7 Things You Must Know Before Opening an Offshore Bank Account

There are certain things you should know before opening an offshore bank account – things that can save you a lot of time and frustration. The following 7 facts about offshore banking offer a useful insight and a good starting point to the process.

1. The Most Important Benefits of an Offshore Account

WG Hill, the author of the underground classic PT (The Perpetual Tourist), was quoted as saying: “Get your money out of country, before your country gets the money out of you!” And this strikes at the core of what offshore banking is about. Give you one example. Let’s say you owe a tax bill which you are contesting. Now, in most of the modern Western democracies, it’s a simple matter for the government to seize the funds from your domestic account. One day you have $10,000 in there – and the next day you don’t. And such nations also get the banks to do their tax collecting for them. This is done by the practice of automatically deducting a withholding of tax on any interest earned. In this way your domestic banks are tax agents and put the government’s interests above your own – the client.

Opening an offshore bank account puts your funds out of harm’s way. If you had $10,000 in an offshore account, your own government could not siphon it off automatically. And if you are banking in a place where there is no tax charged on interest, then your funds are growing quicker – without any withholding taxes being applied at source. An offshore bank account also gives you more financial privacy – something in great demand in this increasingly regulated world. Then there’s the flexibility that comes with having more than one bank account – in more than one country. This strategy allows you to hedge your bets and keep your cash in dispersed locations.

2. Choose Your Jurisdiction Wisely

Not all jurisdictions (countries) are equal. Every bank is governed by the laws of the country it is licensed to operate in. It is also governed by a plethora of internationally-applicable financial oversight regulations. While some typical offshore tax havens appear ideal as banking jurisdictions, the truth is that often they aren’t – precisely because they have been, or are being, targeted in some way by anti-money laundering laws or other financial restrictions on how they conduct business. You don’t want to end up in the middle of such a financial conflict.

Another factor to take into consideration is the geographical area in which the bank operates and the existence of any information sharing treaties or tax-collecting agreements between the countries in that area. Where you currently live in the world impacts on where you can bank offshore. For remember, offshore simply means somewhere other than where you currently reside.

3. The Truth About Privacy and Anonymity

Swiss banking has always been held up as the pinnacle of banking privacy, and that largely holds true – even though they are under increasing pressure to comply with international norms. The Swiss, however, have a vested interest in maintaining their USP (unique selling proposition), that they provide the most secure and private banking in the world. But privacy in an offshore bank is conditional. Most offshore banks will be covered by privacy protection measures, which could include such things as it being a criminal offence for a bank employee to disclose the details of any client’s financial affairs. However, these laws can usually be breached by the presentation of a court order issued on the basis of suspected criminal activity.

This is all well and good for those of us who are not criminals, and usually means our privacy is pretty well assured. The trouble is in the definition of the word “crime”. It’s well known that certain banking jurisdictions have now succumbed to pressure to include tax avoidance as a criminal offense – meaning your account information could be disclosed under such an assertion if part of a court order from another country. So you may as well accept the fact that truly bullet-proof private banking is hard to come by – and anonymous banking is a thing of the past.

4. The Impact of KYC and FATF

Offshore banking has become a lot more restrictive since 9/11 – as the US enforces stringent regulations aimed at combating what it terms money laundering. This catchall approach means that straight-up, honest people find themselves having to jump through hoops just to get started. Unfortunately, there seems to be no end in sight to this process – so all you can do is bite the bullet and proceed.

When you first apply to open an offshore bank account you will immediately feel the impact of KYC (know your customer) regulations. Banks have a way of making this requirement sound as if its in your best interest, but that’s just them trying to sweeten a bitter pill. In effect, the bank will want to know a lot more about you than they would have a few years back. They will want not only to sight your valid ID, proof of address and business, banking or personal references, but they will also want to know what you do and what type of account activity to expect.

5. What You Need to Open an Offshore Account

Opening an offshore bank account needn’t be traumatic – if you know what to expect and what you’re in for. You need to carefully consider your banking requirements. Do you want a personal or corporate account? In most cases a personal account is sufficient – and is usually easier to open. Some offshore banks will only open corporate accounts in person – not on the internet or by mail.

Of course you’ll need to have valid passport, and will have to get it notarized by a Notary Public (which you’ll usually find in large legal firms). This process involves making an appointment with the Notary and having him sight your passport, then make a copy and add his Notary seal and signature, stating he personally viewed your passport. You will also need one or two utility bills as proof of residence.

The good news is, once you have gone through the mill and opened your account, you’ll find the bank (like any company wanting to make a profit) will want to retain your business and keep you happy! A good banking relationship is like gold – so hang on to it.

6. The Facts About Offshore Credit Cards

Most offshore banks will readily offer you a debit card – you know, a plain ATM card like you have from your domestic bank. These are usually Cirrus and Maestro branded, although in EURO countries Visa Electron is quite popular. Now while these cards are very useful, the main function (when issued by an offshore bank) is to withdraw cash from ATM machines.

This is where the desire and need for a full-blown credit card comes in. However, due to rules laid down by Visa and MasterCard International – such cards are usually only available to residents in the country the bank operates from. So, for example, if you have a bank account in an offshore jurisdiction, their Visa card may only be available to local residents – not you.

