New! How to Open an Offshore Bank Account (revisited)

 

Here I will go through how to open a an offshore bank account and whether it’s worthwhile to pay someone for it.

Do It Yourself or Use an Intermediary

Going through an intermediary or offshore service provider (OSP) can have a few benefits, such as:

• If you used the OSP to incorporate, they will often handle most of the paperwork for you and all you need to do is fill in the application forms and provide whatever due diligence the bank requires; usually notarized copy of your passport and a utility bill or bank statement as proof of address.
• Many banks, especially in the Caribbean and South and Latin America, require a reference. In some cases, the OSP can provide the reference.
• Some banks require introducers and will as such only open accounts through OSPs or other trusted person.
• In some cases, the OSP has such a good relationship with the bank that the KYC procedure is more lax.

However, there are a few drawbacks to consider:

• Limited selection of banks. An OSP usually only deals with 10 – 20 banks, none of which is necessarily the truly best for you.
• It costs more to go through an OSP than to do it yourself. Typical cost for bank account varies from 300 to 1,000 USD/EUR. Doing it yourself can cost considerably less, since your only expenses are notarization and courier fees.
• Your documents never end up in the hands of an oftentimes unregulated OSP.
• You have no contact with the bank until the account is opened.

There is no easy answer to whether you should do it yourself or pay your OSP to do it. Whatever you do – make sure you take an informed decision. Ask the OSP what banks they work with and then look into what services those banks offer. Consider what services you need. Do you need a credit card or is a debit card enough, if any card at all? Does the bank offer cards that you can use where you live? Can the card be used online, in a store, and/or in ATMs? Do you require multi-currency accounts? Does the bank issue loans to offshore companies?

It is a huge red flag if the OSP will not reveal the banks they deal with. There is no legitimate reason to keep it secret. Customers are becoming increasingly aware of this and OSPs are opening up.

In some cases, an OSP may state that in order to recommend a bank for you, you must be a paying customer. This is perfectly legitimate as you are then paying them for their time and knowledge.

Doing It Yourself

If you decide to open your offshore bank account yourself, you need to understand which banks are available and suitable.

Below is a table of common offshore jurisdictions and some banks that open bank accounts directly with you for offshore entities and without visiting the bank in person. These are the banks most OSPs work with.

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As you may see from this table, there are very few Cypriot banks. This is because banks in Cyprus almost always require an introducer; one of few jurisdictions where this is such common practice.

Visiting the Bank

This is something I highly recommend if you are serious about your business and, of course, can find both time and money to do it. For small businesses, it might not be feasible to fly all the way to the bank – at least not initially. Remember, even if you start with something simple like a bank account in Belize, you can open another one later when your business has grown.

There are two distinct advantages with visiting your offshore bank in person:

• First, it establishes a human relation between you and the bank. This can be very important.
• Second, it vastly increases the number of available banks, primarily throughout Asia and some places in Europe and Central America. Many banks here simply will not open an account unless you are the bank in person.
• Third – as a bonus – it may reduce the due diligence and documentation required. You are considered a lower risk to the bank if you meet them in person. For example, you will not have to provide a notarized copy of your passport. You simply show them the original.

The cost of visiting the bank may be lower than or very close to the price an OSP charges, especially if you consider that you will not have to pay notary and courier fees.

Documents Required to Open an Offshore Bank Account

This is going to be quite generic. Not all banks ask of all of this and some banks – especially Panamanian – ask for even more.

Personal offshore account

• Notarized copy of passport (or other form of photo identification). Some banks also require apostille.
• Notarized copy of a utility bill or bank statement as proof of address. Some banks also require apostille.
• A bank reference. This is usually a letter from a bank, on the bank’s official letterhead, stating that you have been a customer for so and so many years and have always been an upstanding customer. Don’t worry if you haven’t. As long as you are still a customer of the bank, they will almost always provide one.
• A professional reference. These are quite rare, but some banks require them. Can often be substituted for another bank reference (if you use two different banks). Professional reference is a letter from a lawyer, accountant, or other person of reputable profession confirming that you are of good character.
• Proof of income. This can be a set of bank statements or pay slips showing your monthly salary. If your income is from savings or investments, you will need to provide proof of these. It does usually not have to be notarized.

 Corporate offshore account

The first four are the same as for a personal offshore account.

• Notarized copy of passport (or other form of photo identification). Some banks also require apostille.
• Notarized copy of a utility bill or bank statement as proof of address. Some banks also require apostille.
• A bank reference. This is usually a letter from a bank, on the bank’s official letterhead, stating that you have been a customer for so and so many years and have always been an upstanding customer. Don’t worry if you haven’t. As long as you are still a customer of the bank, they will almost always provide one.
• A professional reference. These are quite rare, but some banks require them. Can often be substituted for another bank reference (if you use two different banks). Professional reference is a letter from a lawyer, accountant, or other person of reputable profession confirming that you are of good character.
• Full set of notarized company documents. This includes memorandum and articles of association, certificate of incorporation, certificate of good standing, register of directors, register of members/shareholders, and company structure diagram (if there are corporate shareholders, for example).
• Detailed business plan, outlining the goal of the company, estimate turnover/revenue, marketing channels, and a competition analysis.

If you open a corporate account for your offshore company using an OSP, they will take care of the company documents.

New! How to Open an Offshore Bank Account (revisited)