| An offshore bank is a bank located outside | | | | participate in mandated bank account deposit |
| the country of residence of the depositor in | | | | protection insurance systems. Some offshore |
| a low- or no- tax jurisdiction. It provides | | | | banks may even provide higher interest rates |
| financial and legal advantages like privacy, | | | | than banks in the home country, but the fees |
| reduced legal restrictions, and protection | | | | and minimum deposits required to open and |
| against local political or financial | | | | operate accounts at some offshore banks can |
| instability. Offshore banking has increased | | | | make them inaccessible to the general public. |
| rapidly all over the world since mid-1960s | | | | |
| because of the growth and liquidity of | | | | The majority of offshore banks operate within |
| Eurocurrency markets. | | | | highly regulated environments under national |
| | | | monetary bodies such as the IMF. These banks |
| The full spectrum of financial services from | | | | are required to maintain capital adequacy |
| offshore banks include deposit taking, | | | | requirement in accordance with international |
| credit, money transmissions, provision of | | | | standards. They must submit financial reports |
| foreign exchange, letters of credit and trade | | | | at least quarterly to the regulator on the |
| finance, investment custody, investment | | | | current state of their business. |
| management, fund management, trustee | | | | |
| services, and corporate administration. | | | | One common misconception about offshore |
| | | | banking is that it can legally prevent assets |
| Offshore banks provide access to politically | | | | from being subject to personal income tax or |
| and economically stable jurisdictions that | | | | interest. For those persons who meet fairly |
| may be an advantage for those resident in | | | | complex requirements, this conception is not |
| areas where there is a risk of expropriation | | | | applicable because the personal income tax of |
| or where there is corruption within the | | | | most countries makes no distinction between |
| banking system. Many offshore banks offer | | | | interest earned in local banks and those |
| services that may be unavailable in one's | | | | earned abroad. For instance, people subject |
| country of residence, such as paperless bank | | | | to pay US income tax are required to declare |
| statements. Offshore banks in several nations | | | | any offshore bank accounts they may have. |