A good alternative is a Visa or MasterCard debit card – which is directly linked to your offshore bank account. When you spend money using it, the funds are immediately withdrawn from your current account. You can’t get credit with this card, but you do get full Visa and MasterCard functionality when traveling internationally – like hotel check-ins, airline bookings etc. These types of cards are not readily available offshore, but a few major offshore banks issue them to their international clients.

7. The Advantages of Accounts in Various Currencies

One of the benefits of banking offshore is the ready availability of multi-currency accounts – where you can open more than one account at the same bank, each denominated in a different currency. Now, why would you want to do that? The answer is simple – for hedging. In this volatile world currencies are always changing value. And as I write this, the USD is deemed to be heading downwards in value over time.

Most offshore banks that provide multiple currency accounts will allow you to move funds quite easily between them, as and when you see fit. So if you have a substantial amount of cash on deposit, then spreading your cash risk by holding different currencies is a sound financial decision – one made a lot easier by having an offshore bank account.


Opening an offshore bank account could be the best thing you ever do. However, many people find the process daunting – not least because they need to overcome the irrational fear that somehow their money won’t be as safe as banking at home. Of course the truth turns out to be the opposite. If you bank with a reputable offshore bank, then your money is much safer than before!

Opening Offshore Bank Accounts – Why So Many Questions?

A question that comes up frequently is why offshore private bank account opening procedures require so much information from the client. Some clients believe that legendary numbered bank accounts still exist, or that offshore banks operate a ‘no questions asked’ policy when it comes to source of funds etc. In fact, nothing could be further from the truth, as banks in offshore banking centers operate very strict due diligence policies.

It is, however, quite possible still to open your own offshore bank account – even, if you wish, to open it by mail, if you have the right documentation.

As an offshore banking consultant, I get to see the account opening processes of many different banks in different jurisdictions, and how widely they vary.

I can see both sides of the equation – the bank’s perspective, and the client’s. Often, literally and figuratively, they speak different languages. My job is to act as intermediary and make sure both parties understand each other.

So, how do you open an offshore bank account? You will typically need your passport, one or more bank reference letters, and proof of source of funds. But let’s look at why all these questions are necessary…

I can fully understand that if clients are seeking privacy, they may not feel comfortable baring their financial souls to their bankers. But there are good reasons why banks need to collect so-called ‘Know Your Customer’ information. And there are steps you can take as a client to manage your banking and to protect the confidentiality of information you hand over.

The first and foremost reason is because the law dictates it. In all reputable jurisdictions, banks are required to collect certain information. Failure to comply would have absolutely dire consequences that may include closure of the bank and/or jail for its managers. You are looking for security – and dealing with banks that are prepared to bend, break or flout laws is not the way you are going to find security! There are only a few places in the world left where you can still open accounts without ID and – trust me – you don’t want to be banking in those places!

Secondly, banks also have to protect themselves and their reputations, in order to protect their honest clients. If they take on clients who bring problems or bad publicity to the bank, it is bad news for you the client. So you should really be happy to deal with a bank that is quite picky about the clients it takes on. For example, if it turns out later that clients were involved in white collar crime like running a ponzi scheme or any kind of unlicensed offshore investment activity, the bank will almost certainly be on the receiving end of a lawsuit from people who lose money. Sometimes scammers are very good at hiding their activities, and they look like honest, respectable business people. If the bank has never met you before, they really need to check you out.

Thirdly, many people compare offshore account opening procedures to opening an account in their home country. This should be obvious, but it’s not the same thing. One thing that might have escaped your attention, though, is the extent of Big Brother databases that exist in your home country. Banks will automatically run a credit report when you open an account, even if you are not applying for credit. They can check you out online. Offshore banks, however, cannot run online credit checks. To do so would leave an electronic footprint that would generally be a breach of confidentiality laws. That is why they have to ask new customers for a lot more paperwork. Of course, it’s more convenient for the customer that the bank can verify everything online and doesn’t have to ask the customer for so many documents. But such online checks completely nullify any expectation of privacy in the relationship.

Finally, it’s just good business for banks to know their customers. If they know a bit about who they are and where you are coming from, they can give you better quality advice and they can respond more intelligently to your requests. They can be proactive in offering services you might need, that you might not even know existed. Having a good relationship with your private offshore banker is absolutely beneficial. That banker will be more motivated to look after you. Try to be a ‘perfect client’ for the bank – that way, if for some reason you really need a special favor from the bank at some time in the future, you are much more likely to get it.

Banking secrecy, as I’ve often said, is far from dead, despite the propaganda that would have you believe otherwise. I even believe now that the tide has turned. Bank secrecy is a basic human right, and is more necessary than ever. What is rather passé is trying to use bank secrecy for illegal tax evasion, by holding undisclosed accounts. This is illegal and if you try it these days, the chances are you will be caught – so don’t do it!

By taking good advice, choosing the right banks, using legitimate international asset protection structures such as Panama Foundations or Nevis LLCs, and carefully managing your residence and citizenship, always staying within the law, you can still keep your finances completely and utterly private. Nobody is saying it’s easy… but you can do it, and it’s worth it.

