OK, so you’ve decided to open an offshore bank account, and you have narrowed down your shortlist to a few banks that you believe would suit your requirements and personal circumstances. Now, having analyzed your requirements, and found a bank you feel comfortable working with, how do you go about actually establishing the business relationship?

Requirements to Open Offshore Accounts

Banks are under enormous pressure to conduct detailed and ongoing due diligence on offshore clients. As part of this process, offshore banks require a number of documents in order to conduct an in-depth due diligence or KYC (“Know Your Customer”) background check on you as a new client. Typically to open the account you will need:

o A reference from your existing bankers

o Certified copy of passports of all signatories

o Proof of residential address (typically a utility bill)

o Letter stating expected activity, with supporting documentation if available

o Documentary evidence of source of funds to be deposited

The letter stating expected activity is especially important. The bank can be expected to verify this and will then monitor your account on an ongoing basis, to ensure that the activity on the account is consistent with the profile. If your estimate proves wildly inaccurate, your bank’s compliance department will be worried and will most likely close your account.

Documentary evidence of specific transactions (for example copies of invoices or contracts) will also usually be requested, especially in the case of large transactions like real estate business. It is always advisable to notify the bank in advance of out-of-the-ordinary transactions coming in (for example, if you just sold a house), or sudden changes in volume. In the case of corporate accounts, also keep your bank notified of changes to the core business which may occur over time as part of the natural process of business development.

Please understand that even though your bank is asking so many questions, it doesn’t mean they think you are a criminal. Detailed due diligence procedures are part of global business today. If your banker sees a well administered account and has a good two-way channel of communication with you, that will build the foundations of an excellent and flexible business relationship with your bank.

What if you can’t provide the documents they ask for?

Inevitably, sometimes clients won’t be able to provide all the documents requested for offshore bank account opening. While I certainly would not recommend banks that cut corners in due diligence procedures, it’s worth mentioning that offshore banks tend to take an overall ‘big picture’ view of the proposal in front of them. This means that it is sometimes possible to open accounts even if you don’t have all the required documents.

For example your existing bank won’t give you a reference (some banks simply have a policy of not writing references), or you don’t have any utilities in your name because you are living as an expat in temporary accommodation provided by your employer. Provided you can offer alternative documentation that logically proves your bona fides, or a good and verifiable explanation, then you are in.

If you haven’t travelled much, you might not have a passport. Up until recently Americans could travel widely without the need for a passport. Europeans still can, using national ID cards. It is sometimes possible to open accounts with drivers’ licences or national ID cards, but it is strongly recommended that if you don’t have a current passport you should immediately order one from the issuing authorities in your country of citizenship. Passports can take some time to obtain. A passport is always the preferred identity document for international transactions.

In case of clients in businesses considered as “high risk” (including businesses handling third party funds, doing business with certain high risk countries, credit card merchant accounts, internet gaming and so on) enhanced due diligence procedures are necessary and it can become very difficult to find a bank that will accept the business.

Having chosen your bank, how do you go about approaching them and getting your account opened?

Think of offshore banking like a romantic relationship… things you say at the beginning are of the utmost importance and may work for or against you later! That is one of the reasons why it’s sometimes better to use an intermediary.

Anyway, each bank has different procedures. Some will ask you to send all the documentation first, refusing to look at it at all until the file is complete. Others will want to chat with you over the phone first, before you send any documents, to ascertain if you and the bank are compatible. Both methods are fine, depending on your requirements.

Either way, if you choose to contact the bank directly then probably it is best to do so first by telephone. Email is fine later, but it’s good to get the name of somebody in the bank and their direct email address, and if you have talked to them on the phone they are more likely to remember you positively later when your account opening paperwork lands on your desk. It also avoids your email landing in your desired bank’s spam filter, which often happens if you write to a general ‘info’ email account.

By: Peter Macfarlane

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