The Best Offshore Bank Accounts

This article will discuss the best offshore bank accounts. The pros and cons, how we are to define offshore banking and some options for offshore banking.

Is banking in Singapore superior to say the Cayman Islands or does it depend?

If you have any questions or are interested in offshore investing, you can contact me. My contact details are hello@adamfayed.com and WhatsApp +44-7393-450-837.

La información contenida en este artículo es meramente orientativa. No constituye asesoramiento financiero, jurídico o fiscal, ni una recomendación o solicitud de inversión. Algunos hechos pueden haber cambiado desde el momento de su redacción.

Offshore Bank Accounts

Having an account abroad is known as an ‘Offshore Bank Account’. It isn’t usually about tax evasion unlike what the populist media claim!

People often choose to open an offshore bank account for various reasons. The general categories of which people opt to choose opening an offshore bank account are:

• People who earn income from countries other than their own country. For example, international workers, business owners, etc.
• People who want to put their money in a place such that it won’t be affected by economic conditions.
• People who make international transfers a lot and try to minimize the charges and taxes.
• People who want to optimize certain taxes that are applicable to their wealth such as Inheritance Tax.
• People who want a better and centralized source for maintaining their money in order to use it worldwide without any difficulties.
• People who live in an economically and politically unstable country.

People often judge offshore bank accounts as the primary source where illegal activities such as money laundering, tax evasion, etc., usually take place. They also think that offshore bank accounts are only useful/maintained by individuals who are extremely wealthy (trying to hide their money from taxes).

The above-mentioned misconceptions are entirely false and anybody regardless of their financial status can be able to open an offshore bank account.

Just because some people avail the services offered by offshore banks in an illegal way doesn’t mean that all the offshore banks are existing for that exact purpose.

Individuals who want to benefit from having an offshore bank account should keep in mind that there is a huge difference between tax evasion and tax optimization.

Taxes can be optimized with the help of having an offshore bank account and it is legal. However, if a person tries not to pay the taxes by moving their wealth into offshore bank accounts, there is a possibility for them to become the Tax authorities’ next target as it is illegal.

Why should anybody have an Offshore Bank Account

There are a vast number of reasons that people might be able to benefit from having an offshore bank account. Some of the major reasons why anybody would want to have an offshore bank account are as follows:

1. First of all, the most common reason why any person would want to have their wealth stored in an offshore bank account is to avoid overpaying in the form of taxes. This is a method useful for many types of people.
   For example, some people receive income from other countries. They would have to pay a lot of money in the form of transfer costs, currency conversion rates, etc., in order to move those funds into their respective country. By having an offshore account, these people can be able to store their money in a safe place until the conversion rates are good and are able to transfer it by paying the transfer costs once rather than paying many times for each transfer.

2. People who are fond of tourism or try to travel often to other countries (whatever the reason might be) can be able to benefit from having an offshore account in that respective country so that currency exchange or monetary needs won’t be so difficult. Such type of people can use the funds from their offshore bank accounts very easily.

3. People who want to earn more interest from their wealth and reduce the taxation on interest earned from their wealth. There are many offshore banks that provide higher interest rates to an individual than the local banks of their country.
   They also don’t have any type of taxes on the interest that has been earned from their funds. This is a very profitable case for the people who choose to have their money in an offshore bank account. Although they would have to pay the taxes on those interests if they try to bring that money onshore.

4. People who want greater privacy and anonymity. Most offshore banks, if not all, give a greater amount of privacy to their customers. A lot of people want to have privacy with their bank accounts and they can get the required amount of privacy and anonymity (some banks don’t even use the name of the individual).

5. People who want to have the option of banking services provided to them with more than one currency. Almost all the offshore banks offer people the privilege to choose the currency in which they would like to store their funds. Some banks even allow the customer the availability of using multiple currencies at a time. 

6. People who want to avoid situations that might take place in a country that would affect the economy. Such situations have a major impact on the wealth of a person. A few examples of such types of situations are High Inflation, War, Financial Crisis, Devaluation of Money, etc.