So, as one of my banker friends is fond of saying, if you unilaterally choose to waive some of the account opening requirements, you will just be causing delays for yourself. Clients who try to avoid complying with requirements will be viewed as suspicious right away. Then, trouble ahead is almost a self-fulfilling prophecy.

Bottom line? If privacy is a concern to you (and it should be) do your homework and choose a bank where you can be confident that your information will remain private. Do your due diligence on the bank first. You should only do business with people you feel 100% comfortable with, and this applies to banks and any other business relationships. Anything less than 100% and you won’t sleep soundly at night, which surely defeats the whole object of the exercise. Online research can help you do this due diligence. Once a bank has passed your own due diligence smell test, then be prepared to give them the truth, the whole truth, and nothing but the truth.

The “Why Investment Banking?” Interview Question – How to Give a 10/10 Answer

In a sea of overachievers who are equally talented, likeable and prepared, the “Why investment banking?” interview question can be the only differentiating question left for bankers to ask; making it both a popular & decisive question.

Whilst for college students who don’t look like aspiring bankers on paper (i.e. no fin/acc major, business degree or relevant work experience) it’s of epic importance. After all, you guys need to be able to explain why you want to do investment banking when your past decisions don’t suggest anything of the kind.

How do you give a 10/10 answer to the “Why investment banking?” interview question?

There’s a huge selection of points you could make, but keep it short and sharp. Generally a good answer will contain 3-5 solid reasons why you’re interested in IB.

Typical examples like world class education, skills development, type of work, the challenge, real responsibility in billion dollar transactions etc. are all acceptable.

But try not to trot out the same BS as everyone else.

Importantly, avoid reasons that are self-centered in a ‘bad’ way

Let me explain. As a banker interviewing you I’d be OK if you mentioned investment banking attracts you because of the learning opportunities, as this is a selfish reason that also, and ironically, benefits the bank – passionate 24 year olds put in 100-hour work weeks with ease after all.

But if I heard you wanted to do IB simply in order to ‘build your resume’ and/or to secure an exit opportunity I would – in my mind at least – throw you out the freaking door and then proceed to lay a BlackBerry beat down! Being made to feel like a halfway house for financial vagrants, a mere stepping-stone, is not my idea of good times you see. So even though everyone knows investment banking is attractive for the resume & exit oops don’t say it!

What can help you avoid a BlackBerry Beat Down? Well, you would get me extremely interested if you answered the “Why investment banking?” interview question by talking about how you have older friends in banking who have over the years shared with you what it’s really like to be a banker – both the good and the bad.

And then how that’s made you realize 3 specific things about banking which make it stand out above any other graduate job.

Not only will I believe you still love banking despite the war stories, but that you’ve actually given it some thought beyond “I need a salary of Blankfein proportions if I’m ever going to pay off these student debts”.

What I’m trying to say is that a great answer will list unique and specific reasons ‘why investment banking’ and it will connect them to the sources you learned them from whether they be friends, professors, books etc.

Want 6 specific reasons ‘Why investment banking’ that are sure to work? Try talking about how you love the…

  1. Cornerstone role investment banks play in deals and/or the role they play more broadly within the world of business – IBs are to business what the White House is to the world…central hub HQ! And this is why bankers are called masters of the universe. So bring up this point, albeit laced in more formal language and without ever mentioning ‘masters of the universe’!!
  2. Coalface exposure to industry and financial markets, which is unique to IB – there’s not a graduate job on the planet that puts you closer to the action than banking.
  3. Results-driven deal-oriented approach – this point distinguishes banking from so many other professions like law, consulting etc, where players often get paid for simply ‘doing’, as opposed to ‘achieving’. And by specifically mentioning this point you will show bankers that you’ve got the right mentality and that you’re not an increment-fiend like lawyers. PS Once again be sure to phrase this in a more professional kinda way!
  4. Type of people that work in banking – talk about this from both a learning and enjoyment point of view, and most importantly reference people you know in banking (particularly at that bank) to avoid looking like you’re simply shining shoes and kissing ass!
  5. Nature of the work – analyzing, problem solving, real-world focused. If you are going to talk about this then make sure you bring up a handful of examples in passing; eg 10k analysis, spreading comps, deal structuring etc.
  6. The specific industry/product group you are interviewing with – this is a must! By talking about why IB through the lens of that specific group, you’ll really narrow the reasons down to specific, tangible, relatable ones – and that means bankers are more likely to believe you and like you. eg If you say to Goldman Sachs TMT that you want to do investment banking because you find the business/investing side of the tech industry fascinating after working as an unpaid intern at a social media start up over summer, then you’ll hit the “Why investment banking?” question out of the park!

Whatever you choose, be sure you can talk intelligently about it if probed by the bankers.

Special note for those of you with non-banking experience

If you have work experience in accounting, consulting etc. then tell the bankers that whilst your time at KPMG or BCG or wherever you worked was a terrific experience, it didn’t offer…[reasons why you love IB].

This is a hidden opportunity to further explain your story, point out why you want to change into banking now and assure them again that IB is what you truly want above all else.

Any comparison you make should be delivered subtly though. Not because your interviewer might have worked at KPMG or BCG, but simply because it looks unprofessional to blatantly badmouth others. Negativity in any form doesn’t look good.

