Unit 8
OFFSHORE BANKING
Skills focus
Reading
•Understanding
dependent
clauses with passives
Vocabulary focus
•Synonyms
•nouns from verbs
•definitions
•common ‘direction’ verbs in
essay titles (discuss, analyse,
evaluate, etc.)
Writing
•paraphrasing
•expanding notes into
complex sentences
•recognizing different
essay types/structures:
descriptive
analytical
comparison/evaluation
argument
• writing essay plans
• writing essays
8.1 Vocabulary
8.2 Reading
8.3 Extending
skills
8.4 Extending
skills
8.1 Vocabulary
A Look at the website on the opposite page.
1 What is meant by offshore in
banking?
‘Offshore’ refers to a centre
(including banks, companies, trusts),
located outside the
depositor’s/user’s country of
residence. The majority of the
account holder’s transactions are
carried out electronically.
8.1 Vocabulary
A Look at the website on the opposite page.
2 Name some offshore banking locations.
Offshore banking locations include the
Bahamas, Barbados, Belize, Bermuda, the
British Virgin Islands, the Cayman Islands,
the Channel Islands (Jersey and Guernsey),
the Cook Islands, Cyprus, Dominica,
Gibraltar, Hong Kong, the Isle of Man,
Panama, Saint Kitts and Nevis, the
Seychelles, Singapore, Switzerland, and the
Turks and Caicos Islands. Of these,
Switzerland and the Cayman Islands are the
most important. Many offshore banks are
located in small island nations.
8.1 Vocabulary
B Look up each noun in box a in a dictionary.
1 Is it countable, uncountable or both?
2 What is its banking meaning?
3 How does it relate to offshore banking?
4 Make verbs from the nouns if possible.
5 What useful grammatical information can
you find?
8.1 Vocabulary
B Look up each noun in box a in a dictionary.
Word
(C/U)
Banking meaning
Offshore aspect
asset
something of monetary
value belonging to a
person or company
money earned from
deposits in a bank or
paid on a loan
legal power or
authority in a specific
situation or location
keeping
personal/financial
matters secret
an offshore asset is difficult
for domestic jurisdictions to
access
investment interest rates are not used in a
generally more favourable banking
context
the term tax haven is
associated with jurisdictions
of low or no taxation
under secrecy provisions in privatize
offshore legislation, banks
and companies operating an
offshore facility maintain
their clients’ privacy and
anonymity
C
interest
U
jurisdiction
C/U
privacy
U
Verb
Useful grammatical
information
usually used in the
plural in a banking
context
uncountable, so has
no plural form in this
context
the countable form
refers to a state or a
country
uncountable, so has
no plural form; not
used with the
indefinite article
8.1 Vocabulary
B Look up each noun in box a in a dictionary.
Word
(C/U)
Banking meaning
regulation
government rules or
controls
the absence of exchange
regulate
control regulations facilitates
the flow of currency for
transfers and investment
purposes
steady or unchanging
position
the political and economic
stabilize
stability of an offshore
jurisdiction is important to
investors
offshore financial centres
tax
either do not deduct tax or it
is very low
C/U
stability
U
tax
C/U
government levy on
income earned
Offshore aspect
Verb
Useful grammatical
information
regulator (n) = the
person responsible
for administering
regulations
adj = regulatory
uncountable, so has
no plural form
taxation (n) = the act
of taxing an
individual or business
8.1 Vocabulary
C Study the two lists of verbs in box b.
1 Match the verbs with similar meanings.
amend
contribute (to)
get
maintain
maximize
move
retain
(fully) achieve
hold
keep
change
obtain
play a role (in)
shift
8.1 Vocabulary
C Study the two lists of verbs in box b.
2 Make nouns from the verbs in column 1 if possible.
Verb
Noun
amend
amendment
contribute (to) contribution
get
maintain
maintenance
maximize
maximum
move
move
retain
retention
8.1 Vocabulary
D Look at the Hadford University handout.
1 How does the writer restate each section
heading in the paragraph?
Cross-border capital flows – move … capital
from one country to another
Offshore banking regulations – the rules for
nonresident banking
8.1 Vocabulary
E Look at the Hadford University handout.
2 Find synonyms for the underlined words.
Use a dictionary if necessary.
words and phrases
synonym
contribute to
play a role in
foreign
overseas
move
shift
capital
funds
obtain
get
amended
fully achieve
changed
maintain
keep
retain
hold
maximize
8.1 Vocabulary
E Look at the Hadford University handout.
