Offshore banking is often associated with a high level of financial sophistication. However, the average person can open an offshore bank account with just a few hours of work. 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.
The Basic Requirements
The basics of opening an offshore bank account are similar to opening a bank account in your home country.
- 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
- Banks are concerned with verifying your residence or physical address since this may affect taxation issues.
Depositing to an Offshore Bank Account
Offshore bank accounts are funded electronically through international wire transfers.
- Sending a wire transfer is a simple operation, but almost all banks charge international wire transfer fees to send or receive funds. Pricing for wire transfers vary from bank to bank, so be sure to look for deals.
Withdrawing from an Offshore Bank Account
Offshore banks offer a variety of ways to withdraw funds 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.
- The best option may be to use two accounts: one offshore, one domestic.
Additional Verification Documents
Additional requirements are in place to discourage money laundering, tax fraud or other illegal activities that are often associated with offshore banking.
- Offshore banks may ask for financial reference documents from your current bank, indicating average balances and a “satisfactory relationship.”
- Many offshore banks ask about the nature of transactions expected to take place through the account.
Bottom Line
It is relatively simple to open an account. Fill out the paperwork, supply some basic identifying documents, and provide additional information to show that you are not planning to use the account for illegal activity.
- When using offshore bank accounts and receiving international wire transfers, it is important to consult with a tax professional to esnure you are following tax regulations at home and abroad.
Choosing a Currency for Your Offshore Bank Account
Offshore accounts offer an option of which currency to hold the account in.
- This can be a highly valuable feature of an offshore account since it offers the ability to hold funds in a different currency if one’s domestic currency is unstable or expected to depreciate.
