THE OFFSHORE BANKING

Money Laundering

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An offshore bank is a bank account which is located abroad as a country of the home of the depositor that presents financial and legal advantages such as better privacy, slight taxation, little deposit rates, security against confined political and financial firmness (Morriss, 2010). Offshore banking is linked with the underground wealth, organized crime and the money laundering. This explores that money laundering tend to conceal the source of the illegal proceeds in order for the money to be spend without any detection of its criminal source.

An illegal arms sales, ontraband and planned crime tricks can produce huge amounts. Money laundering allows trading of insiders, computer scam, corruption, and stealing can make big profits and create facilities in terms of legality of unlawful earnings (Lessambo, 2013). Money laundering acts as a dynamic process that assures availability of money for criminals whereby the occupational and geographical origin of the money are hidden out. Money laundering also assures concealing of money traces in order to avoid any legal investigation about the lost capitals by hiding the evidences.

The offshore banking has the advantages like enabling individuals and businesses in keeping all money earned in interest as not subject to the tax deductions, it also allows money to be protected from a high inflation and currency shifts. The offshore bank also ensures protection of the individual’s estate inheritance from taxes in future. An advantage of money laundering is that the methods applicable in the money laundering process are difficult and complicated in such a way that they varies from purchasing and selling of extravagance items of big value by passing the money through a tricky worldwide network of legal businesses, such as shell companies which exists as legal entities without following commercial practices or consulting business. Another advantage of using offshore banking facilities is that they have a regulation that requires banking secrecy and luckily located in areas with high tourist potential (Morriss, 2010).

Technical or Corporate operations should be formed in order to prevent influences by criminal element.

Certainly, establishing a course of action like effective anti-money laundering strategy has to detect or even take legal actions for the illegal funds which enters financial systems and also to the organizations. The money laundering act enables the banks to monitor their systems through compliance and prohibit some of the structured transaction which seems to be unrecognizable. Another practice which may deliver people from the crime influence and which also authorities should adhere to is an approach of multi-model. This approach of multi-model creates an environment where trust and interaction between criminals are built. Due to multi-model approach, it may ultimately lead to competitive advantage for some groups though it is inaccurate to adopt this as the only determinant of classification in organized crime (Lessambo, 2013). Approach of entrepreneurial model is another practice which may lead us out of the criminal influence. This model conforms to social learning theory hence conforms to communal learning theory or degree of difference association in such a way that there are clear relations and contact among criminals where information may be shared, or values imposed.

References

Morriss, A. P. (2010). Offshore financial centers and regulatory competition. Washington, D.C: AEI Press.

Lessambo, F. I. (2013). The international banking system: Capital adequacy, core businesses and risk management. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan.