Open a Corporate Offshore Banking Account: Proper Reasons, Jurisdictions, Banks, Accounts, Approach

There can be many reasons to open a corporate offshore banking account. By and large, any foreign bank registered outside one’s domicile is called an offshore bank, and an offshore banking account is one you can open abroad. So, the choice is endless! But how can you choose the most beneficial option so that you can make the most of upgrading your company’s funds to a global lavel? 

The focus of this article is on the intricacies of offshore banking on the whole and banking from IFCs (offshore jurisdictions) in particular. 

Benefits of corporate offshore banking account set-up in offshore jurisdictions (IFCs).

Let us narrow our area of interest to the most popular destinations. Such countries are known and chosen for a stable political and economic landscape. This is where many savvy foreign investors, corporations,and  HNWIs find for their assets a friendlier environment and protection from the growing turmoil in their home countries. 

The most common reasons why high-profile clients decide to go offshore are:

• to incorporate a new company abroad;
• to protect assets from political instability at home;
• to set up their offshore subsidiaries, offices, and trusts;  
• to register vessels or vehicles; 
• to buy real estate or make other investments; 
• to seek a second citizenship by investment as a backup plan in case of some adverse scenarios in their home countries;
• to park funds (treasury);
• to enter foreign markets. 

It is only natural that jurisdictions compete for foreign capital by offering very attractive incentives. Most of the said incentives (yet not all) refer to the category of International Financial Centers (IFCs, often also called tax havens, offshore zones).  

Offshore jurisdictions come up with lower or zero taxes and tariffs, privileged passports, ample investment opportunities, an abundance of skilled human resources, and other perks.

Midshore and onshore jurisdictions promote themselves for foreign companies as excellent gateways to the regional markets, high-tech hubs, research and science centers, other benefits.  

The list of the reasons to turn to foreign solutions is growing. 

When it comes to non-resident banking, the most convincing advantages of accounts with offshore banks registered in International Financial Centers are as follows: 

• more freedom, for example no currency controls nor forced heirship rules; 
• better protection of assets; 
• a higher level of data security; 
• lesser risks; 
• lower costs; 
• and as a result – greater profits. 

Besides, our clients’ feedback spotlights the following positive experience of banking with banks in offshore jurisdictions:  

• the account set-up wait time is much shorter;
• regulations and taxation in the offshore jurisdictions are friendlier;
• automated payment and billing processes are more efficient; 
• fiscal control is milder; 
• corruption is remarkably lower.

In which countries can you open a corporate offshore banking account legally?

There is no simple answer to this question because the world is a hotchpotch of different laws. As we all know, one activity may be completely legal in one country, but illegal in another. That is why people travel to Vegas to gamble or to Amsterdam to smoke pot.

All free countries generally allow their residents to open an offshore account. Therefore, it is legal unless you live in some restrictive state, like North Korea. Some countries however do not allow their banks to open accounts for non-residents. This test, at least, is fairly easy to pass.

Second, whether you can (and should) open an offshore banking account in a particular jurisdiction depends on many variables. 

You must have seen many firms promoting online their ‘ready-to-use’ recommendations of ‘the top 5’ or ‘the best 10’ offshore jurisdictions for opening foreign bank accounts. Though geography is important, your choice of the destination should NOT be based only on the internet bandwagon induced by the jurisdiction’s high-profile banking reputation, tourist attractions, economic incentives, visa-free non-stop travel convenience, other ‘bells and whistles’. 

Otherwise, you might get trapped at a later stage in such sudden complications as 

• the impossibility to open some particular account type or line of business because of the bank’s specialization or restrictive policy, 
• a ban to conduct business and transactions with customers from the countries that are on the bank’s grey list, 
• the less attractive fees and terms than you have expected, 
• or some other confusing difficulties. 

We recommend that when choosing the place for opening your offshore banking account, you should balance several considerations, including the following criteria:

• the strategy of your company; 
• the purpose and utility features of the offshore accounts (we recommend more than one account) that you think you will need;
• the currencies you will deal with;
• the international reputation of the jurisdiction;
• DTA agreements and relations between your country’s domicile country and the offshore jurisdiction;
• taxes, tax residency terms;
• the status of the banking sector in the jurisdiction, the leading banks;
• the profile of the banks where you could apply;
• the bank’s restrictive policies that may refer to your / customers’ / contractors’ geography and business profiles;
• reporting requirements;
• data security protection;
• the capital required;
• the estimated annual costs;  
• the ease and speed of opening the account (also, the opportunity to open remotely);
• popular languages: the linguistic support at the bank;
• technological issues;
• list of the banking services;
• some other specific considerations.

