Offshore banking involves opening up of bank accounts outside the country of residence of the investor. The offshore accounts are generally opened in countries that offer a variety of benefits that include tax free environment, legal protection and secrecy. With offshore banking comes the freedom from excessive taxation as well as bureaucracy or red-tapism. Offshore bank accounts can today be opened using mail, phone or by fax.

While availing offshore banking services, some precautions need to be taken. There have been cases of wrong choice of jurisdiction or the wrong bank. The choice of jurisdiction or bank is of utmost importance. The offshore bank has to be legally enshrined. The banking haven has to provide all these in equal measures that include the culture of bank secrecy, stability of the jurisdiction and chosen bank, a low profile, so as not to raise undue suspicion.

The investors invest in offshore accounts to take advantage of the lesser taxes prevailing in these areas. Apart from the low taxes, there are also the provisions of privacy of funds, which is unheard of in terms of onshore accounts. Anyone who wishes to handle large amounts of money and earn interest without compromising on confidentiality can avail the offshore banking services.