Banking Offshore
Banking offshore simply means banking in any other country than your home. One of the main differences between domestic banking and
offshore banking is that when you bank offshore almost all your transactions will be carried out online, since your visits to an
offshore bank will be limited to the times you physically visit the offshore jurisdiction.
Who Takes Advantage of Banking Offshore?
Personal investors often benefit from higher interest rates in offshore savings accounts, and many like to combine their
offshore bank accounts with offshore trusts and IBCs to make foreign investments. For example some private investors will use
offshore companies and structures for tax free trading, forex trading or to open offshore brokerage accounts.
Private Banking Offshore
Another benefit is the privacy offered by tax havens and other offshore banking centers. Many individuals take advantage of the secrecy that a combination of trusts, bearer-share corporations and nominee services offer to effectively hide their wealth and shield it from frivolous litigation. Some offshore investors will do the leg work themselves, individually hiring the required personnel and registering their offshore company direct with a registered agent in an offshore jurisdiction. Others may not have the time or offshore banking contacts and so instead will hire company formation agents or accountants to organize the various elements in their investment plan.
Many however are content with the knowledge that they have an account set up with internet offshore banking and secure online access.
Business Banking Offshore
The incentives for business banking offshore differ slightly to that of the personal investor although they often overlap. Both large and small businesses may set up offshore subsidiaries or choose to relocate some of their operations offshore to lower their tax burden or cash in on specific tax credits. Due to the amount of investment in offshore tax havens by big business, many of these jurisdictions have become international financial centers in their own right, attracting even more foreign investment due to the high standards of financial, legal and accounting services they have developed.
Cayman offshore banking developed in this way, as did services in Honk Kong and Panama. Although not strictly a tax haven,
Singapore
offshore banking is another good example.
Along with offshore internet banks and notorious 'shell banks' now many international banks are beginning to set up offshore subsidiaries (offshore banking units), normally in more 'developed' tax havens like the Channel Islands. Although these offer many investors the security of depositing with a big name, may can not offer the same privacy as small private offshore banks since they are subject to reporting requirements in home jurisdictions like the US, UK and EU.
Conversely some swiss offshore banks, and some
Swiss offshore banking units, have wandered abroad such as UBS and Credit Suisse have run into similar privacy problems, with debate over whether their US operations are subject to US law or Swiss
bank secrecy.
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