The above-given list of criteria is quite long and not exhaustive. You are welcome to discuss them with our experts informally and in confidence by phone, or complete and send us the fillable online form. Only if we fully understand your needs and circumstances can we help you by shortlisting and recommending to you the most appropriate jurisdictions, banks, and accounts. You are also welcome to send your questions to the e-mail address given at the top of this page.

Can the offshore bank specialization make a difference for your company?

Each bank specializes in a particular line of business. There are retail and/or corporate; commercial and/or investment banks. 

Depending on the profile of the operations, banks are universal or specialized. Universal banks offer a wide range of banking services. Their activities cover several economic areas and segments of the financial market. Specialized banks are more focused on specific areas of activity and services – for example, marine finance, private wealth management or e-commerce.

Therefore, you need to be sure that the specialization of the bank you are choosing matches your company’s profile and objectives. Please be guided by this awareness when deciding to open your non-resident corporate bank account with a particular bank.

How do offshore banks choose their non-resident corporate clients?  

Application is a two-way road. Our experts often say that the client chooses the bank, and the bank chooses the clients. Banks are free to set their specific criteria for foreign corporate clients. 

However, all banks conduct a Customer Due Diligence check before opening an account and perform periodic reviews of the client’s activity for compliance.

The minimum set of documents to be submitted with an application is as follows:

• the proof of the company’s residence, the proof of the beneficial owners’ (UBO) residence; 
• the IDs of UBOs, directors, account administrators, other key persons in the company that will have access to the account;
• the standard set of incorporation documents of the company;
• documentation explaining the company’s business operations; 
• the proof of the legal source of the company’s funds;
• a simple chart or written explanation of the company’s corporate structure; 

Why do ALL banks require the above-mentioned documents? What do banks want to find out? Some banks are more meticulous than others. But, every bank wants to be sure that the clients do not pose any risks to the bank’s reputation, license, operation.

• Banks want to be sure that the client’s residence jurisdiction is not on the FATF black/grey lists. Besides, many UBOs have dual or multiple citizenships, and they do not necessarily reside in every country that has issued them passports. To avoid confusion, banks ask for copies of the recent utility bills or some other proof of the primary/actual residence.
• Banks need to see your company’s current and expected turnover, the average amount per transaction, the frequency, and the types of transactions.
• They need to be sure your business area, products, services are legal and not blacklisted (for example: some jurisdictions have a quite proactive attitude towards crypto business, online gambling, some other ‘high risk’ business areas, others are more cautious). 
• They need to know if the company needs an account in this offshore jurisdiction with this particular bank for some plausible reasons of business development (like work with contractors, etc.) but not to bluntly avoid taxation by ‘hiding’ assets in an IFC.
• The bank needs to know that the company UBO and CEO are not any of the Publicly Exposed Persons or related to ill-famous PEPs. If they are, this is not necessarily a cause for rejection, but enhanced due diligence will be required.
• The bank needs to be sure of the company’s legal source of assets, a history of operations.

All the above-mentioned documents need to be properly executed and submitted to the bank together with the application form in full compliance with the requirements. If the process seems a bit daunting don’t worry, as our experienced staff are here to guide you.

Given below is an example of how the offshore banks’ requirements may differ depending on, for example, the applicant companies’ business profiles. 

Offshore banks’ requirement set for non-resident companies’ corporate documents
IT Company	Trading company	Holding company
a simple written explanation of the business model, transactions	statements (financial, accounting, tax)	exhaustive information about the subsidiary’s activities
proof of the UBO’s experience in this activity	proof of the residence/address of the company	report on the subsidiary
proof/evidence of no relation to/connections with high-risk business	on-demand submission of partnership agreements, contracts, shipping documentation, other extra documents requested by the bank
corporate website address

The additional list of required documents is most likely to include 

• proof of owner’s source of funds (savings, employment etc), 
• the detailed business profile/business plan,
• the proof of the physical or virtual office, 
• equipment or stock needed for operations,
• whatever else may confirm the credibility of your business.  

