Types of Offshore Bank Accounts

Offshore Bank Accounts can generally be divided into three types:

Offshore commercial bank accounts

These are used for active, going-concern type businesses: for example import-export, e-commerce or consultancy services. Generally there are lots of transactions in and out, relating to day-to-day business activities, buying and selling of goods and services, making payments to suppliers, settling staff payrolls etc. Typically credit cards are also needed to cover company purchasing, travel expenses of executives and the like. Sometimes clients may also require international trade services such as Letters of Credit and Bank Guarantees.

It is quite hard to open these types of accounts for offshore companies, for the simple reason that it is harder for banks to make money on these. There is more compliance and supervisory work than for personal accounts, so a significant amount of bank staff time is required. On the other hand, commercial clients typically pressure the banks for low transaction charges. It is therefore not a very attractive business for banks.

As professional intermediaries to a number of offshore banks, we are able to effect introductions for commercial offshore bank accounts. We will be happy to review each client’s needs individually based on our extensive knowledge and experience of dealing with bank accounts for offshore companies. In general, we find this kind of client can work well with banks in Latvia or Estonia in Europe; in Hong Kong where there is significant business with Asia; and in Panama where there is business in the Americas or a lot of US dollar transactions.

Offshore private bank accounts

These are predominantly accounts maintained for private individuals with a high net worth. The accounts are often maintained in the name of a corporate entity, such as an offshore company, a foundation or a trust. However, the type of transactions are not commercial – put simply, money is more likely to enter the new bank account all at once and then there will be few transactions in or out. A credit card may be required for personal spending of the owner. The focus of the account is on a personal and private face-to-face relationship with an adviser known as a ‘Private Banker’ who will assist the client with investments, portfolio growth and asset protection. Numbered accounts are available. Private banking clients usually qualify for our VIP Banking.

Recommended jurisdictions for offshore private banking and wealth management include Andorra, Monaco, Switzerland, Singapore and the Bahamas.

It’s worth noting that some private banks are happy to open commercial accounts as an extra service to private banking clients. By combining business and personal deposits, a higher relationship value may be reached, which can qualify for the client for a higher level of service.

Offshore retail banking

This third category really covers personal accounts with a lower balance: for example where the client is just trying to ‘test the offshore waters’ and establish a small account to have a presence offshore, but will not be depositing very much money and will neither be carrying out a lot of transactions. Clients may be held in personal names, or through corporate entities such as trusts and foundations. LLCs are very popular vehicles for this kind of account, due to their legal simplicity and low set-up and running costs. Caribbean jurisdictions are typically ideal for these clients, since accounts can be opened without the need to travel.

Whatever your international banking needs, our experts are standing by to answer your questions. Please Contact Offshore Pro Group today!