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Most people understand offshore accounts to be an account reserved for only the rich. However, this is just a misconception. an offshore bank account can be opened and owned by any individual as long he/she meets the requirements of the offshore bank. In most cases, opening an offshore account only takes minutes. This is because the advancement of the internet has made everything easy.
In this article, we will focus on explaining what an offshore bank account is, and how it works.
WHAT IS AN OFFSHORE BANK ACCOUNT?
An OFFSHORE BANK ACCOUNT is the type of account opened outside an individual's jurisdiction or country. These bank accounts are mainly used by individuals who invest, study, work or decide to retire in a different country. Individuals who do business with international banks also make use of an offshore account.
For the longest time, the most popular countries that practiced offshore banking were Switzerland, the Cayman Islands, and the British area of Bermuda. These countries were well-known for being popular centers to open offshore bank accounts.
However, in recent years, other countries have joined the club. Countries like Mauritius, Ireland, and Belize have joined to become one of the popular centers for offshore banking.
As mentioned, people have a misconception about offshore bank accounts. They believe it's only for the rich, top financial companies, affluent criminals, or accountants. Nevertheless, offshore bank accounts are not illegal, or solely used for illegal activities. Offshore banking has a lot of legal advantages and uses. However, people believe that individuals use it to evade tax, or for money laundering.
For instance, it's illegal when an individual based in the USA deposits funds in an offshore account with different baking rules and regulations.
HOW AN OFFSHORE BANK ACCOUNT WORKS
An OFFSHORE BANK ACCOUNT can be set up by any individual, as long as the individual meets all the requirements needed.
Additionally, opening an offshore account is not expensive. It doesn't require a huge sum of money contrary to popular opinions. Let's break it down, a personal offshore account owned by an individual ranges from $300 to $1500. How it depends on the country, and the laws governing the jurisdiction. For companies, they range from $1,500 to $2,500.
HOW TO OPEN AN OFFSHORE BANK ACCOUNT?
To open an offshore bank account, the individual needs to fill out an application, initial deposit, and meet the requirements. Once all the information submitted is verified, the account is activated. The application process is easy. It comprises the applicant's name, house address, and telephone number. The applicant provides a valid document that verifies his or her address. They also provide their minimum deposit and withdrawal information.
An offshore bank account offers its customer privacy, however, this basic information is required to safeguard the customer's funds and avoid impersonation. Therefore, a customer has to provide basic information such as a photograph passport, an authenticated light bill, reference letters, and other requested information. This document is to confirm the applicant's identity and avoid any sort of impersonation. With the high alert of fraud ongoing, the ability to safeguard customers' funds depends on the ability to authenticate their identity during funds withdrawal.
There is no difference between opening a local bank account, to opening an offshore bank account. They both require the same information. This information includes:
- Applicants name
- Original address
- Date of birth
- Citizenship
- Occupation
Like every other banking system, the information provided has to be verified. The applicant must provide a valid government-issued ID, a passport, or driver's license, or a light bill payment.
Additional information such as a payslip that provides your earnings information for about 6 to 12 months.
This financial statement is mostly used to verify your source of income and ensure you have a good record with your bank. The bank can also ask questions such as the motive behind the opening of the account. This is done to minimize the widespread fraudulent activities within offshore banks.
Once all this information is provided and verified, opening an offshore account should be easy.
PROCEDURES ON DEPOSITING FUNDS INTO AN OFFSHORE BANK ACCOUNT
Thanks to the advancement of the internet, individuals don't need to carry cash from one country to another just to deposit funds into an offshore account. Most offshore bank accounts can be funded via international wire transfer.
However, this is not a straightforward process. An international wire transfer is not the same thing as a domestic wire transfer located in your country. When transferring money into an offshore account, requires a different transfer process.
However, when you have all the details, it becomes simple. With just a click using your computer, laptop, or mobile, you can transfer funds into your offshore account. However, these types of transfers incur a transfer charge. Receiving or sending funds into an offshore account incurs a transaction fee.
PROCEDURES ON WITHDRAWING FUNDS FROM AN OFFSHORE BANK ACCOUNT
Depositing of funds might require some extra work, but the withdrawal of funds is a different ball game. Offshore banking systems offer individuals different methods of funds withdrawal and a means of providing comfortability for their clients.
Several offshore banks offer international debit cards to their customers. The cards enable their customers to have easy access to their money at any location. However, these cards attract a monthly fee, so it is advisable to do thorough research before opening an offshore account. The fees incurred from these card usage can accumulate over time. However, for people using ATMs, withdrawing a huge amount at once is the best.
Most people who operate an offshore bank account also own a local bank account. This helps for the easy transfer of funds.
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