Singapore today is hands down the best place today to open a commercial bank account for your offshore company. Even with the COVID-19 crisis (or perhaps because of it) Singapore banks are open for business and have actually simplified account opening processes – now you can open an account via videoconferencing so no need to visit the bank in Singapore.
There are, however, some basics you should understand, or perhaps we should call them quirks. Iif you want to be approved for a Singapore offshore bank account through which you can do commercial transactions, read on and we will tell you how to qualify.
Here at Offshore Pro Group we have had a close relationship with Singapore ever since our early days. Long term clients might remember the good old days of our address in the Far East Finance Building, and our cooperation with some wacky Singapore-based expatriate organizations! Now, after some years of focus being elsewhere, it feels like it’s time to come back and promote Singapore bank accounts to the world. Here’s why…
Some people claim that the offshore banking business is dead. It isn’t. It just keeps evolving! While fintech and EMIs are now dominating the European banking scene, opening a bank account in Europe in a large, traditional bank for an offshore company these days is nigh on impossible. European EMIs are a pretty good solution for offshore company accounts – with a couple of major caveats: EMIs do not offer international trade banking. EMIs do not offer trade finance, letters of credit, bank guarantees, real credit cards and the like, while Singapore banks do! Also EMIs in Europe are often unable to handle transactions in USD and other global currencies… those that can typically have fairly clumsy mechanisms for doing so.
In Singapore the best offshore banks compete for the business of companies incorporated in jurisdictions such as Marshall Islands, BVI, Nevis, Bahamas, Mauritius, Gibraltar, Isle Of Man, Belize, Seychelles, Nevis. Private banking in Singapore is suffering a downturn, and in the era of negative interest rates, banks can no longer make money by sitting doing nothing. Commercial and offshore banking, therefore, has become the new focus for 2020 and beyond!
Many banks in Singapore are now opening accounts via videoconferencing. This is great news for those affected by the COVID-19 crisis.
Benefits of Commercial Bank Accounts in Singapore
First of all, why would you even want to open a business bank account in Singapore for an offshore company?
Because Singapore is a well known, prosperous and stable business hub. Giving a reputable Singapore bank on your payment instructions will bring instant credibility to your offshore company. Your clients and suppliers, who may be wary of an offshore company at first, will be reassured by the fact that you have a Singapore bank account.
Levels of technology and efficiency are also excellent. Even though Singapore does not participate in the IBAN system, receiving payments is a breeze – no need for long-winded correspondent wire instructions. Sending bank SWIFT transfers from Singapore can be done online and they typically arrive in Europe or North America the same day, helped along by the time difference!
Which Banks Are Present in Singapore?
Banks in Singapore include such trusted financial institutions as:
- DBS (a Singapore owned bank with presence in many countries)
- HSBC (needs little introduction)
- Standard Chartered (a British bank focused on emerging markets)
- OCBC (Oversea-Chinese Banking Corporation, also based in Singapore despite the name)
- Citibank (American owned giant, very good for USD-based businesses)
- Chang Hwa Commercial Bank (a Taiwan-owned bank)
These of course are just examples, and most banks work in different niches and have slightly different onboarding procedures. That is where Offshore Pro Group can help out, with our boots-on-the-ground insider knowledge. Contact our Pros for advice on what is the best offshore bank in Singapore for your particular situation.
Basic Requirements for Singapore Corporate Bank Accounts
Here are the basic terms for opening of Singapore bank accounts for offshore companies:
- Your business must not conduct any regulated financial services activity (money service business, securities dealers and brokers, etc. – unless it is regulated by the Monetary Authority of Singapore). Certain exceptions may apply to blue-chip, reputable and well established financial services companies with credible audited accounts etc.
- Your business must not be involved in any of the following activities: cryptocurrencies, precious metals or stones, MLM, replicas, oil and gas trading, or anything else considered high risk. If in doubt, there’s one way to find out. Yes, you guessed it, contact us and ask!
- The company and/or beneficial owners must not be or must not trade with any sanctioned/embargoed company or country (North Korea, Iran, Afghanistan, Syria, etc), and – this is a slightly more difficult point – must not be/must not trade with Russians/Belarus/Azerbaijan and other neighboring CIS countries or high-risk African countries (Mali, Somalia, Zimbabwe, etc). It is nothing to do with racism – Singapore bank compliance officers simply do not feel comfortable with these regions. The places they feel comfortable with are South East Asia, China, Europe, North America and Australasia. Being high risk is not necessarily a deal killer, but then you should probably look at Incorporating a Singapore Company instead. That will at least cover the next point, which is…
- The company must have a regional or local nexus. This means that the company should have a commercial or investment reason to open the account in Singapore. We’ll talk about this requirement in a bit more depth below.
- Companies with nominee directors or shareholders are generally not accepted by Singapore banks. If you can come up with a very good reason they might accept it. Genuine fiduciary arrangements such as family office set-ups might be a good reason, but “privacy” certainly isn’t – in fact it will have the banker cancelling the bank account opening process and calling security to have you escorted out of the bank!
