Offshore Banking- Fourth Flag of Internationalization Strategy
This is part of our Pillar Content of Flag Theory™ where we detail how you can take a well proven strategy for protecting and growing your self and your wealth apply it. The strategy is comprised of 7 flags, and Offshore banking is the 4th flag.
Depending on your individual citizenship and passport situation, you might have a much greater or lesser option for offshore banking. Countries and individuals facing sanctions might have difficulty opening up an account in certain jurisdictions. However, there are plenty of benefits to offshore banking for most nationalities. Here is a list:
List of the Best 102 Offshore Banks
|Andorra||Credit Andorra||100,000 EUR||No|
|Antigua and Barbuda||Antigua Overseas Bank||5,000 USD||Yes|
|Antigua and Barbuda||Global Bank of Commerce||2,000 USD||Yes|
|Antigua and Barbuda||North International Bank||5,000 USD||Yes|
|Anguilla||National Bank of Anguilla PBT||1,000 USD||Yes|
|Austria||LGT Bank||350,000 EUR||No|
|Bermuda||Bermuda Commercial Bank||25,000 USD||Yes|
|Bahamas||Bank of Bahamas Ltd||10,000 USD||Yes|
|Bahamas||CIBC First Caribbean International Bank||2,500 USD||Yes|
|Belize||Atlantic International Bank||1,000 USD||Yes|
|Belize||Belize Bank International||2,000 USD||Yes|
|Belize||Caye Bank||2,000 USD||Yes|
|Belize||Choice Bank||1,000 USD||Yes|
|Belize||Heritage International Bank||3,000 USD||Yes|
|Cayman Islands||Altajir Bank||5000 USD||Yes|
|Cayman Islands||Butterfield||2,500 USD||Yes|
|Cayman Islands||Cayman National Bank||1,000 USD||Yes|
|Cayman Islands||NCB Cayman||2,500 USD||Yes|
|Cook Islands||Capital Security Bank||500,000 USD||Yes|
|Curaçao||Maduro and Curiel’s Bank||None||Yes|
|Curaçao||SAI Bank||1,000 USD||Yes|
|Dominica||National Bank of Dominica||None||Yes|
|Germany||VarenGold Bank AG||None||Yes|
|Gibraltar||Jyske Bank||200,000 EUR||Yes|
|Grenada||Republic Bank Grenada||10,000 USD||No|
|Hong Kong||Bank of China||1,000 HKD||No|
|Hong Kong||Bank of East Asia||5,000 HKD||No|
|Hong Kong||DBS||25,000 HKD||No|
|Hong Kong||Hang Seng||5,000 HKD||No|
|Hong Kong||HSBC||5,000 HKD||No|
|Hong Kong||Standard Chartered||100,000 HKD||No|
|Isle of Man||Standard Bank||5,000 GBP||Yes|
|Saint Kitts and Nevis||Bank of Nevis International||Unknown||Yes|
|Saint Lucia||Bank of St. Lucia International||2,000 USD||Yes|
|Latvia||Baltikums Bank||1,000 EUR||No|
|Latvia||LPB (Latvijas Pasta Banka)||None||No|
|Lichtenstein||Valartis Bank||300,000 CHF||Yes|
|Luxembourg||Keytrade Bank||1,000 EUR||Yes|
|Malta||Banif Bank||2,000 EUR||Yes|
|Malta||Bank of Valletta||2,500 EUR||Yes|
|Mauritius||ABC Banking Corporation||1,000 USD||Yes|
|Mauritius||Bank of Baroda||None||Yes|
|Nevis||Bank of Nevis||None||Yes|
|Panama||Balboa Bank and Trust||1000 USD||no|
|Panama||Bank of China||500 USD||No|
|Panama||Capital Bank||500 USD||No|
|Panama||Credicorp Bank||1,000 USD||Yes|
|Panama||Banca Privada De Andorra||500,000 USD||No|
|Panama||Popular Bank||2,000 USD||No|
|Panama||Global Bank||100 USD|
|Panama||St Georges Mank||100 USD|
|Panama||Tower Bank||500 USD|
|Portugal||Banco Espirito Santo||1000 EUR||Yes|
|Saint Lucia||Hermes Bank||None||Yes|
|Saint Vincent and the Grenadines||B2B-Bank||Unknown||Yes|
|Saint Vincent and the Grenadines||Euro Pacific Bank||None||Yes|
|Saint Vincent and the Grenadines||Loyal Bank||1,000 USD||Yes|
|Switzerland||CIM Banque||5,000 CHF||Yes|
|Switzerland||Coutts Bank||1,000,000 USD||No|
|Switzerland||Julius Bär||100,000 CHF||Yes|
|Tanzania||FBME Bank||500 USD||Yes|
|Turks and Caicos||British Caribbean Bank||1,000 USD||Yes|
|Turks and Caicos||Turks and Caicos Banking Company||50,000 USD||Yes|
|Taiwan||Bank SinoPac||1,000 USD||Yes|
|Taiwan||Industrial Bank of Taiwan||None||Yes|
|Vanuatu||Pacific Private Bank||None||Yes|
Continuing from the last two articles: where to form a company, and where to set up a merchant account – we cover another vital component of any business set up: a bank account. Much is already known and transparent about traditional banking “onshore”. In this article, I’ll attempt to demystify and explain the process, benefits and options for offshore banking. If you are new here, you might check out The 6 Flags of Flag Theory.
