What is OFFSHORE BANK?

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What does OFFSHORE BANK mean? OFFSHORE BANK meaning - OFFSHORE BANK definition - OFFSHORE BANK explanation. What is the meaning of OFFSHORE BANK? What is the definition of OFFSHORE BANK? What does OFFSHORE BANK stand for? What is OFFSHORE BANK meaning? What is OFFSHORE BANK definition?

An offshore bank is a bank located outside the country of residence of its depositors, with most of its account holders being non-residents of the jurisdiction. An account held in a foreign account, especially in a tax haven country, is often described as an offshore account. Typically, an individual or company will maintain an offshore account in a low-tax jurisdiction (or tax haven) that provides financial and legal advantages, such as:

- greater privacy (see also bank secrecy, a principle born with the 1934 Swiss Banking Act),
- little or no taxation (i.e. tax havens),
- easy access to deposits (at least in terms of regulation), and
- protection against local, political, or financial instability.
While the term originates from the Channel Islands being "offshore" from the United Kingdom, and while most offshore banks are located in island nations to this day, the term is used figuratively to refer to any bank used for these advantages, regardless of location. Thus, some banks in landlocked Switzerland, Luxembourg and Andorra may be described as "offshore banks".

Offshore banking has often been associated with the underground economy and organized crime, via tax evasion and money laundering; however, legally, offshore banking does not prevent assets from being subject to personal income tax on interest. Except for certain people who meet fairly complex requirements, the personal income tax of many countries makes no distinction between interest earned in local banks and those earned abroad. Persons subject to US income tax, for example, are required to declare, on penalty of perjury, any foreign bank accounts—which may or may not be numbered bank accounts—they may have. Although offshore banks may decide not to report income to other tax authorities, and have no legal obligation to do so as they are protected by bank secrecy, this does not make the non-declaration of the income by the tax-payer or the evasion of the tax on that income legal. Following the 9/11 attacks, there have been many calls for more regulation on international finance, in particular concerning offshore banks, tax havens, and clearing houses such as Clearstream, based in Luxembourg, being possible crossroads for major illegal money flows.

"How dare citizens control monetary value beyond their state's grasp and supervision." - the perceived mentality of the state, satirically verbalized by defenders of offshore banking.

Defenders of offshore banking have criticized these attempts at regulation. They claim the process is prompted not by security and financial concerns, but by the desire of domestic banks and tax agencies to access the money held in offshore accounts. They cite the fact that offshore banking offers a competitive threat to the banking and taxation systems in developed countries, suggesting that Organisation for Economic Co-operation and Development (OECD)] countries are trying to stamp out competition.