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Offshore Banking: What Is a Foreign Bank Account?

by | Nov 27, 2019 | Offshore

Every time we talk about ‘offshore’ something, we feel like we must explain ourselves. It conjures up images of sneaky older men, drinking whiskey on the rocks while depositing briefcases full of bundles of cash into numbered accounts, never to be sussed out.
It’s NOT like that.
You can open an offshore bank account and not be or do any of that. Plus, it’s all legitimate and you’ll never run into trouble with any tax authority if you comply with their requirements.
So, please, don’t be thrown off by the word ‘offshore’. You can and you should have a foreign bank account, for various reasons.

Here’s what we’re going to cover in this Tax-Free Citizen article.

1. What’s Offshore Banking?

  •  Is Having an Offshore Account Illegal?

2. 7 Reasons Why You Should Bank Offshore

  • Your personal information will remain personal
  • Banks are safer elsewhere
  • Foreign banks pay higher interest fees
  • Diversify your currency
  • Opening doors for yourself
  • Avert political and fiscal disasters
  • Keep your assets safely tucked away

3. How to Open a Foreign Bank Account

  • Walk-in
  • Remotely
  • App-based Banks
  • What Happens Next?
  • Should You DIY?

4. Common Reporting Standard

5. Best Countries to Open an Offshore Bank Account

6. Offshore Bank List

1. What’s Offshore Banking?

Before we get into the nitty gritty, it might help to have a basic definition of what offshore even means.
This concept dates back to the beginning of 18 th -century Switzerland. Of course, it would be Switzerland – the original offshore haven!
Back then, banking secrecy was the top concern for Swiss bankers as wealthy Europeans flocked to the land of Alps, chocolate and watchmaking.

Forever positioned as politically neutral, Switzerland did their very best to shroud the identities of their depositors in mystery, be it individuals, corporations or even banks.
Needless to say, the main objective of many of those entities was tax avoidance. Switzerland allowed them to fully exploit super-lax financial regulation.
But what’s offshore banking right now, in the 21 st century?
It simply means that you’ve opened a foreign bank account that is not in your usual country of residence or citizenship.
That’s all there is to it.
Have you invested your money or are you banking in locations that you don’t consider ‘your country’? Then you’re banking offshore.

Is Having an Offshore Account Illegal?

Nowadays, it’s not about tax evasion or secrecy. It’s about smart financial planning and tax optimisation.
Having an offshore account is totally legal, as long as you’re complying with all the requirements that your country of citizenship and/or residency have imposed on you.
Mostly, those requirements involve reporting. In certain instances, it might be about paying tax on your profit too (say, income from interest accrued). So, keep things legal and reported, and you’ll be totally in the clear with authorities.

2. 7 Reasons Why You Should Bank Offshore

There are multiple reasons why you should open a bank account in an offshore company outside your
country. Below, you can find our top seven:

1. Your personal information will remain personal

You probably know the drill when it comes to opening a bank account in your state or country.
They ask for so much personal information that sometimes it feels even your own family doctor doesn’t know that much about you as does your banker!
Do you really want to share it with complete strangers?
Sure, they are bound by laws to keep it safe and sound, but you’ll just never know. When you open a foreign bank account, your personal information will be kept private and will be less vulnerable to data breaches. You can also pay for a service of a nominee, which will add an extra layer of privacy to your account.
And if the government were to ever want to confiscate or freeze your assets back at ‘home’ (or wherever your legal residence is), it will be much harder to do so.

Confidentiality is certainly a luxury and people are willing to pay a pretty penny for it.

2. Banks are safer elsewhere

Did you know that American banks are rated… 40 th safest in the world? And the British? They are 44 th safest.
We bet you didn’t. Otherwise you would’ve been shocked and pulled out your funds from USA and UK banks a long time ago, in favour of safer banks elsewhere.
So, what are safe banks?
Well, a regular bank, say an American or British one, will keep a couple of cents per dollar invested or deposited in their bank at all times.
This means that if everything came crashing down and everyone suddenly wanted to withdraw all their cash , there would be riots – the banks simply couldn’t fulfil everyone’s money orders.
Meanwhile, the safest banks in the world – the Canadian, German, South Korean, Singaporean and Australian ones – keep at anywhere 20-30 cents per dollar on hand. You can count on them, much more than regular banks, to keep your assets safe.
Sure, there are deposit insurance schemes (e.g. FDIC in the United States), but even they cannot guarantee that your deposits will be returned to you in a timely manner.
Your best bet, then? Find a safe country to bank in where there is hardly a possibility for a bank failure that would leave you without your assets.

