What is Offshore Banking? What are its Benefits?

by Mariska Clark on March 1, 2009

To put it very simply offshore banking can be defined as banking in a location different from that of your citizenship or residence. So you use services of a bank located in a different jurisdiction. However, this is not all these locations are tax or financial havens. Such jurisdictions are called offshore financial centers. For example the most well-known tax havens are:

The term itself “offshore banking” appeared originally in the British Channel Island, a territory belonging to the United Kingdom, which is literally situated offshore of the mainland.

What is Offshore Banking

Nowadays offshore banking is a large and very well developed industry. This is sobecause of the multiple benefits offshore banking offers. One of the many such benefits is the fact a holder of an offshore bank account is provided with secrecy and confidentiality. In addition, offshore banking provides important asset protection. As a rule offshore banking jurisdictions have very relaxed bank regulations and rules. That is why an interested person in opening an offshore bank account gets except substantial financial privacy and confidentiality great flexibility, which is quite important as well. This flexibility, as stated above comes from the fact that offshore bank accounts are not overburdened by the government with regulations and in comparisons with domestic banks they enjoy less restrictive rules. These allows for many benefits and options when it comes to bank services. Though when choosing an offshore banking jurisdiction it is important to be prudent and do some research beforehand. Indeed all of them have in place regulations that confer confidentiality to its bank account holders and a wide range of services; however some give priority to privacy, other jurisdiction put more emphases on safety, others on both. So depends on what precisely you are looking for and value more. Only a very small number of offshore banking jurisdictions provide poor benefits.

As already mentioned two of the most important benefits that offshore banking is offerings are financial privacy and asset protection. Very shortly on both these obvious benefits: financial privacy – its most probably the first thing that comes when talking about offshore banking. According to privacy principle offshore bank have no obligation to release personal or business information of its account holders. Of course in case there is evidence provided that the account holder is involved in some sort of criminal activity, his or her information will be accordingly given to the competent authority. Another crucial benefit provided by offshore banking services is asset protection. Having an offshore bank account gives you protection from multiple regulation and interventions with your assets. You assets are duly protected from seizures.

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