OFFSHORE BANK ACCOUNTS
Offshore bank accounts, exactly like onshore, may be classified by different parameters.
The first and the most clear classification principle is PERSONAL BANK ACCOUNT VS CORPORATE BANK ACCOUNT.
The second principle is by the way how they are utilized, For example: Numbered offshore bank account, offshore merchant account, offshore investment account, offshore savings account or offshore business account.
1. PERSONAL OFFSHORE BANK ACCOUNT
As the name shows this is bank account opened on a physical person. Normally the client himself is the account holder and beneficial owner of money on the account. Notwithstanding it is governed by the same banking secrecy laws as other types of offshore bank accounts, it is the least protected asset protection vehicle. To overcome this privacy issue without introducing more advanced offshore protection schemes, in some offshore jurisdictions it is available to open the numbered bank account where bank account title differs from person's name. Normally it is some combination of numbers and letters, not similar to any person’s name.
2. CORPORATE OFFSHORE BANK ACCOUNT
Normally is opened on offshore company incorporated in the same or, more often, in the other offshore jurisdiction. To open corporate bank account, you need to choose carefully the jurisdiction for opening offshore bank account, as well as the jurisdiction for offshore company incorporation. Also, it would be important to consider offshore legislation of both countries and see how it answers the purposes pursued by the establishing of offshore bank account.
The title of such corporate bank account is the name of the company. Normally, the company name differs from beneficial owner's name thus protecting one's privacy when sending in and out the money.
3. NUMBERED OFFSHORE BANK ACCOUNT
Similar to the way how private offshore bank account is opened on private person's name, but for numbered offshore account a number or some neutral word is used instead of person's name in the account title. Numbered accounts are not easy to open, and there are very few banks providing this kind of service.
Swiss banks are the most known place where to open genuine numbered account. To open numbered offshore bank account, personal visit to the bank is the must. Customer should physically go to the bank in Switzerland to go through very serious due diligence procedures, and be ready to place substantial initial deposit. Also the annual or monthly maintenance costs are very high. And remember, the numbered offshore bank account is not anonymous since the bank definitely knows who is the owner of the money on the account.
Other popular types of offshore bank accounts are OFFSHORE MERCHANT ACCOUNT providing the ability to accept credit or debit card payments from customers; OFFSHORE SAVINGS ACCOUNT, similar to onshore savings accounts; OFFSHORE INVESTMENT ACCOUNT that provides offshore investors with wide range of offshore investment opportunities less limited both in terms of risks and earnings than those for offshore savings account.
4. OFFSHORE MERCHANT ACCOUNT
An offshore merchant account is an account providing the ability to accept credit or debit card payments from customers for goods and services. An offshore merchant account establishes a relationship between credit card processor, the bank and business willing to accept the credit card payments. Unlike with regular merchant account, funds generated from sales and credit card payments are deposited with offshore bank.
Offshore merchant bank accounts are very popular in various industries starting from mega online gambling projects and adult industry sites to small businessmen selling some software or unique products or ideas to everybody in the world through the Internet.
When opening offshore merchant account, the offshore bank assigns unique merchant ID to business. Such offshore merchant account is associated with offshore business current or checking account.
Funds debited from customers credit cards are processed through merchant account and placed on the business account, less commissions as well as security deposit which is widely used with offshore merchant accounts, especially at the early stage of customer and bank relations. Security deposit means that some portion of processed money is "freezed" for some time as collateral against chargeback.
5. OFFSHORE SAVINGS ACCOUNT
Offshore savings account is similar to onshore savings accounts. The main difference is that interest is generally paid by offshore banks without tax deducted. From one side, it is an advantage to individuals who do not pay tax on worldwide income, also to expatriates in particular cases, however every client of offshore bank should get tax advice before receiving benefits from such arrangements.
Offshore savings account is a wise way how to reduce tax burden, but it should be used only if it is allowed by one's country.
Taxation is not the only benefit of offshore savings account, some offshore banks operate with lower costs and can provide higher interest rates than the rates of onshore banks, due to reduced expenses and less government intervention.
6. OFFSHORE CURRENT ACCOUNT
A flexible international current account for your-day to-day banking needs, and a convenient, secure and potentially tax efficient way to manage your money.
• Available in sterling, US dollars or euro. View debit/credit card options
• Accounts based in Jersey, Channel Islands or Isle of Man
• 24 hour internet and phone banking - Info
• Make international money transfers
• Interest paid without deduction of tax*
• Minimum balance £5,000, US$ 10,000, or €10,000. No account opening fee.
7. OFFSHORE INVESTMENT ACCOUNT
Offshore investment account provides offshore investor with wide range of offshore investment products to choose from. Unlike offshore savings account, offshore investment account provides less limited opportunities both in terms of risks and earnings. There are thousands of offshore investment funds, offshore bonds and other offshore investment vehicles. These offshore investment instruments are flexible enough to fit around today's changing lifestyles. However with offshore investment account the customer should be prepared for higher initial investments and less liquidity of funds placed to such account. Offshore bank will not allow this account to be used as offshore business account. Too frequent inward and outward transactions may be penalized by additional fees and penalties. The main difference between offshore and onshore investment accounts is taxation as well as the fact that offshore banks normally provide wider choice of the investment products. Investor protection laws are in place in every offshore jurisdiction.
OFFSHORE FINANCIAL CENTRES
In terms of offshore banking centres, in terms of total deposits, the global market is dominated by two key jurisdictions: Switzerland and the Cayman Islands. In particular, Jersey, Guernsey and the Isle of Man are known for their well regulated banking infrastructure. Some offshore jurisdictions have steered their financial sectors away from offshore banking, as difficult to properly regulate and liable to give rise to financial scandal.
LIST OF OFFSHORE FINANCIAL CENTRES
British Virgin Islands
Channel Islands (Jersey and Guernsey)
Saint Kitts and Nevis
Turks and Caicos Islands
United States Of America
Isle of Man
Antigua and Barbuda
Offshore Banking are an important part of international financial system as half of the capital of world economy flows through Offshore Banking.
People generally operate their offshore account during vacations as they spend their holidays abroad. So they do require foreign currency, which offshore bank provides. Also a lot of advantage is provided apart from those of commercial banks like privacy.
However it influence crimes as full confidentiality about the account is maintained. Any person after fulfilling certain criteria can open an offshore account.
From the project, I would like to infer that a wide spectrum of offshore banking centres are known. Offshore banking makes avail of tax exemptions and higher interest rate in foreign currency. This helps to earn foreign currency. It becomes mandatory for the businessman and the organizations who have a global business.
Thus, Study about offshore banking will help to acquire more knowledge & certainly have a positive effect in future.