One of the most misunderstood topics related to the offshore world is the cost to open an offshore bank account. And unfortunately, the requirements and related costs are always changing.
Fortunately, offshore bank account opening doesn’t have to be expensive. In fact, if you do it right, you can get a lot more out of it than you put in. The key is to identify the right banks and make sure they’ll actually accept you. Of course you also need to make sure you don’t waste any time or money during the account opening process.
With this in mind, if you’d like to get started opening offshore bank accounts in the most cost-effective way possible, download our FREE Non-Resident Banking Starter Guide, which will help you find the best banks in your price range.
In this article, our team is going to break down to costs to open an offshore bank account. We’ll also tell you how to open offshore bank accounts on the cheap. But, more importantly, we’ll also be explaining how to avoid some of the biggest offshore banking costs entirely.
In other words, if you put the lessons that we’re about to share with you into action, you can easily save yourself up to $3,000 during the process of opening just one account.
Let’s get started with a quick look at why the cost to open an offshore bank account is one of the most misunderstood aspects of the offshore world.
Most people open offshore bank accounts to grow their wealth or diversify their investments. They might also be doing it to protect their assets or internationalize their life. No matter why they’re trying to bank offshore, they typically don’t see it as a major expense.
But they’re wrong.
Offshore banking can be very different than banking “onshore”. Everyone knows that offshore banking means having a bank account outside of your home country. But the banks that are typically used for offshore banking also operate differently than “onshore” banks.
Not surprisingly, they also have different upfront and ongoing fees associated with opening and maintaining accounts.
Unfortunately, most people don’t do their homework. They simply dive in headfirst without looking at the fine print and they end up paying for it later.
Making the situation worse is the abundance of misinformation being spread by internationalization gurus and introducers. Forget sourcing credible insights and data points. Just wading through the false information to determine what’s real would take six months… and by then, account opening requirements will have already changed.
Fortunately, we’re going to breakdown all of the costs and expenses associated with opening an offshore bank account. To get started, let’s tackle an often misleading, unnecessary, and painfully high cost: introducers.
If you do a quick Google search for “offshore bank account,” you’ll find plenty of introducer websites and ads offering to help you open accounts. Most of them are going to charge you between $500 and $2,500 in fees just to help you choose a bank and submit your application.
Unfortunately, the “Introducer Trap” has many levels. And paying the introducer to help you open an account is just the first step in a horribly expensive and inefficient process.
If you are unable to get the first bank account open, the introducer will ask if you’d like to try again. Of course, if you do want to apply to another bank, you’re going to have to pay their introduction fee again.
Considering all of the costs to open an offshore bank account, hiring an introducer is the biggest. If you fail to open an account, your opening costs will skyrocket and quickly start to outweigh the benefits.
To make sure that doesn’t happen to you, keep reading below to get a better understanding of what you should (and shouldn’t) be paying when you open an offshore bank account.
The average cost for onboarding a new client has increased significantly over the past five years. The reason for this is the expansion of information sharing agreements, increased regulations, tougher KYC and AML requirements, and more scrutiny on offshore banks in general.
And unfortunately, as is usually the case, these increased costs are being passed onto the consumer. In the world of offshore banking, this means that it is now common for banks to charge fees to evaluate applications. And while these can sometimes be waived or reimbursed, this fee can be from $150 to $2,000 per application.
Of course, this doesn’t include any of the service fees that you paid to third-party introducers. These account opening fees are charged directly by the bank.
Every bank has a different set of account opening requirements. There are the official (and often generic) requirements that the bank writes down on paper and distributes to all prospective customers. You are going to have to collect whatever documents they ask of you in order to apply. And the cost to compile those required documents can add up.
When banking offshore, you may also be asked to get the documents notarized or authenticated. This will carry a per document fee. And depending on where you are in the world, and where you want to bank, you may also be required to have the documents translated by a certified translator.
Depending on which country you’re trying to open an account in, the expenses related to showing up in person can quickly climb. This can include airfare, accommodation, ground transport, and your living costs while in the country.
If you don’t work with an introducer (which you shouldn’t), your cost of physically opening the account will likely be the single largest expense of your new bank account.
Now, some people might be wondering about remote account opening. As discussed in our recent article, it is possible to open accounts remotely in certain countries, but it’s becoming more difficult and the best banks usually don’t accept remote applications.
In addition to the costs that you will incur when applying for the account, there are other non-bank related costs that you will incur during the account opening process.
These other costs will be largely determined by which bank you choose. This is also influenced by their business model and how technologically advanced they are.
Knowing your bank’s requirements for an “address” is an important component of your application. And it can have a very real cost. If you don’t already have an address that you can use, you’ll have to buy (or acquire) one before you submit your application.
Some banks will require that you have a local address. Some will require you to provide proof of that local address. Other banks will just want to see any local address – so they can mail you your debit card and other account materials.
The specific address requirements will depend on the country you’re in and the bank that you’re applying to.
