How to Set up an Offshore Banking Account
Offshore banking can give you increased confidentiality, better interest rates and some other benefits, but you'll also have to bank under different laws than with a domestic account. There are a few things you need to watch for if you want to set up an offshore banking account.
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Instructions
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Set up an Offshore Banking Account
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Research different countries and banks known for handling international accounts. There are some offshore banking scams in which someone will just take your money and run. Both Switzerland and the Cayman Islands are well-known areas for international banks.
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Contact a few different banks and find out the specifics of their offshore accounts. You want to know how your privacy will be protected, which government agency oversees the bank, current interest rates and currency options. Check to be sure that you don't have to be there in person to open the account, and find out whether you can get an international debit card to access your funds.
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Wire your funds to the bank of your choice, and set up your account. Some banks have minimum-balance requirements to set up offshore accounts. Some banks will require that you provide references from your domestic banks.
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Talk to your accountant to find out whether you have to pay taxes on your interest earned offshore. Usually, offshore accounts are given domestic-tax breaks, but you may have to do some reporting of the earned-interest income. Be sure that your CPA specializes in foreign tax laws.
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Monitor the health of your offshore bank and its country's government. Don't be afraid to pull your money out of the account if you think an international incident will jeopardize your funds. Remember that you cannot complain to the Federal Reserve Board if your bank doesn't follow applicable laws.
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Tips & Warnings
You want to be sure that you can handle transactions and look at your offshore account balance online.
You may be able to invest your offshore account in Certificates of Deposit and get a higher rate for promising that you won't access your money for a set period of time.
Avoid banking in a currency other than United States dollars because your money will be subject to rising and falling exchange rates.
Don't set up an offshore bank account to hide funds from the government or reduce your net worth for the purpose of defaulting on payments.
