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Opening an Offshore Account in an Offshore Banking Jurisdiction

Why Foreign Bank Accounts Provide a Better Banking Alternative

 

Table of Contents:

 

What is Offshore Banking

Offshore banking refers to the use of banking services in a foreign jurisdiction; where the individual resides outside the jurisdiction where the bank is located.

If you are a UK person with a bank in the U.S. for example, you are using offshore banking.

The term offshore is really just used to separate domestic and foreign banks.

Historically, offshore banking and financial services were predominately located in only a few jurisdictions, whereby the term became synonymous with a location itself, rather than the fact it merely refers to a foreign bank.

Many banking and financial services performed by institutions located in offshore environments differ from local domestic services primarily because of the jurisdictions' global banking laws which allow for broader use of services with fewer regulations.

Offshore banks are regulated by laws defined specifically within each jurisdiction and exist as per their regulations. Each banking entity operates under a Banking License governed by that specific state or governmental authority.

To exist as a Banking institution it must also comply with international banking standards and regulations that must be meet regularly to continue dealing with correspondent banks.

An offshore bank operates in many ways like a traditional bank.

An individual or corporate body can open an offshore account with a foreign bank outside of the country of their residence and have access to the same services such as deposits, payments, withdrawals, and online transactions.

The differences, however, are that offshore accounts benefit from a number of advantages that come from being located in international offshore jurisdictions.

Why Open an Offshore Bank Account?

Banking in a foreign jurisdiction isn’t as distant and exotic-sounding as the name sounds.

By some estimates, there are nearly 3 million people in the US who have foreign bank accounts. So it's definitely catching on, but that's only 1% of the population, so it still hasn’t caught fire.

Many see the value in having a back-up-plan, a Plan B in case something goes wrong, to be prepared, but somehow using an alternative banking system is still not seen as a solution for tomorrow's what if’s.

Global banking gives the ability to ensure your future. You become more autonomous in your ability to exist outside the confines of any one system; and

  • should that economic system collapse (Venezuela)
  • if your domestic assets get frozen (Cyprus)
  • or if you get slapped with a lawsuit (1 in every 2 Americans)

you will have your offshore back-up-plan already in place.

Offshore banking isn’t what the headline say it is. Its not about tax evasion, secret stashes of cash, shady dealings, its, as its been said ‘going where you’re treated best’, going to a country that is economically sound, politically stable, with a banking system that is fully functional, where you are able to reap the benefits of establishing multiple financially secure asset structures in foreign banks.

Offshore banking doesn’t necessarily mean opening an offshore account in traditional tax-havens such Bahamas, the Cayman Islands or Vanuatu, though there are still opportunities to be had there, it also extends to financial centers in modern ‘onshore’ environments such as Hong Kong, UAE, Liechtenstein, Singapore, and Georgia.

The simple fact is, there are many foreign jurisdictions that have banks that are safer, more fiscally sound and exist in a country that has a more durable economic outlook. Banking systems in the West are abysmal for a number of reasons.

If we take the US for example, it suffers from a profoundly sick banking system controlled by the federal government which has the highest debt in history, currently at roughly 20 trillion dollars.

The Federal Reserve is insolvent and it supports a system that allows local banks to engage in dangerous banking practices leaving them like 2008’s financial crises, overexposed with much greater liabilities than is safe and little capital reserves to meet deposits.

Should the economy turn and people start to withdraw their money, all it takes is a fraction of depositors 3-5% and many banks will not have enough capital if their investments fail, to cover the demand for customers’ withdrawals creating a perfect storm (think 2008 crises).

After such a shock it might be a signal to start looking for a more solvent banking alternative.

offshore banking system 1

The Fragility of the Traditional Banking System

The financial crises of 2008 showed how fragile the traditional banking system really is. In the US alone over 500 banks collapsed

Many regular individuals lost their life savings, investments, retirements, and mortgagees. Over 10 million people in the US alone lost their homes. 

Europe did not fare much better than the US during the global banking crises as Poland, Cyprus, Greece, Hungary, all had massive banking failures, with governments ending up taking large swaths of cash from their citizens! 

  • Poland took half if its citizen's retirements funds,
  • Greece imposed severe capital controls; and
  • Hungary nearly ended private pensions.

If a bank has low-cash reserves and engages in risky investments, all it takes is a bump in the economy to send those investments tumbling, leaving the bank unable to cover deposits.

This is part of what happened in the sub-prime real estate mortgages in the US.

Banks were unable to cover their losses because they had lent money to people who couldn’t afford it, and when individuals defaulted on their payments, the banks found themselves overextended leaving many people out of luck.

