6 minute read
17 Jan 2022

How To Set Up An Offshore Bank Account: A Step-by-step Guide

how to set up an offshore bank acocunt

In the previous chapter, we’ve mentioned the benefits of having an offshore bank account for offshore investors and entrepreneurs. If these benefits have caught your interest somewhat, and you want to have your own offshore bank account, this article is what you need. Read on to find out the detailed guideline on how to set up an offshore bank account that we’ve prepared for you.

How to set up an offshore bank account

The process of setting up an offshore bank account is fairly simple and straightforward. In what follows, we illustrate a four-step guide to open and access an offshore account that you should know!

1. Select an offshore bank

The offshore bank you choose will act as a basis that helps you go in the right direction. Below we have some tips to help you choose the best-suited offshore banks:

  • Choose a stable offshore jurisdiction

You should choose an offshore jurisdiction that is reputable and stable in both its economy and politics.

By doing so, you can minimize the possibility of corruption, insecurity, bankruptcy, and other financial crisis that may be seen in your home country.

  • Consider tax obligations that can significantly affect offshore bank’s operations 

There are certain tax regulations for opening a bank account and foreign wire transfers in each banking jurisdiction.

As such, you should carry out research to ensure compliance with the country’s tax obligation. Also, make sure you are legally entitled to tax optimization by dint of your offshore status.

To get an accurate idea of which offshore jurisdictions you should consider, simply read our article of Top 4 Countries With Best Offshore Bank Accounts

  • Narrow down options in the consideration list

Each offshore country’s banking system can have its own outstanding features.

Some countries require a low minimum initial deposit, which helps save your company’s money. Some, on the other hand, put emphasis on customer service for their clients.

Hence, you should narrow down the options of your offshore banks which are in line with your company’s strategy. This allows you to go to the right point and save plenty of time.

  • Decide on a best-suited offshore bank

After you have in hand a list of “potential candidates”, you should select an offshore bank that is well-matched with your financial situation and demands.

There are some parameters that you should examine before going to the final choice.

For instance, if costs are your top priority, you should pay attention to the set-up fees, maintenance fees, and minimum initial deposits as well.

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2. Proceed to open an offshore bank account

In this main part, we outline a step-by-step guide on how to open an offshore bank account for you.

You need to prepare basic documents for your identity verification, including:

  • Name, date of birth, address, citizenship, and occupation;
  • A copy of your passport;
  • Residence proof such as driver’s license, utility bill, or other identity issued documents by the government;
  • Personal bank statements and/or Bank reference letter; (*)
  • Proof of fund sources in the bank; (**)
  • Additional documents such as KYC form, CV of the shareholder(s) and director(s), business review, sales contracts, etc.
Important note

Important note

These documents must be notarized to prove their authenticity. Typically, most offshore banks will require you to submit either a certified copy of documents or an “apostilles” stamp which is a mark specifically served for verifying the foreign document’s authenticity.

(*) Offshore banks require financial references to examine account balances, and support further evidence for “legitimate” status. Normally, a satisfying bank statement verifying for the past 6 to 12 months will be sufficient.

(**) For a legal assurance of your fund sources, you can submit further documents such as a wage slip, proof for investment income, sales contracts, transaction-related materials, insurance payout letter, etc.

3. Choose an appropriate currency to keep your fund

By setting up an offshore bank account, you can decide which currency you keep money in.

This is more advantageous in comparison with local bank accounts where you can only stay with the domestic currency, which is normally unstable and devalued.

However, it is noteworthy that choosing foreign currency for an offshore account can make you subject to foreign tax liability, and cost you a high amount when you want to exchange your current offshore currency for your domestic one.

Therefore, you should always think carefully about which foreign currency can benefit you the most.

For example, investors whose funds are in US dollars are more likely to choose the Hong Kong dollar as a perfect choice for their offshore accounts. The reason for this is the Hong Kong dollar is considered to be pegged against the US dollars, allowing you to submit very minimal cost when converting between those two kinds.

If you’re interested in setting up an offshore bank account, Hong Kong is a great place to start. Take a look at our full list of Best Banks In Hong Kong That You Must Know.

4. Understand how to optimize deposits and make withdrawals

More often than not, account holders fund their offshore accounts via international wire transfer.

Notwithstanding, there is a transfer fee when you put your fund into the account through the wire transfer option, and this fee is not the same depending on each foreign bank.

In addition, most offshore banks do not accept domestic checks or cash depositing.

Like domestic accounts, offshore banks offer various choices for clients and customers to withdraw their funds. You can use an ATM or debit card; its fee, however, is quite costly.

Taking money out of your offshore account by using checks is acceptable, but it limits the widespread use and does not ensure your confidentiality. Use cash? Yes, you can. You should make cash withdrawals with a big amount as it helps you to economize on the fee that you need to pay when withdrawing.

Another method to access their funds is to closely “tie” the offshore account with the domestic one. By this, you will pay less fee, meanwhile, allow much more convenience and privacy when wire transferring between those two.

About to start an offshore business? This manual covers all you need to know when going offshore:

  • Roadmap to offshore company formation
  • How-to guide to offshore bank account registration
  • Introduction to international rules in offshore landscapes
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Conclusion

In this article, we’ve provided a clear guide on how to set up an offshore bank account for your company.

There has been an escalating increase in the number of expatriates and corporations opening offshore accounts. This is due to the great advantages of offshore banks compared to domestic banks. They offer lower tax burden, currency diversification, asset protection, confidentiality, and many more.

Opening an offshore bank account is also straightforward and done quickly. So do not miss out on your opportunity to get an offshore account now!

Feel free to get in touch with one of our friendly consultants if you need advice on which offshore bank you should choose!

In the meantime, why not discover our tips to secure your chance to open a corporate bank account in Singapore.

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