What is an offshore bank account
An offshore bank account is a bank account that is off the shores of where you currently live. In other words, it is a foreign bank account located in another jurisdiction. Oftentimes it makes sense to setup this account in a different territory then where you have your offshore company flag. This is because when you hold the account in a different jurisdiction, it gives you additional redundancy, time and protection against a frivolous lawsuit.
Are offshore bank accounts legal?
Yes! International bank accounts are legal, both personal and corporate. There is nothing inherently illegal about owning an offshore account and they are not “shady” or unprofessional in any way. Trillions of dollars are stored in offshore jurisdictions and they remain an integral piece of international finance.
When Can Offshore Bank accounts cause a problem?
If you don’t file the right forms to report the accounts. Oftentimes the beneficial owners create problems because they don’t properly report their savings accounts, because they are trying to hide something.
Offshore banking is powerful, and thus it can be abused. You must make sure to file the correct forms with your relevant government agencies. This is why a professional approach is always helpful.
Special Notes for Americans who own an offshore bank account. American taxpayers with a foreign financial account must report all accounts every year using an “FBAR” form that your accountant can help you with. This form is required f the total amount across all foreign accounts exceeds $10,000 USD equivalent in any year. Other forms such as 5471 if you own shares in an offshore company and if the total amount is more than $50,000 then form 8938 also may apply. The main but you should check with an accountant for your unique situation. This is not tax advice, and should not be used to avoid taxes in any way.
Why open an offshore bank account
- Currency risk
- Sovereign risk
- Asset seizure
- Protect your savings
- Diversify investments
- Different investing opportunities
- Ease of money transfer
- Merchant Accounts
There are many reasons why an offshore bank account could be beneficial, not the least of which is to decrease your sovereign risk. The country where you live now could look dramatically different or fall apart, the government could institute exchange controls, meaning money cannot flow freely. Ask any Argentinian about the currency in their country and you’ll hear all about so called capital controls.
Where can I open an offshore bank account
There are a number of different offshore jurisdictions which offer personal and corporate bank accounts. In order for a bank to call itself a “Bank” – and have Bank in its name – there are a number of different requirements needed to be met.
Therefore, if the company comes from a reputable jurisdiction – you can be assured of capitalization or bonding requirements. A bank with a “class A” license can trade with the public, and a one with a “class B”. If in doubt, you can check with the company government agency, who maintains the compliance for all of the banks in the country.
For instance if you were looking to set up an account in St. Vincent and the Grenadines, and you wanted to do due diligence, you could first make sure that bank has the proper licenses, by looking at the government registry like this one.
How to open an offshore bank account
It helps to a large extent, to have an introduction or pre-existing relationship with the bank where you are seeking to procure an account. Bankers are by nature very risk averse – and don’t want to lose their fat salary by signing up a high risk client which later turns into a nightmare.
However, if you have an introduction and can tick all the proper boxes, there shouldn’t be a problem to open the account. You’ve bypassed their internal controls, and the burden of proof has been met. This burden of proof always included (at a minimum) AML:KYC requirements. [Anti-money laundering act, and Know Your Customer requirements] Basically you need to meet 3 tests to pass KYC.
- Proof of identity (easy when meet up in person, otherwise is a certified passport)
- Proof of residency ( this is utility bill – and should have your name and address)
- Proof of wealth (letter from accountant or bank is best who can confirm your earnings).
These KYC standards are what banks do in order to satisfy thier regulatory compliance. You’ll need to meet at least these standards to open an account at most banks.
After meeting the KYC requirements, you’ll likely be required to make an initial deposit into the bank. This can sometimes be immediately withdrawn, other times it will have to remain in the account as an ongoing account minimum.
For a corporate account you’ll need to provide the following in addition to your proof of identity, residency and wealth:
- M&AA (your incorporation documents, memorandum and articles of association)
- Certificate of incumbency – apostilled (who are the shareholders, certified copy)
- Certificate of good standing – apostilled (are the government fees paid, certified copy)
Be careful as many providers try to sneak this in for an additional fee. You’ll be unable to open a bank account without these documents, which show the true beneficial owners of the company. There will always have to be some record of who is the rightful owner of the bank account.
You’ll also need a directors resolution to open up a bank account, or power of attorney for whoever is indeed opening the account.
Some time should be dedicated to thinking about who will be a signatory on the account, and for which amounts they will be able to move money in and out of the accounts. If the account is to be a joint signature account – different banks have different technical abilities. Some, for instance, are far better at allowing for complicated signature requirements.