3 Rewrite each sentence to make paraphrases of
the texts. Use:
• synonyms you have found yourself
• synonyms from Exercise B
• the nouns you made in Exercise C
• passives where possible
• any other words that are necessary
Example:
Early in the 21st century, the International
Monetary Fund (IMF) amended the rules
for non-resident banking.
The regulations for offshore banking
were changed by the IMF (International
Monetary Fund) early this century.
8.1 Vocabulary
E Look at the Hadford University handout.
3 Rewrite each sentence to make paraphrases of the texts.
Possible paraphrases:
Cross-border capital flows
If overheads in an offshore location are low, this can play a role in attracting
overseas investment. This may encourage multinational companies to shift funds
to different locations with the aim of obtaining optimal terms and the highest
returns in new markets.
Offshore banking regulations
The regulations for offshore banking were changed by the IMF (International
Monetary Fund) early this century. Offshore banks must keep an international
capital adequacy ratio of 8%, the same as onshore banks. In other words, 8% of
their assets must be held as shareholders’ capital.
8.1 Vocabulary
E Study the diagram on the opposite page.
1 List the boxes in the diagram under the following headings:
1 Setup procedures
2 Operating procedures
Possible answers:
1 Setup procedures:
appoint a registered agent
have paid-up share capital of US$1 million
hold US$150k in government bonds as a reserve
submit an application for a banking licence
apply for company registration
establish a representative office.
2 Operating procedures:
retain a capital-to-asset ratio of 8 % of the assets
file annual audited accounts
pay annual licence fees
8.1 Vocabulary
E Study the diagram on the opposite page.
2 Write a paragraph entitled How to set up an offshore bank.
Possible answers:
To set up an offshore bank, first appoint a registered agent, who must register
the company name and apply for a licence to operate the bank.
Before applying for an offshore banking licence you must have paid-up share
capital of US$1 million, and hold a reserve in government bonds of
US$150,000. You then need to establish a representative office. Once you have
your licence, registration and premises you are ready to open for business.
During the whole term of your operation you must pay an annual licence fee
and file audited accounts annually. You must comply with the IMF rules and
retain a capital-to-asset ratio of 8% of the bank’s assets.
8.2 Reading
A Look at the words in box a.
1 Match each word or phrase on the left with a noun on
the right.
2 Make a sentence with each completed expression,
showing its banking meaning.
capital flow
protection
controls
financial
product
financial disclosure
procedures
interest rate
ceiling
licensing and administration
fees
tax
rates
asset
8.2 Reading
B Look at the four essay types in the Hadford University
handout on the right.
1 What should the writer do in each type?
What the writer should do
descriptive
describe or summarize key ideas/key events/key
points. Give the plain facts. Could involve
writing about: a narrative description (a history of
something); a process (how something happens);
key ideas in a theory; main points of an article
(answers the question What …? or Describe …)
analytical
try to analyse ( = go behind the plain facts) or
explain something or give reasons for a
situation; may also question accepted ideas
and assumptions (answers the question
Why/how …? )
8.2 Reading
B Look at the four essay types in the Hadford University
handout on the right.
1 What should the writer do in each type?
What the writer should do
comparison
compare two or more aspects/ideas/things/
people, etc.; usually also evaluate, i.e., say
which is better/bigger, etc.
argument
give an opinion and support the opinion with
evidence/reasons, etc.; may also give opposing
writing opinions ( = counter arguments) and show
how they are wrong
8.2 Reading
Descriptive
Analytical
B Look at the four essay types on the right.
2 Match each essay type with one of the questions (A–D) below
the handout.
3 What topics should be covered in each essay question?
Question
Topics
B What questions do offshore banks
need to ask to ensure their clients do
not have criminal or terrorist
associations? Describe some client
screening procedures they could
implement.
C Explain why the term tax haven
could be considered misleading.
• client screening: what is it? Why is it
important?
• how to evaluate clients:
questions/procedures
• how effective these may be
• tax haven: what is it?
• are the reasons for the term valid?
• if not, why not?
8.2 Reading
B Look at the four essay types on the right.
2 Match each essay type with one of the questions (A–D) below
the handout.
3 What topics should be covered in each essay question?
Question
Comparison
A What are the advantages
and disadvantages for banks
of establishing offshore
facilities?
Topics
• offshore banking: what is it?
• examples of advantages for the banks
• examples of disadvantages
• do the advantages outweigh the disadvantages?
If so, why? If not, why not?
Argument
D ‘Offshore banks have an
important role to play in the
financial services industry.’
