What you need to know about international banking

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Posted on October 26, 2017

You have probably heard of offshore bank accounts and Swiss bank accounts. You may have¬ heard there is great wealth to be found in these foreign bank investments. But what is really so special about these esoteric banking opportunities?

An international bank is a financial entity that offers financial services, such as payment accounts and lending opportunities, to foreign clients, according to

These foreign clients can be individuals and companies, though every international bank has its own policies outlining with whom they do business.

According to OCRA Worldwide — an organisation that matches people and companies to international banking — international banks tend to offer their services to companies and to fairly wealthy individuals, i.e., people with $100,000 and counting. But plenty of international banks, particularly Swiss banks, open their doors to customers of any income bracket.

Companies do business with international banks to help facilitate international business, the complexities of which can be quite costly.

Individuals work with international banks for a number of reasons, including tax avoidance. This may probably be the term you have heard the most in relation to offshore banking. Tax avoidance isn’t necessarily illegal, as you will learn later in this piece. But there are plenty of other hazards in international banking.

First, we will look at some reasons for banking internationally.

There’s a wealth of reasons for individuals and companies to bank internationally. Many people around the world use international banks to shelter their money from their home country’s income and estate taxes. Hosts of banks are based in countries with low or no income and estate taxes, such as the Cayman Islands, Belize, Panama and the Isle of Man. But you can’t just put your income in Belize and not pay taxes. Customers must report their income and work with their bank to make sure tax avoidance doesn’t turn into tax evasion.

Some individuals use international banks to invest in the economies of booming countries and in developing countries, the same way they might invest in a domestic corporation or real estate venture.

A number of wealthy individuals keep their wealth in offshore banks and other entities to keep it safe from lawsuits. That doesn’t mean these people are criminals; they simply want to avoid losing every penny to a sudden, unexpected or predatory lawsuit.

Since international banks lend and borrow on international markets, they are less affected by domestic interest rate fluctuations. For example, when Mr. and Mrs. Platinum want to avoid sinking interest rates in their own country, one thing they may do is move their money into an international bank.

Also, some foreign banks may offer better interest rates than domestic banks, providing a money-making opportunity for customers.

International banks also make it easier for a company with an international presence to do business around the world.

For one, the company doesn’t have to set up a million different bank accounts around the world, and then wait to receive money while the banks deal with one another.

In addition, international banks offer many financial services to facilitate international trade. Besides offering payroll services for companies with employees and contractors in other countries, they offer letters of credit to ensure that companies in different countries pay one another for goods and services. They also offer financing services to support businesses facing the large costs of importing and exporting products.

The process of establishing an account at a reputable international bank will probably include the following:

  • The bank will confirm your identity and the identities of anyone who has an ownership interest in your money.
  • Like a good father, the bank will ask you about your intentions. Why do you need an international bank account? What does your business do?
  • The bank will inquire about the origin of your deposits, especially very large ones. Where did you get that $756m, son? Hopefully, not from that big heist in downtown Rome.
  • The bank will ask for references. Are you a reputable individual or company?

The bank will analyse how risky a customer you would be. Can you or your company pay back loans?


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