Offshore banking

1. Offshore banking

2. Introduction • An offshore bank is a bank located outside the country of residence of the depositor, typically in a low tax jurisdiction (or tax haven) that provides financial and legal advantages.

3. An offshore bank is a bank regulated under international banking license (often called offshore license), which usually prohibits the bank from establishing any business activities in the jurisdiction of establishment. Due to less regulation and transparency, accounts with offshore banks were often used to hide undeclared income.

4. Basic requirements to open an account: • The basics of opening an offshore bank account are similar to opening a bank account in your home country. • Offshore banks will ask for your personal information, such as your name, date of birth, address, citizenship and occupation. Like your passport, driver's license utility bill and bank statement. Many offshore banks ask about the nature of transactions expected to take place through the account.

5. If you have significant funds from a business or real estate transaction, you may need to provide sales contracts or other relevant documents. • If you are depositing funds from an insurance contract, you may need to provide a letter from your insurance company. • If your money comes from an inheritance, the bank may ask for a letter from the executor of the estate testifying to this effect. • If the money is from your job, a wage slip from your employer.

6. How to Deposit Funds:The offshore bank accounts are most often funded electronically through international wire transfers. Its very simple method.

7. How to Withdraw Funds:Many offshore banks issue a normal Credit/Debit/ATM card that allows you to easily access your funds worldwide. Some offshore banks offer cheque. However, cheque is usually not a preferred method because problems may arise since cheques are drawn on foreign accounts are not always accepted locally.

8. The best option may be to use two accounts. One offshore and one domestic. In this way, electronic wire transfers can be used to transfer larger amounts of offshore funds to a domestic account where they can be easily accessed

9. Greater privacy. • Low or no taxation (i.e. Tax havens). • Easy access to deposits (at least in terms of regulation). • Protection against local, political, or financial instability. • Offshore banking has often been associated with the underground economy and organized crime, via tax evasion and money laundering

10. legally, offshore banking does not prevent assets from being subject to personal income tax on interest.

11. Advantages of Offshore Banking • Offshore banks can sometimes provide access to politically and economically stable jurisdictions. • Some offshore banks may operate with a lower cost base and can provide higher interest rates than the legal rate in the home country due to lower overheads and a lack of government intervention.

12. Interest is generally paid by offshore banks without tax being deducted.  • Some offshore banks offer banking services that may not be available from domestic banks such as anonymous bank accounts, higher or lower rate loans based on risk and investment opportunities not available elsewhere.

13. Disadvantages of Offshore Banking • Offshore bank accounts are sometimes less financially secure. • Offshore jurisdictions are often remote, and therefore costly to visit, so physical access and access to information can be difficult.