Offshore banking might be something you only associate with the super-rich and highly-sophisticated investors, but the fact is, most of us can open such an account when living and working away from home and the process is actually relatively straightforward.
What is an offshore bank account?
An offshore bank account, which is often also referred to as an international bank account, is simply a bank account that is not domiciled in your country of residence and typically, in a different location to your home country as well.
In other words, you’re from Country A, you’re living in Country B and the offshore bank account is based in Country C.
Opening and having an offshore bank account is perfectly legal as long as you follow the laws of your own country.
Over the past few years, we’ve seen a number of changes in the way the offshore banking industry operates due to things like FATCA, the Common Reporting Standard, the Panama or Mossack Fonseca Papers and it has become harder for citizens of some countries, e.g. USA, to open bank accounts in foreign jurisdictions, but, for most expats, it is still possible to open an account remotely and actually, the process, which I have outlined below, is quite straightforward.
As mentioned earlier, the process is usually quite simple with not too much administration required.
Applications require your personal information, e.g. name, date of birth, citizenship, occupation, etc.
You will also need to provide verification of identity via a notarised copy of a government-issued ID document and proof of your address, typically something like a utility bill, bank or credit card statement dated within the last 3 months.
These supporting documents also need to be approved by a notary or other suitable certifier.
This can be difficult in some countries, as many notary services will only certify documents that are in the local language. This is the case in China, for example, so you need to go either to one of the international law firms (where notary services are notoriously expensive when you consider that all you’re asking for is a stamp and a signature!), or your home country’s Consulate, which sometimes offer this type of notary service.
It can be a pain, but you only need to do it once and you shouldn’t let it put you off from opening an offshore bank account.
You can usually apply for these accounts online, but the certified/notarised identification documents will need to be sent separately by courier, since originals are always required.
The application may also ask about the number and value of intended transactions to the account each year. You may not be entirely sure of this when you’re setting up the account, but don’t worry too much about being really accurate – it is never a contractual obligation and I think most of the time this information is only used for internal marketing data.
There may also be an anti-money laundering element here and if the amount you state that you intend to transfer in the application is dramatically less than the amount you send in reality, the bank will probably ask for additional information regarding what is termed as ‘source of wealth’.
Depending on the type of account you select or are eligible for, as a minimum you should be able to access basic banking services, such as online and telephone banking, debit card (I don’t know of any that issue a credit card) and a foreign exchange facility.
Additional services may include overdraft facilities, mortgages and investment options.
What type of bank account is available to expats?
Firstly, you need to select the bank you want to work with. I have worked with many of them and I cannot say with conviction that any one stands.
Each of them have strengths and weaknesses and the service is usually in line with what you’d get from a bank in your home country, which I’d probably describe as . . . ‘meh’.
The most popular and accessible current account options for non-US expats from seem to be:
- Barclays International, Jersey/Isle of Man (£25,000 min)
- HSBC Expat, Jersey (£60,000 min)
- Standard Bank, Isle of Man (£4,000 min)
- Lloyds Bank International, Isle of Man (£25,000 min)
(NB: This information was correct at the time of writing, but may have changed since.)
Most of these banks have a few different types of account available to expats and typically include the following.
This kind of account generally offers some interest, but with the benefit of being able to withdraw your money any time.
Fixed Term Deposit Account
These accounts can be used to deposit the money you intend to save for a fixed period, usually between 1 month and a year, and benefit from interest rates that track the market.
This type of account can usually hold several major currencies, provide an online banking facility and can often be linked to debit cards, which are essential banking tools for an expat.
What are the benefits of an offshore bank account?
Having an offshore bank account has numerous benefits, some of which are:
- One centralized account
- Ability to handle multiple currencies
- Flexibility and convenience
- Potential tax efficiency
- Systems in place to deal with expat needs
If you’re planning on working abroad for a couple of years or more, for the little time and effort it takes to set up an international bank account, I would definitely recommend doing so, since it can make managing your finances across borders much easier.
If you would like more information on opening an offshore bank account, feel free to contact me.