offshore bank, it would be prudent to minimise risk and only deal with centres maintaining a track record of strong stability and regulation. Recently, the introduction of depositor’s protection schemes such as Hong Kong SAR Governments Exchange fund, has been designed to protect against bank failure. High interest rates led people to deposit into Iceland and few could have predicted the events of last year’s collapse.

The requirement to know who your customers are features highly with several banks, and sometimes documentation is needed on the history of how you earned your money. Whilst this can seem intruding, this can also be beneficial, since your bank may notice other funds with another institution (perhaps on your statement). You may find increased bargaining power with what cash rates you receive, since the bank would be tempted to entice your further funds.

Once you have chosen and set up your account, day-to-day banking can sometimes be a problem, especially if your debit card is declined by a security block (a common feature with some banks), i.e. a bank may give you a debit card to withdraw funds, stating it is “for international use”, but will need to learn your overseas spending pattern, so potentially could block you each time you try to use in a new destination. Having 2 or 3 accounts/ cards is usually essential to ensure you’re not stuck in a foreign country without any access to money.

Being paid in different currencies in different jurisdictions can be both beneficial and hindering if not set up correctly. Some banks offer debit cards for different currencies, enabling you to draw direct from your earnings. If you are paid in USD, why have it paid into a GBP account and be penalised for the exchange rate conversion?

A typical international client now holds several local accounts in different countries, managing small daily expenses and 2 or 3 offshore bank accounts, to maximise earning potential whilst minimising the risk of being stranded with no access to money.

International property finance has taken a big hit during 2009. With most overseas property funded for investment purposes, banks have tightened lending, increased margins & funding costs, meaning it is harder to apply, since you will need a larger deposit. A typical new loan to value (LTV) at the end of 2008 could be seen at around 80% and now is more like 65%.

Countries such as the UK, Singapore, France, Spain, Hong Kong, Australia, New Zealand, Portugal, Dubai and the USA have all been fundable from banks taking security over the property in location. With banks tightening reins, other ventures such as Hedge Fund loans have sprung up. This has opened the door to allow a Farrang purchase of a property in Thailand without marrying a Thai local, and, at the same time, to have security over taking the money back out of investment when required.

With a developing world and renewed optimism for 2010, maintaining an offshore account for an Expat should be both profitable and fun.

Choosing a reputable jurisdiction and sticking with big name banks will usually provide the comfort of knowing your hard-earned money is in safe hands.

If you are unhappy with your bank, it is far easier to switch companies and open new accounts than ever before, and now is the time when banks require increased capital to satisfy the regulators following last year’s dramatic events. Rates can be bargained for and the customer can be more challenging over what they require. A small difference on your interest for a large deposit will go a long way to aiding your future spending power.