In this article, we’re exploring nominee meaning in bank account opening and offshore structures, since these two topics tend to go hand-in-hand.
This is part of our free series on navigating the complexities of opening international and offshore accounts. As such, the following article will be relevant whether you are looking to bank in India, Switzerland, or the United States.
That said, if you want immediate free access to our detailed offshore bank account opening guide, you can access it now by clicking here.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Nominee Meaning in Bank Account Opening
- What Is the Use of a Nominee on a Bank Account?
- Benefits of Having a Bank Nominee
- Frequently Asked Questions
- Ready to Explore Your Options?
Nominee Meaning in Bank Account Opening
Nominee meaning in bank account opening refers to accounts where a designated third party has permission to facilitate transactions on behalf of the ultimate beneficial owner. Permissions can range from complete legal control of an account to limited access involving certain transfers or trades.
Importantly, even when a nominee is employed, the ultimate beneficial owner of the account must be made clear to the bank. This is true whether the account is opened on behalf of a natural person or a corporate entity, which itself may use nominee directors.
In other words, the use of a nominee does not alter the ultimate ownership of the account or underlying assets. Instead, the meaning of a nominee is that a separate person or entity has permission to carry out specific actions on behalf of the owner at a bank or brokerage.
In the following section of this article, we will look at specific examples of nominees in banking, including finance, investments, offshore, and private banking.
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What Is the Use of a Nominee on a Bank Account?
The use of a nominee on a bank account depends on the type of account being opened, the purpose of the account, and the goals of the beneficial owner. That said, in most cases, the use of a nominee is designed to pass the operating burden and responsibility of a bank account on to another person or entity. This may include regular banking activities, sophisticated investments, or anything in between.
With this in mind, here’s a look at the use of nominees in several common banking scenarios.
Nominee Meaning in Finance & Investments
Nominees are commonly used in the world of investments and finance to streamline investment activity. In most cases, this involves invested assets being held in trust, through the UBOs own account at a financial institution, or in segregated accounts with a broker-dealer.
Nominee Meaning in Offshore & Private Banking
When dealing with offshore and private banking, you will often find that Independent Asset Managers (IAMs) or External Asset Managers (EAMs) have nominee access to client accounts at various private banks. This access allows IAMs or EAMs (used interchangeably) to execute the client’s agreed upon investment mandate.
Similarly, when clients open accounts at private banks directly they may agree to a discretionary asset management mandate. In these instances, the bank has nominee access to the client’s securities portfolio held at the bank even though the client retains full ownership of the underlying assets.
Benefits of Having a Bank Nominee
The benefits of having a bank nominee depend on the specific permissions that a nominee is given. However, in most cases, nominees are used in order to facilitate greater efficiency and access more sophisticated investments and banking services.
With this in mind, here is a look at the most common benefits of having a bank account nominee:
- Trusted third party to carry out regular transactions
- Time savings from not managing financial accounts
- Access to greater knowledge and expertise
- Unlocking more established financial relationships
In short, the specific benefits that people look for when employing a nominee depend on their personal objectives. However, most people that decide to use a nominee will be able to capture the above benefits.
Frequently Asked Questions
Below are three of the most common questions that we receive from people looking into the meaning of a nominee in bank account opening. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
How Many Nominees Can I Appoint for My Bank Account?
The number of nominees that you can appoint for your bank account ultimately depends on where you are opening accounts and the purpose of the nominee. Also, it is worth mentioning that in certain countries like India, the term “nominee” refers to an account beneficiary. Note, this is not the same as the context given to the nominee in this article.
Who Is the Nominee in a Bank Account?
In the world of international banking and finance, the nominee in a bank account is a person that is given control of an account to carry out specific actions on behalf of the ultimate beneficial owner of the account. That said, the nominee’s permissions may be restricted to specific transfers and trades. Or, unrestricted to manage all activities in the account.
What Is the Role of a Nominee?
The role of a nominee in the world of international banking and finance is to carry out agreed-upon transactions on behalf of an account owner. These agreed-upon transactions will depend on the type of account (e.g. private, commercial, personal). But also the objective of the account (e.g. investment, transactions, etc.).
Ready to Explore Your Options?
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Of course, if you have any questions, please contact us directly.