All About Offshore Banking

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. 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.

Recent Offshore Banking Buzz

Global Battle Against Tax Crimes Intensifies - An international task force says tax cheating should be seen by nations as an indicator of other financial crimes like money laundering. [Read More...]

5 European Nations Agree to Help U.S. Crack Down on Tax Evasion - France, Germany, Italy, Spain and Britain will ?intensify their cooperation? to identify U.S. tax cheats in return for help in finding U.S. accounts held by residents of those countries. [Read More...]

Romney?s Returns Revive Scrutiny of Offshore Tax Shelters - Experts say Mitt Romney appears to have benefited from an investment technique that has long frustrated Congress. [Read More...]

Swiss Turn Over Encrypted Bank Data to U.S. Prosecutors - The Finance Ministry delivered information on Swiss bank employees who served American clients, but said the data will remain encrypted until a tax dispute is settled. [Read More...]

Romney Tax Returns Show 2-Year Income of $45 Million - Details about Mitt Romney's taxes and income suggest the breadth of his wealth and income. [Read More...]

I.R.S. Renews Disclosure Program for Offshore Assets - The program is part of the government?s efforts to crack down on tax evasion worldwide. [Read More...]