These are the main reasons that people often want to make use of an offshore bank account.

Pros and Cons of Having an Offshore Bank Account

Pros:

• Tax optimization on the overall wealth and avoiding certain taxes such as the Inheritance Tax.

• privacy and anonymity to the customer along with many other features such as oportunidades de inversión, loans, etc.

• Higher amount of interest when compared to the regular local banks while having a lower cost base.

• Stability of the wealth, both economically and politically regardless of the situations that happen in the individual’s country.

• Ability to choose the type of currency in which the funds are needed to be stored based on the needs and requirements of the customer.

Contras:

• Lesser amount of Financial security when compared to that of the local banks. This means, if any global crisis is to occur, the funds deposited in an offshore bank account can be at stake.

• Known to be the warehouses for illegal activities such as money laundering and tax evasion.

• Lower chances of being able to monitor the banking activities and contacting the bank as the location of the bank is not the same as the individual’s respective country. The people owning offshore bank accounts would have to travel to that bank’s country to contact them or discuss anything personally.

• Probability of changes in the terms and conditions, rules and regulations, requirements, charges, and other types of services offered by the offshore banks.

Important aspects to be considered before opening an offshore account

There are quite a few important things that need to be taken into consideration by the individual, who is wishing to open an offshore bank account. Those important things are as follows:

1. First of all, an individual is required to strategize a plan on how they are going to make use of that offshore bank account. Based on that, they would have to select the perfect jurisdiction in order to pick the bank. After choosing the jurisdiction/country an individual should select the bank in which he/she is willing to open an account.

2. People should get familiar with the details, terms and conditions, rules, process, charges, taxes, and other types of such details of the bank in which they wish to open an offshore account. They can do this by taking the help of experts such as an international wealth manager or a professional financial advisor or their personal lawyer. They can also find these details over the internet or books.

3. They also should get familiar with internal costs such as transfer charges, debit card charges, and other types of charges that are involved with the account. The good thing is any type of bank won’t be charging hidden costs to its customers, hence, they can find out what they are/will be charged for. The individuals should get familiar with these types of details while they are selecting the bank. By doing so, they can be able to choose a bank that will charge them lesser costs.

4. People should always opt to report their income-related details to the local tax authorities. Not doing so is considered a legal offense and the government has the full power to take any necessary actions upon those people. Usually, people trying to hide the money in order to avoid taxes are subject to penalties or imprisonment if the government finds out.
   For example, in the United States, people who try to hide their wealth in order to avoid or evade the taxes are subjected to either a penalty of up to $500,000 or imprisonment which may be as long as 10 years. However, it is a wise decision to report the details on income rather than paying half a million in a penalty or being jailed.

5. Offshore bank accounts can be used for tax optimization or asset protection. In addition to that, they can also act as a centralized source of funds through which a person can be able to meet with their monetary needs. 

6. Another most important issue to be considered while opening an offshore bank account is checking whether the bank is nomad friendly or not. People having an international/nomadic lifestyle should definitely know about this aspect in their bank. To check whether the bank is nomad friendly or not, a few important factors to be checked are:

• International Debit card availability and in which countries the person can be able to use that debit card.
• Checking with the bank about whether they have a perfectly working online banking system.
• Availability of customer service no matter where the person might be present (this is also one of the major aspects to get familiar with).

How to open an Offshore Bank Account

Opening an account at an offshore bank is not as complicated as people often think of. It involves some very easy steps and requires a few sets of documents and Voila! Anybody can be able to open an account successfully.

For this, an individual has to go through the procedure, i.e. choosing a bank to open an offshore account, submitting the required documents, choosing a currency that is convenient to the customer, depositing the minimum account balance, etc.

Mostly any offshore bank would require documents such as identity proof, address proof, financial reference documents from the current bank, source of income, proofs for the source of income, etc., By submitting these to a bank, anybody could be able to open an offshore bank account. 