Why You Need An Offshore Bank Account

Having Offshore Bank Accounts is a perfect diversification strategy that gives you much-needed access to foreign banking systems that are much more aligned with common-sense practices.

There is too much to lose by having all your funds stored in the banks that engage in dangerous financial practices as they are gambling with YOUR MONEY!

Offshore accounts offer a wealth of opportunities that offer insurance against the negligence of an irresponsible system. Here are 8 reasons why you need an offshore bank account.

  1. Foreign Banks have Higher Liquidity
    • Some offshore private banks are 100% liquid, that means they keep all of their assets on hand and do not lend out your money

  2. Don’t put all your eggs into one Basket, Diversify Your Wealth
    • Protect your wealth from domestic political or economic fluctuations by diversifying your assets across jurisdictions and accounts. This allows for a stable long-term savings portfolio that will not be affected by the downturn of just one economy.

  3. More Stable Banking Systems in Foreign Jurisdictions
  4. Generate Higher Interest Rates in an Offshore Bank Account
    • Foreign jurisdictions and banking systems offer much higher interest rates than typical US or UK banks. Even many banks around the world abysmal rates, for instance,  Germany and Japan have negative interest and have had those rates for years, meanwhile, banks in India can have upwards of 6-7% with fixed-term deposits upwards of 18% and Georgia has 6% rates with fixed-term deposits at 14%

  5. Higher Returns in Global Investment Funds
    • Offshore accounts give you greater access to banking and financial services typically not available to domestic banks. 

  6.  Hold Multiple Currencies in Your Account
    • Some offshore accounts allow for upwards of a dozen different currencies so that your assets aren't tied to a single country and its fluctuating currency 

  7. Asset Protection from unscrupulous lawsuits
    • Protect your assets from predators by having separate foreign banking laws to shield you from malicious parties

  8. Greater Levels of Banking Privacy
    • Prevent your name and details to be easily associated with your account by using an offshore company to hold the account. Although there is no such thing as absolute secrecy in this age, there are measures that can be effectively taken to make your account more private and less open to the public gaze

 

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Is it Illegal to Have an Offshore Bank Account?

Contrary to common perception opening an offshore account is perfectly legal. Not only is it legal but nearly 75% of all Fortune 500 companies have offshore companies and accounts in foreign offshore jurisdictions.

As long as you abide by the laws regulating the overseas bank as well as laws within your own country of residency there is no problem.

The problems only start to come when you are trying to hide assets. That is illegal.

Gone are the days of anonymous Swiss numbered bank accounts. While there still can be various levels of privacy, that depends on the laws in both the offshore jurisdiction and the laws in the country where you live.

While it's often the illegality of the offshore industry which grabs headlines. Tax evasion, money laundering, international drug dealing headlines sell papers. It's the shock factor we like. 

Middle-aged half-retired man opens an offshore bank account in the Bahamas,” just doesn’t sell papers.

Like all media headlines, illegality and criminal behavior are always over-reported, and so the reality of things is skewed by whats reported.

Because what's there to report if there is no scandal?

It is estimated that nearly 25% of the world's wealth is held in offshore accounts at upwards of up to 20 trillion Pounds Sterling. People have been using the offshore financing model for a long time. It is not new. Though it is only recently that it has fell into the public eye.

While that is a staggering number, this number shouldn’t be too surprising, as the world is big, and filled with dozens of countries that have lower taxes and liberal banking systems. 

The common narrative that has been adopted by many, to the supposed evils of offshore banking has been because high-networth individuals were caught. And liberal media has a harder time letting that one go by.

If investigators caught and reported that 20,000 retirees were apprehended with their pensions stored in an offshore holding company in Bermuda, it would be a very different story.

 

Something to Consider: Global Banking Regulations

Consideration should be placed on how important banking secrecy is above other factors for your type of business. This may depend on your country of residence and what information-sharing agreements it may have.

As of 2014, the U.S. FATCA (Foreign Account Tax Compliance Act) makes it very tough for any U.S. citizens or residents to obtain any type of banking secrecy.

This is due to the U.S. reporting obligations forcing foreign banks to send tax information regarding any foreign account held by a US citizen else risking losing banking ties with American correspondent banks, being blacklisted and essentially cut-off from American capital.

U.S. citizens have for several years now been required to report their ownership of any foreign held account with deposits of more than US$10,000 through FBAR.

The only thing that has changed is that now the US government has made it much more difficult for individuals and their corresponding banks to get away with not reporting their accounts.

For many other countries, (106 as of 2019) there are other pieces of legislations drafted by the OECD known as the Common Reporting Standard (CRS) that have been widely enacted in an attempt to encourage the Automatic Exchange of Information.

