International Banks
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An offshore or international bank is a financial institution offering banking services to people who reside in other countries. International banks offer various financial and legal benefits to accountholders. Anyone can have an offshore bank account. In fact, individuals and organizations have been benefiting from international banking for many years. Usually, only high net worth clients hold accounts in international banks.[br]
International Banks: Offshore Banking Hubs
International banking is mostly offered by small wealthy countries. Some of the popular hubs are Switzerland, Hong Kong, Panama, the US Virgin Islands, Cayman Islands, Aruba, Samoa, Belize and San Marino. They have no residency regulations for their clients. These are also called tax havens. Around 15% of the countries in the world operate as tax havens as estimated by the US National Bureau of Economic Research. These countries offer a variety of account types to accountholders.
International Banks: General Advantages of Banking Offshore
Holding accounts in international banks proves extremely beneficial for wealthy individuals and companies. The biggest benefit includes low or no taxation. Accountholders are paid interest without taxes being deducted from their accounts. International banking offers more privacy as the private financial information of the accountholders is not disclosed.
Companies that need to send their clients offshore on a regular basis can leverage on the logistical and financial benefits of international banking. Most international bank accounts are multi-currency and offer easy access to deposits from different parts of the world. Conversely, standard banks charge considerable fees when money is withdrawn outside their usual protocol. International banks offer more loans and investment products than standard banks.[br]
Individuals can also take advantage of asset protection, estate planning and foreign direct investment services offered by offshore or international banks.
Offshore banking also fosters international trade and provides protection against volatility in domestic interest rates.
International Banks: Disadvantages
Accountholders may have to suffer in the event of economic or political instability in the foreign country where they hold an offshore account. Nationalization of their assets is another major risk.