3. Foreign banks pay higher interest fees

Another brilliant reason why you should look into opening a foreign bank account is for higher interest rates.
Are you currently getting half a percent interest? Maybe 1.5% and consider yourself incredibly lucky?
Forget about it.
Foreign banks are offering 5-10 times that – at the very least – and would be glad if you opened up an account with them.
But don’t get carried away, as annual percent yield (APY) isn’t the only number you should be looking at.
There is also the political and economic stability of a place to consider. Would you go for Ukraine or Cyprus at this moment in time?
We wouldn’t recommend you do so, even though they advertise their super high yield interest rates all
the time. It’s just not worth the risk, if you ask us.
And lastly, there is the currency question. We’d advise you look for foreign banks and accounts that will
take your home currency, say the US dollar, as a deposit. They want your dollars and you want their high yields. It’s a win-win. Plus, you won’t have to convert currency, so you can avoid bank fees.

4. Diversify your currency

You always hear the economic and financial experts talking about ‘diversification’. No matter if it’s about stocks or currencies, it’s a brilliant strategy.
Offshore bank accounts in various places around the world will ensure that if something horrible happens in one country, your assets in another one will give you a nice enough cushion.
It just makes sense: don’t keep all of your eggs in the same basket, your dad said.
If you diversify, via offshore accounts and hold your wealth in three or four currencies, you’ll be better prepared for when the inevitable storm hits.
The key here is to seek out international banks that are accustomed to dealing with foreign customers and clients.
Take, for example, the banks in Hong Kong, a well-known offshore tax haven for businesses and individuals alike.

5. Opening doors for yourself

Another completely legitimate reason is to give yourself access to a brand new country.
In other words, opening a foreign bank account may be necessary if you want to become a resident and/or a citizen of another country.
It might seem obvious, but many countries make it really hard to open a bank account without jumping through so many hoops.
You can’t simply show up somewhere like the UK and open up a bank account. You’ll need to prove your residence; you’ll need to explain your reasons for being there and so on.
Meanwhile, others like Georgia, make it almost too easy. You can walk up to a bank branch with just your passport and walk out a proud owner of a Georgian bank account.
Of course, you should keep your cool and have a good enough reason for opening said account. But they will gladly oblige, because they love foreign capital.

6. Avert political and fiscal disasters

It all comes down to protecting your own assets from external factors. We definitely won’t be the first ones to tell you that crap happens in politics.
Governments get ousted, leaders get toppled or imprisoned, early elections are called time and time again (think Brexit and the UK). All sorts of rumblings go on all the time. You can help protect your assets by opening a foreign bank account offshore.

You see – offshore money is much harder to freeze or seize, were the government ever to want to go this route.
You’d have more time to get it together and protect your investment by moving it or cashing it out.
And then there are times when banks go insolvent and don’t want to pay out your deposits.
There have been numerous stories, even in recent times, when governments have seized private funds, from bank deposits to pension fund cash, so you really can do well for yourself by taking your assets away from the government of your home country.You can never know what could happen. That’s why diversification is the name of the game.

7. Keep your assets safely tucked away

And when it’s not the politics and the government threatening collapse, it’s your ex trying to fight for some of your cash or the solicitor coming after your company in some frivolous law-suit… It’s really hard for lawyers to come after your assets that are stacked away abroad.
This will mean extremely lengthy processes, legal representation abroad and all that jazz. Not many people will choose to pursue it due to the fact of just how pricey and lengthy it might be.
So, your cash might not be 100% invincible when set up in an offshore bank account, but it sure will be much less susceptible to being thoughtlessly raided.

3. How to Open a Foreign Bank Account

If we’ve got you convinced that you need an offshore bank account, then this section will be the practical and hands-on guide as to how you can actually accomplish it.
Depending on the jurisdiction that you choose (more on which one below), the process of opening a bank account can be quite different.
There may be several countries worldwide that will suit you and your financial interests. And it’s no surprise because offshore banks vary on:

  •  Asset protection
  • Banking for (non-resident and resident) individuals
  • Banking for (foreign) companies
  • High interest yielding accounts
  • Tax-free accounts

Whichever country you choose, there are three scenarios as to how you can open a bank account.

Walk in

Do you imagine opening a bank account by waltzing into a foreign bank branch, a briefcase at hand and being tended to, as per your appointment?
The most traditional way of opening a foreign bank account is by actually showing up there in person.

We appreciate it might not always be the most convenient way – imagine flying to Vanuatu just to open a bank account!
Yet, in many ways, it’s the best method. You’ll deal with the paperwork right there and then, your documents won’t normally have to be notarized or verified if you’re presenting the originals, and you’ll save loads of time and back-and-forth.

Just make sure you do the following:

  • Have a solid answer as to why you want to open the foreign account
  • Be ready to explain where you are a tax resident and what business you do
  • Be ready to meet their initial deposit requirements
  • Look chic, not shabby!

How long you’ll have to wait for the actual account to be ready to use will depend on the bank.


