Offshore bank accounts are very often used in connection with offshore business and the use of offshore structures in general. A bank account is a key to any business. This is the case for offshore companies, but also for classic onshore companies. This article is devoted to a brief definition and description of offshore bank account.
The common rule of offshore business is the division of basic business instruments among multiple jurisdictions, ie at a particular level, it is the choice of the place of registration of a company in a jurisdiction other than the domicile. Another is the choice of jurisdiction for opening a bank account, which is different from the two jurisdictions mentioned earlier. Thus, the rule is as follows, in one jurisdiction to live and reside, in the other to do business (understand having a registered company) and in another country a bank account. Although this is not a dogmatic rule, however, due to the many benefits of it, the use of this model can be more than recommended.
As far as the offshore bank account is concerned, it is also a very useful tool in other cases, not only in business. It is, therefore, necessary to distinguish between a person and a corporate bank account. There are also special accounts, eg for non-entrepreneurial legal entities, but only two cases will be described below, ie a personal and a corporate bank account.
Opening an offshore bank account in offshore destinations
A corporate offshore bank account is an account opened with a bank outside the country of registration, typically in an offshore destination. It is established in an offshore bank, ie typically in a smaller banking company that offers complete banking services like classic banks. The corporate account is designed for a wide range of activities, particularly for receiving payments, direct debit services, executing payment orders or other banking operations. Compared to a personal account, the main difference is the identification of the account holder, which is a legal entity. In connection with a specific bank, it is possible to expand the number of services provided, but it always depends on the specific bank and the customer’s request.
The opening of an offshore account in a bank is dependent on many factors, such as the internal set of bank control measures (compliance), the speed of preparation and submission of all required forms, the speed of providing the required documents, and so on. Opening the account is fully at the discretion of the bank, which is entitled to request additional materials and documents. Although the account holder is a legal entity, ie a company, it is necessary to provide information on natural persons as authorized persons to handle the account when opening an account. The Bank, as a private individual, has the possibility to reject the application if the requested materials or documents are not delivered, and also in cases where the investigation rejects the application due to the risk of authorized persons, eg if these persons appear in the records as debtors or enforced.
It is important for the bank to know the expected or already performed activities of the company, its turnover and overall nature and scope of the company’s business. It is also possible to meet the requirements for detailed delineation of supplier relations, marketing and the way the company and its products or services are presented.
The personal account in offshore bank
As regards the personal account, it is normally opened in connection with the intention to hold banking in a country other than the State of residence. There are many reasons. The most common is the attempt for anonymity within bank accounts, which is not 100% secured anywhere, even in an offshore jurisdiction, but is significantly higher. There is also a tendency to diversify the banking portfolio across multiple jurisdictions, a step that is useful in many cases.
Personal offshore bank accounts have much lower compliance and information requirements for setting up them. It is still necessary to check the person on the part of the bank, but it is not as extensive as in the case of corporate accounts. A personal account is opened very quickly and as a rule, there are usually no problems with its establishment.
In the case of both personal and corporate offshore bank accounts, it is highly advisable to seek out professionals in this field as there are many problems that may arise in practice. The indisputable advantages of offshore bank accounts are an incentive for their acquisition by both entrepreneurs and individuals. However, it is always a good idea to find out as much information as possible about this option and decide what your account really is for. Other aspects such as the price list and the number of banking services are also important, but all information can be obtained from a specialist in this field. However, it is crucial to turn to a specialized company when opening a bank account, both personal and corporate. In practice, it is common for banks not to open accounts directly, but to open them through intermediaries. While not being pointed out anywhere, this practice is very common and it is difficult to go through complicated compliance processes within direct account opening. In such cases, the re-application is often rejected and it is necessary to contact another offshore bank.