To what extent do you agree
with this statement?
• financial services industry: what is it? OR
offshore banks: what are they?
• what role do offshore banks have in the
industry?
• is their role important? To whom? How
important?
8.2 Reading
C Read the title of the text on the opposite page and the first
sentence of each paragraph.
1 What will the text be about?
The title of the text suggests that the text will look at the reasons for offshore banking,
then describe it, then say where it is located.
Paragraph 1 will explain the background of offshore banking.
Paragraph 2 will give a definition of offshore banking.
Paragraph 3 will discuss the structure of offshore banks.
Paragraph 4 will compare services offered by offshore banks and onshore banks.
Paragraph 5 will discuss a common misconception (that offshore banking is not legal).
Paragraph 6 will discuss another common misconception (that with offshore banking
you can legally avoid tax).
Paragraph 7 will discuss who can set up an offshore bank.
8.2 Reading
C Read the title of the text on the opposite page and the first
sentence of each paragraph.
2 Choose one of the essay questions in Exercise B. Write four research questions
which will help you to find information for your essay.
8.2 Reading
D Read the text on the opposite page.
1 Find out whether there is information for your essay question in the text and make
notes in your own words. You can also draw on your own knowledge.
2 Work with another person who has chosen the same essay question as you.
Compare your notes.
8.2 Reading
D Read the text on the opposite page.
Possible notes:
A What are the advantages and disadvantages for banks of establishing offshore
facilities?
• offshore = banking by non-residents carried out in a foreign currency
• advantages: less regulation; lower taxes; lower costs; attracts customers wanting
privacy and anonymity; less exposure to unfavourable exchange rates; attracts high
net-worth clients, therefore better revenue stream
• disadvantages: remote location; risk of being exposed to money laundering;
financing terrorism, etc.; pressure for increased fiscal transparency; risk that countries
with onshore banks revise their legislation to make offshore banking less attractive
8.2 Reading
D Read the text on the opposite page.
Possible notes:
B What questions do offshore banks need to ask to ensure their clients do not have
criminal or terrorist associations? Describe some client screening procedures they
could implement.
• client screening: carrying out procedures that ensure the banks ‘know their client’ to
protect themselves from undesirable clients
• check client identity, financial status, source of their funds, nature of their business
• obtain evidence of information given in answer to the questions
8.2 Reading
D Read the text on the opposite page.
Possible notes:
C Explain why the term ‘tax haven’ could be considered misleading.
• tax haven: implies client pays very low or no taxes
• most offshore banks do not impose taxes themselves
• for the clients, interest earned could be taxable in their home jurisdiction (it is their
responsibility to declare it)
8.2 Reading
D Read the text on the opposite page.
Possible notes:
D ‘Offshore banks have an important role to play in the financial services industry.’
To what extent do you agree with this statement?
• financial services industry = broad term including banking, insurance, and all
services relating to finance
• offshore banks can be viewed as providing an alternative (more favourable) option,
particularly for residents in weak or controlled economies
• give private citizens and companies privacy
• it could be argued that given the demand for their services they have an important
role in the industry in fulfilling a need not currently provided by onshore banks; more
importantly, they create business opportunities for host countries
8.2 Reading
E Study the highlighted sentences in the text.
1 Underline all the subjects and their verbs.
Joining word Subject
Verb
Object/complement
offshore banks
operate
in low tax jurisdictions
taxes
have been kept
low
in order to
encourage
non-resident businesses
to
locate
there
include
their identity, their financial standing,
the nature of their business, and the
source of their funds
by offshore banks
1
where
2
questions
which
an offshore
banking facility
3
that
need to be
considered
can be established by any individual or group
can pay
the setup, licensing and
administration fees
8.2 Reading
E Study the highlighted sentences in the text.
2 Which is the main subject and verb for each sentence?
Main Subject
Main Verb
1
offshore banks
operate
2
questions
include
3
an offshore banking facility
can be established
8.2 Reading
F Study the table on the right.
1 Match each word or phrase with its meaning.
Word/phrase
1 low tax
jurisdictions
Meaning
the legal selling of shares not listed on the main stock exchange
2 over-the-counter
trading
the process whereby criminals attempt to conceal the origin and
ownership of funds generated through illegal activities
3 parallel-owned
banks
centres or countries where the authorities impose low or no taxes
4 money
laundering
separate legal entities but with the same shareholders as the
onshore bank
8.2 Reading
F Study the table on the right.
