Opening a bank account can be a daunting task if you’re not aware of your circumstances or they don’t match most bank’s requirements. But at the same time, assuming you have all the documents in place, it could also be a relatively simple task.
Despite most expectations, the hardest part is choosing the right bank, rather than gathering documents. On the same note, if you’re looking for an account abroad, you’ll need even more research. So, how do you open a bank account locally or in an offshore jurisdiction? Here’s what you need to know.
Offshore Vs. Onshore Banks
Onshore means within the same country, while offshore means abroad. In other words, an onshore bank account is an account with a local bank from where you’re resident. An offshore account is a bank account you open in a different country, whether online or in person.Onshore banking offers quite a few benefits and might be the best option in certain situations. Normally, you have some stability before anything else. After all, you’re banking with a local institution, so you’re aware of all the news and potential issues that may arise with it.
At the same time, being local means you get some transparency from the bank. You have access to all kinds of local services too. If you bank abroad, some services may not be available. Plus, they could come with some extra requirements, such as big deposits once you open the account.
That doesn’t mean you should overlook offshore banks, as they obviously have their own advantages too.
For example, if you need a bank account for your business, some countries have lower taxes or even no taxes at all for certain types of income. Therefore, you could potentially save anywhere between 10% and 20% on your income.
Some offshore banks also allow you to invest without being charged tax on interest rates.
Then, think about the extra privacy too. Countries like Switzerland are committed to offering an excellent level of privacy.
On top of all these, offshore banks give you some asset protection, as well as the opportunity to diversify your assets into more currencies.
In Person Vs. Online Bank Account Opening
Now, assuming you’ve made your choice, how do you open a bank account? In terms of procedures, you usually have three options. You can do it online, in person or just start it online and complete it later in person.Strictly for account opening, doing it online is obviously more convenient. You need to research banks, find one that matches your needs and start the application online. Applying online is usually a matter of 10 minutes. You’ll have to provide some personal details and upload the required documents.
When applying online, a verification might be needed, which is usually a selfie or a video call.
Applying in person is suitable for those who expect an old school form of customer service. If you think you’ll need help with account opening, talking to someone face to face might be a better idea. From the same point of view, a brick-and-mortar institution is better if you’re not good with online banking.
Now, there’s also the possibility to start your application online, and then finish it in person. Basically, you'll have to provide all the info and documents online, but you'll have to be verified in person.
Each bank has its own requirements and options. In today’s age of technology and convenience, it’s pretty obvious that most people prefer to do it online, from the comfort of their homes.
There are banks that operate exclusively online too, meaning that you can’t open an account in person even if you want to.
Most Common Requirements to Open a Bank Account
How do you open a bank account based on a bank's requirements? Before digging deeper into details, it's worth noting that every bank has its own requirements. If you choose to bank abroad, there are also local laws and regulations you need to take into consideration.However, apart from all these particularities, you should know that there are also a few general requirements that apply pretty much everywhere in the world.
First of all, you’ll always be asked for some form of identification. The ID you use must have a photo and display your date of birth. That’s because unless you’re young and you open a youth account with your parents, chances are you’ll have to be 18 or over in order to open an account.
Second, you’ll usually need to prove your address. Proof of address is a utility bill in your name, but it could also be a mortgage statement or a rental agreement from an agency. Banks need to ensure you live where you say you live. Plus, you’ll get the PIN code and the card at the respective address.
If you’re planning to open a bank account offshore without being a resident in the respective country, you’ll often be asked for an initial deposit. Local banks are less likely to ask for it, but those catering to foreigners probably will.
The deposit could be light and start from $1,000 for some banks, but it could also be massive and exceed $100,000 for other banks. Therefore, if you go offshore, make sure you check for this requirement upfront.
Last, but not least, consider the laws and regulations. Some countries, such as the USA, will require you to declare offshore bank accounts to local tax authorities, even if they’re empty.
Precautious When Opening a Bank Account Abroad
Thoroughly research banks and jurisdictions before going abroad. You want a stable country with the right laws in place, as well as a bank that won’t rip you off with fees and taxes. Think about the overall reputation too, as well as accessibility.Make sure you understand KYC (Know Your Customer) rules, as well as potential reports the bank may do, such as AML or CRS. Running and maintaining an offshore account may also bring in some tax implications. If you’re not sure, discuss this aspect with a tax advisor.
Review the fee structure associated with the bank. You don’t want your money draining to random fees for maintenance. Plus, consider transfer fees as well. There may also be some minimum balance requirements, not to mention an initial deposit.
Last, but not least, be aware of currency fluctuations. If your offshore bank account is in a different currency, fluctuations could cause you to lose money. Sure, you could also make some money out of them, but you’ll still have to be aware of all these.
