RSS |
A bank established in any offshore jurisdiction that provides services to non-residents of the jurisdiction are called offshore banks. For example, an offshore bank registered in Dominica can provide services to clients from any country, except to the permanent residents of Dominica. |
Operations
Offshore banks operate in low tax areas or the tax havens, commonly referred to as offshore finance centers. This provides for the banks to conduct their banking and financial activities in an environment free of fiscal and exchange controls. These offshore locations also have a favourable banking legislation, relatively less strict than those in most onshore jurisdictions, that makes rather easy to obtain a banking license here.Offshore banks can be controlled by residents of any country in most offshore banking jurisdictions.
Offshore banks are often established by existing onshore banking or financial institutions. Corporate groups also establish offshore banks to handle external borrowing or to consolidate the group's financial or banking transactions. Large or even medium sized companies have their own offshore banks to handle their liquid assets and current accounts of their branches.
Essentials
An offshore bank must have a registered office, minimum number of Directors and shareholders. A Registered Agent is also a must in all offshore banking locations. Management and the accounting department are usually located in the place of the owners' domicile. Some offshore banking locations insist that the management of the bank must be physically present in the jurisdiction.
Importance of an offshore bank
Forming your own bank puts you in charge of your assets and grants you financial privacy. Your own bank keeps you shielded from the eyes of tax collectors and governments, ex-wives, vicious relatives or anyone else that you would wish to protect your assets from. Your own bank can take care of your various overseas properties, investments and assets and that too while you remain perfectly anonymous.
Not only do these banks grants protection to your assets but they also provide you with an excellent opportunity to enhance your business and gain over your competitors.
Existing onshore banking or financial institutions often establish offshore banks for the many advantages gained therein.
Mileage of an offshore bank
- Access the international credit market
- Access international correspondent account networks
- Provide clients with tax effective loans
- Provide clients with actual banking secrecy
- Provide clients with other services that would be impossible in severely regulated onshore jurisdictions
- Provide Letters of Guarantee
- Accept deposits outside the controlled environment
- Avoid strict debt-equity ratios and lending restrictions imposed by more severely regulated onshore jurisdictions
- Avoid huge minimum capital requirements imposed by more severely regulated onshore jurisdictions
- Operate in the securities market without limitations
- By-pass intermediaries while carrying out certain financial operations
Minimize political risk (that could be higher in some East European countries for example) - Enhance group's image
Certain activities like external loan raising, provision of confirming finance to clients and group entities, discounting or factoring of the group and other debts, and tax effective corporate group's loans etc can also come under the domain of offshore bank activities.
Corporate groups have often established offshore banks to handle external borrowing or to consolidate the group's financial or banking transactions. For a company involved in international trade with financial resources being handled by an outside bank, establishing your own offshore bank would be a wise call. This bank could be used as a foreign or multi-currency management center.
Large or even medium sized companies have their own offshore banks to handle their liquid assets and current accounts of their branches. For a group of your companies that require banking services, it really makes sense to establish your very own offshore bank that can be used to conduct your transactions with regular clients or provide Letters of Credit, etc.
However, offshore banks are established also to satisfy the needs of small groups or even one person. Offshore banking is traditionally oriented towards fulfilling the needs of the wealthy.
GOWEALTHY.COM © 2010
For comments: editor@gowealthy.com