Special note for aspiring investment banking analysts

PS for those of you who get this question in an investment banking analyst interview (ie not a summer internship interview), you’ll need to push your story of why IB even harder to convince bankers to take you on. This is because bankers hate offering permanent spots to candidates who might quit the minute things get tough.

Passion is a banker’s best insurance policy against this – so make sure you show it guys!!

If you want to go one step further and really impress the bankers with your answer, then tell them how you became interested in IB years ago and point to the real life things you’ve since done that have confirmed your passion; studies elected, college clubs joined, people met, friends talked to, books read, jobs taken.

Showing a long and considered journey to get into investment banking is the idea here.

What’s the final secret to a magic answer here?

Recognize the downers of banking, not just the uppers. Bankers you see, want to hire students who aren’t being drawn to banking based simply on Hollywood-hype or CNBC-glamor. They want to know you are realistic about the job, prepared to do grunt work, and yet still super passionate.

After all, the Jimmy Cramer fan club and the Gekko Wannabe students will never be able to hack it when they find out what investment banking really involves – and this sort of drop out costs the banks a bomb.

So with all that in mind, during your answer briefly mention how your friends in banking have clued you in on the realities of the job too – the long hours, sacrifice and other downers which we’ll talk candidly about in the Inside Investment Banking System when it comes out this fall.

Of course, don’t end your question on a downer – meaning be sure to follow up any reality checking with your 3 main reasons why IB repeated in very very short form, kind of like “…but of course banking is an easy choice for me, because of…”.

Now that you’ve conquered the “Why investment banking?” interview question, check out our advice on other common investment banking interview questions and answers now.

Reasons To Use An Online Bank

Online banks are not recent evolutions in the financial world, with humble beginnings starting in the early days of the internet around 1995. Today, using an online bank is universal and widely popular.

We’re speaking of internet banking, with all the product and service found in traditional banks, but with much of the overhead removed. Internet-only banking is the marriage of cloud computing with high-tech efficiency. It delivers a transparent super-charged system of personal money management.

A word to the wise, here, it’s not the same as using your traditional banks e-commerce or mobile services. The online bank experience has advantages not matched by the traditional banks with their widespread physical presence and higher operating costs.

Savings Accounts

Savings account balance requirements are rather friendly with online banks. On average you only need a balance of $350 or higher with online banks before service fees kick in.

Traditional banks average $4,500 minimum balance to get out of fee charges. My personal bank requirement is $3,500. A $12 per month fee applies if the balance drops below $3,500, even if for one day.

Beyond lower fees, interest rates paid by online banks are higher. The four largest brick and mortar banks in the U.S., all with worldwide presence, pay 0.01% annually compared to 0.95 – 1.00% with their online siblings.

Framing this in real dollars, $10,000 in a savings account at 0.01 percent interest will earn a whopping $1 after a year. However, $10,000 at 0.95 percent will yield $95 in interest. That’s $94 extra dollars before the power of compound interest growth kicks in.

Checking Accounts

You can open most checking accounts with $0.00 – $50 at internet-only banks, and account fees are generally lower than store-front banking. Often, standard checks are at no cost, plus free re-orders are common.

Other bank assessments like overdraft fees, transfer charges, and special service costs are lower, too. There are some online banks that charge nothing for overdraft transfers, ACH transfers and cashier’s checks.


No doubt ATM service is a must in banking and lets traditional banks run with a smaller footprint. While online services can’t top the corner bank for branded ATM locations, they do offer a functional alternative.

Allpoint ATM network is predominantly used for automated teller services by online banks. Allpoint ATM has 55,000 free for use ATM’s in North America in retail locations like CVS Pharmacy, Target, Costco, and others. Some internet banks will reimburse for fee’s charged at non-network ATMs as a way to offset site limitations.


While this is a bit tricky for some people, depositing money into an online account really isn’t difficult. As with local banks, you can easily deposit checks or cash into a network ATM.

Using a mobile banking app, deposits are possible from anywhere and at anytime, as long as a wireless network is available. Mobile deposits are as simple as snapping a picture of a check. The bank app records the deposit directly into your account.

Moving funds between accounts and transferring funds outside the bank system are just as convenient. Direct deposit of paychecks is straightforward with the app, too. It’s no surprise that brick and mortar banks have moved into the mobile app arena.


Security always seems to come up when internet and cloud computing is the topic. I won’t say much about this other than data theft is a problem, but no more so whether with an online bank, private company, physician’s office, or any business that stores data electronically.

This is scary to a lot of people, but I can tell you that banks with physical buildings don’t offer any more comfort. Their data storage is cloud centered and transactions are electronic data transmissions.

Financial institutions ranging from Federal facilities, to Wall Street institutions, to local banks house our personal information in big data centers. In fact, data center companies are a huge business sector in America. While cyber security is a serious issue, it is not any greater issue with an online bank than the bank down the street.


The comforts found in a traditional bank are still important to a lot of people. Face to face contact is still a need at times, and traditional banks beat in areas such as loan officer availability, brokerage services, real estate & mortgage specialists, and other professionals.

But, it also comes down to the fact that brick-and-mortar branch banking carries a lot of costs, with the greatest being physical buildings and staff. This overhead passes straight to customers through fees, charges, and low-interest rates.

