Popular Offshore Banks for Singapore Corporates - Updated List 2024
In the early 2010s, Singapore-based companies, or Singapore-incorporated companies, mostly opted to set up their corporate bank accounts with one of the local or regional banking groups that have a physical presence. The most common options are OCBC, DBS, or UOB.
Faced with limited options, companies couldn't expand their opportunities or enjoy much of the banking benefits we are now accustomed to.
Over the last few years, we've seen a rise in FinTech companies or neo-banks. Combined with the advent of technology, there was a proliferation of cross-jurisdiction virtual banking options for offshore and Singapore companies. Among them is the existence of a pure online-only bank without a physical branch or a full-fledged offshore bank operating outside of Singapore.
If you've chosen Singapore as your regional headquarters to cover Southeast Asia, you might be wondering what offshore banking is and if it's worth considering for your business operations.
This article will go over what offshore banking is, its misconceptions, and its benefits, among other things.
What is Offshore Banking?
The term "offshore banking" sounds like something that only rich people can take advantage of, or the very exclusive.
In reality, an offshore bank account is a bank account that belongs in a country where you don't reside in. An offshore bank account would allow you to make or receive payments, set up savings and investment accounts using multiple currencies, and hold money.
This is a popular option for business owners who incorporate their companies in a different country or expatriates living in another country.
Why Offshore Banking?
There are several benefits to using offshore banking.
Receive Foreign-Sourced Income
Singapore companies that do business with other companies from different countries can receive foreign-sourced income in the currencies they wish to receive other than SGD (Singapore Dollar). For example, a Singapore company with Malaysian customers may receive payments made in MYR (Malaysian Ringgit) from bank accounts in Malaysia.
Enjoy Banking Benefits From Superior Banking Jurisdictions
Offshore banking allows its clients to enjoy different banking benefits from another banking jurisdiction. This is most common with a client who owns a Singapore company but has plans to invest in another country.
In this case, the client would need to open an offshore bank account in Europe to carry out these transactions. Because the client now owns a bank account in Europe, they now have access to the bank's features made available within that jurisdiction. They can deposit or withdraw money from that European bank account and even receive payments from their clients through that bank account.
Likewise, a foreign company that transacts with Singapore clients frequently may find it prudent to open an offshore bank account in Singapore to make things easy.
Attractive Tax Benefits
When you open an offshore account, you may be entitled to tax deductions and lower tax rates instead of opening a bank account in your home country. Some offshore accounts may not even impose tax at all.
You don't have to worry about double taxation in Singapore because Singapore signed DTA (Double Taxation Agreements) with more than sixty countries, including the USA.
But be sure to check with your accountant or tax advisor before you decide to open an offshore bank account in another country. You may want to know how you file taxes when you have an offshore account.
If you are interested in opening an offshore account in Singapore, you can get in touch with one of our dedicated account managers using the form below:
Security
Singapore is reputed as a secure and critical financial centre. Every year, businesses and clients are attracted to Singapore because of the solid rankings in its financial ecosystem. That said, financial security has improved over recent years, and many offshore jurisdictions have caught up, presenting viable alternative banking solutions for corporates based in Singapore.
Having your accounts offshore would mean the offshore country's banking regulations protect your assets, but your obligation to follow the same laws comes with this protection.
Convenience
You can easily access your bank funds even when you're not in the country. You can access your bank account through the bank's mobile app or their online banking website.
You can access your funds 24/7 through different ATMs all across the country and even around the world. You also enjoy your offshore bank's Internet banking features to help you manage your funds anytime, anywhere. This makes it easy for you to manage your funds even when travelling to another country.
Misconceptions of Offshore Banking
Offshore banking is not without its misconceptions. People even have doubts as to how offshore banking works, and most would even consider it too complicated for consideration.
These myths were prevalent in misleading people into thinking that offshore banking was:
Illegal
A way to avoid paying taxes
A way to hide your wealth
Only for the rich and the elite
But this is not the case. Different banks have simplified offshore banking worldwide over the last few years. There are other laws and regulations in place to help regulate banking activities.
What are these myths that have been misleading people?
Myth #1 - Offshore Banking is Illegal
For as long as we can remember, offshore banking has been considered illegal; at least, that's what people have been fooled into thinking. The truth here is that offshore banking is allowed in many countries, especially countries noted for being tax havens.
Countries allow offshore banking because it encourages foreign investment, which strengthens their economy. While it's not illegal to do offshore banking, a small fraction of offshore bank accounts are tied to illicit funds.
But with the latest amendments made to banking secrecy, banks are now more transparent about who their clients are. And it turns out that banks that offer offshore banking don't intend to protect criminal clients.
Myth #2 - You Need To Be Physically Present To Open An Offshore Bank Account
Some banks may require your physical presence before you can open a bank account, but it's not strictly mandatory. The majority of top international banks allow their clients to open offshore bank accounts without the need to be physically present in their banks.
You can submit your documents via mail to get the process started or work with a corporate service provider to do it on your behalf. This allows you to cut down on unnecessary travel while enjoying the benefits of having an offshore account straight from the comforts of your home country.
If you need assistance with your offshore bank account opening, we here at Piloto Asia can help you.
Myth #3 - Offshore Banking Accounts Are Anonymous Numbered Bank Accounts
Numbered accounts are still being used in most countries, notably Switzerland. Swiss banks allow their clients to use numbered accounts for a nominal fee, but this does not guarantee complete anonymity. Banks still need documentation that would let them access your identity.
Offshore bank accounts are not necessarily numbered bank accounts. Even if they were numbered accounts, you'd still need to disclose your identity when sending or receiving wire transfers.
Myth #4 - Offshore Banking Is Used for Tax Evasion
Offshore bank accounts are not meant to promote tax evasion, and there's no proof anywhere that they are used to doing that either. Some laws and regulations discourage money laundering and illicit activities within offshore jurisdictions.