Trade and global banking has been politicized, manipulated by the countries seeking to usher in their agenda. These new pieces of legislation have changed the privacy of offshore banking, as a result, we can not recommend to anyone who now tries to hide money away from the government.

Offshore banking is not about hiding, but global tax restructuring.

This legislation along with the threat of being cut off being excommunicated from the global banking system has, as a result, made the global banking system much more transparent.

That is not to say that there is no such thing as privacy anymore. There definitely is. It will just not be available to everyone, and must be carefully structured, as it will depend upon the individuals:

  • Citizenship
  • Tax residence 
  • Nature of their business; and
  • The offshore jurisdiction they are seeking to open a company or account with.

More on this later.

 

Offshore Banks Are Easy to Use

Offshore banks exist like many other domestic or international banks and can be accessed globally with a touch of a few buttons on your mobile.

Offshore banking allows you access to many of the same services as domestic local banks such as ATM withdrawals, online banking and transfer services, customer support as well as the use of credit and debit cards.

While regular personal domestic checking accounts limit its banking services there, an offshore account can also allow for investment opportunities not available in domestic accounts.

Why do most people bank locally? Well for one its easier and generally speaking most people do not know there is an alternative.


An offshore bank account is easier to establish than ever. With the easy access of information, one can literally open an offshore bank account online, with minimal documents from the comforts of your couch.

Though it may be easier to open an offshore bank account, offshore banking is more difficult of an environment to navigate in.

Global banking laws are tighter and constantly changing with many new regulations, plus offshore banks are more hesitant to take clients who have certain shell companies or companies formed in non-compliant jurisdictions fearing being blacklisted by the OECD, tariffed by the US or bullied out of the global banking system by correspondent banks.

Not that this vastly changes things for most people per se. What it does mean, is that individuals should seek professional guidance from an offshore tax professional or consultant and conduct thorough research to help make sure you are getting it done right.

ofshore jurisdiciton 1

Differences Between an Offshore and Onshore Bank Account

There really are not many differences. Despite all the misinformation out there on offshore accounts, they act like any other traditional domestic checking or savings account.

While we somehow in our mind's eye see local banks to be safer and more secure because it is just down the road, that is often not the case.

Just because we can walk down the street and withdraw money from our home branch does not mean that our account is safe and sound.

Bank accounts are all digitally recorded on global servers around the world. That goes for your small town bank and your big International Commercial Banks. Both types of banks store assets on the same types of global servers and actually care very little cash on hand.

In fact, foreign banks would be more likely to have your cash-on-hand rather than your local bank.

Your local down the road bank most likely has your money somewhere else.

What to Look for When Opening an Offshore Account?

There are potentially many things one could look into when opening an offshore account. One of the most important things to look out for is, however, is first off, is the economic and political stability of the offshore jurisdiction that you choose to bank in.

Finding a secure and stable country is about as important as the bank itself. What good is a secure bank in a lousy unstable country? 

In fact, the very reason you might be wanting to go offshore in the first place is to find financial security, and so make sure to do your due diligence before you decide your destination.

Some other things that are worth investigating before you open a bank account are:

  • the amount of debt the bank is carrying
  • the amount of derivates exposure it has
  • the debt of the governing institutions and Central Banks as well as the primary backer - The Government.
  • how liquid is the bank (how much cash on hand do they have)
  • solvency (by what % can a banks assets drop and still have their assets be greater than their liabilities)
  • corporate culture (think scandal-ridden Wells Fargo.)

This should all give a pretty clear picture as to the nature of the system that governs banking policy.

While shopping around to find the best offshore banking jurisdiction some important questions that you should ask yourself so that you can find the right match for your particular unique situation.

  • What are my motives for opening an offshore bank account in the first place? 
  • What types of assets would I hold? or what/how many currencies would I like to invest in?
  • Are there any tax laws or Doubt Taxation Treaties I need to be aware about (think CRS, DTT, TIEA, FATCA)?
  • What jurisdiction will allow me to be tax compliant and yet reduce my worldwide taxation?

A thorough bank investigation and thee answer to these questions and you will begin to find a suitable jurisdiction and banking situation that will match your needs.

 

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Best Offshore Jurisdictions to Open an Offshore Bank Account

 

1. Panama

           Panama flag

 

2. Hong Kong 

 HK Flag

 

3. Singapore

singapore flag button

If you are an American citizen you might have a harder time banking in these jurisdictions due to FATCA. In the last few years, they have been more hesitant and don't just accept every client that walks through the door though it is definitely still possible.

