Many people open an offshore banking account because of the increase privacy offered by offshore banks. A normal bank in your own city has to inform the authorities about customers and their accounts, so a normal bank offers almost no privacy for its customers.

An offshore bank is often situated in a country with little or no rules about banking privacy and it is therefore possible for offshore banks to keep most details about their customers secret.

The privacy offered by offshore banks can also be called 'anonymous banking'.

People have different reasons for wanting the privacy offered by an offshore bank. Some of the most common reasons are:

• To hide money from family members and friends.
• To hide money from investment salesmen and others that are attracted by wealth.
• To hide from the press and avoid publicity.
• To prevent authorities from confiscating the money.
• To launder money, although this illegal practice has become very difficult.
• To evade taxes in their country.

Although offshore banks offer a high degree of privacy, there is a tendency for offshore banks to open up towards the authorities. This opening is caused by recent terrorist attacks which have made the international society interested in any relations between offshore banking and terrorist funds.

The opening towards the authorities is one of the reasons it has become increasingly difficult to do launder money through offshore banks. Hopefully this will also change the way people look at offshore banking and make it a more accepted practice.

M. Phican is a successful entrepreneur. He studies offshore finance and runs a popular offshore banking website: http://www.offshorebankingcentral.com