A Comprehensive Guide For Opening An Offshore Bank Account

A Comprehensive Guide For Opening An Offshore Bank Account

What Is An Offshore Account?

Offshore bank accounts are special accounts opened in foreign banks or financial institutions overseas. There are two types of offshore accounts which are personal offshore accounts and business offshore accounts. 

Personal offshore accounts are foreign accounts opened in foreign countries or regions outside of the person’s country of residence that are solely for personal use. The business offshore accounts are accounts opened in regions outside of the company’s registered location.  

The offshore accounts serve the purpose of tax advantages, privacy protection, and capital mobility opportunities. However such accounts are still obligated to comply with the legislation related to combat money laundering and tax evasion. This article will help you to get more knowledge on offshore accounts through the introduction as well as an analysis of its advantages, target users, and account opening procedures.

Comparison of Offshore Account Services and Features

Offshore Accounts Banking Services Provided In Hong Kong

Banks in Hong Kong provide offshore account opening services. This is a great opportunity for you as a customer to open an offshore account at those banks.

Depending on the requirements of the bank, some provide the convenience of opening an offshore account either by online application through the bank’s website (International Banking Center – IBC) or by visiting a branch.

Offshore Accounts Banking Services Provided In The UK 

Along with the branches of local banks abroad, the accounts for non-UK residents can be opened in the local banks conventionally. The majority of international banks have the minimum requirements for their customers which include submitting a passport (certified copy) and other necessary documents such as proof of address, and proof of income, and the money should be deposited within the stipulated time.

Offshore Accounts Banking Services Provided In The US

A customer can easily open a US offshore account with the US branches of your local banks. Clients can either schedule an appointment at the US office with assistance from Hong Kong staff or alternatively apply for a US bank account online. It should be noted that local banks can also provide offshore account opening services which come with certain minimum requirements. 

Offshore Accounts Banking Services Provided In AU

Some Australian banks allow offshore account opening via online applications. Clients will be requested to provide information such as their passport details, phone number, Taxpayer Identification Number (TIN) as well as Australian address. The customers should visit Australia within 12 months. Nonetheless, some Australian banks are still so traditional and do not conduct online account opening applications. In some cases, customers will need to visit a branch when they arrive Australia to start their account opening process. 

Keep in mind that the offshore account services discussed above are only for personal offshore accounts. To understand more about business offshore accounts, you can refer to the information below.

What Are The Main Differences Between Offshore Bank Accounts And Local Bank Accounts?

The Main Features Of Offshore Bank Accounts

The main characteristic of offshore bank accounts is that sometimes, depending on the jurisdiction, there are possibilities to transfer money outside the home country without any restriction by laws and other rules imposed in the home country (e.g. foreign exchange controls). Furthermore, when funds are transferred to an offshore account whether for payment of expenses or savings or investment, these accounts can minimize transaction fees and currency exchange losses.

The Main Features Of Local Bank Accounts 

Local bank accounts provide a great deal of advantages when it comes to the convenience aspect. Customers can also ask members of the staff for more information or clarifications. Additionally, a lot of prominent local banks also offer different types of foreign currency accounts. This makes it possible for clients to carry out transactions and transfer funds through foreign currency accounts and it is still important to check the supported currencies and the possible transaction fees.

FeaturesOffshore bank accountsLocal bank accounts
Account opening requirementsAccount opening procedures vary by bank. While some offer online options, many require in-person visits to local branches.Allows for online account opening in Hong Kong or visiting a branch
Deposit requirementsDeposit requirements differ based on the bank and account level, ranging from no minimum to several million Hong Kong dollars (HKD).
Account servicesTypically, offshore accounts provide standard banking services like online banking, deposits, transfers, investments, credit, and debit cards.
Deposit protectionProtections vary depending on jurisdiction.Deposits are safeguarded by the Hong Kong Deposit Protection Board, offering compensation up to HK$500,000.

Advantages Of Setting Up An Offshore Banking Account

Speed Up International Trades

Normally, when conducting international business with suppliers, customers, and employees from foreign countries, transferring money overseas often takes half a day or more. This kind of delay is significantly inconvenient. Alternatively, by using the local bank transfer, money can be deposited into the accounts of the suppliers and the employees. 

Reduce The Costs Related To International Trade

During international remittance, the banks of both the payee and the payer may impose charges. For instance, wire transfers to the UK or the US charge a transaction fee of tens of dollars, while local bank transfers do not have any transaction fees. 

Diversified Financial Services

Multinational companies can benefit from a variety of financial services like foreign currency hedging, investments, or even loans in foreign currencies. To have access to those services, having an offshore bank account is often beneficial.

How Can I Set Up An Offshore Bank Account?

Companies can utilize different options for opening offshore accounts, ranging from directly opening accounts with foreign banks or opening through local banks that have offshore branches.

What Is The Requirements And Process For Opening An Offshore Account With Local Banks? 