Don’t fancy flying half-way around the world just to sign some paperwork? The digital era has got you covered.
You can open up bank accounts left, right and center nowadays, all without leaving the comfort of your sofa. In fact, go ahead and wear your comfy pants while you open up that Panamanian bank account – why not?
So, how does it work? You will have to send notarized copies of your passport and any other necessary documents via mail. The regular, snail-mail. Of course, it will take considerably longer to deal with all this, and your bank account won’t be available
in a matter of hours. More like weeks. But we think the hardest part of this is to find a place where you can actually print hard-copies of documents.
We don’t have a printer at home anymore, do you?

App-based Banks

A rather novel idea in the world of offshore banking are the fin-tech banks that exist in the app mode only. Think Revolut, N26, Monese and a bunch of others.
They are usually limited to residents of certain countries, however.
They lure people in with ridiculously low currency exchange and money transfer fees. Plus, their transaction fees are usually phenomenal.
Yet, as every mod-con, it comes with… well, cons. You can’t walk into a branch, all of your support will be via live chat or email, your deposits aren’t always protected by governmental schemes… The list goes on.

So, while it’s all fine and dandy to open up one of these digital bank accounts (which can, technically, be considered offshore), you should carefully consider the cons before you take the plunge.

What Happens Next?

After you submit all that is needed to open a foreign bank account, the institution might come back asking for more documents to be served.
This is all done to keep your account legal and completely transparent.
Obviously, they are trying to avoid money laundering, illegal income streams and any money that may come from criminal activities.
Some of these additional documents can include your balance sheet of your previous bank account. For example, the proof of the last 12 months of financial activity might be necessary for the foreign bank to verify your account.
But don’t get offended. Recently, banks are faced with harsh reporting rules that they must comply with to stay in operation.
And finally, we’ve come to the part of spending money.
Offshore banks, just like your regular banks back at ‘home’, will issue you with an ATM card (were you to want one), that you can then use all over the world.
Of course, you can keep your home bank account in addition to your offshore one. In fact, it’s recommended – remember diversification?

Should You DIY?

All of this doesn’t sound that hard – you might be thinking. And really, opening a foreign bank account all by yourself might seem tempting. The minimum deposit is a couple of hundred and you can just walk in from the street and open an offshore account.
You can do it while you’re on holiday!
But that doesn’t paint the entire picture. How would you know if the bank is safe and also won’t waste your time with low interest accounts or eventual closures? That’s when tax advisor expertise comes in.
Don’t skimp on paying an expert of international tax and banking to advise you as to what you should do. Opening a foreign account is a major thing and you better have a game plan before you set out.
And, for the love of God, don’t believe in those ‘experts’ who tout their advice as ‘one-size-fits-all’.
Your citizenship, your residency status, the place where you invest and do business, among many other things, all make up the puzzle that needs to be solved to decide where it might make the most sense for you to bank.

4. Common Reporting Standard

The ever stricter know-your-customer rules that have faced the offshore banking world are getting out of control.
Part of this has been the instigation of the Common Reporting Standard (CRS). Yet, what is it exactly?
Developed in 2014, it’s an agreement between nearly 100 countries as to how information should be communicated and exchanged when it comes to bank accounts and tax authorities.
It’s main goal – eradicate tax evasion. We’ll all agree it’s a noble goal, but as usual, many of these agreements go overboard and impinge on the freedoms of individuals and countries, which should normally be safeguarded.
Plus, there are various loopholes that countries can take advantage of, even though they are themselves part of the CRS.
For example, countries can choose not to report certain data, in exchange for not receiving any of it themselves.
Fair trade for some Caribbean island nation that wants to protect its investors.
As the legislation develops, it remains to be seen as to how it will impact foreign banking further. For now, it has definitely made it harder for foreigners to open bank accounts.

5. Best Countries to Open an Offshore Bank Account

The ‘best’ country for you to open an offshore bank account will be different than the ‘best’ country for your colleague or friend.
Deciding as to where to do foreign banking isn’t a decision you should take lightly.
We always recommend consulting a tax specialist in the jurisdiction that you’re interested in. There is always more to it than meets the eye – and you definitely don’t want to learn this the hard way.
There may even be several countries worldwide that can suit you and your financial interests.
However, below are descriptions of seven countries and the characteristics of each one where you can open a foreign bank account.
1. Georgia
Georgia is simply awesome – the banks are highly reliable and warmly welcome foreigners to open bank accounts.
It’s not necessarily for the currency diversification, but it’s great to bank in Georgia for its stable political environment and their strong focus on foreign capital.
They are really customer oriented. If you’ve made a substantial initial deposit, prepare to be treated like royalty.
Plus, they have some amazing high interest accounts and interesting propositions on term deposits too.
All in all, if you’re looking to open a foreign bank and have little idea as to where you should start, just look into Georgia. It could be all that you need.

