ELI5 How do rich people just hide their money in offshore bank accounts? Do they just call up the bank and say I want transfer such and money? How come the original bank doesn't catch on?

So let's say you own an insurance company, and you want to offshore all the profits. You establish a reinsurance company in Bermuda to underwrite all your policies and charge your insurance company billions for the privilege. Now it's a business expense so it doesn't count as income for the insurance company. You have successfully offshored billions of dollars.

I've worked for big companies before that opened up shell companies in tax havens like Dublin. They literally just moved the payments to there. When they floated it to us, they said hey, we're just not going to owe taxes anymore. We'll save billions.

We all looked as each other and said Jesus that sounds illegal. And yet there it was and it passed muster and they went public and IPO and everything

The rich use a multiparty trick to stay rich:

Put their money in an offshore account that doesn't tax them based on wealth in the country. Typically the deal is the managers get some very small amounts, single digit percentages, to charge the customer for moving money in or out of the country. Then they never touch this money again unless it is an emergency.
The rich then use their bank account full of money as collateral for a loan that is much smaller, like a few million borrowed with a secured loan linked to the millions/billions in the account. The banks easily accept the terms because they can't lose - if the loan defaults the amount is pulled from the account. But the rich usually try to make their payments so that account money isn't touched.
The rich spend their loaned money and make payments from the dividends, annuities, funds, and/or interest on their principal amount. This way the bank gave the person money that they can spend and it's not income so they aren't taxed on it, unless there is a sales tax. It's basically free money.

As they spend this free money, the government for the country that they live in doesn't know how much money the rich person actually has so they are unable to create an accurate amount to tax them. This is partially why folks like Bezos and Buffet pay a few hundred thousand dollars on hundreds of billions in actual wealth. Stock valuations are an entirely other beast but functions roughly the same way as having wealth to borrow money against.

The rich stays rich and get free money because the banking system was made by them and they are educated by their accountants and financial advisors on how to pay the least amount of money they can to get the most out of each cent.

In addition, all the secured loans they take make them look on paper as though they are deeply in debt and that debt then is a tax write off. This further lowers their tax brackets so they pay even less. Add to this that in the US at least only income is taxed, all of the stocks, options, and other assets they hold are non-taxable since they aren’t cash; technically their value can (and does) change regularly and they can become worthless just as easily as they can gain value and so it was determined they aren’t income since nothing is realized until they are sold.
How much money makes this worthwhile? Asking for a friend.
- This. Why is this system not exploitable by us? What do we need ti make this work for us? Also: if the system is known, why is nothing done about it?
I believe they also write off as much as they can as income losses to reduce their tax bill. Minimal or no income? No taxes.
- A lot of the expenses are NOT substantiated but limp dick IRS won't do their fucking job. Same with SEC...
  
  Useless regime whores
Interest income is definitely taxed.
Also the old fashioned olive oil scheme is still in use
- I can't find anything about it except fake olive oil sale.
  
  Do you have any sources?

There's law firms that specialize in this sort of thing. If you remember the Panama Papers from a few years ago, those were internal documents from one of these firms. Banks don't catch on because they like making money and pretending its not happening is often more profitable than calling the cops.

Why would banks care? If they’re getting a cut they care, otherwise it’s someone else’s business. Usually it’s the tax authorities who would care.
- Banks were the only ones still able to fuck people over en masse during the pandemic, and oh boy did they know it
"a few years ago" being 2016
- ..too old or too recent? I'd describe anything from 3 to 10 years ago that way

First, 99% of it is completely legal. Rich people write the tax laws. It's only when the money is coming from an illegal source that it becomes a crime and most big criminals know how to get around that.

While rest of us get get flagged for feds when we want to do something with 9k dollars because it close enough to 10k 🤡
- Isn't that $9k limit against pure cash deposits? As in an ACH, wire transfer or even old school paper cheque would be fine, but untraceable cash of $9k raises the eyebrows of regulators.

Yes, the banks know. Their cut is usually large enough for them to look the other way.

Just to be clear, it’s not like the bank explicitly says “yeah, we’ll hide your money for x%”

Banks make money on fees, active management of investments, etc.