What do you need to open an offshore account?

Nassau, Bahamas is a popular location for offshore accounts with UAE expats. (Shutterstock)

The words offshore banking often evokes quite a number of unsavoury connotations. It’s associated with tax evasion, money laundering and high-level of secrecy, but the truth is that anyone can open an offshore bank account and it’s completely legal.

Most expatriates set up a bank account offshore to protect their assets, enjoy tax benefits or greater returns on their money, and have easy access to their funds. Others do it for privacy, with some countries, such as Switzerland, offering confidentiality of bank accounts.

“I would suggest that the vast majority of people living in Dubai have an offshore bank account, or more specifically an account in a jurisdiction that is not Dubai. The primary reason for this is that many of us living and working here are expats and will remit income back to our home country to pay bills and support our families,” said Andrew Prince, a financial planner at deVere Acuma.

If you don’t have an offshore bank account yet and want to know more about the subject, Prince attempts to answer some of the questions you may have:

What is an offshore bank account?

In simple terms, an offshore bank account is one that is located outside the customer’s country of residence.  So, for foreigners living or working in Dubai, practically any country outside the UAE, including the expat’s country of origin, is considered offshore. (However, some financial planners would advise maintaining an offshore account outside the home country, if the main goal is to get the most of the money or enjoy some tax benefits).

Can any expatriate in Dubai just open an offshore bank account anywhere? Are there any restrictions when it comes to the nationality of the applicant?

There are certain nationalities that have restrictions placed upon them due to international sanctions and some politically exposed persons will be subjected to additional vetting, but other than that, it is up to the individual banks to determine what profile of applicant they wish to attract.

Are there any specific countries that are highly recommended for expatriates?

Switzerland, Cayman Islands or Bahamas are some of the most popular offshore havens, but offshore bank accounts can be opened anywhere. For those who have accumulated huge sums of money, for example, money experts may recommend keeping their savings in the Channel Islands (Jersey & Guernsey) and the Isle of Man because they provide better tax environment and are regarded as long established and secure.

What documents do the offshore banks require? Is there a uniform set of requirements for expatriates in Dubai?

There are thousands of different institutes that offer the service and each has varying criteria, so it would be nearly impossible to give exact requirements.

However every financial institution will require at least the following:

.  Passport or National ID showing a picture of the applicant and their signature

.   Proof of current residential address complete with the applicant’s name

For those who may be interested to open an offshore bank account in Switzerland, you can find a list of requirements here.

Expatriates who want to keep their wealth in a bank in Belize,here is a list of requirements.

For those interested in United Kingdom, this will provide you the necessary information.

Do I need to submit original documents?

The originals can either be sent if dealing direct or as is often the case, copies certified by a regulated adviser to accompany the application.

Where it becomes interesting is where an applicant is in company lodgings, or at least paid for by the company and therefore bills are addressed to the employer and not the individual. Some organizations will insist on two forms of proof of address i.e. Dewa bill and bank statement.

In both cases, often there is just a PO Box documented and not the applicant’s full address and therefore the bank’s employee or broker will be required to complete a home visit, certifying they have physically attended the property. Alternatively, some institutions will accept or require in addition to the above, a letter from the employer confirming address etc.

Does the applicant need to be in the offshore country to open the account, or can he do it online?

In essence, accounts can be set up online and original documentation forwarded as part of the vetting. However, it is better to appoint a professional adviser to assist, or stick with a subsidiary of your current branch. It very much depends on what you want the account to do for you by way of facilities – that’s to say, is it just somewhere to “park” funds in a non-Sharia jurisdiction, or will you require loan facilities coupled with offshore trusts etc.?

How can the account holder deposit money in the account if he’s based here in Dubai? Does the deposit need to be done personally if a huge amount is involved?

In many respects, the answer to this question lies with both the remitting and receiving banks’ internal policies. Today, money can be transferred online almost instantly. However, banks have internal limits to protect the individual from entering too many digits. Imagine you wanting to send $1,000 and accidentally press $100,000 instead, particularly if you are distracted at the time. While there is undoubtedly a convenience of online banking, there are times when a personal visit to the branch is merited. For larger transfers where you are changing currency, you will often find a better exchange rate outside of your bank.

A client recently converted GBP72,000 into USD and received USD5,000 more than his bank offered. A heavy price for convenience of using the bank.

What sort of guarantees will a depositor have with the offshore account? Will the earnings made on the deposit be tax-free? Will it stay hidden?

Essentially, individuals should seek professional advice for nationality and individual guidance on taxation, particularly Americans. Generally speaking, the established offshore jurisdictions are safe and secure. Regarding “hidden” there are confidentiality principles in place. However, tax evasion is illegal and not to be considered unless you fancy a jail term. The internet helps you with your online banking and it also helps the tax authorities.

If the bank account holder is married and ends up getting divorced, will the spouse have the right to claim a share of the money in the offshore account?

Generally speaking, all of an individual’s assets globally are counted in a separation situation, but it does rely on that party disclosing they have the account / asset.  That said, there are many high-profile divorces publicized where a spouse has later discovered these assets and returned to court for settlement.

What if the account holder dies, where will the money go?

On death, the money forms part of the individual’s estate and will be distributed in accordance with their will. This may be a lengthy process and therefore a financial planner will assist with considering the “what if” elements of your family’s strategy.


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