2. Cayman Islands
A lot of people open accounts in foreign banks to benefit from tax-free policies.
And when you consider that the Cayman Islands are a tax-haven, imposing minimal tax on foreigners and their companies, it seems an even better idea.
What’s great about a bank account on the Cayman Islands is the confidentiality that the banks there can provide. You can even use the ‘nominee’ service to be the director and the point of touch for your company in the Cayman Islands, who can also become your bank account holder.
On the flip side, you will have to deal with the notion of ‘island time’. It’s not that they intend to make you linger around, and then wait some more. It’s simply a much more relaxed pace of life over at the Cayman Islands and you must play the game too.
Plus, many bank transactions are quite pricey, due to the fact that banking is one of the main livelihoods in these tropical island paradises that also happen to be offshore tax havens. Keep that in mind.

3. Bermuda
Another tiny island, but this time in the Northern Atlantic, Bermuda is technically a British Overseas Territory.
So, the governance and the laws are, in part, based on those of the United Kingdom.
However, it has long been an established offshore heaven for individuals and businesses alike. If they could stomach the extreme high costs of living, that is.
We’re all for a legal and transparent offshore strategy, so although Bermuda might not be the country where you could pay the least fees when banking offshore, it is one of the more trustworthy ones. Its banks are certainly used to dealing with foreigners and the customer service mirrors that of the UK, with much less ‘island-time’ business going on.
Thanks to the tax benefits, a great reputation, solid banks and the overall friendliness, Bermuda is a great offshore banking choice.

4. Uruguay
Little did you know, Uruguay has become a South American banking hub for wealthy locals. But there is no reason you cannot open a foreigner account there either. Stable banking and political systems mean that your money will be in safe hands.
What’s more, although Uruguay is nicknamed the ‘Switzerland of the South’, it’s remarkably low threshold for the first deposit is a lure for many. Let’s say you don’t have a hundred thousand to drop, but maybe just $5,000. No problem in Uruguay.

They will take your 5K and open a bank account for you. That’s not to mention the extremely simple procedure to gain Uruguayan citizenship. So, although it certainly doesn’t have the glitz and the glam of Switzerland, it’s a viable option.

5. Jersey
The largest Channel Island of Jersey is a well-known tax haven.
It’s surely known globally for its location, as well as its financial and political independence.
From the very beginning of the 20 th century, Jersey has recognized that helping people and companies set up financially beneficial entities within its shores could be its main money-maker. And they were not wrong.
Since 2008, Jersey has abolished all taxes for corporations that do business on the island. That, with an exception of the financial service firms, that they tax at a flat rate of 10%. When money is transferred from abroad and remitted into Jersey, no tax is levied. Finally, having a foreign bank account in Jersey and an eventual residence, were you so inclined, could get you on a path to citizenship.

6. Puerto Rico
This list wouldn’t be complete if we didn’t throw Puerto Rico out there.
With historical and political ties to the United States, this tiny country has a great economic environment and offers some of the best deals to open an account in a foreign bank.
If you’re an American, opening an account in Puerto Rico could mean that you’ll be able to protect your assets by way of their secrecy policy.
There is no huge sum that you must deposit up front either, so even if you want to casually dabble in the world of offshore banking, this paradise island might be a great choice. You only stand to win, not lose, as far as we’re concerned.
Banking in Puerto Rico is a safe bet.

7. Singapore
Singapore offers the possibility to open a bank account in multiple currencies, picking and choosing the ones that work the best for you.
While other banks will charge you fees to make transfers, and pretty high ones too, many of the transactions in Singapore are conducted for free. Plus, the country is highly economically and politically stable – a perfect setup when it comes to doing business abroad.
Like many other countries on this list and others, Singapore banks have a confidentiality policy that they apply to the personal data of their customers.

In other words, if you have attorneys seeking you out at your jurisdiction abroad, your money tucked away in Singapore is much safer.
Finally, there are many international banks that also have their branches in Singapore. These are ABN- AMRO, Citibank, and HSBC. So, if you have an account with them in your home country, you can normally open a Singaporean account with them without even having to go to Singapore.

6. Offshore Bank List

There are hundreds of banks that allow foreign citizens and residents to open accounts. Each has different requirements. For example, you might need to deposit $1,000 to open a bank account in one bank, whereas another one may require a hefty initial deposit of $100,000.

Plus, ways of banking, withdrawal procedures and the like will be different at each institution. There is value in knowing your options, as well as having a deep understanding of your individual situation and needs. Both will dictate which bank will be the best one for you to open an offshore account.

If you’re in doubt and need help in pin-pointing the exact bank or banks where you should store a part of your wealth, let us know. We’ll be glad to help, working with you one-on-one.


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