Information about the benefits of offshore banking and how to go about setting up an account .
What is Offshore Banking?
An offshore bank refers to a bank located outside of the investor’s country of residence or domicile. It provides banking services mainly for clients who are not physically residing in the country of the bank, but are interested in investing in that country.
To whom is Offshore Banking most applicable to?
Offshore Banking is applicable to investors interested in setting up overseas bank accounts outside of their domiciles. This could be an individual looking to diversify and keep their investments in more than one place, to invest in financial products not available in their home country, or to invest in a more favourable tax environment to protect their assets.
What are the main benefits of Offshore Banking?
Diversification of investments internationally
With Offshore Banking, clients are able to manage their wealth by diversify their investments internationally. Investors are able to move their assets from one country to another, where the financial infrastructure, stability and security surpass that offered by their country of residence. As such, stable and prosperous markets such as Singapore’s are very popular amongst investors.
Favourable tax environment
An offshore bank account can be set up in a country of lower tax jurisdiction than that of the investors’ home countries. For countries which do not tax income earned outside of home countries, an additional advantage would be that investment interests paid by offshore banks are non-tax deductible.
Heightened banking confidentiality
A major advantage is the privacy of a client’s financial matters. Almost every offshore bank is established in a jurisdiction that promises to provide a higher than usual level of financial privacy into the affairs of their clientele. In most circumstances, these banks are under no obligation to reveal details of clients’ investments if requested by their home countries.
Access to foreign investments and products
Offshore banks are well-positioned compared to local banks in that they allow investors to gain access to banking products that may not be available in their country of residence. Individuals can gain access to far more sophisticated markets, with a wider range of Foreign Exchange products.
Can anyone open an Offshore Bank Account?
No, some countries have Offshore Wealth Policies which mandate that their residents are not legally permitted to set up an offshore bank account. Offshore banks are set up in compliance with various countries’ Offshore Wealth Policies.
It is important to consult the various offshore banks for advice before applying for an account..
Opening an Offshore Bank Account
How do I begin?
Banks have their own account opening processes. Contact the bank for detailed instructions. Most banks have an enquiry or application form on their website. If possible, visit the branch personally to find out more.
When opening an offshore account the following documents and pieces of information are typically
required by most banks:
- National ID
- Bank Statement (where fund will be taken from)
- Information on: basic personal background, source of funds, purpose of setting up account (all these are commonly required information as part of the bank’s set-up process for investments)
How to use an Offshore Bank Account
Offshore accounts should come with the following basic features, which should be accessible online:
- Savings account
- Multi-currency account
- Time deposit
- Global fund transfers
All offshore bank account holders have access to the following advisory services, be it in person or via phone/online:
- Relationship manager to advise and manage investments
- Product specialist to advise on specific investment products
- Portfolio counselor to advise on balancing across the different investments in a portfolio
Below is a list of investment products commonly available for most offshore accounts. These products are mostly available online, by phone banking and via a relationship manager. It is best to consult the individual offshore banks for their detailed product offering.
- Stocks brokerage
- Foreign exchange
- Investment funds
- Equity-linked products
- Mortgages and lending
- Financial products not available in home country.