Online banks are cheaper to run because they don’t have buildings to keep up nor large staffing needs. You can do everything done in traditional banking, but with efficiency, lower cost, and higher earnings return using an online bank. With the online bank, it’s all about low fees and higher interest rates.

For many people, online banking is not the best option. For others, however, mobile app’s, cloud technology, and mobile communication are second nature in their lives already. The online bank could simply be an extension into their current virtual world.

How and Why to Open a Bank Account in Hong Kong

Hong Kong today remains one of the best offshore banking jurisdictions. It offers a great combination of bank secrecy, corporate secrecy, a financially and politically stable environment, and strong banks. But perhaps most importantly, it’s a secure offshore investment haven for those who want to diversify out of sinking western currencies into booming Asian markets, and China in particular.

So how can you go about opening an offshore bank account in Hong Kong? Do you have to travel there? This article will answer these questions and give you some practical hints and tips. But first some background.

A Successful Free Market Experiment For East and West Alike

Hong Kong, in my opinion, is the only practical example in the world of a major city that has been developed from scratch and run as something of an offshore, free market experiment – first by the British, then by the Chinese.

The main Island (and later Kowloon and the New Territories, parts of the mainland) was a British colony for most of the nineteenth and twentieth centuries. During this time it grew from a fishing village and opium trading hub, into a city-state of seven million people. It became known as a free-wheeling, free market paradise for capitalists, with an economy characterized by low taxation, free trade and no government interference in business.

In 1997 the British returned sovereignty over Hong Kong to China. The former colony became one of China’s two Special Administrative Regions (SARs), the other being Macau. Many people were initially doubtful about one of the world’s capitalist bastions being run by a communist power, and at the time a lot of investors pulled out, many taking their dynamic business acumen heading to places like Singapore and Vancouver.

However, the “one country, two systems” model adopted by Beijing to coincide with free market reforms and the growth of China into an economic superpower has proven very successful. The Basic Law of Hong Kong, the equivalent of the constitution, stipulates that the SAR maintains a “high degree of autonomy” in all matters except foreign relations and defence. The SAR today operates as a major offshore finance center, discreetly oiling the wheels of commerce between East and West.

These days, rather than being put off by the Chinese influence, most international investors who are attracted to Hong Kong are coming precisely because of this Chinese connection. Hong Kong is the point of access to Chinese trade, without the legal and cultural difficulties of doing business in mainland China.

Those who do not trust their own governments are reassured by the fact that under the Basic Law, Hong Kong’s foreign relations are run from Beijing. While most offshore jurisdictions humbly submit to demands from the USA and other western countries, in the case of China, the relationship is definitely reversed. Hong Kong does have a number of Tax Information Exchange Agreements (see below) but these are sensibly policed and do not allow for fishing expeditions.

Offshore Banking in Hong Kong

The region’s population is 95 percent ethnic Chinese and 5 percent from other groups, but English is very widely spoken and is the main language in businesses like banking.

One thing I like about using Hong Kong for offshore bank accounts is the same argument I have used for Panama and Singapore: it’s a ‘real’ country with real trade going on. The Hong Kong dollar is the ninth most traded currency in the world. Compare this to doing business on a small island or other remote banking jurisdiction, where everybody knows your only reason for doing business there is offshore banking. It also means that there is no problem doing your banking in cash, if you so wish.

For now the HKD, the local dollar, still tracks very closely the US dollar, but this appears to be changing as the Chinese Yuan circulates freely in Hong Kong, both in cash and in bank deposits. We think this represents an excellent opportunity to diversify funds out of the US dollar now, gaining exposure to Chinese growth in the meantime. (Of course, you can also hold HKD in banks in other parts of the world too)

Bank accounts in Hong Kong are almost all multi-currency by default, allowing all major local and international currencies to be held under one account number and exchanged freely and instantly within the account at the click of a mouse.

There is no capital gains tax, no tax on bank interest or stock market investments, and no tax on offshore sourced income. This, combined with a welcoming attitude to non-resident clients in the banks (including US citizens by the way, who are generally unwelcome in traditional offshore banking havens like Switzerland), and strong cultural and legal respect for financial privacy, makes Hong Kong one of Asia’s best offshore banking jurisdictions.

For those who want to establish a small offshore account under reporting limits, or simply to have the bank account established in view of future business, Hong Kong is also attractive given the low minimum deposits demanded by the major banks there. The minimum bank account balance can be as low as HK$ 3,000. Of course, you can’t expect red carpet, VIP private banking at this level – but you get a perfectly good functioning bank account with all the technological trimmings.

Offshore Corporate Bank Accounts in Hong Kong – Do’s and Don’ts

Typically, offshore clients choose to open accounts using corporations, as opposed to personal accounts. This not only offers greater privacy, but also flexibility and can – depending of course on how things are structured – offer significant tax and asset protection advantages.

Accounts can easily be opened both for pure offshore companies like Panama, BVI, Nevis or Marshall Islands, or for local Hong Kong companies that are set up using nominee directors and shareholders.

When contacting local corporate service providers in Hong Kong, you’ll find that most of these corporate service providers will recommend you use a Hong Kong company to open the account. The reason they do this is that it’s simpler and more profitable for them. They can incorporate a local company at low cost, opening the bank account is smoother and faster with a local company, and they can carry on billing nominee director fees every year. But it may not be the right thing for you.