Banks in Hong Kong and Singapore (which are ideal for corporate banking) tend to be better in this regard. Offshore banks that are more for private individuals typically have less options when it comes to control of the company via signature and less robust online banking.
There are many places around the world that will open a bank for you if you are actually living or investing there, have a work permit and other necessary documents. However, particularly in terms of offshore banks, and those with remote account opening – your choices are rather limited.
Americans Being Shut out of Offshore Banks?
This is largely due to FATCA – the foreign account tax compliance regulations, part of the HIRE act – which has already come into effect. FATCA requires that banks report back to the IRS on all of their accounts (if they accept any US clients) – or simply refuse US accounts all together. The penalty for non-compliance is a 30% withholding tax rates when utilizing the US banking system. For Americans.
FATCA (foreign account tax compliance act) has been fully implemented and well over 70,000 banks have complied. You can look up any bank or FFI on the IRS website using a tool on their website. It is likely that any of these banks still accept US clients since they are going through the hassles of being an FFI compliant with the IRS.
In 2016, there are still many banks that take on American clients. There are additional forms which are required on the banks behalf, but as a consumer you won’t notice much of a difference (perhaps you will also need to file form 8938 – but your accountant can easily assist you with this.)
Here is a shortlist of my favorite banks that still accept American clients:
- SAI Bank in Curacao, this is one of the best options, but they do not have cards. Remote account opening.
- BES Portugal or Luxembourg, if this will be Nevis LLC, opening will take about one month after bank receives hard copies of the documents. Remote account opening.
- GBC in Antigua and Barbuda, opening might take up to one month. Remote account opening.
- Andbank in Monaco, also one the best options, but min. required deposit is 500k+. Meeting with the bank rep. required.
- BPA in Andorra or Panama, also good option, but deposit of about 500k is required and balance has to be about 100k, meeting with the bank rep. is required.
Oftentimes is a greatly help to have an introduction as an American, as banks are increasingly suspicious of Americans opening an account. You need to know how to answer their questions in order to get them to accept your business. We would be happy to assist you with the provision of an international bank account, and we can also introduce you to a qualified, licensed CPA in our network who can help you remain in compliance with the IRS.
I’m not American
This list may be overwhelming to some, where do you start?
I would recommend starting with Euro Pacific Bank, which is an offshore bank which allows for normal “traditional” offshore bank accounts – but also provides a dedicated banker for each account.
Another very interesting product they offer is a “Gold backed debit card”.
This is essentially a gold account, where each time you swipe your card, a % of your holding (equal to the spot rates at gold) will be deducted from your account to pay for the item.
If you are here, reading this, you probably don’t need me to reiterate the power of gold. Want to know how you can open up an offshore account – backed by gold – today?
If you can’t already tell, I’m a huge proponent of the shiny metal luster. Why?
Gold is a hedge against an unsafe and fragile monetary system. Gold is a boring – but safe investment, and it makes perfect sense to keep a portion of your portfolio allocated to gold in some form.
- The world’s oldest store of money
- Inherently valuable
- A commodity (giving it greater value due to its use in wire and cable)
- Decorative (giving it greater value due to its use as jewelry)
- A economic store of value (giving it greater value due to its reserve status for central banks)
- Scarce (you cannot conjure gold out of thin air)
- Growing demand in emerging economies (gold has tremendous value in countries such as India and China)
- Exchangeable (any where in the world, it can be bought or sold for the same value as the spot price on worldwide markets)
- Fungible (it can be broken down into smaller parts – through smelting)
The main problem with gold
is was that it lacked the liquidity of paper money or credit cards, until now…
I know that readers of Flag Theory are predominantly permanent travelers, and when traveling – its difficult to store and bring gold. It also is difficult, unsafe or even illegal to carry a large amount of gold across borders, unless you have a gold backed debit card that is…
How it works: you open up a regular bank account at the offshore bank. This functions the same as any other bank. There is no cost to open an account. From there, you can look at the different products they have – one of which is a gold backed debit card. essentially, an allocated gold account in your name will be stored in a vault in Australia, and every time you use the card – an amount of gold equal to your purchases for the month will be deducted from your account at the current spot price. Or you can simply hold on the card and not spend anything, in which case you’ll have the gold, but be able to immediately liquidate the account if need be.
This is a fantastic opportunity to keep your money in an appreciating asset AND retain the liquidity of fiat currency by using a credit card.
All the best aspects of owning physical gold backed by the conveniences of a credit card you can carry in your wallet.
Euro Pacific bank is located in the Caribbean Island nation of St. Vincent and the Grenadines. They have notable privacy policies that restrict the sharing of information. However, they are not FACTA compliant and absolutely do not take on US clients. Persons from most other countries of the world can apply, however. Chances are you should be able to apply and be accepted for a gold backed debit card.
There is no fee to open the account, and a private banker can explain to you the full process in detail. Click here to read more (opens new tab)
Does this excite you? Get even more information about offshore bank accounts below