Having an offshore bank account is a way of safekeeping your money and protecting it from an unprecedented economic crisis in your country. In addition, overseas bank accounts can also offer higher interest rates and they enable you to undertake financial transactions worldwide, in a more private and secure setting. In comparison to domestic banks, offshore banks provide services not available in domestic banking such as multi-currency accounts, access to markets locked out by your home country, international investment opportunities and even access to gold and silver direct from your single account.
There are two available methods in opening an offshore bank account. One is a do-it-yourself and another through an intermediary.
Do it Yourself (DIY)
DIY opening of an offshore bank account is doable and the process is almost the same with the local version. Of course, the requirements may differ from one bank to another but the general rules are basically what every bank requires. Offshore banks will need your personal information, notarized copies of passport, government IDs, and utility bill to verify your address. Others might require “apostilles” stamp, a type of certification recognized internationally. In which case, you have to find the government office that issues this kind of stamp for your country.
Also, financial certifications from your existing local bank might be needed as a bank reference. A bank statement for the last six to twelve months will suffice. In some cases, they will even ask for a professional reference that is a lawyer or an accountant confirming that you have a good character.
Offshore banking is often associated with illegal activities. Because of this, banks would need to know the nature of the business or personal transactions where the offshore account will be used. Corresponding documents showing where your deposits will come from (job, business, inheritance, insurance, etc.) will be required.
Your research skills are going to be very useful and important in this method. Choosing the right bank lies on how good you are at researching. There are a handful of banks worldwide, each boasting that it is the best option. Be careful and study your options very well before deciding.
Application can be lodged online so traveling to visit the bank in person is not necessary, but this is getting harder everyday and most banks are now requiring you to visit to open the account. However, if your transaction is huge, and you can afford to travel, visiting the bank is recommended. Visiting the bank in person can increase your options and will provide the bank a level of confidence and also establish an in person relationship and reduce the due diligence, hence faster and safer processing.
Opening corporate offshore accounts also require all those mentioned above plus additional ones. If you’re applying for a corporate account, you will need to present a full set of notarized documents of your company and detailed business plan.
Using an Intermediary
Offshore Service Providers (OSP) exist to serve those individuals and corporations who want to hire professionals to handle their offshore bank accounts. An OSP will serve as middle man between you and the bank. It will handle all the documents and the whole application process. OSPs can also provide the references banks require and the ‘know your customer’ procedure is loose because of their good relationship with the banks. In some cases, banks will require introducers such as an OSP or other trusted person.
Hiring an OSP sounds convenient and fast but there are also some drawbacks. OSPs have limited number of banks, none of it may satisfy your requirements. Sometimes, OSPs do not reveal the bank names. This shouldn’t be the case and this is considered a red flag. Having an intermediary will also cost you more than a DIY and you will not be allowed to communicate with the bank until the account is opened.
Again, either you choose DIY or intermediaries, make sure to be informed. Always ask about the banks they work with and the services each of them offers. List down the services you need and choose the best bank suitable and the most advantageous to you.
Offshore bank accounts offer clients an option as to which currency they wish to hold the account in. at first, this might sound good because having deposits under a different currency other than your existing ones is a great risk protection. However, as a client, you must also consider the fees and exchange rates that entail during currency exchange every deposit and withdrawal. Also, as the bank offers high interest rates, foreign tax liability also increases.
Access – Depositing and Withdrawing
International wire transfers are the most common and convenient way of depositing to an offshore bank account. This could be done electronically through a local bank. Fees are collected for every successful international wire transfer and may vary from one bank to the other. Look for the one with the lowest charge. Because personally carrying your funds to an offshore bank is very impractical and local checks are generally not accepted, wire transfer is the best option.
Offshore banks will normally issue you an international debit or ATM card for your convenience in withdrawing funds worldwide. Hefty fees are also associated with these transactions so make sure to know the charges and the least costly method or location to access your funds from.
Some banks also offer checks but this is highly discouraged for security and anonymity reasons. The suggested way to withdraw funds from an offshore bank account is to use two accounts, one local and one international. Funds are easily accessed domestically so offshore funds must be first electronic wire transferred to a domestic account then withdrawn using the local ATM card. To minimize the fees, withdraw in large amounts and in few occasions.
Another method been used more often now is the international prepaid credit cards, these cards are issued by providers and allow you to top up the card with a set amount via a wire transfer, and allow the user to access the funds via credit or debit machines all over the world.