Whilst it is true that Hong Kong companies do not have to pay any tax provided they do not make any local source income, administering such a company is not so simple. For example, Hong Kong companies are required to file audited accounts every year. They must file pages and pages of documents to convince the Inland Revenue Department (HKIRD) that they don’t have any local business, and, from practical experience, the HKIRD is getting much stickier about this. Long-established companies are normally left unmolested but newly established companies can expect a lot of compliance work in their first few years. Again, this suits the Hong Kong corporate service providers who charge handsomely for such services.

Another factor to consider is Controlled Foreign Corporation (CFC) legislation in your home country. (For an explanation see Wikipedia ) Many clients choose to set up LLCs as they can be treated as passthrough entities, vastly simplifying reporting requirements in some countries like the USA. Hong Kong corporations are not LLCs and cannot be treated as passthroughs for tax purposes.

My advice – assuming you don’t intend to do any business in Hong Kong besides banking and perhaps the occasional trip to visit your money – would be to open the account in the name of a company from a foreign offshore tax haven. It’s a little more work and expense at the beginning, and the bank might ask you more questions, but it will save you a lot of money and headaches in the long term. If you want a local look and feel for your company, numerous virtual office services are available.

Hong Kong Tax Information Exchange Agreements

Contrary to what you will read on some out-of-date websites, Hong Kong has signed a number of Tax Information Exchange Agreements (TIEAs). However, the HKIRD is at pains to point out that fishing expeditions are not going to be tolerated.

The HKIRD has issued Practice Note 47, available on the internet, which usefully explains how the HKIRD seek to achieve a balance between the requirements of compliance with the OECD requirements, whilst providing checks and balances to protect the rights of businesspeople.

The HKIRD are professionals and should be well positioned to deal with TIEA requests properly and justly in accordance with the treaties and guidelines. I am confident not going to allow their ‘clients’ rights to be trampled on.

Regulation of Banks in Hong Kong

Hong Kong’s Banking Ordinance was revamped in 1986. It has since undergone several amendments to improve prudential supervision. The Hong Kong Monetary Authority (HKMA) was formed in 1993 as a one-stop financial regulator, responsible for everything from banks to stored value anonymous debit cards.

The SAR maintains a three-tier system of deposit-taking institutions, comprising licensed banks, restricted license banks, and deposit-taking companies. Only licensed banks may operate current and savings accounts, and accept deposits of any size and maturity. RLBs are only allowed to accept deposits of HK$500,000 and above, while DTCs are only permitted to accept deposits of a minimum of HK$100,000 with original maturity of not less than three months.

Both these latter categories provide an opportunity for overseas banks to conduct wholesale, investment or private banking activities in Hong Kong without having to jump through the hoops of applying for a full banking license. In addition, some foreign banks have chosen to open representative offices in Hong Kong, which are not allowed to take deposits but can assist in opening accounts at other offices within their groups.

As Hong Kong is an international financial centre, it is an explicit policy of the HKMA that the regulatory framework in Hong Kong should conform as much as possible with international standards, in particular those recommended by the Basel Committee.

Hong Kong’s five largest banks, in terms of total assets, are as follows:

– Hong Kong & Shanghai Banking Corporation (HSBC)

– Bank of China (Hong Kong)

– Hang Seng Bank Ltd

– Standard Chartered Bank

– Bank of East Asia Ltd.

A full list of updated Hong Kong banks can be found on Wikipedia.

Visiting Hong Kong to Open a Bank Account

If you are visiting Hong Kong to open your account, it can normally be opened the same day provided you have made some arrangements with a local service provider, or directly with the bank, in advance. This is assuming you use one of the major banks, that nearly everybody does. You can then simply visit the bank, sign documents and receive the bank account number immediately. This will be a full multi-currency account and you will typically receive a digital token for internet banking, a password and a debit card.

The documents required for opening offshore bank account are:

1) Formation documents (in the case of corporate accounts. Apostilles are required in the case of foreign corporate accounts – your offshore provider will know how to obtain these.)

2) Bank forms and business plan/expected activity (a corporate service provider will normally supply these as part of the service)

3) Passport copies of each director, signatory and shareholder (take special note of this requirement if you are using nominee directors – if the persons are not present, copies will have to be notarized.)

4) Proof of address (such as updated bill statement which shows up your name and address) and signed (of each director and shareholder)

A bank reference is generally required if you are dealing direct with the bank. If you go through a corporate service provider, they normally write a reference so you do not need to supply a bank reference. However, if you can obtain a bank reference it is better.

Opening an account without visiting Hong Kong

It is also perfectly possible to open accounts without visiting Hong Kong (known as ‘remote account opening’) though this process tends to take substantially longer as banks will ask a lot more questions. In this case, your bank or service provider will generally e-mail you the forms, that you will need to print out and sign.

Depending on the bank, there may well be certain special instructions about how and where to sign – for example, HSBC in Hong Kong will typically request that you have your signature witnessed in the HSBC Bank nearest to you. As with all foreign bank accounts, you should be sure to use the same signature that appears in your passport, otherwise the documents will be rejected.

