Citizens of most countries are free to set up foreign bank accounts. You may think that you do not really need a foreign bank account but you cannot actually predict the future. Something may happen in your home country that will make a foreign bank account highly desirable. National currencies do fluctuate and having a bank account in a foreign country would mean keeping part of your capital in a different currency (or different currencies). This may be one of the reasons why you should think of opening a foreign bank account: to protect yourself from currency fluctuations.
The Covid-19 pandemic has changed many people’s lives dramatically. They have suddenly discovered that they can earn incomes without leaving their homes. If you work from home, you can have international clients too and if this is the case, you need a bank account in a foreign country too. If it is easy for a client or an employer to pay for your services, your chances of getting hired improve. Now, if the client/ employer is in a foreign country, it is much easier for him/ her to transfer money to a bank account in his/ her country.
Why else may you need a foreign bank account?
Sometimes, people open foreign bank accounts ‘just in case’. However, several groups of people cannot do without a foreign bank account. These include the following ones:
- Entrepreneurs who want to pay for products and services abroad and accept payments from foreign customers;
- Freelancers working for foreign clients;
- Students of foreign colleges and universities: they have to pay the tuition and cover their everyday costs;
- Applicants for legal residence in a foreign country or citizenship of that country: whichever visa program you choose, some costs are going to be involved in any case.
Even if you don’t have to have a foreign bank account, you should consider setting one up because you can find some advantages in foreign countries that the banks at home simply don’t have. Depending on the country and the bank that you choose, you may find some of the following benefits when opening a foreign bank account:
- Higher interest rates on deposits;
- Access to international banking products and services that are unavailable in your home country for legal reasons;
- Confidentiality and banking privacy;
- Online account management opportunities;
- Availability of tax incentives;
- Asset diversification opportunities;
- New investment opportunities in foreign countries;
- An opportunity to set up a multicurrency account thus saving on currency exchange.
Can you open a bank account in a foreign country without visiting that country?
Is it possible to open an account in a foreign bank without leaving home? The answer is affirmative but there are two methods of remote account opening. First, you can do it online and second, you can do it by proxy. You have to realize, however, that many banks are more cautious when taking non-resident clients onboard: they feel more comfortable when providing services to local clients. Some banks do open accounts for foreigners remotely but they may sometimes limit the range of services available to foreign clients. Some other banks will want you to pay a personal visit to open accounts there. Alternatively, you can hire a representative in the foreign country that you are considering and authorize him/ her to open a bank account on your behalf. Your chances will improve in this case and you will not have to go to a foreign country but you will have to pay the agent for his/ her services.
We must note that opening a personal offshore bank account online is quite a realistic opportunity. It is true that banks in some faraway lands such as the Bahamas, for example, are less choosy when it comes to taking non-resident clients onboard. At the same time, the recent lockdown experience has made banks in reputable European jurisdictions offer more opportunities for remote account opening too.
There is one more option that you should not disregard if you are thinking of setting up a foreign bank account. A number of Payment Service Providers (sometimes also referred to as neobanks) offer a wide range of banking services. You don’t have to leave home to set up an account with Wise, Payoneer, Revolute, N26, Black Cat Card, or some other PSP as client identification is performed online and with the help of mobile applications. At the same time, you will be able to make international money transfers in the same ways that you could use if you had an account with a traditional foreign bank. The only thing is that using a PSP for money transfers is going to be less costly than using a traditional bank for this purpose.
How could you go about opening a corporate bank account abroad?
Let us say from the outset that setting up a foreign bank account for your domestic company would be a challenging task. The easiest way out would be to register a company in the foreign country of your choice and then open a corporate bank account in the same country. You will have to complete the following tasks:
- Choose the country;
- Register a company there;
- Chose the bank in the country;
- Apply for banking services.
Choosing the country
It’s good for business if your company is registered in a reputable jurisdiction. If you started a company and set up a bank account in one of the Western European countries, for example, your (potential) business partners would feel more trustful and inclined to work with your company. You must realize, however, that the company registration and maintenance costs are going to be comparatively high in a well-developed country and the same goes for the costs of banking services. Thus, you will have to weigh all the pros and cons and compare the prices when choosing the country where you want to register a company.
Registering a company
The process of registering a business entity in a foreign country does not require too much effort or time whatever country you look at. If you opt for an offshore jurisdiction, however, you will find that registering an offshore company remotely is quite possible and little costs are involved. At the same time, you have to realize that some financial institutions in well-developed countries look down on offshore companies and refuse to cooperate with them. If this factor is important for you, you should probably look elsewhere.
Choosing the bank
There are some universal criteria that you should always take into consideration when choosing the bank for your company – at home or abroad:
- Reliability. You should check the bank’s credit ratings and log on to its official webpage. Besides, you should check out the bank clients’ feedback.
- Universality. Learn about the banking products and services that the bank offers. Assess their suitability for your corporate needs.
- Comfort. If you are not planning to relocate to the foreign country where your company is registered, you have to be able to manage your bank account remotely. Does the bank offer online account management opportunities? Do you speak the language of the country? If not, do they have a webpage in a language that you know?
- Opportunities for premium customers. Are any special offers available to premium customers? Can you negotiate individual service conditions and/ or individual tariffs?
Applying for banking services
When setting up a corporate bank account, you have to submit quite a large number of application documents including the corporate documents and company officers’ personal documents. When you are setting up a corporate bank account in a foreign country, the risk of making a mistake doubles. For this reason, we highly recommend that you seek some professional assistance when applying for banking services in a foreign country.
As far as the timeframes are concerned, it’s hard to say anything definite these days. The banking world has been changing drastically over the last few years and each bank will take a different amount of time to process your application for services. In some cases, you will be able to open a bank account within a day or two, in other cases, you may have to wait for months before your bank account is opened and activated. Anyway, opening a foreign bank account is quite possible especially if you use professional advice.