They generally will all require in-person visits and being a non-resident will have larger minimum deposits and most often require that foreign individuals have a local IBC company.

Changes in banking regulations and transparency laws together with the onerous due diligence processes that have come as a result of these new laws have made offshore banks much more careful in who they let open accounts.

Hong Kong and Singapore will likely want a valid business plan and a solid reason why you would like to open a bank account whereas Panama is generally not quite as strict and can be done usually with minimal hassle.

Most Popular Tax Havens for Offshore Banking 

These accounts have become popular for our clients as they require only basic documentation requirements, without the need for a bank introduction, offer multiple currency options, have minimal balances and can be done entirely online:

  1. Belize-offshore bank Belize
  2. Saint Lucia offshore accounts St. Lucia
  3. St-Vincent-offshore bank accounts openeing St. Vincent

We establish many accounts in these jurisdictions because they are reliable, don’t require in-person visits, have a long history of offshore services, offer attractive financial services and have potential investment opportunities.

They are a great alternative for those living working in the North American region, as are easily reached by flight, are in the same time zone and offer accounts that are widely accessible.

Jurisdictions that not now have weaker banking secrecy

Many offshore jurisdictions now have eroded banking secrecy laws that we do not recommend as readily as we used too if someone is looking for more confidentiality.

Many British Dependent territories have seriously eroded their banking secrecy laws. Places such as:

  1. British Virgin Islands
  2. Montserrat
  3. Turks and Caicos Islands
  4. Cayman Islands
  5. Anguilla
  6. Bermuda
  7. Isle of Man
  8. The Channel Islands

This does not mean that banking in these jurisdictions should be absolutely avoided, it's just that there are not the same levels of confidentiality as they were in the past or in comparison to other jurisdictions.

However, there are virtually no countries where we can claim are anonymous.

There are ways in making your details more private.

But if you are American its impossible for complete confidentiality, though most other countries as for now, can maintain high levels of secrecy in most jurisdictions, depending on each countries tax laws, which we always recommend you be aware of.

Offshore Banking Jurisdiction List for Bank & Brokerage Accounts

Panama-banking jurisdiction Panama
Belize-offshore bank Belize
hong-kong-offshore bank Hong Kong
St-Vincent-offshore bank accounts openeing St. Vincent
Saint Lucia offshore accounts St. Lucia
Nevis-offshore bank account registration Nevis
Cyprus offshore banking jurisdiction Cyprus
Mauritius offshore banking Button Mauritius
seychelles-offshore banking Seychelles
Bahamas-offshore-bank-account-button Bahamas
austria corporate bank Austria
leichestein offshore corporate account banking Liechtenstein
singapore open an offshore account button Singapore
andorra offshore corporate bank account Andorra
Latvia Flag Latvia
puerto rico bankingPuerto Rico
Swiss offshore bank flagSwitzerland

 

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Different Types of Offshore Accounts

There are many different types of offshore accounts. For clarity's sake, we will be talking only of offshore bank accounts and will be making a distinction between two different types of offshore accounts that generally operate differently and have different services.

Offshore Commercial Bank Accounts

Type 1: These are Ordinary current or savings account for standard commercial or personal usage. These accounts generally are used for business transactions that have inflow and outflow of assets. They can be started with minimum balances from a few hundred to a few thousand dollars

These are designed for those that need a secure location to place assets and an account to receive payments, transactions, commissions or investment dividend payments.

Investment options are usually limited with little or no personalized banking services or investment portfolio management. However, some banks do offer in-house brokerage facilities as well as other investment options.

Offshore Private Bank Accounts

Type 2: Private client banking accounts that specialize in private investment banking and require a higher minimum opening.

Generally accounts assets are transferred rarely and do not have a high volume of transactions, although a Private account can be paired with a commercial account. In most cases, private bank accounts require starting balances of at least US$100,000 with upwards of 1 million USD.

They provide more personalized services and investment portfolio management. With a wider variety of investment options beyond just simple term deposits, and in many cases 'in house' investment products.

Offshore accounts, surprisingly have a stigma surrounding their use, which is generally why people have avoided them.

Once we begin to understand the nature of the offshore banking industry and how it works, these prejudices will be washed away and we will realize that we are actually free to choose our banking jurisdiction from anywhere in the world.

Offshore Bank Account Product Options

Offshore Commercial Bank Accounts

Type 1: Typically this comes with our Offshore Corporate Packages, whether it is a Company, Foundation, or IBC & Foundation Combination Packages, they usually can include a ‘Type 1’ offshore account and offshore debit card.

