Offshore banking is simply a term used to refer to the use of banking services in a foreign jurisdiction outside of the country where one resides. An offshore bank account may be held by a person who travels worldwide, has an international business company, or operates an offshore account for other reasons.
Offshore Banking Units operate as fully staffed entities. They are licensed to transact banking business with non-residents of the country and in currencies other than the country’s own. They may also engage in banking activities with the Central Bank or with onshore banks which are authorized, foreign exchange dealers. Furthermore, having an offshore bank account will facilitate your company registration if you intend to register one in that foreign jurisdiction.
Types of Offshore Banking
There are two types of offshore banking:
- Offshore banking using physical banks
- Offshore online banking using Electronic money institution
Offshore banking using physical banks
This involves opening an offshore account with a traditional bank with physical offices and structures in another country where you are non-resident. These banks offer a suite of elite and tailored services to their customers, including banking, investments, and financial services from their location. The principles of this type of offshore banking are related to the high quality and level of services extended to the client. They usually have a sound reputation in banking and stringent confidentiality rules.
Benefits of Offshore banking using physical banks
Among their many benefits include:
- The lower base cost of operating the offshore account which translates into more affordable banking options and higher earnings on investment
- Greater access to international investment opportunities
- A well-regulated banking system that is safer to transact with
- Walk-in option if you need to resolve an issue anytime you are in the country
- They also offer online banking services where 24/7 operation can be carried out by their customers.
Offshore online banking using Electronic money institution
This kind of offshore banks are second to the type offered by physical banks and are run by Electronic Money Institutions (EMI). They provide access to offshore banking facilities through the internet and carry out banking transactions and other activities on that offshore account. Offshore online banking is an absolute necessary auxiliary service in offshore banking.
Benefits of Offshore online banking using Electronic money institution
- This kind of offshore online banking allows the client to maintain control of the finances from anywhere in the world at any time
- It is easy to open and manage an EMI offshore account
- It provides immediate and instant access to check account balances, open or closed transactions, facilitate money transfers, make bill payments, global payments, check credit, and debit card activity.
The issue with this kind of account, however, is that periodic upgrades are generally conducted to make better and newer services available to the client, but may slow the process until the client is once again familiar with the interface. Things like this hinder a client’s productivity, Confidence in online services. Clients may be wary of trusting their information to online processes. However, physical banks ensure that such services are wholly secure and will maintain the client’s privacy and protect client information.
Finally, offshore banks provide access to politically and economically stable jurisdictions. This will be an advantage for residents of areas where there is a risk of political turmoil, who fear their assets may be frozen, seized, or disappear. Whatever the reason for ‘Going Offshore, ‘there are many banks in Cyprus that are happy to provide you with excellent offshore banking services that were once only available to the Elite and Wealthy.