Offshore Account

An offshore account is a valid bank account set up and operated from a bank in an offshore location. The account is offshore- meaning the account holder is not a resident of (nor does he reside in) the country where the bank account is to be opened. Offshore banks offer all the standard products and services, plus more customized services. The account types: accounts, including brokerage accounts; merchant accounts; private, business, checking or savings and term deposit bank account. Both non resident individuals and non resident corporations can open an offshore account.

Offshore centers where offshore bank accounts can be set up are widely available. Before choosing an offshore bank, do some check into the bank and the jurisdiction. Make sure the bank has the features and services you will need. Offshore merchant accounts and offshore brokerage accounts are more specific and business oriented, while regular offshore banks accounts such as checking and personal savings accounts can be used for normal day to day personal and business operations. An offshore banking account is an essential tool for any individual or offshore company where foreign currency transactions, buying and selling and some form of international trade is conducted.

The standard offshore bank services include remote application processing (no need to travel to jurisdiction), secure online or internet banking, international credit and debit cards, banking via telephone, ATM cards and services, low cost wire transfers, competitive rates on loans and savings. Some offshore banks offer investment services and management options. There are some banks that will not open individual or personal offshore accounts, only servicing offshore companies or other offshore entities, such as trust, foundation.

Offshore accounts are used for a variety of reasons. Generally, offshore bank accounts and offshore banking is used as a tax savings plan, since most offshore jurisdictions where the offshore account is opened, apply zero. This means that interest earnings, capital gains and deposits originating off shore are not taxed within the jurisdiction (but can be taxed elsewhere). However, there are other reasons and advantages for offshore accounts as well; greater privacy, protection against political, economic or financial instability, better interest rates, wider range of banking services, greater access to international trade, tax free currency exchange.

Opening an offshore account is a simple process (using an incorporation agent), and the time it takes to activate the account can depend on the type of account and other details on the account and the services required. Offshore registered agents will assist with bank introduction and documents which will remove the need for a potential client to make trips to a tax haven to set up an offshore account. Offshore banks have websites where application forms and other necessary information for setting up offshore accounts can be obtained. . In many cases banks will only accept applications on a referral or recommendation basis, and in other cases an introduction is required. Bank introductions are made available through offshore services providers, who normally provide this service “after” an offshore entity such as an offshore company has been incorporated through their business. Additionally the process of opening an offshore bank account is not as simply as walking into a bank and opening the offshore account. First off, offshore banks are normally remotely located and face to face contact sometime impossible. Hence the need for intermediaries; offshore service providers are facilitators of bank applications, and sometimes bank introductions.

For setting up an offshore company account the directors of the offshore companies must issue a statement t the offshore bank of choice stating that the decision had been taken to set up an offshore bank account in the name of the corporation. Additional information needed includes

  • Photo identification, notarized copies of Passport
  • Bank reference from bank with which the offshore corporation is a client
  • Declaration of source of funds and summary of anticipated deposit and withdrawal activity
  • The incorporation documents of the offshore corporation
  • Signatures of the persons who will have access to the account
  • Proof of physical address such as utility bills, credit card or bank statement

Offshore accounts benefit from banking privacy laws in the offshore jurisdiction which makes it possible for information in offshore bank accounts to remain private. A person who comes into contact with offshore account information can be fined heavily for divulging information. Offshore banks cannot reveal the identity of its account holders unless requested to do so by a court order issued by a court in that specific jurisdiction. For such a request to be made the courts first has to have sufficient evidence to prove that the source of funds is related to criminal, illegal trade or terrorist financing.

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