Offshore Finance and offshore Financial Centers (ofcs)

As a consequence of recent regulatory initiatives against ‘banking secrecy' in the environment of globalization, international financial activities in Offshore Financial Centers (OFC), which comprise mostly small island tax-havens, may have diminished appeal to financial institutions and investors in advanced economies. Nevertheless, OFCs may also have unintended positive consequences for their neighbors, since they act as a competitive fringe for the domestic banking sector. This study also examines the different characteristics of OFCs and outlines the various strategies uses of OFCs in order to dispel the commonly held perception that OFCs are simply used for the tax evasion and money laundering. The purpose of this paper is to provide background information on the business of OFCs and on a number of initiatives taking place in various international fora concerning OFCs.

This research paper defines in great detail what contributes an Offshore Financial Centers (OFC) by utilizing the basic definition of an OFC provided by the International Monetary Fund (IMF). There is a discussion about the ways that the existence of OFCs affects the work of the Fund, generally, in three major ways. First, a better understanding of the activities taking place in OFCs is a must, it can