A
Account balance
The balance in an account at the beginning of each business day; includes all deposits and withdrawals that were posted from the previous night, whether or not funds have been collected. See also Glossary term, "collected balance."
Account statement
A printed or online statement of all the debit and credit transactions on an account for a given statement cycle.
Annual percentage yield (APY)
A percentage rate reflecting the total amount of interest paid on a deposit account (checking, savings, CDs, IRAs), based on the interest rate and the effect of interest compounding for one year.
APR
The annual percentage rate of interest, usually on a loan or mortgage, usually displayed in brackets and representing the true cost of the loan or mortgage as it shows any additional payments beyond the interest rate.
Arbitrage
A form of hedged investment meant to capture slight differences in the prices of two related securities.
Asset manager
A person appointed by a written contract between the company and the Investment programmatic can be a fully discretionary amount or limitations can be imposed by the contract under the terms of the APT or by the officers of the IBC. Fees to the asset manager can be based on performance achieved, trading commissions or a percentage of the valuation of the funds under management.
Auditors
The last body needed in connection with a corporation: required to inspect the company’s bookkeeping and verify the correctness of annual accounts. Usually buy an outside firm.
B
Banking Secrecy (or Banking privacy)
A legal principle under which banks and financial institutions are allowed to protect personal information about their customers, through the use of numbered bank accounts or otherwise. Effective bank secrecy is better achieved in certain countries, such as Panama, Belize, and Switzerland or in other tax havens, where offshore banks and financial institutions adhere to voluntary or statutory levels of privacy.
Bank Statements
This is a statement from the bank giving details of transactions in the relevant account. It can be requested at any intervals required, usually monthly.
Bear Market
A bear is somebody who believes that the market is falling and a bear market is a falling market. See bull market for the opposite.
B
Bearer Bond
A bond issued in bearer form rather than being registered in a specific owner's name. Ownership is determined by possession.
Bearer Shares
Shares in the capital of a company which are transferable by delivery of the certificate. They do not display a shareholder's name but instead grant ownership rights to any individual who is in actual physical possession of the certificate(s) Unlike registered shares, which are transferred by an instrument of transfer and display the shareholder's name on the actual share certificate, the name of the holder is not registered in the books of the company.
Beneficial Owner
Person who is the ultimate beneficiary of a company or trust
Beneficiary
The person to whom a trust's proceeds are distributed.
Board of Directors
The company's "cabinet" - as specified in the Articles of Association - is supposed to make decisions on the issues that are too specific for the general meeting to discuss but which are beyond the day-to-day responsibility of the company management.
Bonds
These are securities which pay interest at specified intervals and the principle amount of the loan is paid at maturity.
Bull Market
A bull is somebody who believes that the market is rising and a bull market is a rising market. See bear market for the opposite.
C
Certificate of Deposit (CD)
A time deposit that is payable at the end of a specified term. CDs generally pay a fixed interest rate and generally offer a higher interest rate than other types of deposit accounts. Terms can range from a few months to several years. If an early withdrawal from the CD prior to the end of the term is permitted, a penalty is usually assessed.
Certified Documents
These are photocopies of original documents that have been signed by a professional i.e. a solicitor, accountant, teacher, doctor or bank official. The professional also states, on the document, "original seen" since they must be able to verify that these are genuine copies and therefore have to have seen the original, they also date the document and put their full name, profession and their address.
Common Trust Fund
A trust that operates by the process of pooling funds from a number of participants in the trust, who as beneficiaries under the trust, share in the income or other gains derived from the acquisition, holding, management or disposal of assets acquired for the trust.
Compound Interest
The process by which a deposit or asset can, not only earn interest, but also build continually on the new sums with additional interest. For example, if you have $500 deposited, and gain 2% interest ($10), the next cycle will see that you gain 2% interest but now on the new sum, which is $510. Your sum thereafter would be $520.20, and so on and so forth. The more frequently interest is compounded, the higher the effective yield.
Coupon
A detachable part of a bearer bond. The coupon gives its holder the right to the interest payments that are due on the bond.
Credit
A financial term that refers to an increase in a deposit account balance (such as a deposit made to the account). See also Glossary term, "debit."
Credit card
A plastic card issued to an individual for the purpose of purchasing goods and services using credit; a credit limit is established for each card holder.
Credit rating
This is the rating which an individual (or company) gets from the credit industry. This is obtained by the individual's credit history, the details of which are available from specialist organizations.