In the case of remote account opening the bank will normally courier the password, debit card, and token direct to your address in your home country. Then you need to activate them via the bank’s website.


Hong Kong competes very favorably with Singapore, the other Asian banking jurisdiction we favor. If you have not yet diversified your offshore holdings into Asia, you should seriously consider doing so. I hope this article will be helpful in this regard.

Know More About Recent Bank Jobs

The chief responsibilities of bank clerks in vacancies bank clerk is to carry out day-to-day functionality is in banking institutions and similar financial companies, such as record-keeping duties and clerical tasks. It may be seen that bank clerks and bank tellers sometimes share the same kind of functions; the roles of a bank clerk are generally seen performing backroom tasks whereas bank tellers have to face customers on a daily basis and interact with them face to face. The duties of vacancies clerk varies from various tasks to daily assignments, depending on the banking institution, but largely most of the duties are common among all banks.

Of late, recent jobs that call for clerks incorporate complex duties and additional tasks not seen before. For example, it is the duty of a clerk to keep customer information regarding loans in an organized manner, ensuring that both the banking institution as well as the customer avails of the loan data as and when required by either the bank or the customer. In addition, the loan information must be constantly monitored and updated by the banking clerk based on the current standing of status of the loan information. Additional duties within this arena include computing the interest to be owed to the bank by the customer, interest owed to the customer by the bank on savings accounts, various kinds of interests on business and personal loans, mortgages and other banking accounts. It is the duty of the clerk to bring to the attention of senior management or supervisors of delinquent loans or outstanding payments.

Vacancies bank clerk also include a number of functions that call for the support of financial transactions. Within a given day, banks make a large number of transfers with other banking institutions of financial companies either through check payments or drafts. Most of these transactions must be covered or affirmed by clerks. During the process of wire transfers, it is also the duty of a bank clerk to conduct currency exchanges, and involve the use of specific information to find out the present rate of exchange before enforcing it to the transfer.

These days, recent bank jobs also called for the involvement of clerks to detect initial stages of finance fraud through the use of specific software technology or copyrighted tools within the Finance institution. Clerks are encouraged to report any shady transactions or unusual practices that they might come across in their area of work. For a bank employee to understand the level of transactions, it is important that they possess exhaustive information of bank policies and processes. Moreover, Clerks are also involved in performing an administrator’s duties such as data entry and typing caste or banking information. For instance, some of these duties could include drafting letters to consumers or updating the banking database on a regular basis.

Make Your Way Ahead for a Banking Job

A banker is a professional, who deals with the funds possessed by the customers and helps them manage it. These professionals hold great communication skills and ace the art of customer service. Their every day work involves dealing with the customers and helping them choose the beneficial investment plans, thus a detailed knowledge of the banking services is crucial to them. For all those aiming to find their abode in the banking sector, the future looks promising. In the years to come, banking is expected to be among the sectors creating a maximum number of jobs.

If we are to believe the sources, banking is anticipated to created 7-10 lakh jobs in the next decade. It is even expected to be among the top job creators in the year 2014. Behind this lie many reasons, one of which is the public sector openings that are to come up in the years to come as half of the staff employed by the public sector banks is expected to retire soon. Besides, the hopes of new banking licenses to be issued would also create demand for banking professionals in the country. Besides, the new government financial inclusion plans, which seek to expand banking into the rural areas. This ensures a better future for those aiming to be employed in the banking industry.

Besides, if we talk about the qualifying criteria for these jobs, a minimum of a bachelor’s degree would be required. However in the public sector banks, a qualifying examination is conducted, whereas the private sector banks hire through recruitment. One can go on to apply for varied positions in a private sector bank such as customer care executive, bank teller, relationship officer, loan officer, financial analyst, sales manager, personalized banking officer or operations manager. For the higher level positions in a bank, the criteria may be more than just a bachelor’s degree. Generally, for the positions, an MBA degree is required, or a prior experience in the banking industry is considered.

If you found yourself to be eligible for these jobs, you just have to review the criteria specified by the bank, for the position you wish to apply for. For instance, an investment banking officer has to hold comprehensive communication skills besides a detailed knowledge of the basis, on which an investment plan can be suggested. Similarly, for varied positions, different criteria is set by the bank to bring apt resources.

Now when, you know all about the banking sector and your prospects to make it to a banking job, all you need to do is to step ahead and find the suitable vacancies. The best sources that can help you get this task done are the job search websites. You can simply log on to these sites and scroll through the openings in banks.

Managing Bank Liquidity in Real Time

Just a decade ago the concept of bank liquidity was for all intents and purposes only one for the Bank Regulator to really concern himself with. A bank had to remain liquid -critical if it were to enjoy the confidence of its depositors – but this criticality was an “after the event” issue.

Then banks enjoyed a high degree of anonymity and choice in how it managed its liquidity. This was as a result of the techniques then used for settling interbank obligations. These techniques had been devised and refined over two or more centuries. They had come from a pre-computer world that relied on manual transaction processing of instruments such as cheques. Early moves at computerization of bank processes simply mechanized the manual approach by using the batch processing system. So the critical factor that related to the measuring of a bank’s liquidity could only be determined after the end of the trading day had been completed and all the “ins” and the “outs” were matched up. Even then, a bank had a safety net, provided by the central bank, which in most countries was prepared to cover any shortfall, and then to backdate this cover to the previous trading day.