Although it is easier to open an account through local banks, not all local banks provide offshore account opening services to corporate clients. Besides, customers should evaluate if the branches of the bank offer their overseas business operations. 

The bank might only provide the process of opening offshore bank accounts but companies still have to submit the mandatory documents for the account opening so that they can meet the demands and requirements imposed by the government. 

What Is The Requirements And Process For Opening An Offshore Account Independently? 

Generally, an offshore account can be opened either through the name of a locally registered company or the existing offshore company (e.g. British Virgin Islands, Cayman Islands, Bahamas registered companies).

In order to open an offshore bank account in the UK, these are two main conditions to meet : 

  1. The applicant should be either a registered UK incorporation or an offshore company.
  2. The applicant has to be a local tax resident except for the Channel Islands and Isle of Man.

In this case, applicants can visit local branches or contact the bank’s local corporate banking department. After the pandemic, some banks have started providing online account opening services in the wake of the pandemic. The following documents and information are required to proceed with your application : 

Company information:

  • Company address with postal codes.
  • The contact information (landline telephone number, mobile phone number, email address)
  • Limited companies and partnerships must also provide their Company House registration number (CRN).
  • Estimated annual turnover

Personal details of the shareholders and directors : 

  • Their full name and date of birth 
  • Phone number and email address 
  • Current place of residence (if you have been staying at the current place for less than 3 years, you must provide the previous places of residence as well)
  • Account number (if you are an HSBC customer).
  • Credit card details and debit card details.

Will Overseas Virtual Bank Account Be As Reliable As Traditional Overseas Bank Account?

The Definition And Concepts Of Virtual Banks

Virtual banks do not have the physical offices that traditional banks do. They depend on the Internet to perform multiple financial operations including bank account opening and closure, transfers, deposits and withdrawals, and bill payments. Because virtual banks can operate anytime anywhere, they can offer lower fees and higher deposit rates compared to traditional banks. Moreover, virtual banks are still subject to the same regulations as traditional banks by the local government thus they enjoy the same protection from the deposit insurance just like other traditional banks.

Overseas Virtual Bank Accounts

Like traditional banks, most of the virtual banks only accept the applications from companies that are registered locally. The main requirement of all virtual banks in terms of the applicant or a significant controller of the company is to be a local or tax resident which may not be suitable for companies and residents of Hong Kong.

Remote Account Opening From, Transfer, And Deposit Fees For Overseas Virtual Banks

Virtual banks provide remote account opening services to facilitate those individuals who cannot go to the bank physically. The general steps and necessary documents for virtual banks may have a slight difference but the following procedures must be followed: 

  1. Start by browsing the virtual bank’s website and choose the option to create a business account.
  2. The applicant should fill out the online application form which will need to fill in the name, address, and date of birth.
  3. Fill in company and business details, such as the name, identification number, and the company’s trade name (if any). 
  4. Some virtual banks may ask you to submit the company’s registration certificate or other registration documents. 
  5. Provide the names of shareholders, their birth dates, and the address proof of shareholders and directors.
  6. Wait while the bank processes your application. 

Foreign virtual banks provide the membership of different account levels with different monthly fees. A basic business account is typically free and it supports the local real-time transfers and cash deposits at ATMs. Nevertheless, the transaction fee for the international SWIFT transfer is usually less than 1% in general across all corporate account types.

How Should You Consider Before Opening An Offshore Account For Your Business?

It is quite crucial to keep in mind the following factors when you set up an offshore account for your business. 

Clearly understanding what you specifically need is vital for choosing the best account before you open one. If you want to send money abroad to the supplier or an employee, you can streamline the process and avoid the redundant remittance fees. 

After that, go through the eligibility process by reviewing the requirements of the account opening with the legal and tax regulations of the respective country or region. Some of the banks accept applications from local tax residents and registered companies only therefore, these might be crossed out.

Then, it is recommended to consider the level of legal protection and the security of the asset in the local jurisdiction including the reputation of the bank, the geopolitical situation, and any limitations on deposit protection. 

Finally, consider the financial expense and the time spent that might come from setting up an offshore account. Some banks can have complex entry requirements for opening an account, requiring the applicants to visit the branch or impose service fees and minimum deposit booking. The applicants should carefully evaluate the cost versus the potential business gain.

Open a Multicurrency Account in minutes today with FastLane
Sign up for free

How FastLane Group Can Help?

If you want to expand your business horizon, setting up an offshore account will be a lot helpful. However, opening an offshore bank account with an offshore bank can be difficult for foreign corporations since many of them only accept registrations from local tax residents or registered companies. Establishing a company in a foreign country can be challenging for small and medium-sized businesses requiring extra resources and tax considerations. 

Fast Lane Group is a feasible option to open offshore banks or offshore companies in different jurisdictions. Our expert team will revise your strategy together and get your world of opportunities flowing. Contact us today to find out more about how we can help you!

hello there