People should remember that most banks would also require a notarized copy of the documents or an apostilles stamp (to confirm the authenticity of the credentials).

People can either visit the bank personally or open an account digitally without having to visit the bank. Some banks make this process on an instant basis, whereas, some banks would require a prior appointment.

For some banks, it is mandatory that the person who wants to open an account should visit the bank in order to check the mannerism, appearance, behavior, etc., This might seem inappropriate or unfair to some people but what can we say? Banks have their own rules.

There are some private banks which come in handy for people with subsequently higher amount of net worth. For such banks, the minimum account balance should be at least $500,000 and the person should have a net worth of at least $5 million. 

Types of Banks that aren’t very profitable

Neo-Banks & Fintech

‘Neo-Banks’, also known by the name Fintech Solutions are the types of banks that have great back up and considered to be specifically designed for the people who are starting or entry-level.

The important thing that needs to be taken into consideration with the Neo-Banks is that they are not accessible by everybody, especially by the citizens of the United States. The services provided by these Neo-Banks are also limited when compared to other offshore banks. 

Although Neo-Banks may provide some good features for the people who look to have their salary deposited or have a lesser amount of money (less than $100,000) in their account. But all the banking needs required by many people who look for an offshore account might not be met with these types of banks. 

Another thing that should be remembered is that Fintech solutions are offered online and it is better to have a bank that people can be able to visit in person if they need anything. 

By looking at these aspects, it is better to avoid the Neo-Banks, but if you decide to go ahead with those, Many Asian Fintech Products have the best features under this category. To pick one of the best available Fintech Bank, NEAT is a very wonderful option, which is based in Hong Kong.

The Caribbean and other classic offshore jurisdictions

Regardless of what it is said on the internet or TV, classic offshore jurisdictions might not be that much favorable to their customers.

The first and foremost thing to be considered is that Banks such as these won’t provide good customer service, which is a very essential key factor while having an offshore bank account.

If we take the Caribbean for example, Island Time is a major issue even in the most famous offshore banks. This makes customer service even slower.

As the classic offshore jurisdictions have a great reputation, they attract a lot of attention. Most of the countries’ governments try to put stress on them with laws such as the ‘Foreign Account Tax Compliance Act’, ‘Common Reporting Standard’, etc. 

That being said, if you are a person expecting frequent transfers of money from certain locations such as the British Virgin Islands, Belize, etc., then you should keep an eye out for the governments and taxing authorities as they become more interested in such type of bank accounts. 

HSBC

Although people might think that HSBC banks are one of the best offshore banks available to the people, it is not entirely true. HSBC banks are known not to be very communicative/responsive, the services offered by the bank are not worth the costs paid by the individuals.

Based on the reviews for the HSBC bank, People can be able to find even better banking services in offshore banks when compared to that of the HSBC banks. 

The Best Countries for Offshore Banks in the world

Given below are the best offshore banks in the countries and the features that they are best known for.

1. Cayman Islands (Tax Benefits) – Cayman Islands, being a tax haven, offer a wide range of banking needs to their customers. The Cayman Islands is known to offer banking services to the customers (either businesses or individuals) at the lowest tax rates available. It is also a country with political and economic stability, which is one of the major aspects that people look for in an offshore bank.
   Offshore banking at the Cayman Islands has no taxation on capital gains, corporations, property, income, etc. This makes it one of the best available offshore banking options available to the people.
   Another advantage is that Offshore Banking at the Cayman Islands is known to allow no-cost fund transfers, which means that people can be able to transfer money in or out of Cayman Islands easily in any type of currency they want.
   The Cayman Islands are also in the list of top ten financial centers of the world and client confidentiality is included in their banking laws. They also have a strong framework of regulations that act in favor of offshore banking and they are competitive in the currency markets of Europe.
   Although people can enjoy outstanding tax benefits, citizens and residents from countries such as the US and UK are taxed on their worldwide income by their respective governments.

