Offshore Banking FAQ

What is the difference between an onshore bank (local bank) and an offshore bank?

Offshore banks are generally banks that are dedicated to working with VIP clients with private bank service and much more interested in promoting investments; however, there are also small offshore banks that don’t disdain commercial accounts and small deposits. Generally, offshore banks don’t like opening accounts where 1000 are deposited and then 999 are withdrawn; these are considered transit accounts with risk of laundering. If you don’t have a large business volume, you should alternate between both types of banks so that the bank’s control system doesn’t give an alarm for deposit and immediate withdrawal of your funds.
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How and where to choose the bank?

This depends on your income, the economic activity engaged in, the available balance to deposit and the level of privacy you desire. Banks have an A classification, just like stars for hotels; the best are the big AAA banks which are the most uncompromising. Actually, they want nothing to do with poor clients. Therefore, what you have to ask is not which is the best bank, but which bank will accept me?

Basically, how much must I deposit and maintain in the account?

There isn’t a set rule. Obviously, if you already have contacts with an offshore bank or a millionaire friend who has them, it will be easier to obtain a special treatment. You can also go from bank to bank and negotiate terms. For example, a small Swiss bank would have less strict requirements than a big Panamanian bank.

Can I open an offshore account in the country where I do my business?

No, otherwise it would become an onshore bank, and therefore, would become subject to taxes.

Can I open an offshore account in the United States?

Yes, but only a personal account and you must be present at the moment you open the account.

Can I open an account for an LLC in the United States?

Yes, but the company becomes onshore (resident) and, therefore, you won’t have to pay taxes, losing tax advantages.

What expenses are paid in an offshore bank?

Generally, they cost 30% more than local banks. It’s just that you don’t pay taxes in offshore banks, so there’s no reason to worry about the difference in costs.

How do I withdraw money from my offshore account?

You can make withdrawals through bank transfers to accounts that aren’t yours in order to avoid being traceable or through ATMs that work around the world.

In what currency will I manage my account?

The big banks offer multi-currency account service. Other offshore accounts are in American dollars or Euros (in one or the other currency, so it will be necessary to pen two accounts to manage both currencies).

What advantages does a multi-currency account offer me?

The advantage is that your clients can pay you in different currencies and you won’t lose money in currency exchange commissions. You can receive and pay in any currency.

Is the bank secret guaranteed?

All countries that offer offshore banking service have legislation that guarantee the bank secret; however, because of international regulations information exchange treaties, the secret is practically non-existent.

So then, how can I stay anonymous?

Impossible. You can increase your privacy by using name lenders, fiduciary services, or e-wallets like PAYOPM.com. All these systems offer a degree of anonymity, but these services are obviously subject to controls and whoever offers them will want to know with whom they are dealing.

In which country, which bank and what kind of account should I choose?

It’s difficult to give generic advice since various factors should be considered when choosing the country and the bank.

Is it best to use an intermediary to open an offshore bank account?

The agents or representatives of a financial entity are generally not owners of a bank and can’t guarantee that an account can be opened in a determined bank. Paying for the service of opening an offshore bank account, the intermediary agrees exclusively to prepare the papers that are necessary for opening a bank account in the chosen bank and country. Keep in mind that opening an offshore bank account isn’t as easy as you might think; therefore, it’s possible that you and/or your intermediary won’t obtain the account or that the bank opens the account for you and later closes it. In this case, you will lose the money spent for the paperwork and will have to start over from the beginning, facing a double expense.

Why are there so many difficulties?

Unfortunately, pressure from industrialized countries is strong and more and more banks prefer avoiding the risk of multi-million dollar fine or accounts being closed in the corresponding banks. If a bank has been signaled as being suspected of money laundering or of facilitating money laundering operations, or any other crimes, it could lose its license or they could close correspondent accounts so that, in practice, it is impossible for the bank to operate. If you were the owner of an offshore bank, you would do the same thing: you would eliminate the small clients who provide little profit and expose the banks to the same risks as a big client.

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