How to successfully open a bank account abroad

Opening accounts abroad helps you to diversify investments and ensure that you are not solely dependent on just one country, but it’s not always easy. In today’s article we explain some points that you should be aware of before doing so.

Regardless of which offshore banks you may opt for (our e-book on offshore banking may help you to choose which are the most interesting options for you), the action of selecting them is only one half of the story, the other half, crucially, is that they are happy with you and, as such, they allow you to open an account with them.

Key considerations regarding offshore or foreign banks

Generally speaking, foreign or offshore banks function in the same way as do those in your country. A bank account abroad is no more than an account in a jurisdiction different to that of your place of residence or citizenship. When we discuss offshore accounts, we are referring to accounts abroad, that is to say, the terms are used interchangeably. However, accounts in neighbouring countries are rarely considered offshore. If you are Spanish and you have an account in Portugal or France, it is most likely that said account is not considered offshore.

For an account to be considered an offshore account, it requires an additional characteristic—greater banking secrecy, lower taxes or higher level of security, to name a few examples.

Key considerations regarding opening bank accounts abroad

If you are going to open a bank account abroad (or anywhere) the first thing you must do is understand what the bank is expecting of you and what kind of clientele it wants to work with. More specifically, you must be able to put yourself in the shoes of the bank clerk who will attend to you.

Two of the most prized assets of banks are the trust of their clients and their banking licence which grants them a legal right to conduct banking activities. Jeopardising these assets is the very last thing they want to do. They would rather avoid getting embroiled in cases of tax evasion, undeclared money, and any illegal practice. Simply put, it has to be very clearly worth their while to accept a client who could bring this type of problem.

Meanwhile, we have the bank clerk. Their main priorities consist in staying well clear of any trouble, obtaining the maximum profit possible through commissions and, last of all, doing their job, which is opening bank accounts.

As far as the bank clerk is concerned, it is preferable not to open a single account than to open accounts for five good clients and one who causes problems. That said, if they believe the client will help them earn a good commission, they may set aside their doubts.

If opening this account is important to you, ensure to make a good impression, be as transparent as possible regarding the origin of your funds and have a clear idea of why you want to open the account. Adding an insurance, investment or additional service may make the difference if the bank is undecided as to whether or not to take you on.

What banks will want to know about you

Before going to the branch, you should prepare answers to several questions. The first and most important is, why do you want to open an account with this particular bank or in this country?

What link do you have with the country? What has taken you there? Perhaps you have investments, businesses or companies there, you are currently living or will live there, you have a second home in the country, you are going to buy property there, or you consider the country’s economy more stable and you want to protect your money.

Once you have explained why you want to open a bank account in that particular location, the following questions will address three different points:

1. Who are you?
2. What is the origin of your funds?
3. What will the account be used for?

By law, all banks must obtain information about their clients, known as the famous KYC (know your client) process. They will want to know where you are from, where you live, what you do for a living and more.

To avoid reputational and legal problems, they will request information about the source of your funds. They will want to know when and how you have earned the money.

Lastly, according to the jurisdiction and the bank itself, they may also ask you about what you will use the bank for. Bear in mind that the clearer you are on this point, the easier it will be for you later on.

If you are expecting to receive large sums of money, it is important that you notify them in advance. If you are going to transfer yourself money from a crypto exchange, or if you just want to set up a temporary account, the same applies—you ought to inform them.

As much as you want to make your life easier at the beginning, be advised that the worst-case scenario is not them refusing to open your account, but that they open it and then freeze your assets.

Should you consult an intermediary to open your bank account?

In the world of offshore banking, there is no reason to do it all by yourself. In many cases, to save time and hassle, you can contract the services of intermediaries, especially for business accounts. These intermediaries have contacts within offshore banks which they can direct you to in exchange for a small commission (usually between €400 and €1200).

Intermediaries can be all kinds of people, it is often local lawyers, financial advisors and other financial service providers. Offshore agencies who are responsible for setting up and managing offshore companies often insist obstinately on providing their clients with a bank account abroad. However, the choice that they offer is usually very limited.