2. Singapore (Higher Net Worth Individuals) – Singapore is the best choice for offshore banking for the people having remarkably higher wealth. In simple words, if anyone wants to put away a significantly higher amount of money (such as $200,000 or more) in an offshore bank account, Singapore is the best option. The process of offshore banking in Singapore is very easy and in most cases, can be done without even having to visit the country.
   Singapore is known to have very strict regulations related to the banking sector, which means maximum safety is assured. The assets can also be easily accessed. Singapore also offers a wide range of features such as wealth management services, funds, accounts, etc., in order to manage the person’s money.
   They also offer access to trading platforms. Accounts can be opened with the availability of many types of currencies to avoid high conversion rates. Banks in Singapore also provide expert services from their wealth management teams who help in finding the best financial strategy for the person’s money.

3. Switzerland (Asset Protection) – The most famous country known all over the world when it comes to offshore banking is Switzerland. Switzerland is one of the best choices in offshore banking that provides a great amount of privacy to the customer as well as safety.
   The laws in Switzerland are designed in such a way that the bankers won’t be able to disclose the details of your account without your interference. If they choose not to do so, they can be charged with six months of imprisonment or penalty up to 50,000 Swiss francs. However, there is an exception to this case for criminal acts such as tax evasion. In order to avoid tax evasion, an annual report is sent to foreign tax authorities.
   The best asset protection plan offered by the Swiss banks disengages the person’s assets from their home country. In order to take advantage of this feature, a person should have their account in an offshore LLC or Trust. It is made possible with the help of the privacy laws in Switzerland and the asset protection laws of regions such as the Cook Islands.
   Switzerland is known to have a politically and economically stable environment. This makes Switzerland a popular bank for asset protection, having security considered as a low-risk investment. There are no taxes applicable on interest, dividends, inheritance, etc., There is an exception for these for the companies based in Switzerland. SBA (Swiss Bankers Association), which is known to regulate the Swiss banks, made changes to the Depositor’s Protection Agreement in 2004. According to this, if there were any chances of bank failure, depositors shall receive their claims.

4. Nevis (Best option for companies) – Nevis is the best when it comes to moving the company offshore. The advantages of moving a company to Nevis are Asset Protection, Low Costs, High Living Standards, etc. Higher standards are maintained by the Financial Services Commissions in Nevis and the people are not charged with any type of additional taxes, rules, regulations, etc.
   People can easily move their businesses/companies in or out of Nevis or they can merge with the existing Nevis or foreign companies. There is a specific law that states that the capital should be shared.
   In addition to that, dividends can be declared by the company’s directors. Shareholders can also exit the company at a fair value. Shares belonging to the companies of Nevis can also be listed on the stock exchanges worldwide. Some of the major exchanges where the companies can be listed are ‘NASDAQ’, ‘LSE (London Stock Exchange)’, ‘International Securities Exchange’, etc.
   With some major changes applied to the regulations, Nevis became the top in this category beating the former best British Virgin Islands. 

5. Belize (Higher Interest Rates) – Many countries like Ukraine are said to have higher interest rates when it comes to offshore banking. But people should not misjudge this based on the interest rate that they offer. There are some other things such as inflation, the security of the bank, etc., that are needed to be taken into consideration.
   For example, Ukraine offers 20% interest but with the inflation being 49%, very low interest I received by the customers. The major reason for Ukraine to become so is the fact it is effectively involved in money laundering. Another reason is the declining value of the country’s currency.
   On the other hand, Belize having an interest rate of 2.54%, has inflation of 0%. In addition to that, Belize is also known to have a stable environment unlike countries like Ukraine. International accounts in Belize are not subjected to the local taxation or the restrictions placed by the exchange control.
   Belize is also known to provide a good currency exchange rate as well as excellent privacy to the clients. Another thing is that the international banks in Belize only operate for international clients avoiding the local clients, so the services can be expected to be favorable. 

