The most common reason individuals and corporations access offshore
centres is for commercial and private banking services. In the Bahamas, for example,
banking employs over 3,000 people. The predominance of offshore banking in jurisdictions
like the Bahamas is primarily because of advantageous banking laws that ensure good
service, confidentiality, and asset and tax protection. These laws also provide freedom
from certain banking regulations. Offshore banks often do not have reserve requirements or
strict treasury laws. As a result, they can lend funds at lower interest rates and pay
higher rates on deposits. They also have more freedom than onshore banks to invest
depositors’ funds, and can provide attractive investment returns on relatively
low-risk bonds, term deposits, and other bank products.
