You have decided to open an offshore bank account, because you understand that protecting your assets in a jurisdiction outside your home country, which is more stable and financially favorable, is a good decision (if you are not sure why you might want to go offshore, read this.)
Offshore banks are shady banks for wrongdoers!
This is perhaps the biggest factor why offshore banking is seen under a negative light: Due to the nature of the banks, which offer clients secrecy and more sophisticated, non-public investment vehicles, offshore banks are said to cater rich clients who may also be money launderers and criminals alike.
What people don't know is that the features and benefits of offshore banks are also accessible to average people – if you know how to find them. And yes, it's as legal as you want a bank account to be. Yes, for less than a thousand dollars, you can open a bank account and start protecting your assets from the prying eyes.
So, Citibank is an offshore bank?
We are sure that you are well-aware of the brand of multinational banks, such as HSBC and Citibank. Their reputation is worldwide recognized. What many don't know is the fact that banks like Citibank operates in multiple countries worldwide.
Technically speaking, when you open a Citibank account in, say, Singapore, and you are not a Singaporean, you are an “offshore” bank account holder. Indeed, any banks outside your home country are offshore banks to you and your local regulators.
Multinational offshore bank or local offshore bank?
So, should I consider to go with a large, popular offshore bank or a small local bank, instead?
There are a few things to consider:
Citizenship: Are you the US or non-US citizen?
It's important that you seek offshore banks that are not related to your home country. Why? It's simple: Your government can reach out to your account easily, as needed – in order to protect the best interest if your country.
If you are a US-citizen, you still can open an offshore bank account, but it's wise to avoid offshore banks listed here, for some obvious reasons.
Concierge-like service: Are you looking for top-notch service from private bankers?
Multinational banks are known to have a private banking division whose clients are typically high-net-worth people. HSBC Private Bank in an offshore jurisdiction requires you to prepare millions of dollars for opening an account. There are banks that require less capital, but services' quality is directly correlating with the amount of deposit required.
With that said, if customer service is your top priority, you need to consider offshore banks with higher capital requirements.
Amount of money: How much are you going to deposit your money?
The amount of money that you wish to deposit will determine the type of offshore bank that you should open an account with.
As mentioned above, opening an HSBC Private Bank account will require you to deposit millions of dollars. Opening an OCBC private banking account will need you to invest a minimum of USD 2 million.
Also mentioned above there are also services that require less deposited amount, such as Citibank's International Personal Bank in Singapore (IPB), which require a minium of USD 10,000 to start an online bank account and USD 20,000 for other bank accounts.
If you are new with offshore banking and want to start small by depositing a smallish amount of money for a start, you may want to consider offshore jurisdiction like the St. Vincent and the Grenadines (SVG) – for just USD 500, you can open an offshore bank account.
Please note that the differences in the minimum deposit requirements don't constitute the stability and security of the banks. It's all coming back to the level of customer service that you expect.
Expect a concierge-like service from a million-dollar offshore private bank account, and a decent, acceptable service for the thousand-or-less-dollar offshore account. This is, of course, depending on your needs and wants.
Account opening: Remotely or physically present?
You can open an offshore bank account remotely. However, multinational offshore banks are typically expecting to see you in person, at least once, for opening a bank account.
Opting for smaller but stable jurisdiction like the SVG is a wise decision if you want to open an account remotely. The choice is yours.
Differences in fees
In banking, you should always consider the fees you are going to incur; this also holds true for offshore banks. There are fees related to keeping your assets, as well as doing transactions via your account.
There are fees related to keeping you to stay above the minimum account balance. Citibank, for example, charges a fee of USD 30 a month when your balance goes under USD 10,000.
As you can see, there are things to consider when opening an offshore bank account, and the best choice for you depends on your goals with your offshore bank account.
If you are just starting out, we would recommend you to take the local offshore bank. The minimal account required for opening deposit, the simplicity of the signing up process and flexibility in accessing your account should be the upsides that you are looking for when considering a smaller bank.
If you want reputation and worldwide accessibility, a multinational bank account can offer you just that. This is perfect for an expat who wants to open an account with a bank that he/she is familiar with in his/her home country.
Indeed, the choice is yours. If you seek a second opinion, please contact us for a free consultation.
Read also "Taking your assets offshore: Are you paranoid?"