Currency
The denomination of the notes and coins in circulation in an economy. The UK currency is the pound sterling; the US currency is the dollar; the new European currency is the euro.
Custodial account
An account created for the benefit of a minor with an adult as the custodian.
Custodian
A bank or financial institution that has the responsibility to manage or administer the custody or safekeeping of assets for others.
D
Data Protection
The right of individuals to have access to information about them that is held by other parties, such as financial institutions, credit-rating agencies or government offices. Individuals usually have to submit a formal request to gain access to the information. Such rights are established in many countries by so-called data protection legislation.
Debenture
An unsecured bond backed only by the general credit of the issuing corporation.
Debit
A financial term that refers to a decrease in a deposit account balance, such as a check posted to the account. See also Glossary term, "credit."
Debit card
A plastic card issued by a bank which, in the case of User Bancorp cards, customers can use anywhere Visa debit cards are accepted. Because the money is deducted directly from a designated checking account, there are no finance charges. A debit card can also be used at ATMs so there is no need to carry both a debit card and an ATM card. See also Glossary term, "Check Card."
Deposit
Money added into a customer's account at a financial institution.
Derivatives
A financial contract where the value is based on, or derived from, the price of an underlying financial asset or price - for example, a stock or an interest rate.
Direct debit
An amount of money taken from a bank account, set up by the recipient and can vary in amount and exact time that it is taken from an account. Mortgages are usually direct debits.
Direct deposit
With direct deposit, your recurring deposits are made electronically into your checking, savings or money market account. Deposits can include salary, pension, Social Security and Supplemental Security Income (SSI) benefits, or other regular monthly income.
Disclosure
Information pertaining to the account services, fees and regulatory requirements.
Discretionary Trust
A highly flexible arrangement in which the beneficiary has no fixed interest in any part of the income of the trust or its assets except perhaps at the termination of the trust. The Trustees usually hold the property and income for a broad class of beneficiaries to whom they distribute the assets at their discretion. However, the Trustees may be guided by an informal memorandum written by the settlor who outlines his wishes but has no legal status. One advantage of this arrangement is that benefits can be varied according to changes in circumstances with little difficulty. Another is that the beneficiary has a somewhat nebulous hope of receiving anything and therefore it is difficult for any creditors to find an interest to which to attach a liability.
Domicile
The place where an individual has his permanent home, or to which he intends to return, or in some cases the country of origin.
Double Taxation Agreement (or Double Tax Treaty)
Agreement between two countries intended to relieve persons who would otherwise be subject to tax in both countries from being taxed twice in respect of the same transactions or events.
E
Electronic Funds Transfer (EFT)
Any transfer of funds initiated by electronic means, such as an electronic terminal, telephone, computer, ATM or magnetic tape.
Expatriation
The change of someone’s legal residence or citizenship from one country to another country Expatriates from Third World countries enter OECD countries to search for better income opportunities than they can pursue at home. Expatriates from OECD countries search for better capital preservation opportunities than they can pursue at home.
F
Foreign Corporation
A corporation organized under the laws of a foreign country and whose parent company in the home country may participate in any percentage of shares of the affiliate corporation.
G
H
Hard Currency
A currency that does not normally depreciate (that is, loose its value) against other currencies over time. It is sufficiently sound so that it is generally accepted internationally at face value. For this reason hard currencies the US dollar, the D-mark and the Swiss franc are favoured for denominating international trade. The Euro is widely expected to become a hard currency to rival the dollar.
The term hard currency is a carry-over from the days when sound currency was freely convertible into hard metal, i.e. gold.
High Yield
Investments offering a high rate of return
I
Identity Theft
This is when criminals use an innocent person's details to open or use an account to carry out financial transactions. It is very easy to do with an individual's personal details, which is why shredding confidential information is so important.
Identity Verification
This is often used by financial institutions to verify the customer and usually takes the form of a pass-word and the answer to an obscure personal question such as the customer's mother's maiden-name.
IMF (International Monetary Fund)
Aims to promote international monetary cooperation and currency stabilization and expansion of international trade. The IMF was designed to enable to enable member countries to borrow from each other in order to iron out irregularities in their exchange rates and reserves. Countries are required to meet strict economic and financial conditions if they want to become borrowers.
Interest bearing
An account that earns interest is an interest bearing account.
Interest rate
The rate paid on an interest-bearing account, such as savings, CDs and some checking accounts; also, the rate charged on a loan or line of credit. Different types of accounts and loans pay or charge different rates of interest.
Investment Bank
A financial institution that arranges the initial issuance of stocks and bonds and offers companies about acquisitions and divestitures.