2 Underline the words or phrases in the text which the writer
uses to give the definitions.
See Vocabulary bank.
Vocabulary bank Understanding new words: using definitions
You will often find new words in academic texts. Sometimes you will
not be able to understand the text unless you look the word up in a
dictionary, but often a technical term will be defined or explained
immediately or later in the text.
Look for these indicators:
is or are
The term ‘tax haven’ is basically about …
brackets
… money laundering (the process through which
criminal gangs try to conceal the origins of their money).
or
However, the non-declaration of income, or tax evasion,
on offshore income, …
which
… over the counter trading, which is trading in shares
not listed on the main or official stock exchange.
Vocabulary bank Understanding new words: using definitions
a comma or a dash (–)
immediately after the
word or phrase
… low tax jurisdictions – centres or countries where taxes have
been kept low …
phrases such as that is, in … some are parallel-owned banks: that is, they are not
other words
subsidiaries but may share common ownership...
Remember!
When you write assignments, you may want to define words yourself.
Learn to use the methods above to give variety to your written work.
F Study the table on the right.
8.2 Reading 2 Underline the words or phrases in the text which the writer
uses to give the definitions.
Word/phrase Actual words giving the meaning
Punctuation/vocab/structure
low tax
jurisdictions
… – centres or countries where
taxes have been kept low
word/phrase followed by a dash + elided
relative (which are) + noun phrase
over-thecounter
trading
… , which is trading in shares not
listed on the main or official stock
exchange.
word/phrase followed by comma +
which is
parallel-owned … , that is, they are not subsidiaries word/phrase followed by comma +
banks
but may share common ownership or that is +comma
have interlinked businesses with a
defined banking group.
money
laundering
… (the process through which
criminal gangs try to conceal the
origins of their money)
word/phrase followed by
explanation in brackets
8.3 Extending skills
A Find the words in the box in the text in Lesson 2.
1 What part of speech is each word?
2 Think of another word which could be used in place of
the word in the text. Use your dictionary if necessary.
Word
Part of speech
Another word
depositor
n (C )
investor
impetus
n (U)
reason, catalyst
imposition
n (U)
creation
restriction
n (C )
control, limit
disclosure
n (U)
transparency
expansion
n (U)
increase
8.3 Extending skills
A Find the words in the box in the text in Lesson 2.
1 What part of speech is each word?
2 Think of another word which could be used in place of
the word in the text. Use your dictionary if necessary.
Word
Part of speech
Another word
generate
v (T)
produce
interlinked
adj
connected
standing
n (U)
status
perception
n (U)
belief
8.3 Extending skills
B Study sentences A–D on the right.
1 Identify the dependent clause.
2 Copy the table under the sentences and write the parts of each dependent clause in the table.
Main clause
Linking
Dependent clause
word
Subject
A Here is a list of questions
which
Verb
have to be
considered
B They operate in countries where
taxes
have been
kept low
C The term ‘offshore’ refers in which all banking and
are carried
financial transactions out
to a situation
questions
D However, it is clear
that
are now
also being
asked
which
By whom/ what
by offshore
banks.
(by
governments)
by non-residents.
by the tax
authorities.
8.3 Extending skills
B Study sentences A–D on the right.
3 Rewrite the sentence using an active construction.
Example:
Here is a list of questions which offshore banks have
to consider.
B They operate in countries where governments have kept taxes low.
C The term ‘offshore’ refers to a situation in which non-residents carry out all
banking and financial transactions.
D However, it is clear that the tax authorities are now asking questions.
8.3 Extending skills
C Look at the essay plans and extracts on the opposite page.
1 Match each plan with an essay question in Lesson 2.
Plan A = essay question B: What questions do offshore banks need to ask to ensure
their clients do not have criminal or terrorist associations? Describe some client
screening procedures they could implement..
Plan B = essay question D: ‘Offshore banks have an important role to play in the
financial services industry.’ To what extent do you agree with this statement?
8.3 Extending skills
C Read the essay plans and extracts on the opposite page.
2 Which essay is each extract from?
Extract 1 = plan B
Extract 2 = plan A
8.3 Extending skills
C Read the essay plans and extracts on the opposite page.
3 Which part of the plan is each extract from?
Extract 1 = Plan B, points 1 and 2
Extract 2 = Plan A, points 2 and 3
8.3 Extending skills
D Work with a partner.
1 Write another paragraph for one of the plans.
2 Exchange paragraphs with another pair. Can they identify where it comes from?
8.4 Extending skills
A Make complete sentences from these notes. Add
words as necessary.
