Aug 24, 2016

Why You Need More Than One Offshore Bank Account

When you are in business then your bank account is absolutely crucial to you. Without it your business cannot function, and you will find yourself facing a mountain of problems. Some people have experienced their very important payments not being made and denied access to their accounts and it could happen to you.

The rules of international banking change very regularly. What is working well today may not work at all tomorrow. Do not put yourself and your business at risk. Open at least one more additional offshore bank account. The smart people have more than one additional foreign bank account, and their businesses continue to function whatever happens.

What Kind Of Things Can Go Wrong With Your Foreign Bank Account?

Loss Of Correspondent Accounts By Any Offshore Bank Anytime

One of the most common problems in modern offshore banking is that a bank loses its correspondent accounts. International banks working with non-residents need these accounts to receive deposits from other financial institutions and make payments on their behalf. There were several well-documented cases where a large number of offshore and even European banks lost their correspondent account, and this had a major impact not only on US Dollar transactions, but also on the overall banking business, starting from the non-resident client’s customer support.

Holders of accounts with these international banks were unable to receive deposits in US Dollars from clients and partners. It can take offshore banks between 4-6 months and more to get their correspondent accounts restored. Most businesses cannot afford to wait a day for this kind of service before they start to suffer badly.

So what do you do if your sole offshore bank loses its correspondent account? Open another account with another foreign bank? It sounds simple enough, but the problem is that it can take at least two weeks (and often much longer – up to two or three months, depending on the bank and their remote account opening procedure), to open a new non-resident foreign bank account with all of the changes to the “Know Your Customer” (KYC) regulations and identifying non-resident clients.

So you would have no banking facilities for at least two weeks – minimum. The more complicated your business structure is, the longer it will take. Would you be out of business by then? Maybe you wouldn’t have access to any money from your account and your credit cards would have stopped working.

Don’t assume that this could never happen to you. It is never likely to be your fault, something has changed in the banking world and you are paying a very high price for this.

Changes To Bank Policies Leading To The Immediate Closure Of An Offshore Account

There have been several instances where a bank has changed its policies and this has resulted in the closure of numerous non-resident accounts. This can be a regional situation, where specific account actions are favored by some parts of the world but not in others. A classic example of this is maintaining a passive account.

What if you had a passive account for a personal asset holding company? In the past most offshore banks would welcome such an account. They are still loved in Europe, but in Hong Kong the banking policies have changed, and they no longer want to maintain these kinds of passive accounts. Holders of these accounts had their accounts closed with very little explanation.

This is happening around the world every day. If your foreign bank makes a sudden policy change then it could be that your custom is no longer required, and you will receive an immediate account termination notice.

It is the immediacy of the situation that is the biggest problem. It will take you at least two weeks to set up a new foreign bank account. So what do you do in the meantime? It will also take time for the original bank to send you any monies owed. You will have no banking facilities whatsoever.

We have created a questionnaire designed to help you open the right accounts. Please take a few minutes to fill in the questionnaire now so that we can help you.

Regulators Changing Their Rules For Non-Resident Banking

If you are a citizen of Russian Federation then you will probably be aware that your government is on a drive to increase tax collections from offshore accounts. Some offshore banks are going to react negatively to this, and there is a good chance that they will no longer trust Russian account holders. This could possibly extend to citizens of the Commonwealth of Independent States as well.

The Americans have already done this with their FATCA legislation. American expats are finding it increasingly difficult to open foreign bank accounts because of the documentation overheads involved. In these austere times it is likely that many other countries will follow suit, and they will be expecting their citizens to pay taxes from offshore accounts.

This could mean that certain banks will no longer want your business as they do not want to deal with all of the additional paperwork that will be involved. You could find your account closed very quickly. The banks will have to employ specialist lawyers to ensure that they are complying with these regulations and some will consider that this is not worth the additional cost.

Economic Or Political Instability

We are living in difficult times, and countries that provide offshore banking facilities can be subject to economic or political instability that will have a major impact on your account. You are probably aware of the problems in Cyprus and the financial crisis in Greece. There are now new financial crisis risks in Italy. It is not always easy to predict which countries will be next.

Offshore account holders in countries such as Cyprus, Latvia or Czech Republic may be experiencing a professional, inexpensive and comfortable service at the moment, but this may not always be the case. You need to think about the risks and diversify your assets by opening additional offshore accounts elsewhere.

Know Your Customer (KYC) Procedures

Some foreign banks are becoming stricter when it comes to KYC procedures, and you may find yourself being asked to supply a lot of additional documentation that is very difficult (or sometimes impossible for purely legitimate common sense reasons) for you to fulfil.

Banks that are facing compliance issues with the regulators or with the USA over FATCA are especially vulnerable, and they may be forced to change their policies when it comes to KYC. If you are unable to comply with your bank’s request for additional documentation then you could be faced with account closure.

Regional Issues For Global Businesses

If you are running or setting up a global business then holding just one foreign bank account could be problematical when it comes to channelling payments through different regions. As an example of this you may find that a bank in the Caribbean is not very comfortable dealing with Russia, but Latvian banks will have no problems with this.

If you want to do business with China then it is best to use an account in Asia to channel payments. Asian banks will be comfortable with this, but they will be reluctant to deal with countries in Latin America.

It is not uncommon to find that a payment which is refused or becomes very difficult for one bank because of the region involved, is easily transacted by a bank in another region without any fuss.

A lot of global business owners use the US Dollar for the majority of their transactions. If you transact in US Dollars you need to understand that the US Government has control over your bank transactions. This is irrespective of where the bank is licensed, where it was incorporated and what jurisdiction it operates in.

The BPA Bank in Andorra was subject to an investigation by the US Government and all of their correspondent accounts were closed (not just those in US Dollars). The Bank’s management were sent to prison. They found nothing wrong and apologized but it was too late. The bank was destroyed by this.

Open Additional Offshore Accounts Now

Open additional offshore bank accounts today. Never be at the mercy of a single bank. They could start asking you awkward questions at any time and make life very difficult for you. Don’t just open any offshore banking account that your friend has told you about. This is asking for trouble, as your friend is unlikely to know how the bank will react to your requirements.

At the Offshore Pro Group we have many years of experience opening the right offshore accounts for our clients. We are always tuned in to the different ways that the banks operate, and the changes that they are planning. We can advise you which accounts will suit your needs in the long term so that you can concentrate on running your business, and not having to worry about possible banking problems.

So take action right now by completing the questionnaire here so that we can determine the best banks for your needs. Please remember that it takes at least 2 weeks (and in some cases up to two months) to open a new account, so take action now and protect yourself and your money.

If you have any questions then please contact our expert international banking team via email [email protected]. We will be delighted to assist you.