Offshore banking is an excellent tool for protecting your liquid assets from untoward scrutiny from regulators, litigation, excessive taxation, and potentially adverse government and/or market conditions. Offshore banking could be just as important to your business. It can represent a realistic, cost-effective solution offering unparalleled and sophisticated confidentiality, privacy, and protection for your assets from the perils of doing business in today’s world.
  
 
The common definition of an offshore bank is that of one that is located outside the country of residence of the depositor or account holder. Usually understood to be in low-tax jurisdictions, but not necessarily so. The low-tax jurisdictions provide for certain financial and legal advantages that include privacy, low regulation, low taxation, and protection from local governmental or financial instability. While any country may be fall under "offshore banking", if the account holder does not reside in that country (more on this later…), we will for now assume that we are examining the example utilized for the benefits outlined above, and that are usually in the form of sovereign, island nations (the Caymans, Channel Islands, etc.), or the landlocked strongholds of Switzerland, Luxembourg, and Andorra.
  

The term “offshore banking” was originally intended to refer to the offshore Channel Island accounts many Britons held beginning in the early part of the 20th century. Wealthy British citizens found that the Channel Islands were a tax haven, bereft of the heavy taxation and regulation they experienced at home. When they found these “offshore banks” to be safe, secure, private, and efficient, many of them flocked to the opportunity to secure their money in offshore bank accounts.

This banking practice, of course, soon spread, as smaller jurisdictions found that they could entice investors or depositors from countries that demanded much in the way of regulation or taxes, or from countries that were rife with political turmoil (asset seizures are not uncommon in countries that have violent or radical transitions of power). And interestingly enough, the most famous “offshore banks” are not offshore at all, represented by countries such as Switzerland, Monaco, Luxembourg, Andorra, etc., that offer European convenience.

Today, offshore bank account jurisdictions, also known as tax havens, exist mostly for the purpose of providing asset protection, asset growth, tax reduction, and excellent service for foreign individuals and corporations, large and small, around the world. These banks can present real world solutions to many of the issues facing people looking for asset protection from extraordinary home tax burdens, or as a way to mitigate the ramifications of a local unstable government. (Some countries, such as the US, tax worldwide income, so legal protection of assets is one of the main benefits for such individuals.) To be sure, they can also provide asset protection from the ordinary perils of things such as divorce, poor market conditions, or extraneous litigation that is so often a marked consideration in the Western world. Additional legal protection is offered when account funds are held in a legal tool such as an Offshore Trust.

Some offshore jurisdictions have very tight rules and regulations governing financial institutions including the banks that operate from within their borders. This rigidity naturally affords the account holder a certain high degree of security of funds and personal privacy. Other offshore jurisdictions are poorly structured, poorly regulated and therefore considered by the majority of people to be unsafe and are often the target of the FATF (Financial Action Task Force) because of money laundering. Please see additional content about Offshore Banking Jurisdictions for location specific banking information.