6. Germany (Safety) – Germany ranks number one in the list of the safest banks by ‘Global Finance’. The most important reason for Germany to be the best among the most secure offshore banks is its economic stability. Germany is popular for the source of offshore banking for savings accounts, checking accounts, and custody accounts.
   Germany, being one of the advanced and developed countries, provides the best possible online and ATM services available to the clients. The account opening costs, as well as the maintenance costs for the bank account, are relatively low when compared to other offshore banks.
   A few banks even provide Master Card or Visa credit cards too. Travel enthusiasts can be able to benefit a lot from offshore accounts in Germany. They offer many features and Euros being the currency of Europe, customers can be able to spend their money easily across all over Europe.
   A noteworthy thing that needs to considered here is that Germany enforces Law Judgements. People who want asset protection and privacy should choose some other offshore bank instead of Germany, especially if a person is trying to hide their money.

A few other honorable mentions in this list for the countries having the best offshore banks are: ‘Hong Kong’, ‘The British Virgin Islands’, ‘Puerto Rico’, ‘UAE’, and ‘Mauritius’.

Best Offshore banks

As we have already discussed the countries with the best offshore banks, let us take a look at the best offshore banks as well.

DBS Treasures

DBS Treasures is a well-known bank based in Singapore which is good for ‘Premier Banking’. It offers easily manageable services, excellent opportunities for Investment Banking (along with Robo-advices), etc.
Even though the minimum amount that needs to be deposited is around 350,000 Singapore dollars, the services offered are worthy of it. Hence, it is a good option for wealthy individuals as well as investors. They also provide excellent services in online banking, travel benefits, a wide variety of investment opportunities, etc.

TBC Bank

Located in Georgia, TBC Bank is the best bank that has a very ‘Easy Account Opening Process’. The account at this bank can be opened very easily at can be done within a very less amount of time (as less as 10 minutes). Georgia is an emerging market and requires capital, hence, they are willing to do business with people from other parts of the world.
The minimum account deposits are also known to be very low here. People can be able to open a Cash Deposit with a very little amount of around $10, whereas the premium services on banking can be acquired for something around $50,000. The interest rate is also good being at 10% and provide excellent online banking services as well.

Capital Security Bank

Capital Security Bank is a good choice for ‘Remote Account Opening’ and is known to have ‘100% Liquidity’. If anybody is willing to open an account remotely, then this is one of the best options available. Based on the Cook Islands, Capital Security Bank is known to provide the best remote banking services to the clients.
The minimum amount that needs to be deposited is $20,000 and a monthly charge of $50 is needed to be paid by the customers. Although the minimum deposit amount is high, the services offered make up to it. Unlike many other banks, Capital Security Bank is known to provide 100% liquidity. This means the bank won’t make use of your deposited funds and they are in a safe place.

NEAT

NEAT, located in Hong Kong, is one of the best-known ‘Fintech banks’ available in the world. Although Fintech banks are not much of a good choice when it comes to offshore banking, if you had no other alternative than to choose a Fintech Bank, NEAT can be the best choice.
Despite the European Fintech banks, NEAT is known to provide the best services as a Fintech bank to the customers. Accounts can be made entirely digital and the customer gets the privilege of choosing whatever the currency they wish to store their funds. Electronic wallets such as PayPal, Stripe, Amazon, etc., can be linked with a NEAT account very easily. 

WELLS FARGO

It is a very good bank for the ‘Non-US Citizens’, who want to have good banking experience in the United States. WELLS FARGO is connected with the global financial system and the account opening process is very easy as well. They also provide an FDIC deposit insurance of up to $250,000 per account, known to be the highest offered amount in the world in this specific category. 

What’s the bottom line?

Offshore banking might look easy, but people have to be very careful while opening an account offshore as they are very complex.

It is highly suggested that people should have thorough planning on it by consulting a personal lawyer or a good financial advisor. Although a person can be able to open an account by going through some extensive research, it can become quite complex with even some minute details. 

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Adam es un autor reconocido internacionalmente en temas financieros, con más de 830 millones de respuestas en Quora, un libro muy vendido en Amazon y colaborador de Forbes.