Offshore banking refers to using a bank that is operated and regulated in an international jurisdiction. Because of this the bank may not be subject to more stringent banking requirements that apply in a customer’s home jurisdiction; for example, they offer better taxation rates and privacy protections.
By securing assets in a financial institution in another country, a customer can also make it more difficult for them to be seized by a person or authority in their home nation. One of the most attractive features of these banks is that many of them have strict secrecy provisions which means that third parties cannot access details of accounts maintained by customers.
Another advantage of these banks is the ability to maintain funds in the foreign currency of the country in which they operate. This can provide a hedge against foreign currency fluctuations and simplify foreign exchange transactions when a customer is executing financial transactions internationally.