Glossary of Terms

Below is a list of terms that you may hear or read in relation to your offshore banking, together with a brief explanation.

AER - The Annual Equivalent Rate or AER is the rate that would be applied to the account if interest were paid annually (usually quoted alongside a monthly or a quarterly rate).

BACS - The Banks Automated Clearing System (BACS) is a method of transferring money electronically. Payments made by this method can take up to working days to clear. There are no charges for customers making a BACS payment from their BBI account.

Base Rate - The Base Rate is set by the Bank of England for the UK, US Federal Reserve Committee for the USA and European Central Bank for the EU and represents the minimum interest rate that should be charged on any loans. This is a variable rate and is set at regular meetings of the above committees. Financial Institutions calculate most of their variable lending and savings rates from the respective Base Rate and as such fluctuate in line with any changes.

Bed & Breakfasting - The process of closing an account to capitalise the interest and then re-opening the same type of account with the proceeds usually for the purposes of creating a taxable event. This service is sometimes requested when customers are changing jurisdictions.

Certification - All copies of identification for account opening purposes must be certified by a suitable person such as a lawyer, senior civil servant, bank manager, member of the judiciary, accountant, British embassy official, notary public or a serving police officer. They must confirm that the copy document is ‘a true copy of the original’ and then sign the copy document. The certifier should also clearly print their name, position and/or capacity as a certifier together with stamping the document with his/her business stamp.

CHAPS - The Clearing House Automated Payment System (CHAPS) is a same-day value transfer system. For payments to a UK bank, instructions should be received by us before 12pm GMT; for currency CHAPS payments or payments to a bank outside the UK, instructions should be received by us no later than 10am GMT. CHAPS payments do incur charges. See our Click here for more information.

Clearing time - This is the time it takes for a payment to leave one account and be received in another.

EFT - Electronic Funds Transfer is the generic term given to methods of electronic transfer such as Telegraphic Transfer or SWIFT.

EUSTD - The European Union Savings Tax Directive (EUSTD or EUSD) came into force on 1st July 2005 and is an agreement between EU member states to automatically exchange information with each other about individuals who earn interest in one EU Member State but reside in another. If you are an EU resident and would like more information on how it may affect you see our EUSTD section.

Gross Interest - Interest paid without the deduction of tax at source.

IBAN - The International Bank Account Number (IBAN) was developed by the European Committee for Banking Standards (ECBS) and the International Standards Organisation (ISO) to identify the account of a customer at a financial institution, to assist error-free cross-border payments.

Offshore - The term offshore relates to independent jurisdictions that often provide financial benefits to investors through their legal and tax framework.

Money Market - The Money Market is traditionally a market for major financial institutions to lend or borrow money over short periods of time. This however has become a far more accessible market place and is now available to investors with sums of £250,000+ to place their money over a fixed time period at a fixed rate.

Swift - The Society for Worldwide Interbank Financial Telecommunications (SWIFT) is a co-operative society set up to facilitate the transfer of any currency to destinations around the world that accept electronic payments. SWIFT payments do incur charges. See our Click here for more information.

TT - Telegraphic Transfer (TT) is the generic term given to electronic transfers. (Could also be the world famous Tourist Trophy Motorcycle races held here on the Isle of Man each year, very much depends on the context!!)

Value Date - This is the date a payment to your account is cleared to receive interest. Funds can only be drawn upon after the value date.