offshore banking

Slide 1: 

Offshore Banking

Presented by:- : 

Presented by:- Pradeep Sharma Swapnil Pawar

Overview : 

Overview Introduction Financial services Concerns Duties Of Licensed Offshore Banks Prohibition of certain accounts How does offshore banking affect the international financial system Offshore Bank Security What makes financial privacy possible Why do people prefer to use bank secrecy How did bank security or secrecy evolve Risk Advantages and Disadvantages

Offshore banking : 

Offshore banking An offshore bank as term connotes, is a bank that is outside the country of residence of a depositor, usually in a jurisdiction that offers low tax or tax haven and provides legal and financial benefits. Although the term has originated from the Channel Islands “offshore” from Britain

Offshore Accounts : 

Offshore Accounts Greater confidentiality   Reduced restraining legal directives   Very low or nearly no taxation   Straightforward access to money as a minimum as regards regulation   Security against regional political or pecuniary unsteadiness.

Financial services : 

Financial services Credit Deposit taking or withdrawal Foreign exchange Fund management Wire and electronic funds transfers Letters of credit and trade finance Trustee services Corporate administration and investment management Investment custody.

Concerns : 

Concerns Offshore banking has frequently been linked to organized crime and underground economy through money laundering and tax evasion. Personal income tax policies of many nations do not distinguish interest earned from banks abroad and those from local banks. E.g.:- US income tax

Minimum Capital funds : 

Minimum Capital funds No applicant shall be granted a license under section 6(2) and no licensed offshore bank shall carry on offshore banking business without the written consent of the Minister if its capital funds, unimpaired by losses, are less than ten million or its equivalent in any other currency.

Duties Of Licensed Offshore Banks : 

Duties Of Licensed Offshore Banks Offices and subsidiaries A licensed offshore bank shall not carry on offshore banking business in, from or through any place in Malaysia, other than the Federal Territory of Labuan.   A licensed offshore bank which is an offshore company shall not open any office, or acquire or establish any subsidiary, in Malaysia, other than in the Federal Territory of Labuan.

Contd.. : 

Contd.. A licensed offshore bank which is an offshore company shall not open any office, or acquire or establish any subsidiary, in the Federal Territory of Labuan or outside Malaysia without the prior written consent of the Bank.   A licensed offshore bank which is a foreign offshore company shall not open any office other than its principal place of business in the Federal Territory of Labuan without the prior written consent of the Bank.

Prohibition of certain accounts : 

Prohibition of certain accounts No licensed offshore bank shall accept any money on deposit or loan which is repayable on demand by cheque, draft, order or any other instrument drawn by the depositor on the licensed offshore bank. No licensed offshore bank shall open an account for a customer whose identity is not known to the offshore bank.

How does offshore banking affect the international financial system : 

How does offshore banking affect the international financial system Offshore banking is a significant segment of the international financial system. As it is, some 50% of the global capital flows through offshore centers as experts believe. Based on the “World Wealth Report” Almost one third of the “high net-worth individuals” in the world – almost $6 trillion out of $17.5 trillion – may presently hold offshore. Deposited in tax haven banks are some $3 trillion while international business companies (IBCs) and trusts hold the rest of the securities.

Slide 13: 

According to the IMF, between $600 billion and $1.5 trillion of illegal money if laundered yearly that is equal to 2%-5% of the world’s economic output Moreover, it is believed that the drug money worldwide, approximating to $500 billion, is laundered offshore every year. This is more than the accumulated income of 20% of the world’s poorest nations. In addition, another $1 trillion is added from tax evasion and some more few hundreds from corruption and fraud. Contd..