Our entry-level accounts with these packages make for a suitable entry-level option for clients from all over the world. They provide:

  • Comprehensive internet banking service
  • Debit cards
  • Checking and savings accounts that pay higher than normal interest
  • Variety of innovative investment offerings
  • Privacy
  • Account currency diversification

Many clients need an EU corporation because of the requirements of EU based merchant credit card processors or for marketing reasons.

In this case we usually recommend Cyprus or the U.K. (LLP) as tax-free incorporation options along with an account in one of those EU jurisdictions or another.

Offshore Private Banking

Type 2: This is an ideal option for those that have a nest egg that they wish to preserve in the safest, private and conservative way possible for the long term. It is not a good choice where funds need to be moved in and out on an ongoing basis.

Private Banking services are traditionally exemplified by Switzerland, but also Andorra, Liechtenstein, Austria as well as Singapore and Panama.

These types of banks usually require a personal visit although if the deposit is large enough they will come and visit you.

We also can arrange for accounts in other jurisdictions on a case-by-case basis. In many instances, this has to be done in conjunction with incorporation executed in the same jurisdiction.

Typical examples are a Seychelles corporation along with a Seychelles account or a Hong Kong corporation along with a Hong Kong account.

How Cheap is an Offshore Bank Account?

Opening an offshore bank account is far more affordable than the fancy name implies. In fact, one can usually open an account with as little as several hundred Pounds with minimal documentation in as little as a few days.

Some foreign accounts have minimum balances of as low as 300 USD. Though one may ask, 'ok where's the catch, how do offshore banks make their money?'

Good question, with a very simple answer.

They generally make their money on monthly or yearly account and transaction fees as having low-overheads allows them to give more benefits and higher returns.

They also usually provide a wealth of other financial services, in-house investment options, wealth management and brokerage accounts, where they make a substantial share of their profits.

The fact is offshore accounts have always been readily available, even for individuals without a considerable nest egg. And today, with readily available information, it is easier than ever.

 

 opening a bank

Requirements for Opening A Personal or Commercial Offshore Bank Account

Opening an offshore bank account is much simpler than its often made out to be. Despite all the negative associations around offshore accounts, an international offshore bank account has many similarities as your traditional onshore domestic bank.

  • Copy of passport
  • Proof of address (utility bill)
  • Professional Reference
  • Proof of Funds

Additional requirements that may be needed depending on the jurisdiction:

  • Letter from your Bank
  • Business Plan
  • CV

There are a few more additional requirements needed if one opens a corporate bank account


Requirements for Opening an Offshore Corporate Bank Account

The requirements for opening an account typically vary from one bank to another, but some documents are common for all. 

The common requirements for opening corporate accounts typically include the following:

  1. Original or certified copies of the corporate documents issued by the appropriate regulatory authority (Memorandum & Articles of Association/By-laws), Certificate of Incorporation.
  2. Certificate of Good Standing (if the corporation is older than one year).
  3. One bank reference letter for each signatory to the corporate account and covering at least a period of two years. References need to be on the letterhead of the referring bank and simply need to state the length of the relationship and something positive about it. Most banks will have their own approved formats.
  4. One professional (i.e. lawyer, accountant etc.) or business reference letter as above.
  5. Legible copy of passport with apostille for each authorized signatory, beneficial owner and director on the account.
  6. Proof of Address (utility bill, credit card statement, mortgage statement, local authority tax bill from within the last 60 days).
  7. Most banks require a short business plan or overview of the business.

bank circle opt    Related Articles: Offshore Banking and Investing


Offshore Banking Introductions from Offshore-Protection.com

We specialize in providing offshore account solutions for our clients without needing a personal presence. For private banking and specialized banking services usually, a physical presence is necessary.

We form relationships with financial institutions of all types that prefer to deal with introductions from a law firm rather than with persons who contact them directly.

All provide online access and almost all allow you to execute a wire online.

Contact Us For a free consultation and see if an Offshore Bank Account is the right Offshore Solution for you

 

We offer offshore bank accounts with following PARTNERING OFFSHORE BANKS:

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Popular Offshore Company Packages with Bank Accounts

Panama corporation product  Panama Foundation + IBC w/ St Lucia Bank Account

Belize purchase offshore company   Belize IBC & Panama Corporate Bank Account

Nevis offshore corporation   Nevis LLC + Panama IBC w/ H.K. Offshore Account

Seychelles incorporation package   Seychelles Company & Brokerage Account

Mauritius offshore company incorporation   Mauritius Global Business Licence & Brokerage Account

Bahamas offshre company package   Bahamas Company & Belize Offshore Bank Account

* Includes Year 1: Gov Fee, Reg Address & Agent Services