Most nations recognize the right of their citizens to store their wealth in financial institutions anywhere on the globe. It is generally feasible to maintain any sum of money in an overseas bank account, provided that all applicable legal provisions and regulatory requirements are satisfied.
What are the prerequisites that must be fulfilled to keep funds in foreign banks? What is the maximum amount of money that can be held in an offshore account without drawing attention or inviting inquiry?
Local or foreign bank account: what is more suitable for your needs?
The decision of where to deposit your money is a personal one that you have complete control over. You have the option of selecting a domestic bank in your country of origin or residence, or you may choose to open an account with a foreign financial institution.
Ultimately, the best choice is determined by your unique aims and objectives.
If you are a permanent resident in your country of citizenship, it is generally recommended to keep your money in local banks. This is because it is easier and more affordable to pay for everyday expenses and bills using a local bank account. The latter provides you with convenient access to financial services and enables smoother transactions no matter where in the world you reside.
Numerous factors motivate people to opt for foreign banks as a means of storing their money:
- You may have decided to relocate to another country and will soon use your foreign account as your main domestic account.
- You may have decided to invest overseas, for instance, purchasing real estate, which in various countries is only feasible with a local bank account.
- You may have opted to diversify risks and secure assets against economic, social, and political threats. In such a situation, one or more deposits in foreign banks will decrease your reliance on one bank and one nation, mitigating losses in the event of a negative outcome.
A foreign bank account offers significant benefits to freelancers and entrepreneurs engaged in international business. With a local account in the same country as your client, you can streamline transactions and simplify payment processes, eliminating the need for complicated currency conversions.
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Is it legal to store money in foreign banks?
If you have earned your money and transferred it to your foreign bank account in a legal manner, you have the right to store it wherever you wish. However, to avoid potential issues, keep certain conditions in mind:
- You must possess documents that prove the legitimacy of the funds’ origin, such as tax returns, employment contracts, inheritances, and more.
- You are required to report your account and provide your details to the tax authorities in the country where you are considered a tax resident. In some countries, this is a compulsory requirement, while in others, it applies only when certain conditions are met, such as exceeding a particular threshold amount on your foreign account.
- You must comply with the rules of your tax residency country reporting and paying taxes on your income accordingly.
As an individual with legal and legitimate sources of income, you have the right to store your money abroad. However, it is important to remember that certain global standards and laws regulate this issue, such as the Common Reporting Standard (CRS) and the US Foreign Account Tax Compliance Act (FATCA). These regulations require banks to automatically share information about their foreign clients’ deposits with tax authorities. To ensure compliance with these regulations, it is essential to pay taxes on time and have the proper documentation to prove the legality of your funds.
Combined with an offshore company, a foreign bank account may be a useful instrument to decrease your tax burden.
How much money can you keep in a foreign bank account?
Every bank aims to attract clients to invest as much money as possible. Hence, there are typically no constraints on the amount of money that can be kept in a foreign account.
However, there is a minimum deposit limit. Non-residents are usually classified as high-risk customers, meaning that higher standards are imposed on them, both in terms of document verification and financial investments. The initial deposit and minimum balance requirements vary from bank to bank. Some banks require a deposit of USD 1000 or USD 5000, while others demand USD 500,000 to USD 1,000,000.
When it comes to storing money abroad, what bank is the best? Several factors come into play here. First of all, it’s the bank that is available to you. Not all banks accept foreigners as their customers, and some may only accept individuals from specific countries under certain conditions. For example, European banks may not be keen on American clients (due to the FATCA law) and, since 2022, have practically stopped accepting Russians. However, exceptions are usually made for those who have residence or citizenship in Europe.
Secondly, you need a bank that suits you in terms of location, services, and fees. If you are opening your first foreign account, it may not be ideal, but you will need to build up your reputation in the foreign jurisdiction before opening an account with a larger or more appealing bank.
Step-by-step guide: opening a personal bank account abroad
To open a personal bank account abroad, you should take several steps:
- choose a suitable bank in the jurisdiction of choice (at International Wealth, we recommend you schedule a free consultation with our consultants)
- prepare the required documents, which typically include a valid passport, a document verifying your current address, proof of the origin of your funds, and in certain cases, reference letters and a summary of your professional experience
- translate them into English or another foreign language (depending on the bank’s policies): make sure to check the specific requirements beforehand
- ensure that you accurately complete the application as specified by the bank
- wait for the bank’s decision on your case.
No matter what, the final decision rests with the bank. The bank also has the authority to demand further documentation to validate your application.
If you’re unsure of how to proceed, we suggest taking advantage of our free consultation service for selecting a bank account. The International Wealth team of experts will help you navigate the process and ensure you have all the necessary information that foreign banks require. From there, we can recommend banks that are most likely to accept you as a customer.
By choosing the right bank from the start, you will save time opening your account. It will take you a reasonable amount of time to begin storing your funds abroad. Additionally, you can save money since the preparation, translation, and certification of documents are bound with expenses for you, and some of the above documents, such as proof of address, are only valid for 3 months.
Assisted by industry experts, you can achieve a more predictable outcome within a shorter time. To learn more, you are welcome to contact us at: info@offshore-pro.info.
