An offshore, or overseas, bank account is one that you have in a country you don’t reside in.
They allow you to make and receive payments, hold money and set up savings and investment accounts in multiple currencies.
If you are a Polish citizen and open an account in the US, that can be considered an offshore bank account. In the past, there were typically only a small number of jurisdictions in which banks offered offshore banking services, however, nowadays, one can open an offshore bank account almost anywhere.
That being said, there are still certain jurisdictions (such as Singapore, Belize, Cayman Islands and Switzerland) that are more renowned for their use as favourable offshore environments that have a perfect blend of financial advantages together with strong banking policies and practices.
Because each jurisdiction is unique they each have their own pros and cons and so the choice where to open an offshore account will vary according to individual needs and circumstances. For instance, if you are looking for investment accounts with a range of offshore investment advantages and options, Switzerland and Singapore might be right for you.
If, however, you would like to open a personal account with a low deposit threshold, and would rather do it all online then perhaps Belize might work for you.
Why Use Offshore Accounts?
Offshore accounts can make it simpler to manage your financial commitments across multiple countries and regions. They can be useful if you need to make, or receive, regular international payments and transfers.
Most expats have a bank account in their home country and another account in the country they’re living in. Many also consider opening an offshore account, as this can be an effective way to save, invest and manage money while abroad.
Reasons to open an offshore account include:
- You’re already living and/or working abroad
- You’re planning to move abroad – eg for work, or to retire
- You’re an international assignee and move countries regularly for work
- You make frequent trips between countries – eg for business
- You get paid in a foreign currency – eg for freelance work
- You own assets abroad – eg investments, or property
- You have family members abroad who you support financially – eg a child’s school fees
Here are some of the advantages of an offshore bank account:
Reputation shows the jurisdiction and banking system quality.
A well-reputed banking country is likely to bring a highly pro-business and stable environment.
However, it can be quite challenging for how easy it is to deal with if you as a foreigner open bank accounts by yourself in such countries. Usually, due to its complicated requirements as compared to those in other countries, more efforts will need to be made to open an offshore bank account in these places!
Many foreigners are huge fans of remote account opening, as this will relatively make great convenient for them.
The key pull factor of remote opening is the fact that you do not need to schedule the business plan to take the flight for a meeting with the bank like traditional methods. Save time and save money!
A large number of foreigners may think of Low Deposit as the key factor to find their best offshore bank account, especially for those being start-ups, entrepreneurs or SMEs.
Some offshore banks even do not require the initial deposit for opening a bank account. Some banks, on the other hand, may require the deposit minimums for foreigners, but at a minimal cost.
Several captivating banks and banking jurisdictions like Hong Kong, Singapore, or Panama often require high deposit minimums.
In most cases, the process of opening an account can be done very quickly, depending on how easy it is to open in that particular offshore banking country.
The timeframe of most offshore banks for the account opening process is quite similar to each other.
Typically, it can take you only several working days to get your accounts opened. However, it should be noted that how fast and how trustworthy the provided documents are will be significantly important in determining the processing time.
Examples of Countries for Best Offshore Bank Accounts
It is another big question that may pique your interest – Which countries offer the best offshore bank accounts. Let’s say it is your case now with the same question and then you try to search on the internet to find the best answer. Yet, you still get in a muddle as you explore countless choices and do not know which is the best one. Here we narrow down your hassles of choices by providing you some of the most popular countries that you should open offshore bank accounts:
Switzerland: The Swiss strict privacy laws are relatively well-known, making it one of the best offshore banks for asset protection.
Cayman Islands: Offering very little tax rates plus high level of confidentiality is a great advantage that leads people to set up an offshore account in Cayman.
Belize: One of the key reasons behind the popularity of Belize is that it is among the most stable offshore banking systems in the world based on liquidity rates.
Singapore: One of the most developed and open economies in the world, standing second among countries with “Ease of Doing Business Rank” benchmark in May 2019 from The World Bank.
What Are the Disadvantages?
Offshore bank accounts are sometimes less financially secure than domestic ones. For example, in the banking crisis which swept the world in 2008, some savers lost funds that were not insured by the country in which they were deposited. Those who had deposited with the same banks onshore received all of their money back.
In 2009, The Isle of Man authorities were keen to point out that 90% of the claimants were paid, although this only referred to the number of people who had received money from their depositor compensation scheme and not the amount of money refunded. In reality, only 40% of depositor funds had been repaid.
Both offshore and onshore banking centres often have depositor compensation schemes but banking offshore is historically riskier than banking onshore.