Difference between offshore banking & onshore banking

Written by maegan cleckley | 13/05/2017
Difference between offshore banking & onshore banking
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The volatility of the global economy has made offshore banking more attractive for many reasons. Onshore and offshore banking practices differ significantly in regards to the rules and regulations that accompany each process.


“Onshore” simply refers to a bank that is located in your country of residence and is subject to the rules and regulations of that country. “Offshore” refers to a bank located in a foreign jurisdiction that has obtained offshore banking legislation licensure.

Banking Practices

Offshore banks are characterised by the stringent privacy protections, tax advantages and flexible regulations that onshore banks lack. Unlike onshore banks, offshore banks are not required to disclose personal information to the government or tax agencies.


A bank’s location in an offshore zone does not necessarily make it an offshore bank. Offshore banks obtain special licenses that deem them offshore entities.

Access to Funds

Similar to onshore banks, depositors can retrieve offshore funds using a debit card (though domestic fees may apply), bank wire transfer and Internet transfers. However, offshore credit cards work differently. According to Investors Offshore, a security deposit ranging from 125 to 200 per cent of the requested credit line is standard and no credit check is required.


The strict regulations imposed by onshore banks make tax evasion difficult. The opposite holds true for offshore entities, whose low taxes and privacy regulations can entice those with concealed income.

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