Is it a good idea to open an offshore bank account with introducing services?
To open an Offshore Bank Account, it may seem daunting and/or even taboo in some cultures. However, to alleviate the stress and unfamiliarity, incorporation firms have a solution. Bank Introducing Services are offered as a way to package incorporation, provide extra services and pad the top-line of incorporation firms. However, is this worth it? Is it possible to open an offshore bank account without these introducing services?
Open an Offshore Bank Account with Introducing Services
So you do not know where to begin with offshore company formation and you know you will need an offshore bank account as well. You may also know where to begin with offshore company formation, but feel like your business is a bit high-risk in nature to be going about it alone. Consider that you likely do not have offshore legal counsel as you may not have determined your jurisdiction and the last thing you need is to have an offshore company and nowhere to bank.
Here’s how it works with offshore bank introducing services…
Think of it like working with an agent who works with your registered agent and incorporation firm. When you form an offshore company you can package it together with the incorporation services. What you will notice immediately is that your incorporation firm is not your registered agent and this applies regardless of whether you choose introducing services. It is important to note this as your registered agent is not the one who will be facilitating your bank account opening process, it will be your incorporation firm.
The incorporation firm is an intermediary that facilitates legal and financial relationships and formations. That’s all they do. They do not tell you if your selected jurisdiction is right for you, they do not provide you with any legal insight other than the narrow process of incorporation, and offshore bank introducing services do not really take into account the needs of each client.
Offshore bank introducing services help companies open offshore bank accounts in a one-size-fits-all fashion. The name of the offshore bank is usually not revealed on the websites of the incorporation firms when they are a part of a package. This means that you really do not know what you are getting and you are not even assured that the account will be opened.
Does this make the incorporation firm a shyster? No.
Does this mean you should not do business with incorporation firms? Definitely not. They provide some excellent basic services at an affordable rate.
The process of opening an offshore bank account through the incorporation firm does not start until the incorporation in the jurisdiction is finalized. The next step is to open an offshore bank account and since the incorporation firm has been through hundreds, if not thousands of these applications, they will guide you through the bank application. The timeframe from bank application to bank account acceptance can take as long as a whopping two months. Some banks are more efficient than others. The incorporation firm providing the offshore account introduction services ensures that everything is complete, ready and organized for the account acceptance.
Is this service worth it? No.
When you open an offshore bank account it is not like purchasing an orange.
Opening an offshore bank account blindly is risky. This is going to be an important partner in ensuring that your money is secure, you are able to freely move your money and reducing friction in terms of cash flow. If your bank is costing you time and money, you need a new bank. However, there is no way to know if the bank meets your needs if you cannot research them and you have someone else serve as an intermediary between yourself (your company) and the bank.
Commoditizing banks and thinking all banks are the same is certainly not true. They are not and the banks’ size, relationships, services and quality of services are very important. The characteristics of the banks are not the same. You’re getting an offshore bank account to be able to do things that you would not be able to do in your home country. Getting just any offshore bank account and considering it good enough is ludicrous.
To be fair, almost all offshore incorporation firms offer bank introduction services a la carte. They always list the offshore banks they work with, but when packaging it as part of the incorporation process, it is presented blind.
The Markup on Offshore Bank Introducing Services
When you open an offshore bank account as part of an incorporation package, it does come at a cost. Of course, you or someone within your company can go through the process of researching and applying for offshore bank accounts in a desired jurisdiction.
How much extra is the help with completing an application and being introduced to a bank?
Depends upon the provider, but here are some screenshots of prices for services.
The process of applying for a bank account should be as simple as contacting the individual banks. Calling them during their business hours and being directed to getting an application is rather simple.
You and your business should not have a problem opening an offshore bank account if:
- Your business is not considered high-risk: Gambling, Tobacco, Alcohol, Pornography, Arms and Ammunition, Financial Services with a Fiduciary Duty, Pharmaceuticals, etc.
- Your business has a nexus to the bank’s location.
- You meet the minimum deposit requirements.
- You fully complete the application with supporting materials.
- You have a background that passes Know Your Customer/Due Diligence.
- You are not a U.S. citizen.
U.S. citizens and residents can open offshore bank accounts, but it is an impediment even when they have offshore companies.
Once the introduction process is over, the incorporation firm goes away and it is just you and the bank.
In short, open an offshore bank account yourself.
Open offshore bank accounts yourself and you have these benefits:
- Save money
- Comparison shopping and research aspect
- Choose your bank
- Customize your banking experience
- Relationships with bankers start with the application process
Remember, these are commercial relationship bankers you are dealing with, not elites who could not be bothered with you. They want to do business with you and your company, but the business climate is becoming antagonistic and hostile, especially toward U.S. citizens.
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