One of the most commonly sought types of offshore bank account is a company account. There are those who legitimately need a business account for their company’s transactions for example, and there are those who seek such an account as a means of adding a layer of privacy to their financial affairs.
There are plenty of benefits and advantages to offshore company bank accounts, however there are also many who offer such services but fail to provide them, leaving a client with a useless offshore company to which no back account is assigned.
We will discuss the uses of an offshore business bank account in this article, and explain how you can go about opening one and avoiding those who prey on people seeking assistance with opening such an account remotely.
What is an Offshore Company Bank Account?
An offshore company bank account can be exactly the same type of structure as an onshore business bank account. I.e., it can be used for all types of business transactions – the only difference is that it’s located offshore. I.e., in a nation other than the one in which the account holder resides.
Such an account can be assigned to an onshore company, or to an offshore company.
If yours is a business with international presence, but you prefer to maintain its headquarters in your home nation, you may have legitimate need for an international business bank account.
This could be to more easily facilitate trade and transactions around the world, it could be because the banking environment in your current nation is less than stable, or it could be because you want to bank in different or multi-currencies.
For those who wish to establish a company offshore, an offshore business bank account will be an obvious choice of course.
Those who may wish to have an offshore company include those who will be operating internationally only, i.e., not locally within their own nation. Additionally, anyone who can legitimately avoid local taxation by retaining all business interests offshore and not remitting company proceeds onshore will also benefit from such a structure.
What Can an Offshore Business Bank Account be Used For?
Such an account structure can simply be used for all company transactions. Banks offering offshore company accounts usually provide debit card and cheque facilities, they allow for international transfers, and can handle different types of receipt and transfer as well.
Others who utilise an offshore company bank account use the offshore company as a privacy shield for their own personal banking transactions. This is done in the following way: –
They establish a company in a jurisdiction where there are no local reporting or accounting requirements and where local taxes on offshore company profits are nil. They use the services of nominee directors etc., to keep their personal details off the public record. They then open an account in the name of the company and use it for their personal or business financial transactions.
Those who want an additional layer of security will wrap the company in a trust structure.
If anyone goes to court seeking details about the account holder they will only get as far as the trustees if it’s wrapped within a trust, or the company’s name and perhaps its nominee directors – depending on the privacy rules of the nation in which the offshore company is held.
The legitimacy of this type of structure is dodgy to say the least.
Whilst there are those who of course have perfectly legitimate requirements to safeguard their personal and asset privacy and security, there are also those who will see the above structure as a way of perhaps ensuring they can avoid taxation.
The legitimate use of an offshore bank account (and even an offshore company structure) can provide individuals and businesses with many advantages. However, the illegal use of such a structure is not to be condoned.
Who Can Open a Company Account?
Anyone over the age of 18 (21 in some jurisdictions) can open an offshore company bank account – as long as they have the required documentation to do so.
Required documentation will differ depending on the jurisdiction and the bank in question. However, as a matter of course you need to know that required paperwork will include evidence of the legitimacy of the company requesting the bank account to be opened.
It may be that you have to have articles of incorporation notarised and supply these, you may need to provide the details of the directors of the company, you may need to provide proof of address for all directors and so on.
However, as long as you adhere to the requirements of the bank in question, anyone can theoretically open an offshore company bank account – you just have to have a company to associate it with!
One advantage of having an offshore company and bank account that can benefit some people, is that in certain nations it doesn’t matter if you were made bankrupt previously in your home country, you can open a business and account elsewhere – i.e., offshore.
How to Open an Offshore Company Bank Account?
If you think that having an account offshore for your onshore company would be advantageous to you, first select your jurisdiction. In our previous article Choosing the Best Offshore Bank Account we discussed how to select your jurisdiction.
Your choice may be dictated by where you are most likely to do business, or it may just be that you need an international account for your company. In which case your local high street bank may have an offshore arm that could provide exactly that service for you.
The criteria for opening an account will depend on the bank in question. Ensure you ask up front about all the documentation you will need, and whether you can open an account remotely – i.e., without having to visit the country in question.
Nowadays all banks have to adhere to strict global rules relating to ‘know your customer’ due diligence. This is why you will have to supply detailed data proving the legitimacy of the company, its place of incorporation and details about the directors too.
Alternatively you may have identified that you need an offshore company AND an offshore bank account – in which case it will be up to you to once again determine which jurisdiction/s suit you for each. You don’t have to have a company incorporated in the same haven as your bank account. You just have to make sure they are compatible.
For example, some nation’s offshore companies are more favourably viewed than others. Some havens are known to be lax in terms of regulation, and therefore favoured by those acting illegally. As a result, many banks in many other nations refuse to open accounts for companies held in such jurisdictions.
Do your research very carefully. Once again, you will have to provide details of your offshore company’s incorporation etc., when it comes to opening an account. If you have a country in mind for your bank account, it may be worth approaching a bank therein first and asking them whether there are any nations’ companies that they blacklist, and what their requirements are in terms of documentation for opening an account.
Whatever type of offshore bank account you open, and whichever jurisdiction you choose, such an account will come with fees and charges for opening the account and maintaining it month to month. If you also choose to incorporate a company you will be looking at up front fees in their thousands.
Scams to Avoid!
There are many so-called offshore service providers out there who claim to be able to open you an offshore company and a bank account. Opening the company is very easy – just as you can in the UK, you can buy a company off the shelf in many nations around the world.
However, such a company is wholly useless without a bank account associated with it. As stated above, most banks now have very strict rules when it comes to know your client due diligence, therefore if you want to open a company and provide very limited data in the public records, don’t assume you will find it easy to open an offshore bank account.
No one can get you around these rules. It would be illegal to do so. Therefore do not trust any service provider unless they give you guarantees that they will supply you with a bank account. And even then ensure you know and are comfortable with the data and paperwork you will have to provide to get the account open.
Ask up front about their service, what their guarantees are, and consider holding back full payment or using an escrow account for payment until you are in receipt of all that you expect.
Even taking such action may not protect you against the worst out there – so if in doubt ask for testimonials from satisfied clients, and only choose to work with a company that’s been in business for the long-term and has a proven track record.