If you wish to know the meaning and different things related with an offshore bank then you should read on. An offshore bank refers to such a bank which is not in the country where the depositor resides but in some foreign country. Most of the offshore banks are chosen by people because they are located in low tax jurisdictions and offer various legal and financial benefits to the depositors. Some of the advantages of keeping money in offshore banks include higher level of privacy, less or zero taxation, convenient ways to regulate deposits, safety from local financial and political instability.
A large number of offshore banks are present in island countries at present but it does not mean that the term “offshore banks” is limited to banks in island countries only. Offshore banking is often related with safeguarding the money earned from criminal activities. It is related to underground economy, money laundering and tax evasion. If we talk about the advantages of offshore banks then we have a lot of them to mention. People who live in politically and financially unstable countries may have peace of mind by keeping their money in offshore banks located in financially and politically stable jurisdictions.
One can find a lot of offshore banks which offer higher rate of interest on deposits made by people. When people find that opening and keeping a bank account in an offshore bank involves lesser cost and higher returns, they feel like depositing their money in offshore banks. Another advantage of keeping money in an offshore bank is that they do not charge tax on the interest provided by them. People who wish to evade tax from the money earned as interest on their deposits can keep their money in offshore banks.
One should know that various disadvantages are also associated with offshore banks. First, there is lesser financial security for the money kept in offshore bank accounts. Second, offshore banks are associated with criminal activities, organized crime and underground economy. Keeping money in an offshore bank may draw suspicion towards you if financial regulators of your country find this. Most of the times, offshore banks promote themselves by offering complete freedom from every type of legal and financial trouble but it is exaggerated in most of the cases. However, like local banks, all the financial services like money deposits, wire transfer etc. are offered by offshore banks.