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An offshore bank account is a bank account that located outside the country of residence of the depositor, typically in a greater privacy, low or no taxation, easy access to deposits, and protection against local, political, or financial instability. Below is presented three things about offshore bank account that you should know. 1. What You Need to Open an Offshore Account Opening an offshore bank account need not be traumatic – if you know what to expect and what you are in for. You need carefully to consider your banking requirements. Do you want a personal or corporate account? Usually a personal account is sufficient – and is usually easier to open. Some offshore banks will only open corporate accounts in person – not on the internet or by mail. However, if you really want a corporate account, make sure you have your corporate documents available, as you will need to send photocopies as part of the account-opening process. Of course you will need to have valid passport, and will have to get it notarized by a Notary Public (which you will usually find in large legal firms). This process involves making an appointment with the Notary and having him sight your passport, then make a copy and add his Notary seal and signature, stating he personally viewed your passport. As previously mentioned, you will likely also need one or two utility bills as proof of residence. Most banks will ask for a banking reference – and yet, at the same time, not offer them! This strange anomaly has caused me, on many occasions, simply to say that I cannot get references issued by my bank. In such cases the bank where you want to open a new account will usually accept contact information for any other bank account you have – and seek your permission to approach them if they deem it necessary. You will also want to find a bank where the opening deposit and ongoing monthly fees are not too onerous. You will find there is a great difference between banks in this regard. One bank may be happy to accept an opening deposit of $1,000, while another may put their minimum at $10,000 or even $50,000. So, make sure you find out what the minimum opening deposit is, as well as the monthly account operating costs. These can vary. Some banks will waive an activity fee if you maintain a minimum monthly balance (say $5,000), while others will charge a flat fee which could be anywhere from $10 to $20 or more each month. You will also need to select what type of account you want – a current (usually noninterest bearing) or term account (where interest is paid, according to the currency on deposit). Some banks will follow up a written account application process with a phone call, so they can speak directly with you. This has happened to me personally, and is to be considered as part of their KYC policy. When I got phoned up for an account I opened recently, the bank officer asked me why I wanted to bank with them (as I lived in a different country), and what the main purpose of my account was. He seemed happy with my answers and my account was opened 24 hours later. The good news is, once you have gone through the mill and opened your account, you will find the bank (like any company wanting to make a profit) will want to retain your business and keep you happy! A good banking relationship is like gold – so hang on to it. 2. The Facts about Offshore Credit Cards One of the most frustrating restrictions on your offshore banking experience will likely be the obtaining of an useful credit card. Most offshore banks will readily offer you a debit card – you know a plain ATM card like you have from your domestic bank. These are usually Cirrus and Maestro branded, although in EURO countries Visa Electron is quite popular. Now while these cards are very useful, the main function (when issued by an offshore bank) is to withdraw cash from ATM machines. This is where the desire and need for a full-blown credit card comes in. However, due to rules laid down by Visa and MasterCard International – such cards are usually only available to residents in the country the bank operates from. So, for example, if you have a bank account in an offshore jurisdiction, their Visa card may only be available to local residents – not you. Some offshore banks have overcome this by issuing secured credit cards – which are not really credit cards at all, but rather a Visa or MasterCard branded card which is backed by cash you put on deposit. Usually, in such cases, you will be required to deposit $5,000 or more and be granted a percentage of that as an available credit line. A more user-friendly solution is what has called a Visa or MasterCard debit card -which is directly linked to your offshore bank account. When you spend money using it, the funds are immediately withdrawn from your current account. You cannot get credit with this card, but you do get full Visa and MasterCard functionality when traveling internationally – like hotel check-ins, airline bookings etc. These types of cards are not readily available offshore, but a few major offshore banks issue them to their international clients. 3. The Most Important Benefits of an Offshore Account WG Hill, the author of the underground classic PT, was quoted as saying: Get your money out of country, before your country gets the money out of you! And this strike at the core of what offshore banking is about. When you bank in your own country you take a substantial risk. You must know this. Even worse, your funds are not secure from unauthorized withdrawal. Let’s say you owe a tax bill which you are contesting. Now, in most of the modern Western democracies, it’s a simple matter for the government to seize the funds from your domestic account. One day you have $10,000 in there – and the next day you do not. Secondly, most Western nations now get the banks to do their tax collecting for them. This is done by the practice of automatically deducting a withholding of tax on any interest earned. In this way your domestic banks are tax agents and put the government’s interest above your own – the client. Opening an offshore bank account puts your funds out of harm’s way. If you had $10,000 in an offshore account, your own government could not siphon it off automatically. And if you are banking in a place where there is no tax charged on interest, then your funds are growing quicker – without any withholding taxes being applied at source. Thirdly, an offshore bank account gives you more financial privacy – something in great demand in this increasingly regulated world. Lastly, there is the flexibility that comes with having more than one bank account – in more than one country. This strategy allows you to hedge your bets and keep your cash in dispersed locations.
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