Offshore banks are banks situated in places with low tax jurisdiction, or tax havens. They offer a number of benefits, both legal and financial, to the depositor.

Some of the reasons why offshore banks are so popular include:

-There is little-to-no taxation
-Offshore banks are very careful to protect the privacy of their depositors
-Money is easily accessible to the depositor
-There are few legal restrictions to deal with

Most offshore banks these days are located in island nations such as the Cayman Islands, Cyprus, and the Bahamas. However, Switzerland (the infamous "Swiss bank account"), Luxembourg, and other places offer banking services that fall under the umbrella of offshore banks.

Because the secrecy that offshore banks provide, they have long been a popular place for organized crime, drug traffickers, and white collar criminals to store their money. This has resulted in a bit of an image problem for offshore banks, and much criticism has been raised.

That being said, offshore banks also offer a number of important functions. They offer stability to people who live in politically unstable areas, they can offer higher interest rates than most banks, and they are able to offer important services that most banks just can't provide.

The debate about offshore banks continues, especially in a war-time world where governments are doing what they can to break up terrorist financial rings.

Learn more about this author, Sean Curtis.
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