Offshore Merchant Banking
Offshore bank is also a bank which is
located outside the country of the
depositor. This bank has less tax
jurisdiction providing legal and
financial advantages for depositor.
Majority of offshore banks are based in
nations having islands. The offshore
banking is majority of times associated
with organized crime and underground
economy by means of money laundering and
evasion of tax. But offshore banks never
prevent the assets which are subjected
on interest due to income tax. There are
some people who satisfy the complex
terms, while the several countries
allows no difference between the
interest earned in banks located in
abroad countries and local banks.
The offshore banks will never disclose
the right income to tax authorities and
have no obligation legally to do so.
These banks are protected by bank
secrecy policy. After 9/11 attacks in
2001 on World trade Centre, there were
many calls for international financial
regulation. But the offshore bank
defenders have criticised these
regulation. In addition to this offshore
banking provides a stiff threat to
taxation and banking systems in the
The advantages of offshore banking are
Offshore banks will provide access to
economically and politically stable
jurisdictions. This is a boon for
residents where there is a risk of
political turmoil. But even the
regulated banks in developed countries
will offer the same facility.
Some of the offshore banks will operate
at low base cost and provide interest
rates which are higher than legal rates
in depositor’s residential country. This
is possible due to lack of intervention
from government or low overheads.
Offshore banking finance is one of
industry which can engage competitively.
It can provide support to source
investment for developing countries thus
creating growth in economies. It can
redistribute the finance from developed
countries to developing ones.
In offshore banks the interest is paid
without the deduction of tax.
Few offshore banks are offering bank
service from unknown bank accounts,
providing lower or higher loan rates
which will be based on investment and
Offshore banks may be linked to offshore
foundations or trusts and offshore
companies which support specific
advantages on tax for individuals.
Offshore banks offer various services
including: credit, foreign exchange,
taking of deposits, E-fund transfers,
trade finance, management of investment,
trustee services and corporate
Disadvantages of offshore banking are as
In the past the offshore banks have been
associated with crime gangs and
Offshore jurisdiction is always in
remote place where access to information
or physical access is very difficult.
But in the world of telecommunication it
is not a problem as the accounts will be
set up via online, mail or by phone.
Offshore banking is easily accessible
for individuals with high incomes. So
the burden of tax falls on middle class
group in developed countries.
The regulation of offshore banks has
been improving even though it is
insufficient. The standard of regulation
is being monitored by international
bodies like IMF (International Monetary
Fund). These offshore banks are needed
to maintain adequate capital according
to international standard. At least once
in quarter they need to report to the
governing body with its current business
one of our helpful account
representatives to assist you in the
high risk merchant account or
offshore merchant account for a
high risk merchant.