Once you start the process, it’s important to respond fast to any additional questions that may rise. Otherwise, some documents may expire before you obtain others, and the process will stretch for weeks if not for months.

We have direct access to and keep track of updates of the banks’ requirements and news in offshore jurisdictions. That is why you can trust our competitiveness in the quality of services, customer focus, and performance. On our portal, you can find countrywide and bank-specific articles, products/services reviews, analysis of trends, expert advice.

Food for thought: some offshore partner banks offering to open a corporate offshore banking account

We have recently published many country-specific updates on banking in the UK, Switzerland, the Netherlands, Estonia, Hong Kong, China, Montenegro, etc. 

Let us give you 3 examples of banks registered in IFCs.

Caye International Bank (Belize)

This bank was named the Best Offshore Private Bank in Latin America in 2019 (the Banking Excellence Award by Wealth & Finance International) and the Best Country Bank in 2020 (by Global Finance). It is ideal for companies wishing to invest in new markets, to use the services of top-class specialists.

The bank offers to open five different multicurrency bank accounts – in USD, CAD, EUR, GBP & CHF. You can use prepaid Visa cards for instant payments. Companies wishing to earn extra income are welcome to open term deposits with a fixed interest rate or a corporate offshore demand deposit. 

The account set-up takes from 2 weeks to 1 month if the corporate structure is simple.

You can look up details in our article on the Caye International Bank in Belize.

Global Bank of Commerce (Antigua and Barbuda)

The bank offers corporate and merchant accounts for e-commerce companies. The main goal of the bank is to grow clients’ capital, therefore it is possible to open investment current accounts with returns in USD, EUR, GBP, and CAD. 

The minimum opening balance is $5,000. The account opening takes at least 1 month from the date of the bank’s receipt of the application documents.

Please find more details in our dedicated article about the Global Bank of Commerce in Antigua and Barbuda

Nevis International Bank & Trust (St.Kitts and Nevis)

This is our strongest partner bank in Nevis and a perfect solution for those who are short of time. The bank offers to open an account for an offshore company within 48 hours from the moment you submit the documents! 

The corporate offshore banking account with this bank is suitable for:

• IT companies
• cryptocurrency businesses
• classical trading companies.

The bank processes SWIFT wire transfers in 11 major world currencies, quickly and safely. 

For secure real estate purchase transactions and other operations with large sums, the bank offers to open escrow accounts. The minimum opening balance is USD 100,000.

Efficient customer onboarding, superb client support, and advanced 24/7 e-banking are the motto of this bank. For more details, please read the recent article about Nevis International Bank & Trust in St.Kitts and Nevis on our portal. 

Corporate offshore accounts with payment systems as your plan B

The global banking landscape is rapidly changing. Over recent decades there have appeared new technologies, customer care standards, products, solutions. Private and corporate accounts with foreign payment systems have introduced new instruments that are much appreciated by clients.  

If you have not considered an offshore account set-up with a payment system, at least you should analyze this opportunity as plan B or as a reserve account in case your bank suddenly suspends or shuts down its services. Savvy clients always have a contingency plan, because the world is getting less predictable, but your business must go on. 

Payment systems are generally more loyal to applicants. Nevertheless, one should not expect that opening a corporate account with a payment system will be quick and easy. Their compliance requirements may require a specific set of documents. As we have a big experience of dealing with such financial institutions, we can share with you practical recommendations and offer professional services of opening accounts with the payment systems that we know well. 

Takeaways

Each financial institution sets certain specific criteria and stands out by many parameters. That is why, while you are juggling many reasons and priorities for taking your business offshore, you should study and compare at least a handful of options – jurisdictions, banks, accounts. 

Only then you should start collecting documents for your application or, rather, prepare for the preliminary testing of your chances with several shortlisted banks (without any mutual obligations). 

The PRE-APPROVAL procedure is our special offer – to help you save time, effort, resources, and focus on your application where your prospects are bright. Our proactive approach includes other pro bono and fee-based services.You are welcome to schedule right now a free one-on-one web conference with our experts. Just submit the online fillable form, talk to us and learn more about the offshore banking offers and what else we can do to help your less effortless and flawless selection of and application for jurisdictions, banks, accounts!