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Taxes lost in your home country by sending money overseas, damages your country's well being.
First and foremost, there's the issue of image: offshore bank accounts are automatically stigmatized by the general perception of society at large. In keeping with the old adage, “A person is judged by the company they keep,” and the company in the offshore community isn't that cute and cuddly. From drug-traffickers, to the mob, to outright terrorists or dictators, there has been a long history of shady dealings in the offshore banking community. However, guilt by association should not be—and isn't—the biggest drawback to keeping your deposits offshore.
The most common mistake in offshore banking is the assumption that you don't have to declare the money in your tax statement, and that's where most people run into trouble. Beyond this mistake (which doesn't technically count as a drawback), there are other issues to keep in mind. For instance, the privacy that offshore proponents so vigorously tout has been seriously drawn into question, as after the September 11th terrorist attacks in the U.S., the CIA and the Treasury Department have begun a serious effort to identify and scrutinize offshore holdings, as part of the Terrorist Finance Tracking Program, which has cast serious doubt on the sanctity of offshore bank secrecy. Lastly, there is the altruistic concern among many critics of offshore banking that the taxes lost by the sending of funds overseas damages the home country's wellbeing, perpetuating class differences and other socioeconomic barriers...a whole other can of worms.
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