I have found a good site on the Federal Reserve’s website that discusses these IBFs. From what I have gathered, they enable depository institutions to accept deposits and offer loans to foreign businesses and customers. IBFs aren’t under the jurisdiction of certain interest rate restrictions and are free from the Federal Reserve System’s reserve requirements while also enjoying some state/local tax exemptions. According to the description provided by the Federal Reserve Bank of New York, they offer short-term deposit maturities, large denomination time deposits, and may transact business in foreign currency. From what I have gathered, these International Banking Facilities are a branch of American banks that are established to do Eurocurrency business with foreign customers. I still can’t differentiate between IBFs and offshore banks. To me, offshore banking provies even fewer restrictions and regulations than IBFs, especially in the way of account privacy and the ease to which money laundering and other trafficking activities can be completed. Even though International Banking Facilities aren’t under the subjugation of the Federal Reserve System reserve requirements, detailed ledgers and logs (separate from the U.S. transactions) must still be maintained, so consequently, illegal activities seems to be more easily monitored within the confines of the United States than when someone conducts financial activities on their accounts outside of the U.S.
Source: Federal Reserve Bank of New York: International Banking Facilities
February 23, 2007 at 8:21 pm |
Yeah, so what exactly IS the difference between an IBF and an offshore bank. I’m still not exactly sure I understand what offshore banking is and means.
If you don’t answer that question first, then I’ll look into it and post something about it.
February 23, 2007 at 8:39 pm |
To me, an IBF is a branch of a U.S. bank whereas an offshore bank has no connections to the U.S. banking system. Thus, IBFs are still under the subjugation of the regulations imposed on U.S. banks. Offshore banks, on the other hand, accept deposits and are completely separate entities from the originating country’s banking laws.
February 27, 2007 at 3:44 pm |
Ok that definitely helps. Thanks Brandon.