Instead, offshore banking allows you to strategically plan your taxes and take part in the foreign bank's asset protection benefits. As an offshore banking client, you enjoy higher interest rates and benefits that may not be available in your home country's banks.
Myth #5 - Only Wealthy Entrepreneurs and HNWI (High Net Worth Individuals)
People often mistake offshore banking as something that only wealthy entrepreneurs, or larger companies, can access. But this is nothing more than a myth. More and more small businesses in Singapore are opting for offshore banking to enhance their investment opportunities.
How Do You Find The Right Offshore Bank?
When it comes to your business operations, you must find the right offshore bank that meets your needs. It doesn't help foreign entrepreneurs to know that there are hundreds, if not thousands, of viable offshore banking options available globally, and new ones are made available every few years.
Among offshore banks, you'll find subtle differences between what they have to offer and what they require. For example, offshore banks in different jurisdictions may carry out further procedures for KYC (Know Your Customer) or have specific industries allowed (or banned) to open a bank account. Other subtle differences also include banking fees, nationalities they want to work with (or don't want to work with), and access to online banking.
Here at Piloto Asia, we've helped hundreds of clients open their offshore bank accounts globally. We admit that the process isn't as smooth sailing as we'd hope to be, but we've streamlined everything thanks to the relationships we've built with our panel of banking networks over the years.
What Are the Common Options?
Listed below are the offshore banks that we here at Piloto Asia have developed a close banking relationship with:
What's The Procedure for Offshore Bank Account Opening?
If you're interested in opening an offshore bank account, here's a general overview of the steps in opening one.
Step 1: Find the Right Bank that Meets your Business' Needs.
The first step is to find the right bank for your business. Not all banks are made equal in terms of the industry they want to work with, their KYC procedures, minimum initial deposit requirements, and other factors.
If you own an investment holding company, you might want to work with a friendly bank to holding companies in general. The same can be said for companies who operate in more specific industries such as cryptocurrency, e-commerce, or commodities.
It would help if you also considered how frequent you'd be carrying banking transactions, the availability of credit facilities, etc. Because there are many things to consider here, you might want to talk to a consultant to help you find the right bank.
Step 2 - Prepare your Company and Director Documents
You need to prepare pertinent documents for opening your offshore bank account. You'll need the following, but not limited to:
Certificate of Incorporation
Certificate of Incumbency
Company Memorandum and Articles
Shareholders Organization Chart
Share Certificate
Board Resolution for Bank Account Opening
Then you'll need Director's and Owner's Documents, such as:
Notarized Passports
Residential Address Proof
Curriculum Vitae
Recent Bank Statements
Tax Payment Proof
Note that the documents you'll be submitting will depend on which bank, or banks, you've found in Step 1.
Step 3 - Review and Submit Final Application To Bank of Choice
Suppose you are not familiar with offshore jurisdictions. In that case, you might want to work with a corporate service provider such as Piloto Asia to help you prepare and review documents or navigate the various banking jurisdictions. Once you have all the documents in order, it's time to submit them to the bank.
Step 4 - Prepare for the Interview
Piloto Asia will communicate with the bank to submit the initial documents. Once a preliminary green light is given, a formal interview will be arranged between Banker and the Company Director.
This interview is conducted so that bankers will know more about their potential clients and review submitted documents when the need arises.
You'll be asked questions about your business model, why you chose the jurisdiction, your existing corporate structure, etc. The point here is to help banks become more confident in onboarding this potential client, which in this case is you.
Assuming the interview is successful, the banker will submit a formal report to their management for approval.
Step 5 - Success! You'll Receive Your Onboarding Pack!
The application review process takes about 2 to 3 weeks. If your application is approved, you'll receive your onboarding pack. This is usually your login details, bank account token, and an initial deposit amount (if applicable).
Once all that's said and done, your offshore bank account is ready and live!
Should You Consider Doing It Yourself?
A typical company usually opens at least 3 to 5 business bank accounts within their lifetime. Most will almost always do it themselves because they don't see the need to work with a corporate service provider.
They fail to realize that these corporate service providers, such as Piloto Asia, open hundreds of bank accounts for corporate clients within a year. It's safe to say that these service providers already know the process inside and out and have built relationships with different local banks.
If you do decide to open an offshore bank account yourself, consider the following challenges:
Loopholes - Chances are, you might not be able to find the right bank that fits your company or even meet your company's needs. You miss out on certain benefits and opportunities afforded to you when you don't work with a bank that wants to work with your business.
Chances for Failure - When you consider DIY for opening an offshore bank account, you increase your chances of your application getting rejected. You might not be able to carry out due diligence in preparing your documents, or you might not even know what you're getting yourself into for the initial interview. Remember that not all banks are made equal, nor do they have the same set of requirements or standards for choosing offshore clients.
Time Saved and Convenience - When you consider DIY, you need to research which bank globally is right for your company. It would help if you also spent a lot of time preparing documents that may or may not affect your application. But working with a corporate service provider removes 90% of the guesswork. Piloto Asia will already know which bank is perfect for you and your business and what the requirements they'll probably ask from you. All you need to do is communicate with Piloto Asia throughout the process.
Access To Local Referrals - If you consider DIY for your offshore bank account opening, you'll miss out on working with the right Relationship Manager to help you with the application process. Your application might not be prioritized because the bank doesn't meet your business needs, or you don't fit the bank's client profiles. Many banks often work with referral agents such as Piloto Asia exclusively and elect not to take walk-in customers because they're confident that customers forwarded by these referral agents would meet the bank's basic minimum KYC standards and more.
Let's talk about helping you open an offshore bank account. Get in touch with one of our dedicated account managers now.