A offshore facilities – located – foreign jurisdictions – less regulation + taxation
A Offshore facilities are located in foreign jurisdictions with less regulation and
taxation.
B several key advantages – banks – providing offshore facilities
B There are several key advantages for banks in providing offshore facilities.
8.4 Extending skills
A Make complete sentences from these notes. Add
words as necessary.
C offshore banking services – provided by many banks – customers wanting
privacy/ anonymity/good return on investment
C Offshore banking services are provided by many banks to customers wanting
privacy, anonymity and a good return on their investment.
D however, banks face dilemma – fiscal transparency/ maintaining client privacy
D However, offshore banks face a dilemma between fiscal transparency and
maintaining client financial privacy.
8.4 Extending skills
A Make complete sentences from these notes. Add
words as necessary.
E advantages outweigh disadvantages – provided effective controls
E However, the advantages of an offshore facility outweigh the disadvantages,
provided there are effective controls.
F also, future risk – if favourable tax legislation introduced – onshore banks make
offshore less attractive
F There is also the risk that, if favourable tax legislation is introduced in the
future, onshore banks will make offshore banking less attractive.
8.4 Extending skills
B The sentences in Exercise A are topic sentences for
paragraphs in essay A in Lesson 2. Put them in the best order
for the essay. What is the main topic for each paragraph?
Topic sentences
Paragraph topic
C Offshore banking services are provided by many banks to customers
wanting privacy, anonymity and a good return on their investment.
introduction/purpose of
offshore facilities
A Offshore facilities are located in foreign jurisdictions with less regulation
and taxation.
definition of offshore
facilities
B There are several key advantages for banks in providing offshore facilities.
advantages of offshore
facilities
D However, offshore banks face a dilemma between fiscal transparency and
maintaining client financial privacy.
disadvantages of
offshore facilities
F There is also the risk that, if favourable tax legislation is introduced in the
future, onshore banks will make offshore banking less attractive.
possible future risk
to banks
E However, the advantages of an offshore facility outweigh the disadvantages,
provided there are effective controls.
conclusion
8.4 Extending skills
C Look at the essay question on the right.
1 What kind of essay is this?
This essay is largely analytical, since it
requires students to think critically about
possible problems with a system that is
promoted as being very advantageous for
investors.
Richard Allen, an American resident,
invested US$1 million in an offshore bank
located in Taluva, a Pacific Island, in a hedge
fund that was not permitted to operate
onshore in the US. Within a year, as a result
of a political upheaval and change of
government in Taluva, the offshore bank’s
licence was cancelled and the bank closed.
The remote location of Taluva caused Mr
Allen difficulties in tracing and establishing
title to his investment. In addition, he had
not realized that the administration fees
were so great. The result was a substantially
lower net return than advertised. What
conclusions would you draw from Mr Allen’s
experience?
8.4 Extending skills
C Look at the essay question on the right.
2 Do some research and make an essay plan.
3 Write the essay.
Possible essay plan:
• Introduction: reasons for offshore investment; aims of essay.
• Definition and description of the offshore investment (i.e., the reasons for the
investment, perceptions of benefit of the investment).
• Aspects of investing offshore which can cause problems for the investor – investor
needs to:
▪choose the jurisdiction the bank operates from with care, as it is responsible for
granting the bank’s licence
▪have confidence that the country is well organized and administered
▪assess the political and economic risk associated with an offshore banking
jurisdiction
8.4 Extending skills
C Look at the essay question on the right.
2 Do some research and make an essay plan.
3 Write the essay.
Possible essay plan:
▪ assess the difficulties of investing in an offshore facility in a physically remote
location
▪ fully understand all fees and charges associated with the investment
▪ get independent advice on the financial soundness of an offshore investment in
hedge funds
• Conclusion: thorough checking is required before making the investment.
Tips for Reference
8.1 Vocabulary部分，学生课前完成练习B、C；课堂讨论完成练习A、D、E。
8.2 Reading部分，让学生阅读课文‘Offshore banking – why, what and where?’，完
成练习A-F。教师课堂重点讲解常用的四种 essay types, 并讲解Vocabulary bank
中的“Understanding new words: using definitions”技能。
8.3 Extending skills部分，学生课前完成练习A；教师课堂讲解练习B、C、D。
8.4 Extending skills部分，教师课堂讨论练习A 、B ，并讲解Skills bank中的技能；课
后让学生完成一份essay plan制定及完成一篇essay写作。
谢谢欣赏！