Offshore banking can be carried out legally and is not just about money laundering or tax evasions.

The term offshore banking originates from the Channel Island and defines banks located in tax havens. The majority of offshore banks are located on islands, but exceptions such as Switzerland, Luxembourg or Andorra exist.

Offshore banking may be associated with the illegal practices of money laundering or tax evasions but it can be carried out legally and comprises a number of financial advantages.

Strong privacy, less restrictive legal regulations and easy access to deposits are some of the advantages that have convinced many to go offshore.

More importantly, many offshore banks operate with a lower cost base and provide higher interest rates than legal rates in most countries.

Offshore banks generally pay interests without tax deducted. This is an advantage to individuals who do not pay tax on worldwide income or who do not pay tax until tax return is agreed.