If you are thinking to open an offshore bank account then you must go through the guide mentioned here in order to fully avail all the benefits of offshore banking.
An offshore bank is a bank that regulated and synchronized under international banking license. It is situated outside the residential country of the depositor. International banking license usually bans the bank from any type of business activity in the rule of establishment.
People often define offshore banking as an illegal act. So for their concern, let this guide clear their confusion. Offshore banking is completely legal however sometimes it is confused with tax evasion and other unlawful activities. But offshore banking is legal and is all about depositing your liquid savings in a well- capitalized and strong institution. It is related with branching out your political risk by getting best treatment for your deposits.
In simple words, offshore banking is all about depositing of funds by an individual or a company in a bank that is situated outside the residential country of the depositor. And this type of banking institution is a lot more sophisticated than an onshore bank.
And an account maintained in a foreign offshore bank is called an offshore account. An offshore account is generally maintained by an individual or a company because of the benefits it provides such as higher privacy, decreased or no taxation or exemption from paying tax, effortless access to deposits, and security against financial, local, or political instability.
An offshore bank provides the same services as an onshore bank but these banks offer more anonymity and privacy than onshore banks.
Benefits of an offshore bank
An offshore bank provides the same benefits as an onshore bank but an offshore bank facilitates secrecy and exemption from tax too. It provides many other benefits too such as more security and protection, highest service levels, convenience and easy accessibility, tax savings on investments, deposits, and savings, availability of many international financing opportunities, advantages from foreign exchange services, and many lending and credit facilities.
The procedure of opening an offshore bank account is similar to the process of opening a bank account in your home country. For this purpose, an offshore bank will ask for your personal information such as name, date of birth, citizenship, occupation, address and many other things.
The bank will then verify your personal information and for this purpose the bank will ask you to submit a replica of your driving license, passport or other documents that are issued by a government agency.
You may even expect to submit a utility bill or any other similar document as your physical address or residence may affect taxation issues.
To open a bank account in an offshore bank, you have to submit a notarized copy of certain documents in order to assure document’s authenticity.
Along with these documents, an offshore bank may even ask for some additional requirements in order to discourage some illegal activities that are related with offshore banking such as money laundering, tax fraud or other unlawful activities.
Then, there comes the option of choosing the currency in which you want to hold funds. This is most probably the biggest benefit provided by an offshore bank. Before opening an offshore account one must know the consequences of holding funds in different currencies. For instance, some currencies provide interest on your deposits but can also cause tax liability. And it is mandatory to exchange currencies in order to make withdrawals and deposits. And this wholly depends on the exchange rates and fee structure.
These bank accounts are funded electronically through international wire transfers. Sending a wire transfer is a very common operation but many banks charge fees for this service of sending or receiving funds through a wire transfer. And this fee of wire transfers varies from banks to banks. It is practically impossible to deposit funds in person on a continuous basis and many foreign banks do not accept domestic checks.
One of the most profitable benefits of offshore banks is that they offer a wide range of options to withdraw your funds in order to serve you with the maximum convenience possible. Some offshore banks issue normal debit/ATM card but one must know the fees of using this. This method is really expensive and the fees can be minimized by withdrawing huge amounts of cash at a time.
Many offshore banks even offer checks. But this is not a first- preference as the checks drawn by foreign banks are not accepted locally sometimes.
So the best preferred way is to one offshore account and one domestic account. By this manner, one can transfer larger amounts from offshore account to domestic account through electronic wire transfer. In this manner, the depositor is served with good privacy and security and this method also provides greater convenience and ease to local banking services.