Offshore banking is often associated with a high level of financial sophistication. . Having an offshore bank account is a fundamental part of international diversification. It’s especially important in times like these when currency controls and government regulations are getting stricter, supposedly, “to battle money laundering and international terrorism.”. Offshore banking enables a way of having part of your wealth outside of your country, so that you never risk having one government freeze or confiscate all your assets.
Each offshore bank and foreign jurisdiction has its own requirements, so you'll have to do some research to find the specifics relevant to your situation. The following is an overview of what you can expect, based on common offshore banking centers such as Switzerland, the Cayman Islands and the Channel Islands.
Governments, especially the US Government, can freeze and confiscate your assets without even having to prove their case. They might just act on a hunch. How would you feel like waking up one day with your credit cards not working and finding out all your accounts are frozen indefinitely? It can take months, or even years, of lengthy court hearings before you get your money back. How are you going to afford a lawyer if your bank accounts are frozen?
The Basic Requirements
The basics of opening an offshore bank account are similar to opening a bank account in your home country. Offshore banks will ask for your personal information, such as your name, date of birth, address, citizenship and occupation.
To verify your personal information, you can expect to submit a copy of your passport, driver's license or other identifying documents issued by a governmental agency. Additionally, banks are concerned with verifying your residence or physical address since this may affect taxation issues. This requirement may be satisfied by presenting a utility bill or similar documents.
Due to the wide range of different identification documents that may be presented to offshore banks, additional assurance of a document's authenticity is often required. A notarized copy of certain documents may suffice in some cases. Other offshore centers prefer an "apostilles" stamp, which is a special type of certification mark that is used internationally. Where this is the case, you will need to visit the government office that is authorized to issue this stamp for your state or nation.
Places where you will find the best offshore bank include countries like Switzerland, Hong Kong, Singapore, UAE, Qatar, and a few others. An ”Offshore” bank doesn’t necessarily have to be located in a so called ”tax haven”. Several of the countries mentioned above are spared of the tax haven-
Additional Verification Documents
In offshore banking, there are often considerable additional requirements to open the account to which you may not be accustomed. These requirements are in place to discourage money laundering, tax fraud or other illegal activities that are often associated with offshore banking.
First, offshore banks may ask for financial reference documents from your current bank, indicating average balances and a "satisfactory relationship." Most commonly, this is satisfied by bank statements for the last six to 12 months.
Second, many offshore banks ask about the nature of transactions expected to take place through the account. This may seem overly intrusive, but offshore banking centers have been under increasing pressure to stop illegal activity. For this purpose, many offshore banks want additional documentation, noting from where the money you are depositing in the bank is coming.
If your funds are from job income, a wage slip from your employer will likely suffice. To verify your investment income, an offshore bank may ask for information about your investments and where they are held.
If you have significant funds from a business or real estate transaction, you may need to provide sales contracts or other relevant documents. If you are depositing funds from an insurance contract, you may need to provide a letter from your insurance company. If your money comes from inheritance, they may ask for a letter from the executor of the estate testifying to this effect.
Withdrawing from an Offshore Bank Account
Offshore banks offer a variety of ways to withdraw funds in order to maximize the convenience of using their services. Many offshore banks issue a normal debit/ATM card that allows you to easily access your funds worldwide. You will want to look into the fees for using this method, since international ATM fees can be expensive. Withdrawing larger amounts of cash at one time may help to minimize these fees.
Some offshore banks offer checks. However, this is usually not a preferred method of withdrawing funds. Primarily, this is because confidentiality is often desired in offshore accounts. Problems may also arise since checks drawn on foreign accounts are not always accepted.
The best option may be to use two accounts: one offshore, one domestic. In this way, electronic wire transfers can be used to transfer larger amounts of offshore funds to a domestic account where they can be easily accessed. This method offers greater privacy and security, while also giving the convenience of local banking services.
Seeing Through the Offshore Mystique
Despite the mystique surrounding offshore banking, it is relatively simple to open an account. Often all it takes is filling out the paperwork, supplying some basic identifying documents and providing additional information to show that you are not planning to use the account for illegal activity.