What is International banking
Simply put, international banking, also known as offshore banking refers to any banking that takes place across international borders.It dates back to the Renaissance when lenders loaned funds to foreign kings. However, in the contemporary world, international banking is used by companies and individuals seeking favorable banking conditions in a global marketplace.
From another perspective, international banking is viewed as when a bank headquartered in a country extends credit to residents of another country.
For example, when American banks lend money to Canadians. Besides, international banking also includes any domestic loans made in foreign currencies.
For example, when an American bank gives a loan to American residents in Euros rather than U.S. dollars. It also includes any deposits made to foreign banks. For example, when Americans keep money in a bank in Bahamas or Switzerland.
What is an International bank account?
This is a bank account opened in another country other than that you are a citizen of. It can either be an individual account or a company account. The account might be different from the ones in your jurisdiction, and they might have more requirements and different terms and conditions from the one in your country.
However, international offshore bank accounts come with some advantages such as flexibility of operation, tax advantages, and a possibility of more interesting investment services and solutions due to less government intervention.
There must be some benefits of an international bank account otherwise people and companies would not be going for them. Below are some of these benefits:
Advantages of an international bank account
An international bank account enables one to avoid the risks that come with unfavorable economic climate such as currency devaluation, high inflation, war or coup in the nation in which they live.
You can save on tax. If the nation you live in requires you only to pay tax on the money you remit into that country, you will get some tax benefits by keeping your money in an international bank account.
International bank accounts come with maximum flexibility for their owners in terms of usage. This means that you can access your money from ATMs, phone or just online at any time, any country you are in. You can also get any amount you require as there are no limitations on withdrawal.
Still on tax, an international account saves you the tax deductions as any interests earned are paid free from the deduction of taxation. With this, you are guaranteed greater returns immediately and no need to apply for a rebate.
Greater account privacy is the other advantage of international bank accounts. For example, Switzerland among other jurisdictions put greater emphasis on maintaining their clients’ confidentiality always. You can protect your assets from speculative or unfair litigious behavior, an international bank account can be a great consideration.
International bank accounts charge less while some pay more interests than local bank accounts. However, this has changed with time, but it’s worth looking into and do some careful comparisons when going for a new international bank account.
There is a high potential for an expat to retain their current banking providers even after expatriating because most high street banks are connected to the international banks. You can just swap to an international account.
With fewer government interventions in the international financial centers, international banks can offer more impressive investment services plus solutions to their clients.
Disadvantages of an international bank account
Here are some of the disadvantages that come with having an international bank account that will help you decide whether international bank account is worth having:
Historically, international banking/offshore is arguably more risky than onshore banking. If anything happens, compensation from international banks is almost impossible while for onshore, full compensation is never an issue.
The claim can be easily demonstrated by examining the fallout from Friedlander collapse on the Isle of Man. Here, those who had offshore accounts in the Isle of Man had a rough time to get the compensation guaranteed by the depositor protection scheme.
On the other hand, the onshore in the UK that were affected locally by the nationalization of this bank’s parent company received full compensation.
“International bank accounts” are now synonymously viewed as illegal or immoral money laundering or tax evasion activity. Anyone with an account like that; therefore, risks being seen in such a manner even when their international bank account is legitimate.
Choosing an international bank account jurisdiction takes much more than it would when choosing a local bank account. One may well be aware of how his nation’s banking industry operates and its regulations plus the rules, but these differ massively with other jurisdictions. Also, to note, some international banking havens are less stable than others.
The terms and conditions of an international bank account might be more demanding than that of a local bank account. They might charge higher if one fails to maintain a minimum balance. Their fees and charges for the services and account you wish to use might be different. Always do a thorough check up before the final decision.
When it comes to solving issues that arise with international accounts, it may take more time and money than it would for an onshore account. A simple explanation is that you cannot be there physically nor speak to someone in person.
In a nutshell. International banking is not what it used to be ten years ago. The only significant advantage is its flexibility otherwise it can be overkill for your financial circ*mstances.
The greatest consideration for those looking forward to having international bank accounts is the bank safety. There has been this propaganda that have led most people to believe that their money will vanish if they move it overseas.
Best countries to get an international bank account
This type of propaganda is only nullified by the fact that every developed country has a deposit insurance for their banking clients solely for their money safety.
The next consideration is on interest rates and the stability of the jurisdictions. Some emerging international banking jurisdictions are offering higher interest rates and are thus more likely to attract more clients.
Banks operating under an open door policy are also more preferred. Below are the five best countries to get an international banking account. However, one should always do their research prior to making a decision.
