A Guide to the Top 8 Rules for Opening an Offshore Bank Account

Opening an offshore bank account is a complex and serious process, and being too easy-minded can lead to big business problems, including the impossibility to develop any business and facing huge fines and penalties. Before opening an offshore bank account, one should consider the type of business they intend to operate as offshore banks do not accept illegal businesses, adult, gambling (without a license), online pharmacies (without a license in the jurisdiction of the bank and financial services or currency exchangers without a license.

The first step is to assess one's needs: what type of banking services are needed? What will the account be used for? If direct deposits from customers from Europe are being accepted, they will likely appreciate having an IBAN. The need for some type of card product should also be considered. Credit card, debit card, or both? The account holder should decide whether they are looking for a current account, savings, investments, or trade and determine how much money they have set aside for an initial deposit.

Once one has a clear picture of their immediate as well as future banking needs, it’s time to determine a suitable jurisdiction. Very few banks actually require an intermediary, but he or she can easily facilitate the application and help convince the bank to take on clients that they would be reluctant to, such as start-ups or high-risk businesses. A professional intermediary can help fill out the application form and advise on how to present a company overview in a positive manner. Using an intermediary is costly, but it greatly increases the chance of success.

One should also consider everything from the political situation to climate to stability of the jurisdiction. The reputation of the jurisdiction may also matter. Different jurisdictions offer different degrees of banking secrecy. The jurisdiction may also have relevant double taxation agreements (DTA) or tax information exchange agreements (TIEA); MLAT or the new OECD Automatic exchange.

Personal accounts will require proof of identity, usually a passport, but any photo ID should be sufficient, although this depends on the bank. A recent utility bill as proof of address may also be required. Banks usually ask for a utility bill, bank statement, or credit card statement not older than 3 months. Sometimes, a professional reference may be requested. This would be a reference from a lawyer, accountant, doctor, or person of other licensed and regulated, reputable profession. Corporate accounts will require the same documents as mentioned above under Personal Accounts for each director and/or shareholder. If nominees are involved, the bank will require documents for them as well.

The documents usually required for the company are: Certificate of incorporation to prove that the company is incorporated; Articles of association and/or memorandum of association, which specify the company structure and powers/rights for each member/director; For companies that have been incorporated for some time, a Certificate of good standing may be required to prove that the company has paid all registry taxes and has not been struck off; Certificate of incumbency which may list the company’s members, shareholders, directors, officers, and other officials. The purpose of this certificate is to prove who is allowed to sign agreements on behalf of the company. For start-ups, a business plan may also be required. For offshore companies that use bearer shares, in many cases, the bank will require those shares to be deposited on their premises or at a licensed fiduciary institution to prevent a change of ownership without being notified. There are also banks that, as a company policy, do not accept companies formed with bearer shares. Each entity has its own policy in terms of documentation and requirements.

Selecting a business service provider that offers a bank account with a new company is one of the most important issues. Over 80% of the formation companies do NOT offer bank accounts and leave it up to the clients to try and find an offshore account on their own.

It is important to choose an offshore account that offers all the required services. Not all banks have fully featured services such as trading or no-name debit cards, which is very important if one wishes to maintain the secrecy of their offshore account. 95% of offshore banks do not offer a no-name card. Some jurisdictions may have different banking fees, and fees vary a great deal. Cyprus banks generally offer the lowest fees of any offshore bank, with free SEPA Euro transfers and free incoming wires. Caribbean banks typically charge the highest fees.

The amount of deposit one can make to open the new account is also a very important consideration. The deposit requirements vary, and there are banks that have deposit requirements from 0 Euro to $1,000,000. Cyprus banks require a deposit from 300€, while Seychelles banks require 1,000-,5000$. Caribbean banks require 500-$, Belize banks require 1,000-2,000$, BVI Bank requires $100,000$, Latvian banks require 500-1,000 €, Liechtenstein banks require 50.000-100.000$, Swiss online banks require 0$, Swiss private banks require $5,000-100.000$, Swiss high net worth banking requires $1-2M, Andorra Banks require 100,000$, and Principality of Monaco banks require 100.000$-1M. Singapore banks require $30,000 to $100,000, while Dubai banks require $10,000-$100,000.

The actual process to open an offshore bank account is relatively easy, and professional intermediaries can help individuals through it all. The required documents need to be prepared and completed. The account holder or intermediary should fill out the bank account opening forms, and the documents should be sent via courier to the offshore bank. It is crucial to be careful about what is written in the application forms, and intermediaries can help with this.