Clues to Offshore Banking: an Account for an Offshore Entity (Part 1)

Before you set up your offshore company, the task of opening its corporate account may seem so conventional that you do not give it a thought. Unfortunately, this is a mistake too many owners make. First, they venture to invest in their business registration in some tax haven without any knowledge of offshore banking. And then they discover – too late – the real challenges of obtaining and maintaining an account for their offshore entity. 

In fact, they should have explored the matter yet at the stage of choosing the jurisdiction. Better yet, they should have asked for professional advice on offshore banking well in advance, to avoid the waste of time, money, and efforts. 

The financial institutions’ terms, requirements, opportunities, and solutions for offshore companies do differ across the world. Will it be easy for you to open an offshore company account in the country of your liking? Should you choose onshore vs offshore financial institutions? What do you need to consider when selecting the bank or payment system that would welcome your offshore entity? What limitations may you face in offshore banking? How can you mitigate the risks and maintain your account in a cost-effective, sustainable way? What advantages can you enjoy after you open an account for your offshore company in the right place, with the right institution, under guidance from the right consultant?

Let us start with the most relevant questions posed for any entrepreneur wishing to learn about the fast and reliable ways to open an account for an offshore entity.

Why open an offshore account for your offshore entity? 

Have you ever wondered why would anyone avoid offshore banking at all? One of the most obvious reasons is the media and regulators’ persistent commitment to sabotaging, in their own vested interests, the public trust in the benefits of offshore bank accounts. 

However, mature investors love to hold both corporate and private accounts with banks in offshore jurisdictions, wherever their companies are registered.

Do they understand something you don’t? Could it be that they just know where to go for the best banking services?

Indeed, major banks in countries like the US, UK, and France tend to operate with bigger amounts of loanable funds and make riskier decisions than their offshore competitors.

In other words, a proper offshore bank can offer you more security and banking privacy, better interests, and a wider range of banking services than those currently available in the more economically advanced onshore and midshore countries. Isn’t this a very good reason to open accounts in offshore jurisdictions, particularly those recommended by our experts for all the virtues of offshore banking? 

Today’s economies are much more interconnected than at any time in history. This is especially true in the world of international finance. Moreover, web-based technologies provide many efficient tools for electronic commerce and banking. If you don’t explore and choose more favorable options internationally for fear of the unknown, it will sooner or later prove to be a disservice to you.

Who should open offshore accounts?

With the right tools and strategies of offshore banking, anyone will be entitled to many benefits in terms of better ROI, tax allowances, worldwide revenues, business prospects, financial privacy, and personal ambitions.

The benefits of offshore accounts are available not just to super-rich clients. 

Private and corporate clients may have different needs in offshore banking, and offshore bank accounts may meet nearly all of them. 

Anyone who is looking for reliable ways to protect and grow one’s savings obtained through hard work should consider offshore banking.

Some private and corporate clients need offshore accounts for everyday shopping and payments at lower costs while traveling around the world. 

High performers and digital nomads open offshore accounts to be paid salaries and fees by employers from different countries. 

International business owners prefer offshore accounts for multi-currency settlements with their suppliers and payments in local currencies across the world. 

Many entrepreneurs engaged in international business rely on offshore banking when developing offshore projects for access to other markets and optimization of taxes and costs of their existing business.

Offshore bank accounts can help clients diversify assets and avoid the political, social or economic instability in their countries.

Offshore banking helps to protect, multiply and diversify one’s wealth. It is a shield from adversities, such as the risks of unwarranted lawsuits, confiscation of assets, freezing of bank accounts, unreasonable regulations set for account holders, as well as economic and political bankruptcy in their home countries.

 Having conducted some research, you can find safer offshore banks, better services, lower risks, higher interest rates, and better tools for protecting and growing revenues in offshore countries. 

But before you can reap the benefits, you need to know which countries and banks to choose, what strategies to use, and how to avoid mistakes when opening an offshore company account.

Unfortunately, opening offshore accounts for an offshore entity is becoming more difficult. Banking laws and regulations are getting tougher all over the world. This trend will only intensify. The days of the easy set-up of offshore company accounts are gone. It is impossible to open offshore accounts without the right information and reliable help. To believe otherwise is wishful thinking – vain and painfully expensive.

Offshore banking issues to be aware of

Before going any further, it is important to address some limitations you will undoubtedly encounter when trying to open an offshore company account in 2022.

