Offshore Payments and Offshore Companies to Receive Them
Theoretical Part
Classic credit card processing is an interaction between the payment card provider (VISA, MasterCard, etc.), the cardholder’s bank (issuer), the processing company (processor), the bank where the payee has a merchant account (acquirer), and the payee themselves.
Payment card providers decide which payments (for which services) from which countries to which countries to allow and what commission to charge processing companies for this. Providers prohibit some payments that they consider risky.
Processors are “white” and “grey”. White processors typically only work with existing legal businesses, require the site to meet a number of standards, require a security deposit, disclosure of the names of the real owners of the business, and other things specific to each different type of business.
Possibilities of Using Offshore Companies
One of the most interesting opportunities provided by registering a company in an offshore jurisdiction is the concealment of the names of the true owners of businesses. This opportunity, for obvious reasons, can be very interesting for citizens of the Russian Federation. Unfortunately, such schemes are not welcomed by most financial institutions and, in particular, in the case of Internet companies, if implemented incorrectly, difficulties may arise with the acceptance of electronic payments.
The fact is that obtaining data on business owners is a requirement of VISA and MASTERCARD in relation to banks for opening “Merchant” accounts, which, in turn, are needed to accept payments from credit cards. The second requirement, now of the banks themselves in relation to companies, is that they have annual financial reporting to the state. Both of these requirements are incompatible with the ability to hide the true owner of the operating company (the person conducting the activity). In these cases, it is necessary to use structures from legal entities.
Example of a Simple Company Structure
An example of such a structure is the British Virgin Islands – Cyprus link, which is popular among “real world” entrepreneurs, in which the Cyprus operating company is “openly” owned by the parent company in the BVI. But the owner of the company in the BVI is already hidden. However, Cyprus is not a classic offshore – it is a low-tax jurisdiction with a 10% corporate income tax, which is part of the European Union with all its requirements and restrictions, and also has a narrow Internet channel “to the continent”, which is bad for hosting servers. In addition, to open a merchant account, even if only to the bank, the real name of the business owner will still have to be disclosed. As a result, the BVI-Cyprus link is a good choice for operations to withdraw money to offshore accounts with the subsequent liquidation of the structure, but for conducting a long-term Internet business, such a scheme is not always suitable. However, there are several dozen offshore companies in the world, and depending on the business model, a wide variety of schemes and combinations can be built. The main thing is that this is done taking into account the specifics of Internet entrepreneurship.
In addition, it should be understood that the concealment of beneficiaries in each offshore implies very different things. In one jurisdiction, the register can be opened simply at the request of the court of any state, in another, only by a decision, moreover, only of its own court and only in a criminal case. These are completely different levels of protection. And the higher the protection, the more difficult it is to negotiate with the payment system. In each specific case, this is either a balance between security and capabilities, or a structure of offshore companies, or a security deposit to the account of the payment system. But, as a rule, there is a combination of these methods.
To select the optimal strategy for ensuring the safety of beneficiaries, we recommend that you seek advice from our specialists.
