The great improvement of offshore banking occurred during the 1960s as a result of the development and liquidity of financial markets all over the world. Hence, offshore banks made available a large variety of financial services: money transmission, provision of foreign exchange, finance trading, credit facilities, investments keeping and management, funds management, trustees sevices and corporate administration.
By providing these facilities, offshore banks gave access to established offshore jurisdictions which represent an advantage for those who live in areas where there is a risk of expropriation or where there is corruption within the banking system. Furthermore, there are several offshore banks offering services that may be unavailable in some country. In addition, some offshore banks take part in bank accounts deposit protection insurance systems and some of the may even provide higher interest rates than the usual ones.
The majority of offshore banks are surrounded by highly regulated procedures under national monetary entities such as Central Banks or Financial Services Commissions.
Relevant details about Offshore Financial Services and Offshore Banking
The term Offshore comes from the British Channel Islands, which are tax havens physically located offshore from the United Kingdom. However, nowadays the term refers to all tax havens worldwide either being British or not.
A bank account opened outside of one’s resident country is considered an offshore bank account .
Many offshore banking institutions are connected with major international banks which are able to provide a large range of financial services to their international customers. Offshore banking institutions act as offshore cash management centres either for business organizations and also individual owners.
For many years it was not mandatory that banks reported the existence of offshore accounts and their holders could legally pay small (or even none) taxes to the host country. As a result of it, hold an offshore bank account was a suitable manner to hide profits from illegal activities or underreported business incomes. However, the mainly rules regarding the offshore bank accounts changed in the recent years and the procedures are getting much stiffer.
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