Assisting clients with offshore and international banking
Selecting an offshore Bank
Offshore Account Opening and Maintenance
Acorn Business Services Consultancy Worldwide has been assisting clients to establish and administer offshore and international bank accounts and has developed useful expertise in identifying and working with suitable offshore banks and international banks.
Most importantly, Acorn Business Services Consultancy Worldwide is not an offshore bank, we are an international and offshore corporate and trust services provider. However, a significant percentage of the companies and trusts we administer establish accounts with international and offshore banks rather than domestic banks because often their characteristics include:
- Familiarity with offshore and international business.
- Worldwide investment and business perspective.
- Lack of foreign exchange controls.
- Access to special investment opportunities.
The objective of this section of our website is to advise potential clients of the "basics" and to provide answers to the more common questions relating to offshore banks and establishing and administering an offshore bank account.
Selecting an Offshore Bank
Acorn Business Services Consultancy Worldwide has been assisting clients to establish and administer offshore and international bank accounts and has developed useful expertise in identifying and working with suitable offshore banks and international banks. By the very nature of our business we are exposed to a wide range of offshore banks and international banking activities and we aim to learn from these experiences.
Safety - will my money be safe with an offshore bank?
The factors to consider include:
- The political and economic stability of the jurisdiction(s) in which a bank is head-quartered, located and regulated.
- Reputation and substance - Standard & Poor's, Moody's and Fitch rating reports are useful.
- Quality of regulation and access to deposit and investor protection and insurance schemes.
- Parent company or similarly guarantees.
The business focus of the bank
In general the banks we work with seek to provide services to some or all of these types of clients:
- Private banking clients.
- International commercial activities, such as trading.
These services are provided from both offshore banking and international locations
Private Banking Clients
Although private banking is not a simple business, there is a very simple business model to keep in mind: "keeping rich people happy". The definition of "private banking" varies from bank to bank but is generally taken to mean investment management offered on a personalised basis by a bank to an individual with disposable wealth of more than $100,000 (although some banks do not offer private banking services to clients with disposable wealth less than US$ 500,000 or US$ 1 million). Private banking is obviously not synonymous with "offshore", but the costs of a personalised relationship begin to be worthwhile at the $100,000 + level in the light of the superior gains to be realised from offshore investment. Private bankers probably prefer themselves to be approached and considered as objective financial advisers rather than as an investment-provider, and consequently private banks may not be the most effective choice for a reasonably sophisticated investor who wants to play an active role in the management of his investments.
Numerous offshore banks have sought to specialise in the provision of banking services to expatriates as they perceive such business as being relatively risk free, easy to "systemise" and profitable. In essence, expatriate services encompass managing accounts for people resident outside their home countries who may or may not be employed. The focus of expatriate banking providers is online banking, call-centres, relatively low levels of expertise and the provision of "packaged" investment and protection products, such as life insurance. Whilst the service offered should be professional and "smooth", the relationship between an expatriate client and his expatriate banking provider could not be characterised as personal or in any way similar to the relationship between a client and a top-flight private bank.
International Commercial Activities
Many of our clients utilise the companies we administer for commercial purposes, such as trading. In such circumstances an offshore bank that specialises in private banking or expatriates will be unsuitable. Our commercial clients seek similar services to an onshore commercial bank and will require access to some or all of the following services:
- Cash management.
- Foreign exchange and treasury services.
- International trade - letters of credit, documentary collections, cross-border guarantees and global banking services at locations around the world.
- Risk management: foreign exchange, interest rate, equity and energy price risk management tools.
- Payment, receivables and payroll solutions.
- Selling solutions: point of sale, e-commerce and merchant programmes.
- Speciality solutions, such as dealer, shareowner and fund services.
- Expertise in matters such as energy, aviation, shipping or real estate.
Offshore Account Opening Procedures
All the offshore and international banks we work with regard the prevention of money laundering and terrorist financing to be of the utmost importance, so do we.
Acorn Business Services Consultancy Worldwide does not seek to work with offshore banks which have low standards of compliance as, apart from our own desire to only work with reputable partners, the culture and business ethos of such offshore banks must be flawed.
Consequently the offshore and international banks we work with will seek to:
- obtain evidence of our clients' identities,
- develop a documented understanding of our client's banking and business activities,
- identify the source of funds paid into accounts to ensure that such funds are not derived from criminal activity and to document evidence relating to source of funds.
- monitor banking transactions to identify and forestall money laundering,
- risk assess each and every client.
This means that offshore account opening procedures can be onerous and time consuming.
Typically offshore banks will require some or all of the following information to open and operate an offshore account for a simple offshore company which is owned by individuals (rather than a corporation, trust or other form of entity):
- Certified proof of identity of owners, directors, account signatories and all parties connected with the offshore company. Acceptable proof of identity would normally include a passport copy certified in a prescribed manner by an officer of the bank, a notary or an authorised Acorn Business Services Consultancy Worldwide Manager.
- Proof of residence of all parties associated with the offshore company. Acceptable proof of residence would typically include an original bank statement or credit card statement.
- The provision of a curriculum vitae.
- The provision of bank or professional references.
- Information relating to the expected annual income or asset base of the offshore company, the number of transactions per month, the geographic spread of the proposed business and the amount of money that will be left on deposit at the bank.
- A detailed description of the proposed business activity, often supported by documentation such as brochures, copies of contracts, audited accounts, business plans and details of trading partners or investments.
- Documented evidence relating to source of funds, eg if a million dollars is to be paid into an offshore company's account, the bank will seek to obtain documentary evidence relating to the source of such funds in the form of a bank statement, contract or similar.
- An initial meeting with potential bankers possibly with an Acorn Business Services Consultancy Worldwide Manager. Some banks require clients to visit them on an annual basis.
- In addition, enhanced due diligence will be undertaken if the affairs of the offshore company are complex or if it, or any party connected to it, is associated with what banks or regulators perceive to be high-risk. For example, stringent enhanced due diligence is typically applied to business emanating from countries which were former members of COMECON, counties classified as "non co-operative" by the Financial Action Task Force, or countries associated with the production and distribution of illegal drugs or infamous for corruption.
Offshore Bank Account Maintenance
Once an offshore account is opened it is important to keep the offshore bank briefed and current with the affairs of a client company or trust. Banks do not react well to unexplained account activity, so if a company's trading pattern is set to change or a large or unusual transaction is about to occur it always wise to pre-warn the bank and provide documentation such that the bank can understand and maintain evidence of the wholesomeness and reason for the proposed transaction.
Maintaining an efficient relationship with a bank is a two-way process.