offshore bank - Investment & Finance Definition
Any financial institution that has its headquarters outside of its home country. Banks, hedge funds, or mutual funds based in the U.S. may be located in Bermuda, the Cayman Islands, or the Isle of Man, near the U.K., just to name a few popular locations. While financial institutions can be headquartered offshore, they still have to comply with all U.S. securities regulations for products sold in the U.S. Offshore banks are used by individuals and companies to avoid paying higher tax rates that would be due if funds were left in their home country. Income on deposits in the offshore bank account will be taxed at a lesser rate than if the account was located in the U.S.