What is offshore banking?
Offshore banking can be defined as using the services of a bank
located in a different jurisdiction or country than the
depositor resides in. Offshore banks are usually located in
places considered as tax havens and also provide additional
confidentiality and security for the depositor.
The term offshore was originated from the British Channel
Islands, tax havens located literally offshore from the United
Kingdom. These were the original tax havens and they started the
usage of the term offshore for describing the industry. Those
islands became major international banking centers because of
those tax benefits and regulations. They were optimal places to
hold assets abroad or save and invest.
Offshore bank accounts are often less regulated than domestic
banks due to fewer restrictions from their governments. This
allows for more types of offshore banking accounts and ways in
which they can be manipulated.
Offshore banking has become a major worldwide business
that circulates $2 Trillion every day. Thatís a far shot from
just a few decades ago where there was a very limited number of
offshore financial centers, which were usually surrounded by
myths of drug money and illegal activity.
What services are available?
Just like with your regular domestic banks, you can obtain a
full spectrum of services can be obtained from your offshore
These services include personal and corporate checking and
savings accounts. These offshore financial centers also offer
secure internet banking facilities that allow for wire and
electronic funds transfers, debit and ATM cards which are
accepted worldwide, credit cards, Loans and mortgages. Some even
go so far as offer Anonymous numbered accounts to provide for
Investment management and custody is also provided by some banks.
They also have Corporate Administration services, trustee
services, fund management and foreign exchange. Banks tend to
specialize between retail and private banking, so all the listed
services might not be available at every bank. retail banks tend
to be more economical and offer standard services. Private
banking services, while more costly than their retail
counterparts, tend to offer more personalized services for their
Advantages of Offshore Banking
Privacy is the first to come to mind, considering that
offshore entities have no obligation to release any of your
personal or business information. Unless evidence can be shown
proving your involvement in criminal activity, your information
will not be given to any governing body or tax authority. Pretty
much, they canít sue for or seize things which they donít know
Because of offshore banking centers usually being located in Tax
havens, your assets can grow almost free from any form of
taxation. Thus, tax efficiency is another important benefit of
holding assets overseas. This does not mean that you can avoid
taxes altogether. There may be tax liability when trying to
retrieve your assets to your country of residence.
Asset Protection is another one of the main benefits
offered by offshore banking services. Holding offshore accounts
gives you protection from Invasive bureaucracy, lawsuits, and it
also protects your assets from seizures.