The requirements of international regulators for banks are getting stricter. Therewith, almost every bank has a list of ‘sanctioned countries’ whose citizens are refused services.

 Before opening a personal or corporate account, all credible banks are obliged to scrutinize the profile and activities of every applicant/beneficial owner. 

Bankers approve only potentially safe clients and transactions. No ambiguity, mistake, or omission in the submitted documents is left unnoticed.

Categories of applicants that encounter difficulties in opening offshore company accounts

If you belong to some category of applicants that are not welcome by some bank, you should better look for another one. The challenge is to know the selection criteria. For example, if you are not a legal or tax resident in the country where you are going to open an account, or if you own an offshore company in another jurisdiction, or if you deal in specific ‘high-risk’ business/industries, most banks will refuse you their services. 

As you see, unfortunately, this list of unwelcome categories of clients may include offshore entities. The reason for this prejudice is quite simple and just has to be accepted as a fact: bankers and regulators tend to perceive offshore companies as high-risk customers due to their image tainted by mass media’s sensationalism and over-generalization. 

Another reason why offshore companies are often ruled out by banks is connected to some governments’ policies. The more people bank outside their countries, the more the national authorities strive to retain the businesses and funds of their citizens inside the country. Personal and corporate revenues are always considered the national source of tax revenues. So, it is only natural that governments do not encourage offshore entrepreneurship and any transfer of funds to offshore accounts. In their turn, banks have to obey.

Our experts’ simple recommendation is: never use offshore banking to evade taxes in the country where you are a tax resident. Most countries (governments and banks) exchange information about account holders and their status under extensive automatic information exchange agreements. This AEI framework and the strict Anti Money Laundering (AML) / Know Your Customer (KYC)  laws mean that your assets cannot evade taxation legally. Therefore, it is unwise and impossible to try to park money in offshore banks and hope that nobody will know. Such old tricks do not work any longer.

However, there are many legitimate ways to obtain tax allowances, exemptions, and incentives available in some offshore and midshore countries. 

If you want to reduce your tax burden legally, you may need to register a new offshore company or restructure the assets and entities in a particular way that will justify your offshore banking needs. Nevertheless, many banks will be reluctant to take the risk of opening accounts for offshore entities.

Risk mitigation is one of the challenging objectives of the increasingly strict banking regulations. It basically means that most foreign banks, including offshore banks, should be afraid of breaking the rules. Just one mistake or a “wrong” customer can trigger huge penalties for the bank, or even lead to license withdrawal and business closure. Therefore, compliance departments of banks maintain strict control over the whole process of accepting and onboarding new clients. Every application on behalf of an offshore entity is given particular scrutiny. 

It is the compliance department that decides whether you can be taken in as a client of a particular bank and, later, whether your account should be frozen or shut down in case of a suspicious transaction.

In fact, the new rules of the banking world have become so restrictive that some banks decide to significantly limit the influx of new customers. What’s more, they are closing the accounts of long-time customers who don’t fit their “ideal” customer profile.

As a result, banks can hardly cope with the ever-increasing volume of regulatory provisions and compliance requirements they have to observe.

Some institutions find it easier to turn new customers down and close accounts of those they deem “undesirable.” This is how they implement the “risk mitigation” policy.

What’s next?

Many people and businesses around the world, whether registered as offshore entities or not, are occasionally banned from the banking system.

As we have explained, banks are becoming too cautious about who they accept as clients. And it is likely that things will get worse from here on.

The people and companies who break through the risk mitigation barriers are those who are “close at hand”, don’t raise suspicions during the account opening process, and have a low-risk profile.

Unfortunately, most applicants don’t know the new rules of the game. They think it’s enough to choose the bank which would be most suitable for their needs. They turn up in the office with some randomly selected documents, answer compliance questions carelessly, or neglect them altogether.

Furthermore, they don’t care to understand the vulnerability, likes, and dislikes of the bank. They do not study the specifics of opening accounts. They don’t make any efforts to present themselves as trustworthy clients … So they end up being rejected, having wasted time, money, and efforts.

Your main task, as a potential client of the bank, is to introduce and prove yourself as a nice credible customer and convince the bankers that their compliance procedure can be quickly passed, and you can be most cooperating in resolving issues. 

