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Offshore bank account: Advantages, where to open, fund transfers, presence required

Offshore bank account: Advantages

1. If you are residing in a country that does not have a freely convertible currency an offshore account allows easy travel.

2. You can use your offshore account to buy property or invest in shares and mutual funds.

3. There are many offshore funds that have higher yields because they are taxed at a lower rate. In most cases they are easier to buy via offshore accounts.

4. Offshore bank accounts are generally confidential. However make sure that your offshore tax haven hasn’t entered into a Tax Information Exchange Treaty (TIET) with your home country.

Offshore bank account: Where to open

There are over 40 countries that offer offshore bank account services by law.

Some of the offshore centres that provide bank account services include Guernsey, Cayman Islands, Panama, United Arab Emirates (UAE) and Belize.

To provide an additional layer of protection between you and those seeking information about your activities, it is better to open the bank account in the name of an offshore company.

Many offshore banks have minimum deposit requirements. Switzerland requires at least US$ 500,000.

However UAE has a much lower minimum starting at US$ 10,000.

Before you choose the country for your offshore account check:

Know Your Client (KYC) documentation required
Minimum deposit requirements
Whether the offshore jurisdiction has a TIET agreement with your country
Confidentiality laws of the offshore jurisdiction

Offshore bank account: Funds

Post 9/11 banks have become more leery of being prosecuted for money laundering and have become obsessive about the source of funds.

They have become reluctant to take large cash deposits and will ask you questions about where your funds are coming from.

Be aware that confidentiality doesn’t always mean that your transactions are known only to you.

Offshore bank account: Presence

In most instances your presence will be required at the time of bank account opening.

This is part of the KYC due diligence undertaken by the banks.

Seychelles and Mauritius don’t require your presence. Dubai, United Arab Emirates is also a tourist and business destination in addition to being an offshore center.

Dubai also has many Swiss banks registered in its financial center.

So if you travel to Dubai you are not obviously travelling to a tax haven.

Many offshore banks allow internet banking and some also offer credit and debit cards. So you may only need to visit your bank occasionally.

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