1. Germany. The number one safest bank in the world, KfW (according to Global Finance), is in Germany. Besides, the world’s fifty safest banks are also found in Germany.
Being one of the Europe’s stronger economies, this country takes its banking system seriously. The bank secrecy in Germany cannot even be compared to that in other German-speaking countries such as Switzerland or Austria. It is far better.
2. Singapore. Singapore is home to many of the world’s best international banks. Singapore is home to three of the world’s safest banks (according to Global Finance): (#12) DBS, (#13) OCBC, (#14) UOB. Note: OCBC is the World’s strongest bank.The highest single thing that has put Singapore on the forefront is the acknowledgment of the fact that capital goes where it’s treated best.
By virtue of the above understanding, Singapore is the richest country in the world, thus making it a great country to bank in. However, it is now getting harder to get an international bank account in Singapore, but it is still possible. The truth is, most wealthy Asians are now ignoring Switzerland for Singapore showing that it is a great country to the bank.3. Netherlands. This country is one of the safest to have an international bank account. The Netherlands bank accounts are protected by bank deposit insurance for up to 100.000 euros; the EU minimum. This gives any client total safety for their money. Besides, this country is home to three top international banks in the world: (#2)Nederlandse Gemeenten, (#6) Nederlandse Waterschapsbank, and (#10) Rabobank.4. Australia. It is not uncommon that Australia is referred to as the “Switzerland of the South Pacific”. Most wealthy Asians are now moving their money to Singapore and Australia. This is for the simple reason of bank safety in this country.Australia controls four positions, on the 50 safest banks survey. (#16) National Australia Bank, (#17) Commonwealth Bank of Australia, (#18) Westpac, and (#19) ANZ. This has resulted in many people moving their money to the country, and the good news is, opening a bank account in Australia is possible.5. Canada. You will be surprised to find out that Canada is home to some of the safest banks in the world. These banks include (#11) TD Bank, (#16) RBC, (#21) the Bank of Montreal, among others.
Is it easy to get an international bank account
The ease of getting an international bank account is determined by the country that one chooses to open in.Some countries such as Singapore operate under the “open door policy” and thus they welcome just anyone. However, other banks in countries such as Qatar will be hesitant to open a bank account for Americans or American companies and some other foreigners.
This is because they are always in the fear of them plunking a few bucks in their accounts then disappearing never to return. The following three factors play a significant role in determining how easy it will be for you to get the international bank account:
Your willingness to travel to your country of choice to open the account. The fact is, most reputable banks will want to see you in person for them to open for you the bank account.
The requirement is based on the enhanced regulations in such countries. If you can’t visit in person, you will either be denied the account or your options be more limited.
Your citizenship. For example, US citizens are highly disadvantaged due to FATCA. Even the non-US citizens spending time or living there suffer the same disadvantages.
The amount of money you have. Some banks require you to plunk in high amounts when opening an international bank account. This can be a limitation if you don’t have as much as they require.
Opening an international bank account can be so easy if you do your research well. You can even seek an expert’s help if need be.
Can companies benefit from having an international bank account?
The answer is YES. If your company has financial commitments in more than one country or currency, an international bank account comes in handy as it allows you to bank in different currencies or even multi-currencies.International banks can offer their clients more interesting investment services plus solutions due to fewer government interventions.
Your company will also get tax benefits if the country you are living in expects you only to pay tax on the money you remit them. You benefit more by keeping your money in an international bank account.
Companies also take advantage of the flexibility offered by international bank accounts. You can withdraw any amount and at any time of the day or night. You also have the option to withdraw online, from ATMs or phones.
Your company will reap more returns as the interest earned from these banks are paid free from taxation deductions. You will have no need to apply for a rebate.
Your company’s account will enjoy greater privacy as the international bank accounts offer the most account privacy.
Can Individuals benefit from having an international bank account?
Again, the answer is YES. You can benefit from having a private bank account manager or relationship manager if you choose a private international bank account or premier account. Such a service is beneficial to anyone desiring a more hands-on approach to their account’s management from their bank.Your individual account will enjoy greater privacy as the international bank accounts offer the most account privacy.
Your will reap more returns as the interest earned from these banks are paid free from taxation deductions. You will have no need to apply for a rebate.
You also benefit from the flexibility offered by international bank accounts. You can withdraw any amount and at any time of the day or night. You also have the option to withdraw online, from ATMs or phones.
Your will also get tax benefits if the country you are living in expects you only to pay tax on the money you remit there. You benefit more by keeping your money in an international bank account.
International banks can offer their clients more interesting investment services plus solutions due to fewer government interventions.
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