It is essentially important to become mutually beneficial partners. After all, you know perfectly well that whether you are opening an offshore account, sitting in a restaurant, or taking a cab, the staff will need to appreciate you as a decent and respectful client, who can be served quickly and easily, and will leave a tip. You should adhere to this model of a mutually beneficial relationship with the bank officers from the very start, during the process of opening an offshore company account, and later on.

You need to think carefully and strategically about your next steps every time you approach the bank. When talking to the bank officers, you need to be clear about your banking goals, as well as know what benefits and services you really need for your offshore company.

Your preparation for a successful application involves your analysis of the bank account types, available services, the schedule of fees, and other details that are often published on the banks’ websites. 

You also need to know the risks and disadvantages of a particular bank often discussed by clients in blogs, as well as those little hidden “cons” that no one is talking about publicly. For example, it is important to learn about hidden fees, internal policies, restrictions, and compliance features. 

Of course, it would be hard to collect and master the most relevant information about a particular financial institution and its internet-based solutions if the last time you opened an account was at your local bank branch down the street 5 years ago. However, you should not be discouraged. We will do our best to help you. 

How to open an account for your offshore company?

Application for opening an offshore bank account can be a daunting task. We promise to make it easier for you if you book our free consultation and fee-based services.

The most common pitfalls that trip up any unprepared applicant wishing to open an offshore company account 

We have compiled for you a list of the most common pitfalls that trip up unprepared applicants. These mistakes always dramatically slow down the process of opening offshore accounts because the bank has to make additional requests for hard-to-recover documents, the compliance department has to perform due diligence with more scrutiny or even require face-to-face interviews. Even worse, the company’s application for an offshore account may be eventually rejected with no explanation, and the applicant will have to start all over again from scratch.

The list of potential perils is as follows:

• a very reckless, careless attitude to the application documents, which shows in the applicant’s shallow answers, poorly thought out statements, and clumsily compiled portfolio; 
• a wrong assumption that banking is one’s “right,” not a privilege, hence – the careless attitude to the entire process of opening an account for an offshore company;
• the failure to understand and scope out the questions asked by the bankers, and therefore – one’s inability to provide substantial answers that would satisfy their interest; 
• the failure to properly understand the importance of specific documents and certificates requested by the bank; 
• some unintentional mistakes, awkward answers, or negligent actions that accidentally trigger additional requirements for compliance and due diligence; 
• the failure to understand the specifics of the banking jargon; accidental misuse of terms that can cost one dearly; 
• the inability to clearly explain one’s transactions in a way that would dispel doubts of the bank’s compliance department; the failure to describe one’s business as a whole.

Our experts and partners specializing in offshore banking matters have been working with offshore banks in different countries, opening accounts, and analyzing the market trends for over a decade. 

They are convinced that the above-mentioned drawbacks are often the main reason why banks reject applications for opening offshore company accounts.

Just like with any other task you take on before you apply for an offshore account, you should be prepared for the questions you may be asked by bank managers. Otherwise, you are setting yourself up for failure when opening an offshore account.

And if you have ever been ruled out by a bank, you know how painful and unpleasant it can be. It feels especially bad if you have invested a lot of time and money in the process of applying for your offshore entity’s account.

Unfortunately, getting rejected by banks is a fairly common outcome of self-reliant attempts to obtain an offshore account. And mind you, in many cases, the failure could have been completely avoided. By choosing the right bank, understanding the specifics of the requirements and the procedure for opening an account, and addressing the above-mentioned issues before you apply, you will greatly improve your chances of opening an offshore bank account.

Our experts in offshore banking use specific strategies, analytical reports, personal connections, and open source banking data to update the database and keep our clients well-informed when assisting them in the successful opening of offshore company accounts.

These strategies, combined with the unique objectives that clients set for their accounts, help them achieve success much faster and at a lesser cost, compared to other clients’ independent research of the international banking market, which can be conducted for many years without any noticeable progress.

Proactive approaches that can step up any the chances of any applicant to obtain an account for an offshore entity in 2022 

Let us give you examples of some very important concerns that you will need to discuss with our experts before attempting to open offshore bank accounts:

• How can you establish fruitful relations with the bank officers and build rapport with the bank staff in different circumstances? 
• What are the things that discourage or even scare banks when they are assessing new applicants’ papers and interview findings? 
• What are the banks’ likes and dislikes when they evaluate their clients’ profiles, compliance, and account opening objectives?
• How can you encourage bank officers of a particular bank to become an advocate for your application?

