By definition, offshore banking means to use the services of some bank that is located outside the depositor’s jurisdiction or in a country different from where the depositor resides. This method is chosen to benefit from some form of tax exemption or to maintain security in foreseen cases where the possibilities of future legal proceeding may arise. The British Channel Islands were used by the UK residents as tax havens through their banking; this actually led to the term offshore. These islands are considered to be the first tax havens used by a country and that’s how the term “offshore” came into being. Due to the enormous tax advantages they provided, these islands shortly became major banking centers for the global population.
You will find that offshore banking is liberally regulated because of the less restricting nature of their government policies. Offshore banking becomes more versatile in the kinds of accounts and the way these can be operated. Offshore banking is responsible for the circulation of 2 trillion dollars around the planet every single day. Until a few years ago, offshore banking was thought to be only for crooks and smugglers to hide their illegal accounts.
Whatever services your domestic bank can provide you with, the same services are available through your offshore bank. Checking accounts, savings accounts, personal accounts, corporate accounts – all are possible through such banking. The whole spectrum of other services is possible – credit cards, debit cards, ATM cards, loans, mortgages, wire transfers, electronic funds transfers, etc. People are keeping their accounts strictly confidential by using numbers for the accounts instead of their names.
Other features that some of these offshore banks provide include investment management and custody. You can also get services like trustee services, corporate administration services, foreign exchange and fund management. It is not necessary that all features will be present will all offshore banks because the banks can be aimed at commercial banking or personal banking. Commercial banks provide more standard services and are more economical than personal banks. Personal banking clients get features that are more personalized for their needs, but these banks become more expensive than commercial banks.
Hence, privacy becomes one of the best benefits of an offshore account. But if it is proven beyond doubt that you were associated with some criminal activity, information can be passed on by the offshore bank to the government or tax department of your country. Your offshore banking account is safe unless and until they can find out about it.
Places where your offshore bank accounts are held are not called tax havens for nothing. Saving on tax is very important as a benefit when you are into offshore banking. However, when you are retrieving these moneys into your country, there may be taxes applicable. You also protect your assets better when you are banking offshore. When you hold offshore accounts, you will find that there are much less chances of becoming a victim of invasive bureaucracy, seizure of your assets and even some lawsuits.
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