What is an offshore bank?

• A. Banks that only buy and sell foreign currencies
• B. Banks that issue counterfeit money
• C. Banks that operate only in domestic market
• D. Banks that lend to government

Answer: (A)

An offshore bank is a financial institution located in a country other than the one where the depositor lives, typically in a jurisdiction known for favorable taxes, privacy, or regulatory rules. The key idea is the bank’s location outside the depositor’s home country and its appeal to non-residents or international clients, with services that may include foreign‑currency accounts and international banking options. The choice describing currency trading alone focuses on one activity and doesn’t define offshore banking, while the other options describe illegal activity, domestic-only operations, or lending to government—none of which capture what offshore banking means.