Here are some of the recommended proactive approaches that can help you build rapport, produce a positive impression, enhance your strengths that the bank will appreciate, and earn the trust of the officers who will make the decision about opening your offshore company account.

1. Compile a list of banks that have previously opened accounts for clients like you, that is, with similar objectives, business, and client profiles. 
2. Identify specific bank officers who have personally opened accounts for people and businesses similar to yours in the past. 
3. Write an application highlighting the most relevant facts that bank officers will need to learn about you. Choose the banks with which you can find common grounds. That is, if the bank does not work with foreign and offshore companies, then you should not even try to find out what their requirements and terms are for opening accounts for offshore entities, as this would be a waste of time. Instead, you should rather look for information about banks that provide services to foreign citizens and offshore entities. 
4. Try to find out which applications and customer profiles can be perceived as risky, or weak by that bank. You need to know this so that you would not accidentally volunteer some discouraging or alarming information during the interviews. Whatever data you submit or share, you need to analyze their possible impact on the bankers’ opinions and decisions.
5. Do not be too modest to explain the strengths of your business idea or the possible virtues of cooperation with you and your offshore company. Share all the relevant information and required documents when interacting with the bank officers. Try to build a friendly business relationship with them. Your application form needs to be duly filled out, your portfolio of documents – complete, and your feedback to the bankers’ inquiries – prompt. This attitude will be definitely appreciated and can play into your hands in the long run. 
6. Try to find a common language with the bankers, use the banking jargon, and try to understand what they are asking at all stages of your application. 
7. Try to present your current concerns or gaps in your profile in a way that will either look appealing or quickly resolvable, so as not to damage your application. 
8. Try to determine when and how to handle the sensitive issues relevant to your application for an offshore account. 
9. Always position yourself as a successful, smart, and attractive client, presenting zero or very low risk to the bank.

Awareness of the importance of the above-listed points can improve your application and increase your chances of opening an offshore account in 2022.

We are here to help you clarify all uncertainties, recommend efficient time-proven strategies for account opening, and provide real-time expert support to you.

The key is to understand how and where this knowledge can help you open an offshore company account. Therefore, valid information, the right contacts, and professional are the 3 critical pillars of your success that you need to secure before you apply for your offshore company account opening.

For example, some information about yourself may be flagged by some bank (for example, in the UK) as a high-risk profile, while some other bank (for example, in Singapore) will never rule you out just because of the very same facts. If you do not know the nuances of requirements, likes, dislikes, or preferences of the particular bank, your chances of opening an offshore account with this institution will be negligent. 

Likewise, if you submit documents at the wrong branch, or contact the wrong banker, you may face more difficulties in opening an offshore company account. Some applicants were turned down just because they had not made a prior appointment with the bank: mere negligence was perceived as open disregard of the bank’s rules and procedures. That is why you should choose the bank like you choose a friend. Try to make advanced research on all the subtleties, and come fully equipped with the right documents, attitudes, and answers. Always keep your attitude upbeat and positive. Your bad attitude will ruin things.

If you don’t know your target banks (or branches), you are setting yourself up for failure. It’s like going on an expensive fishing trip without any idea of the specific types of fish you are trying to catch. You’ll just end up wasting a lot of time, and such mistakes can cost a lot of money.

Imagine calling banks, sending emails, conducting phone interviews, collecting papers, paying fees, and traveling to banks, only to be denied an account for no obvious reason. This is a painfully annoying and costly exercise. We’ve seen people spend thousands of dollars trying to open accounts with banks they think are reliable, large, or profitable. But if such banks are absolutely negative to customers of their kind, the whole venture is a very frustrating failure. 

It feels even worse when someone accidentally discloses some sensitive or negative information about oneself, thus severely reducing all chances of opening a bank account!

You are welcome to book the following popular services of our seasoned experts: 

1. A FREE private web-based session on how to choose a payment system for opening offshore company accounts:  this is your chance to make a compelling analysis of the most suitable options and get customized recommendations.  
2. The reasonably priced assistance in choosing a bank for the successful opening of corporate and personal accounts for an offshore entity or private needs, plus the unique PRE-APPROVAL service 

For more information on offshore banking, please contact us at our email address info@offshore-pro.info or messengers given at the top of this page. 

We invite you to look up Part 2 of this article. It is focused on the best ways to identify risks, detect opportunities, prevent slips, and avoid critical mistakes when opening offshore company accounts.