But before providing an address you need to be aware of the requirements. For instance, certain EMIs and digital banks will only accept you if you have a mailing address or proof of address in certain European countries. It just depends on the bank.
If you’re planning on opening an offshore bank account, you might be looking to access your money with a debit card. And unless you plan on staying in-country until your bank card is available, you’re going to need to receive your bank card by mail.
If the mailing address you gave the bank is different than the one where you live, you may need to pay for an additional mail-forwarding service. Some banks will only mail the critical account access items you need to access your account – such as debit card, security keys, tokens, passwords.
If you are in another country when these items arrive – which can be anywhere from a few days to weeks or months later – you’ll need to have someone (or a service) mail them to you. That can get expensive.
You bought a local SIM card when you opened the account. You knew the bank had to send you an SMS message in order to activate the account and set up your online banking.
But, now the important question is: do you need to maintain that phone number? For instance, will the bank ever need to send you another text message again, at any point in the future? If so, will the bank allow you to change your contact number remotely? And can the bank send text messages to an international number?
The problem that most people run into is this: after they leave the country, they discover that either a) they cannot recharge the prepaid SIM card from abroad or b) the phone number they originally used to activate the account expired due to inactivity.
At some banks, if you can’t receive text messages you can’t access your money (or send outgoing transfers, change passwords, or do a host of other things.
They’re in trouble because the bank won’t let them change their primary phone numbers remotely. It’s not uncommon for banks to require the account holder to physically come into the branch to show ID and change the number on the account if they no longer have their original phone number.
So, depending on your bank’s phone protocols and restrictions, you might need to pay a monthly fee just to maintain a local (or foreign) phone number that your bank deems acceptable and can send text messages to.
If you’re looking for a solution, the country banking reports available inside GlobalBanks Insider provide specific solutions to problems and challenges like this on a country by country basis.
In addition to the opening costs, you also need to understand the costs associated with using the account. Whether you bank offshore or onshore, there are always fees associated with operating your bank account. This can include anything from monthly maintenance fees to outgoing wire fees.
Not knowing a bank’s fee structure and the specific services they charge for in advance is a big mistake. Costs can add up quickly. And if you go in blind you might end up being charged for services you didn’t even know existed or could have negotiated out entirely.
Understanding the bank’s structure for maintenance fees is important. Maintenance fees can be monthly, quarterly, or yearly. Or they can be waived entirely.
Some banks allow you to avoid the monthly maintenance fee if you maintain a balance above a certain threshold. Other times, no matter how much money you keep in the account, avoiding the maintenance fee is impossible. It just depends on the bank you choose and what their policies are.
At some banks, however, the maintenance fee is negotiable. And, if you target the right bank, have the right strategy, and deal with the right banker, you can get it waived entirely. In most instances, maintenance fees range from $0 to $75 per month.
Some banks have extremely high transfer fees. Knowing how much your bank charges for transfers to and from your desired destinations and currency is important.
It’s not uncommon for small “shoebox” banks in offshore jurisdictions to have sky-high fees on low transfer amounts. For example, small outgoing wire transfers from $1 to $1,000 can have transfer fees between $30 and $100 each.
So, be careful. Some banks can have normal fees for everything and then have insanely high fees for certain types of wire transfers. Make sure there’s a “cap” or clearly defined maximum fee for the transfer fees they charge.
On the other hand, some banks will charge a higher amount for transfers if you have a “non-resident account.” For instance, there’s a bank in Curacao that charges a flat fee plus 1% on all outgoing transfers.
Likewise, if you have a lot of high-value incoming transfers, watch out for banks that take a percentage of each incoming transfer. And if you make a lot of international transfers each month, you might want to target a bank that has free outgoing international wires or low fees.
Before opening an account, get an idea of the transfer fees you’ll be charged. You should also review the bank’s price list to make sure they’re not price gouging.
Offshore banking has a lot of benefits to offer both individual and business account holders. And the immediate benefits you get from an offshore account significantly outweigh the costs.
Don’t write off a bank just because it has higher fees than you’re used to at home. These higher costs come with better, more personalized service and more benefits. In fact, it’s not uncommon to
For instance, you’ll probably be assigned your own account manager. This is who you can call or email whenever you have a question or need a problem fixed. These individuals are incentives to provide fast and efficient service and keep you happy. Compare that to calling a generic customer hot-line and waiting on hold for hours. You can waste hours trying to resolve to simple issues.
But, in order to reap the benefits of offshore banking, you need to make informed choices going in and ensure you’re not wasting money on unnecessary expenses. Similarly, you need to be able to identify (and avoid) banks that have absurd fee structures, have bad service and painfully high fees.
If you follow the instructions that have been outlined in this article, you can save thousands of dollars when opening accounts. And you can do it without hiring an expensive introducer or middleman.
If you’re ready to take action and start opening international accounts now, you can access GlobalBanks IQ, our dedicated international banking intelligence platform.
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