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Offshore Banks

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Offshore banks are money institutions that are located outside the home country of the depositors. Offshore banks are mostly associated with a high level of confidentiality offered ton their customers.

Similarities between the offshore banks and the mainstream banks

In both the offshore banks and the streamline banks, customers are entitled for a tax. In addition, both forms of organization are entitled for a tax to their territory states. In both cases, the assets are entitled for income tax. The money deposited is also entitled for an interest.

The differences between the offshore banks and the mainstream banks

Offshore banks are not subjected to many regulations that govern the streamline banks. These banks have a wider margin of freedom compared with the mainstream banks which are subject to a number of restrictions. The offshore banks are mostly related with the underground economy like money laundering and financing of the illegal activities like terrorism. This is encouraged by the high level of confidentiality insisted by these kind of banks.

The off shore banks usually have a legal system that protects the privacy of the customers. In other words, offshore banks have stronger secrecy jurisdictions compared to the mainstream banks. It is very difficult to access the information of individuals’ accounts. The employees are strictly prohibited from disclosing the financial matters relating to their customers accounts. Any employee who breaks this rule is heavily punished. Therefore, offshore banking has more privacy than the mainstream banks. With respect to this, government agencies have found it very difficult to identify suspect transactions (Eckert &Biersteker, 2008). This has encouraged the funding of terrorism activities. The offshore banks do operate at a lower cost compared to the mainstream banks. This is due to the low tax or completes evasion of the tax rate.


In conclusion, the main difference between the offshore banks and the mainstream banks is on the privacy levels. However, both types of banks share some of the basic aspects of the banking sector like interest on the deposits. 

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