I.R.C.
Inland Revenue Commissioners (United Kingdom tax authority).
I.R.S.
Internal Revenue Service (United States tax authority).
J
Joint account
Any account owned by two or more people.
Joint Venture
A type of business partnership involving joint management and the sharing of risks and profits as between two or more enterprises based in different countries.
L
Limited Liability Company (LLC)
A hybrid between the partnership and the corporation (originates from the German GmbH created by law in 1892).
M
Money Laundering
Money-laundering occurs when criminals seek to make illegally obtained funds look legitimate by funneling them through a string of banks and businesses until the money's origin is obscured.
Money Market Account (MMA)
A type of savings deposit account intended for larger deposits that offer competitive interest rates. Many MMA’s place a restriction on the number of transactions that can occur in this account throughout the year, as well as requiring a minimum balance
Mutual Fund
Investment company usually formed in a tax haven and issuing shares to the public.
N
Nominee Director
Someone who acts on your behalf as a ‘front’ director of the company In some jurisdictions the nominee director can also is another offshore company.
O
Offshore
Any country other than your own.
Offshore banking
Relates to the banking and financial industry in offshore centres. It is located outside the country of residence of the depositor, typically in a low tax jurisdiction (or tax haven) that provides financial and legal advantages. These advantages typically include greater privacy (see also bank secrecy), a principle born with the 1934 Swiss Banking Act), low or no taxation (i.e. tax havens), easy access to deposits (at least in terms of regulation) and protection against local political or financial instability.
Offshore Country
Countries and jurisdictions, most commonly small islands with little to no resources for revenue, specializing in the provision of financial services These centres specialise and focus on offering to non-residents more favorable tax environments than that enjoyed in their home territory on international trading activities and/or investments via that country. Other beneficial features of offshore centres may include banking secrecy, privacy, various types of discretionary services and other favourable aspects of the legal environment.
Offshore Fund
A mutual fund offering its shares to persons resident outside the country in which it is incorporated.
Offshore investment
The keeping of money in a jurisdiction other than one's country of residence Offshore jurisdictions are a commonly accepted solution to reducing excessive tax burdens levied in most countries to both large and small scale investors alike. Selected offshore domiciles are superficially viewed by some as havens used to conceal or protect illegally acquired money from law enforcement in the investor's country. Although this may occasionally be the case, legitimate investors also take advantage of higher rates of return or lower rates of tax on that return offered by operating via such domiciles. The advantage to this is that such operations are both legal and less costly than the solutions offered in the investor's country - or "onshore". Locations favored by investors for low rates of tax are known as offshore financial centers or (sometimes) tax havens.
Offshore solutions are accessible to anyone who can meet the minimum investment amount or pay the obligatory fees required to open such an entity.
Tax is the driving force behind 'offshore' activity. Due to offshore solutions investors are able to conduct investment activities in a profitable fashion. Often, taxes levied by an investor's home country are critical to the profitability of any given investment. Using offshore domiciled special purpose vehicles an investor may reduce this burden allowing the investor to achieve greater profitability overall.
Another reason why 'offshore' investment is superior to 'onshore' investment is because it is less regulated, and the behavior of the offshore investment provider, whether he is a banker, fund manager, trustee or stock-broker, is freer than it could be in a more regulated environment.
Offshore Investment Jurisdiction
A financial centre used as a foreign base for overseas operations where the investor may move in and out of his investment freely and which fits the needs of the user. Large amounts of financial assets or foreign currencies may be sold without delay at low cost as compared with other types of financial centers. An offshore investment centre is also used as a base for such international activities as export-import trading, commodity transactions, mutual and other investment funds, exchange and securities hedging, futures trading for options, calls and puts, and patent and trademark licensing. Once referred to exclusively as the traditional "tax haven," the title given to this type of offshore operation (offshore investment center or jurisdiction) is now also universally accepted in order to strengthen its image in the worldwide business community.
Offshore Investor
An investor who is a user of a foreign base company in an offshore centre and who may
move in and out of his investment freely.
Online banking
A service that allows an account holder to obtain account information and manage certain banking transactions, including bill payment through a personal computer.
Original Interest Rate
Rate assigned when the CD account is opened. The Original Interest Rate is listed on your CD account receipt and statement.
Overdraft
This is when a person has a minus figure in their account. It can be authorized (agreed to in advance or retrospect) or unauthorized (where the bank has not agreed to the overdraft either because the account holder represents too great a risk to lend to in this way or because the account holder has not asked for an overdraft facility).