Bear in mind that not even intermediaries can guarantee you that they will be able to open an account for you. In the worst-case scenario, you will have paid high commission fees and yet you still won’t have an account—this is a risk that you must be aware of.

Nevertheless, an intermediary can help make the process much more manageable, because they can advise you in all the different aspects and prepare all the documents you will need. Moreover, there are countries in which you will need an introduction for the bank to open you an account; intermediaries can help with that.

As we have already mentioned, the contacts of almost all the agencies tend to be extremely limited. It is highly likely that the bank the agency is suggesting only partially covers your needs. In the best-case scenario, the largest financial service providers may be willing to contact other banks of your choosing in exchange for an additional fee. It is more probable that this is successful if the agency has a physical branch in the corresponding jurisdiction.

Whether or not you can do it by yourself depends, ultimately, on the image that you project. If you are not sufficiently attractive to the bank, they will not open the account you want. That’s why it is important to be transparent, present an image of professionalism and be able to present a business strategy to the banks which will include favourable prospects of income.

Completing the application

In both cases—if you decide to seek the advice of an agent or not—you yourself will have to provide the necessary information on the application forms. If a financial advisor mediating the opening of your account only asks for your signature it is likely to be a bad sign, either because the banks in question are not reputable or because, in reality, they will do nothing.

When it comes to presenting your application, don’t hesitate to ask for help with the bank itself. Not all fields on the forms are completely clear, and many may benefit from a little additional explanation. The best approach is to call the bank as you do it, as this helps to leave a good impression and reflects greater transparency when compared with just sending emails.

When prospective account holders are unsuccessful in opening an account, it is usually due to incomplete information or there being missing documents. This can become a real headache, given that increasingly more demands are put on them owing to the tightening of regulations and the dangers around exchanging information.

This is even more the case when you are not resident in the country (or any country). This calls for overcoming some additional challenges, such as the notarial certification of documents, which often causes lots of doubts.

Certification, notarisation and apostilles

As we mentioned previously, banks are obliged by law to know the identity of the signatories and the end recipients of a bank account. This means that banks need the following information:

• First name and surname
• Nationality
• Date of birth
• Address
• Email address
• Telephone number

It should be noted that, as a result of the tightening of regulations, soon also the Taxpayer Identification Number or tax ID and similar documentation will be required.

In any case, failing to validate your identity can lead to serious consequences, which is why banks will ask you for additional documentation. Later in the article we will deal separately with both the procedure for opening private and business accounts.

Given that the required documents can be very easily falsified, almost all banks insist on receiving certified copies. In broad terms, we can identify three levels of certification:

Certification

The most basic level is the certification of a copy of the original document. An example would be someone writing in the copy of a passport that they can certify its authenticity because they have seen it themselves. In theory, anyone—apart from the passport holder—could do it, but its practice is limited to lawyers, accountants and other legal and financial professionals. Directors of large companies also perform this role.

Notarisation

The second level of certification is notarisation. Notaries are authorised by the local authorities to certify documentation.

Apostilles

Lastly, we have apostilles. Apostille was created by virtue of an international agreement to do away with the tiresome legalisation of documentation. Today, apostilles are valid in 117 jurisdictions, so the drawn-out processes of legalisation have not completely disappeared. In jurisdictions which do not recognise apostilles, documents can only be legalised in the embassy of the corresponding country. In reality obtaining an apostille is not often very important for offshore banking, but it does tend to be a necessary requirement when it comes to acquiring residence abroad. If getting an apostille is impossible, most banks will accept a notarisation.

Apostilles mean, ultimately, that the legalisation process is passed on from the embassy to the notaries of a country. By way of proof, notaries can apostille legalised documents. It provides a guarantee from a government that has agreed to the Apostille Convention its confirmation that the notary is duly authorised.

Opening accounts for individuals

Opening an account for an individual is always more straightforward than opening one for a company, a foundation, association and such. For a private account, you will need the documents listed below.

