Who can resist looking at a picture of a gorgeous sunset on a sandy beach with swaying palms? It conjures up an image of peace, tranquillity and financial security. Increasingly we are seeing volumes of promotional material telling investors that they can make more money and avoid taxes by taking their Canadian dollars to an offshore tax haven (usually in the warmer climates). What should you consider before you send your money offshore?

Securities and banking laws and regulations are there for your protection. When you remove your money to another country, you also remove it from the protection afforded by those laws and regulations. Ontario and Canada have some of the most diligent and responsive securities and banking regulatory agencies in the world. For example, if you use an offshore broker you do not get the protection offered by the Canadian Investor Protection Fund should that broker go bankrupt.

In addition to the regulatory protection, the Canadian system offers some recourse in civil court, if you feel you have been harmed. In offshore jurisdictions, attempting a similar action might be next to impossible. The absence of credible police and regulators makes things easy for scam artists. They convince people to give them money by making extravagant claims that they don't have to justify, and that they have no intention of fulfilling. Once they have the money, they can take advantage of the same secrecy laws that were used to get your money in the first place.

A 2000 study by the Financial Stability Forum, a group of banking watchdogs from industrialised countries, identified those countries offering the least amount of co-operation in the supervision of their banking industry. Calling them "black holes," the Forum named Aruba, Belize, Cayman Islands, Costa Rica, Liechtenstein, Panama and the Bahamas. Scam artists are well aware that these offshore banking havens are the perfect place to disappear with people's money.

Scam artists also know how embarrassing it is for people who were trying to evade the tax laws to report the fact that they have been scammed in the process. Even if this is not your intent, scam artists rely on your reluctance to report them to authorities.

If you send your money offshore, be prepared to forego the protections offered by Ontario securities laws and the Canadian banking system. When thinking about trusting your money to someone who tells you that offshore is the way to go, ask yourself one question: If they're willing to help you circumvent the tax laws, how many laws are they willing to break by conning you out of your money?

Contact the Ontario Securities Commission toll free at 1-877-785-1555 for further information.