Finance Banking

Index:

Definition of offshore banking units

Private offshore banking services

Free offshore banking advice

Safe internet banking tips 

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.

Offshore banking means transferring money and assets overseas to be managed by banking institutions in jurisdictions outside of your country of residence.  The term offshore refers to the British Channel Islands just located physically offshore from the main land.  Those islands were tax havens, thus becoming very attractive places to establish investments that can grow tax free.  Banking institutions flocked to the opportunity to take advantage of those islands. 

Other countries that offer those same benefits began following suit and the practice became widespread. Now the term has been expanded to mean just having assets anywhere outside of your own country of residence.  Usually those jurisdictions have laws in place that favor the offshore banking industry.  Those laws usually enforce privacy and confidentiality as a requirement from banking institutions.  They also have less strict restrictions and regulations allowing for more flexible offshore accounts that are easier to manipulate in various ways.

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. That's 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 banking center.

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 extra confidentiality.

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 clients.

Advantages

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 can't sue for or seize things which they don't know exist.

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. 

In jurisdictions that are not carefully regulated, high interest offshore bank accounts should be approached with caution and should be considered very risky.   It's always important to carry out due diligence on offshore banking providers before committing because new companies usually offer higher rates to attract more customers. 

Aside from that, it's worth window shopping for a higher interest rate because although some are risky, with the proper professional help and research, some good companies can be found.  Some of the larger banking institutions offer customized account packages that combine higher rates with the customer's flexibility need.