Passport, ID card, etc.

The only document that all banks require to open an account abroad, without exception, is a document verifying your identity. This is usually your passport, but depending on the rules of the bank it may also be an identification document or a driving licence. In English-speaking countries, a driving licence tends to be sufficient.

Proof of address

Notwithstanding the above, in many cases a proof of address will also be required. This is difficult to avoid, especially when you are opening a bank account remotely. Depending on the bank, this could be in the form of an itemised bill (electricity, water, telephone, for instance), bank statements or credit card bills which clearly show the name and address of the individual.

If you are living a nomadic life, and no longer have a fixed address, this requirement may cause you problems. One solution would be to use the bank statement of an account or credit card that you had previously, when you had a permanent address.

Another option would be to rent a property (or room) on a temporary basis in another country and thus obtain the necessary bills. It goes without saying that in today’s world, in the age of Photoshop, there are other methods by which you can obtain what the bank is asking for, but be aware you will be in deep waters if you are found guilty of falsifying documents. You must also know that software is capable of detecting if an image has been altered.

In any event, the address that you use must exist and you must be able to access its post, because the bank will send the bank cards and other documents there. There could be issues in the future if the cards are lost or are renewed and you no longer have access to the address. One solution would be to collect the documents and cards directly in a banking branch.

Needless to say, you could always use the address of a friend or family member to save yourself some problems.

Lastly, the safest option consists in having a physical base somewhere in the world, a property that you have access to.

References

Sometimes, banks request letters of reference. In general, this simply means a local bank where you have held an account for some time will provide a reference on your behalf. Most banks issue references without any problem, though it must be said, the concept tends to be unfamiliar to most bank staff, and typically only the directors will know what you are talking about if you ask for one. Also, you will have to pay between $10 and $100 per reference—this depends on the bank.

Occasionally, a professional reference is requested instead of, or in addition to, a reference from the bank. It must come from a tax advisor, solicitor, doctor or other individual practising an accredited and regulated profession, and the relationship with them must have been maintained over a period of several years. However, as this is not an easy requirement to obtain, most banks will not request this reference provided that the rest of the application appears bona fide. In many cases it is sufficient to provide a letter of reference written by a company owner with whom you have been doing business for some time.

Opening business accounts

Generally speaking, the same criteria are applied to both business and private accounts. Each partner and company manager must present the same documents as they would when opening a private account. If trustees are used, the bank will also need to see their ID documents.

Aside from this, to open business accounts certain other additional documents are required (in many cases together with their respective certified translations):

• Articles of Incorporation/Association/Organisation (basic company rules)
• Memorandum of Association (how the company operates)
• Certificate of Incorporation (proof that the company is registered)
• Certificate of Good Standing (certificate of validity, proving that an old company is still registered). When companies’ records are public, this certificate is not usually necessary.
• Certificate of Incumbency (list of the company’s authorised signatories)
• Business plan

Not all banks require all these documents but, in general, the best banks do. Aside from the business plan, all the documents listed must be duly certified. If you are using an intermediary, if is highly likely that they will deal with that.

Accounts for other entities

For trust and foundation accounts, the requirements are similar to those of a business account.

Submitting the application

Once you have correctly filled out all the application forms and have all the necessary documents, you will be ready to submit the application. In general, this must be done through a courier service, which will deliver your important documents securely to the bank or to the intermediary.

You must, at all costs, avoid losing the application because, should you do so, you will have to go through the whole process from the beginning.

The period of time between submitting your application and its approval varies hugely. It may take only a few days, but it could stretch to several weeks. That said, if the bank is happy with your application, it will be very quick to open your account.

Then all you will have to do is transfer your funds to the account that you have just opened.

You will find much more information about the international banking sector and a detailed comparison of the different options of opening accounts abroad in our e-book about international and offshore banking.

Or if you would like us to help you free yourself from the burden of the State and live a more liberated life (free from taxes and more) you can go ahead and book a consultation.