Offshore bank accounts can provide great benefits like transaction privacy, asset protection, tax reduction and higher return on investments. Offshore bank accounts can be set up in a variety of locations, but each location has its own rules and regulations, not to mention benefits and risks. It is in your best interest to always investigate each location before setting up your offshore bank account.

The most famous of all offshore bank account locations is undoubtedly Switzerland. Your swiss bank account can be set up from anywhere in the world via postal mail or you can take a trip to set it up in person. Swiss bank accounts are known for their secrecy. In fact, most proceedings that are public in the United States, including bankruptcy and divorce, are considered private under Swiss banking law.

The U.S. has been able to pressure other countries into changing their laws to be more transparent, but the Swiss have not buckled. If privacy is the most important criteria in setting up your offshore bank account, Switzerland may be your best option but Panama warrants attention also.

Panama has built a well deserved reputation for banking privacy and secrecy and will not break those secrecy laws unless evidence of a major crime is presented.

If you have a corporation, the Cayman Islands banking system is set up to benefit you. The accounts work much like U.S. accounts, but you don't need to provide your legal name if you are setting up a corporation. Your corporation's name will be the only name the bank needs. The Cayman Islands also refuse to report deposits or interest that is paid on deposits. The Cayman Islands banking system depends on offshore bank account holders to report their own income to the proper authorities.  The Cayman Islands are also known to cooperate in investigations of criminal behavior, so don't count on privacy here.

Singapore has the lowest tax rate anywhere in Asia. If you are looking for a reduction in your tax bill, Singapore may be what you are looking for. If your offshore bank account is set up correctly, you can also earn tax free interest on your offshore bank account in Singapore. Singapore helps prop up China's economy, so you get the added benefit of having your money invested in one of the fastest growing economy's in the world.

This can greatly increase the interest rate your money earns and most of that money will accrue tax free in Singapore's banking system. If you are looking for a high return on the  money you place in an offshore bank account, Singapore may be th perfect place for your money.

Opening an offshore bank account in Luxembourg can be a little more difficult that opening an account in another location. For starters, your current bank has to give your a letter of reference and you also have to answer questions about how you plan to use any money invested in Luxembourg. Luxembourg has great return on your financial investment, but if you are a citizen of the European Union, your tax rate may be higher.

If you are a U.S. citizen, you offshore bank account will grow tax free in a country that is protected from natural catastrophes and has a low risk of any domestic turmoil like coups or civil wars.

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