- Preferably, your company should be an active business company i.e. trading company with commercial transactions. Trading in goods is easier to explain, but trading in services is OK too if it is properly documented. If the company is an investment holding company, the company must have investments in Singapore or in the Region (SE Asia), and the requirements and fees will be higher than those stated below. As we said, banks are looking for commercial accounts where they can make money on the turnover, not so much private banking style accounts.
Minimum Opening Deposits in Singapore Banks
Singapore bank accounts are for serious offshore businesses, not for any Tom, Dick or Harry who simply decided one fine day it would be nice to set up a company online, with no particular plan.
This is reflected in the minimum opening deposits required by Singapore banks for offshore corporate accounts. These are not set in stone – banks might exceptionally agree to lower opening deposits if they believe the business will grow soon, or – which is frankly more likely – they will ask for higher deposits in the case of perceived higher risk businesses.
You should generally expect to keep a minimum of around USD 50,000 in your account at all times. Some banks ask for less, some for more. It keeps changing and can even vary between different branches of the same bank. When you are ready to open an account, just contact us and we will be able to advise on the exact latest requirements as they apply to your particular type of business. Obviously we will need to understand your business first, in order to give you accurate information, and we might need to check with the bank in question directly.
Establishing Nexus with Singapore
So what about nexus with Singapore? We promised to come back to that point in more depth. These days, due to international pressure, offshore banks are not keen on taking on business that has nothing to do with their jurisdictions.
If you already have a nexus with Singapore, such as being incorporated there, having a Singapore residence permit, or having a Singaporean partner, great!
But what about those who are attracted to the ease and efficiency offered by a Singapore bank account, but frankly don’t have any business in Singapore? Well, we never said going offshore was easy – you will need to create a nexus.
A nexus could be as simple as an important Client or Supplier, Partner, Employee, Contractor or Investment in Singapore… or in Southeast Asia. A lot of businesses even have a nexus with South East Asia without having thought much about it. Maybe you buy product from the region, or maybe you have outsourced services like IT or call centres to the region. All that information helps.
One sure way to create a nexus would be to Set Up A Singapore Company. You might find this useful, and you could still use your offshore company for the majority of your non-local business.
Singapore Bank Account Opening Procedure
So, let’s say you’ve decided to open a Singapore bank account for your Marshall Islands, BVI or Nevis company. You have talked to one of the bank account opening experts at Offshore Pro Group, and are ready to move forward. What should you expect to happen next?
- Preparation of the Account Application
We will assist you with completing the pre-screening questionnaire to make sure that all the information that the bank needs is provided right away, in order to avoid delays and back-and-forth with the bankers. The bank will expect you to provide 2-3 ‘Proofs of Business’ to make sure your business is legitimate. The business proofs can be, for example, any of the following:
- Business Plan
- Letters of Intent from Clients
- E-mail Correspondence with Clients
- Purchase Orders
- Sales Orders
- Bank Statements (if the company has other bank accounts)
- Curriculum Vitae of the Directors / Shareholders
- Commercial Reference Letters
- Professional Reference Letters of the Directors / Shareholders
- Bank Reference Letters (if the company has other bank accounts)
Note that the above are just examples of typical business proofs, but other documents that prove your business activity can be provided.
- Pre-screening (1 week)
Once the questionnaires are ready, we submit them with the Bank Relationship Manager. The relationship manager will come with questions or might ask for additional supporting business documentation. We will liaise with the banker to address his questions or concerns. If we have properly prepared the application and everything is in order, the pre-approval process should not take more than 3-4 days.
Once you are pre-screened, we will arrange a videoconference appointment. The banker will provide by email the bank account application forms pre-completed. You will need to print them out and sign them during the videoconference. After the meeting, you will need to send certified copies of the required documents to the banker by courier (see below documents required).
- Compliance Review and Account Opening (2 to 3 weeks)
Once the banker receives the documents, he will submit your application to the Compliance Department of the Bank. For offshore companies, it usually takes around 2-3 weeks to have the account approved. It can take longer.
- Operating the Account
Once the account is approved, you will receive a welcome email and your account number by SMS. At that point, it takes another week to receive internet banking credentials via courier to operate the account remotely. It usually takes another week to receive the debit card. All banks provide for 2FA digital token authentication, although a physical token can be also requested if you prefer (good to keep as a backup, in case your phone dies one day, for example). If you opt for a physical token, you will also receive it via courier.
Personal and Corporate Documents Required for Singapore Bank Account Opening
Basically, the documentation requirements are very standard:
- Certificate of Incumbency (within 6 months validity) (or equivalent)
- Certificate of Incorporation (or equivalent)
- Memorandum & Articles of Association (or equivalent)
Personal Documents for each authorized signatory, director, individual shareholder and beneficial owner of the Company
- Proof of Address (typically utility bill or bank statement)
Offshore Pro Group has nearly a decade of experience helping people like you set up offshore bank and company structures. We can help you with both made to measure solutions, and turnkey packages that are ready to go immediately! Contact us today to discuss your needs!