All about Offshore bank accounts

We can call “Offshore bank accounts” any bank account that has been open outside of one's native country.

Personally when I think on offshore bank accounts my mind goes to organized crime bosses and fugitive billionaires… but this is just my imagination! In reality there is not much difference in benefits or service between the bank located in the Cayman Islands and the bank on your street.  Maybe some wealthier individuals and companies could prefer an offshore bank account because in small sovereign states you are able to remain virtually anonymous because an offshore bank is not obligated to report the existence of these accounts. Moreover in these small sovereign states the local laws are able to limit or even eliminate the taxes placed on traditional bank accounts. So for what concern offshore banking the Island nations such as the Cayman Islands can successfully compete with Switzerland or Belgium!

We can say that the advantages of an Offshore bank account are:

• Privacy
• Low or no taxation
• An easy access to the deposits

But there are not only advantages but also disadvantages: for example an offshore bank account is less financially secure, you have to afford a cost to visit the Offshore jurisdictions that are often remote also because the access to information can be difficult. This is also a reason why offshore private banking is accessible to the people with higher incomes. Moreover these bank accounts are often associated to the underground economy, money laundering and organized crime.

In the last years there has been an allegedly increasing in the regulation of offshore banking but it seems to be largely insufficient. Nowadays supra-national bodies such the International Monetary Fund are in charge to monitor the quality of the regulation. But since September 2001 initiative have taken place in order to increase the transparency of offshore banking. For example the European Union has introduced a sharing system information between certain jurisdictions.