P
Protector
An individual appointed by the settlor of a trust to ensure that the trustee(s) administers and manages the trust assets in accordance with the trust deed and he is often vested with the power to appoint and remove trustees.
R
Rate of Return / Annual Return
Percent of your invested amount that you earn each year
Registered Agent
A registered agent is the person or entity designated in the articles of incorporation to receive service of process and other important notices from the state. A corporation must maintain a registered agent at all times or risk forfeiture of the corporate charter.
Registered Company
A company that is registered with the authorities of the country in which it is established In most countries it is illegal to operate as a company without being registered.
Registered Office
The registered office is the place where the registered agent can be found. It may be the corporate office, or it may be the office of the corporation's attorney.
S
Savings account
An account where deposited funds are intended to stay for a short term period, with slow turnover. Savings accounts offer lower interest rates than market rates and funds cannot be withdrawn by check writing.
S.E.C.
Securities and Exchange Commission, United States federal organization which supervises information provided by companies whose shares are offered to or dealt in by the public.
Security for Loans
Where large loans are required the lending institution often needs to have a guarantee that the loan will be paid back. This takes the form of a large item of capital outlay (typically a house) which is owned or partly owned and the amount owned is at least equivalent to the loan required.
Settlor
The person who creates a trust
Standing Order
A regular payment made out of a current account which is of a set amount and is originated by the account holder.
T
Tax Avoidance
Lawful agreement, or re-arrangement, of the affairs of an individual or company intended to avoid liability to tax...
Tax Evasion
Fraudulent or illegal arrangements made with the intention of evading tax, e.g. by failure to make full disclosure to the revenue authorities.
Tax Exempt Company
This is a company designed for companies and individuals who are foreign to the jurisdiction in which it is registered, providing a maximum of privacy, combined with comprehensive freedoms from local taxation. Tax Exempt companies (often referred to simply as Exempt Companies) pay a tax-exempt fee each year. This fee is a fixed annual fee exempting the company from further tax liabilities in the jurisdiction in which it is registered. It also has to pay annual filing fees (governmental fees) and domiciliary fees (service provider's fees) in order to remain registered. The relevant tax-exempt fee for the relevant jurisdiction is denoted in the e-offshore list for every jurisdiction.
Tax Haven
Simply stated, a tax haven is any country whose laws, regulations, traditions, and, in some cases, treaty arrangements make it possible for one to reduce his over all burden.
Transfer
A movement of funds from one account to another.
Travelers check
Check issued by a financial institution which functions as cash but is protected against loss or theft. Useful when traveling Also referred to as traveler's checks.
Trust
A trust is the relationship which arises whenever a person or corporate entity, called a trustee, is compelled in equity to hold property (whether real or personal, and whether by legal or equitable title) for the benefit of some other persons who are termed Beneficiaries, or for a lawful purpose in such a way that the real benefit of the property accrues to the Beneficiaries of the Trust. A trust must have a settlor or a person who establishes the trust to take over the ownership of assets. The trustee is an individual or corporation to which legal ownership of the assets is transferred. A trustee must supervise, manage, invest and distribute the assets in accordance with the trust deed. The trust deed states the terms and conditions under which the trustee operates. A beneficiary is the intended owner of the assets placed in the trust. The protector is a guardian who ensures that trustees carry out the wishes of the settlor.
Trustee
Trustees have a fiduciary duty to act in accordance with a trust deed and for the benefit of the beneficiary (is). See trust.
Trust Deed (Settlement Deed, Declaration of Trust or Trust Instrument)
The document that lays down the foundations of how the trustees are to administer and manage the trust assets and how they are to distribute and dispose of trust assets during the lifetime of the trust.
U
V
Variable rate
An interest rate that may fluctuate during the term of a loan, line of credit or deposit account Sometimes the rate changes based on changes in an index rate, such as the prime rate or other prescribed criteria. Sometimes the bank changes the rate at its discretion.
VAT
Value Added Tax.
Venture Capital
Money that is put up by a financial institution or wealthy individual to back a risky project, either in its early stages or when it needs a new injection of capital Because of the high risk involved, venture capital expects a higher rate of return than that obtained from normal equity.
W
Withholding Tax
Tax required to be deducted at source by companies paying interest, dividends or royalties, but which may in certain circumstances be reclaimed by the recipient or be reduced under double taxation agreement/tax treaties.
Wire transfers
An electronic payment service for transferring funds by wire.
Withdrawal from account
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