What is an offshore bank and is it legal?

What is offshore banking? Offshore banking is an important part of global financial transactions.rnIt is the deposit of funds outisde the country of residence. Offshore banking institutions are usually located in a low tax juridictions that offer legal financial advantages over onshore (domestic) banks. The term offshore bank originated from banking institutions that were located on the British Channel Islands northwest on France. These islands' juridictions were set up to attract more investments by offering a low tax environment. Offshore banking is becoming very common in the financial world. Financial centers provide advantages to the depositor. The two most popular financial centers are Switzerland and the Cayman Islands. These banks also provide greater privacy than onshore (domestic) banks as they are subject to bank secrecy laws that protect the client's information. Today, it is believed that more than half of the world's capital flows trough financial centers also known as tax havens. Offshore banks are located in juridictions that offer low taxation on deposit and gains. One of the main reasons people go offshore is because it can save them money. Is Offshore Banking Legal? While we tend to think of offshore banking as an underground act, you have to know that it is a completely legal to own and run an offshore account. In reality, the offshore banking sector is a strictly regulated business that leaves  very small space for criminal affairs. This sector is supervised by international organizations for example the F.A.T.F (Financial Action Task Force) whose mission is to set and maintain strict regulations which act as a barrier to criminal activity. A series of planned attacks on offshore financial activity has put confusion and fear in the minds of people who would have normally considered banking offshore. Opening an offshore account is a legal service provided by alicensed financialinstitution. What can be illegal is to use your offshore banking account for illegal purposes, tax evasion for example. Except in case of a criminal investigation, Offshore banks do not report your income or activity to anyone, they leave you on the honor system unlike most American banks who report to the IRS. The good news is that you can save on taxes, have a higher return on investment and benefit from offshore advantages without breaking any laws. Tax planning is legal, tax evasion is a federal crime. Source: http://www.offshorebankinghelp.com