When someone uses a bank that lies in a different country or in a different jurisdiction than their own area of residence, then it is known as offshore banking. Someone will indulge in offshore banking only because it has the promise of giving some tax benefits or at least some kind of added security and confidentiality. The concept originated from the habits of the UK residents to open an account in the Isles of the British Channels, which offers some very attractive tax benefits. These places were offshore from the British mainland, and the word offshore later becomes a definition to describe any kind of banking transactions that were done this way. The islands became hot favorites for all countries to start banking with them due to the tax advantages and their regulations.



Since their governments are laxer with their rules, offshore banking is subject to fewer regulations. There are more ways to open accounts in offshore banking and more ways to manage them. About two trillion dollars are circulated on a worldwide scale in offshore banking each day. Financial centers, which were usually surrounded by myths of drug money and illegal activities.

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. Other features that they provide are facilities to use credit cards, debit cards or ATM cards, wire transfers or e-transfers and even loans and mortgages. There can be better confidentiality of banking provided with anonymously numbered accounts.

Other features that some of these offshore banks provide include investment management and custody. Other features that are provided include trustee and corporate administration services, fund management and foreign exchange. You will have to check what features your own bank has, because it may either be a retail bank or a private bank. Commercial banks provide more standard services and are more economical than personal banks. Private banking means several customized services for the clients. But for that, the client will have to pay more.

Since offshore banks are not obliged to divulge any kind of information - personal or business - one of the best advantages of having such an account is privacy. The only grounds on which your information can be provided to any government or tax office is if you have been involved in some proven criminal activity. That means if they are unaware about it, they cannot get at your offshore banking account.

For your country, these offshore banks are known as tax havens. That is the reason why your money can grow totally free of tax in these accounts. Saving on tax is very important as a benefit when you are into offshore banking. But the savings cannot be termed as total because when you are bringing the money into your country, you may be liable to several forms of taxation. Another benefit of offshore banking is asset protection. The offshore accounts make it possible for you to get protection from invasive bureaucracy, lawsuits and asset protection from seizures.