A growing understanding of settlement risk and the possible contagion to systemic failure led central banks, almost without exception, to implement payment systems, usually under their own direct control that ensured finality of settlement. Real Time Gross Settlement (RTGS) especially where high value payments were involved has become the accepted mechanism of ensuring safety in national payment systems.

This was followed by the need to ensure that the settlement of stock exchange transactions also took place in a secure manner and that delivery of the shares was only against the exchange of a payment that was final and irrevocable. The RTGS approach fitted this need admirably.

Foreign exchange settlements were the next problem. The collapse of the Herrstadt Bank had caused major problems. The solution propsed by a group of major international banks was for the CLS (continuous linked settlement) system which won the approval of the major central banks. Again the RTGS system was pressed into use to provide the secure payments leg.
Additional factors such as straight through processing (STP) provided the reward of error free transactions. All this has added to the need to manage liquidity in real time.

Each new payment dimension (i.e. RTGS, DvP, CLS) adds to the complexity of the problem. Funds flows now involve domestic, foreign and securities payments as a minimum – each flow is really dependent on the other flows. There may be other dimensions too, depending on local arrangement and conditions, where other settlements may be require to be settled in real-time and on RTGS principles, such as ACH operations or cheque clearing operations.

The complexity of these requirements was the subject of an intensive study in 2000 by the Payments Risk Committee of the Federal Reserve Bank of New York (“Interday Liquidity in the Evolving Payment System: A study of the impact of the Euro, CLS Bank and CHIPS finality”). The study examined the potential implications for US dollar intraday liquidity risks that would come about from planned changes to payment systems in the US and elsewhere. In the words of the committee the report was “intended to stimulate dialogue on the issue and to suggest some possible best practices”. Even though the main focus was on the liquidity effect to banks in the US, the problems and the solutions are applicable to banks everywhere. A key finding is quoted below in full, and illustrates the direction in which bank liquidity management has been heading.

“These changes will create a need for better measurement of payments flows, use of queuing techniques to regulate payment flows, better communications, and a generally higher awareness by treasury managers of developments in the payments processing functions. Payment operations will assume some of the characteristics of continuous industrial processes where real-time measurement is required to assess the buildup of imbalances within systems, identify gridlocks within and between systems, and establish more elaborate contingency plans. The interconnections between systems will also require new control processes in order to cope with unexpected volume and systems changes.”

Bank liquidity management is a critical area. However, up to the present time, many banks have not yet fully realized the effects that the real-time flows of funds have on their operations.

Depending on the size of the bank, the basic problem that is faces will be different. As an example, in a smaller bank, the problem could well be one of trying to match the magnitudes of the inflows and the outflows in “approximate” real-time. This sort of problem does not arise in the case of the larger banks simply because they send and receive high volumes of payments almost continuously throughout the day. So essentially they have a natural flow of funds that helps with the matching process. In countries where CLS is now fully operational banks have found that they have another dimension to this real-time aspect. What has happened is a whole range of fresh scenarios as a result of interactions between the liquidity side of the RTGS system (which one must remember are real-time domestic payments) and the CLS system (which is real-time Forex settlement). A further example of this process is the RTGS interaction with the securities system.
One way to view the problem is to envisage a game of chess. The real-time liquidity challenge presented by an RTGS system alone, can be viewed as a game of chess, in two dimensions. However once one adds CLS, Securities and other real-time funds flows one begins to add additional “chessboards” to the first. One can visualize these extra chessboards as being stacked vertically so that in reality there are a number of games in three dimensions, one above each other. They are all being played at the same time and each game is affected by and interacts with each of the others. Checkmate on any one level can lead to checkmate on all the others. In essence one is forced to play a game of 3-dimensional chess, replacing the traditional one.

To successfully manage intraday payment liquidity involves a high degree of technical and analytical skill. Until recently the technical complications of successfully implementing such a system on a bank wide basis have been difficult to overcome. New technologies are changing this.
The basic principle of such a system lies in the effective modeling of payment inflows and outflows on a timed basis throughout the trading day. To model these flows three key information sources are required:

oActual data. Actual data relating to payments that have already been received or made

o”In the Pipeline”. Data relating to “pending” payments. This may be payments in an internal RTGS queue, or scheduled to be made in terms of CLS or any other commitment. In certain cases inward payments may also be modeled with certainty such as CLS settlements due

oForecast of payments flows. In some cases an estimate will need to be made of unaccounted for payment flows that are anticipated for the remainder of the trading day. This information may be based on historical data adapted in terms of day, the time of the month, fiscal calendar events and so on.

The timing of these various flows may be entirely random, as in an RTGS system or it may be to a specific schedule linked to pre-defined settlement times such as for ACH, Securities, CLS, Cheque and other similar settlements. The range of payments that need to be covered is essentially the whole range of payments that the bank is involved in clearing. For a typical bank this may involve all or most of the following elements:

oThe RTGS system

oCLS obligations either as a direct participant or as a sponsored member or conventional foreign exchange flows

oSecurities settlements
These three flows are relatively straightforward as they only involve the “credit” flow of funds – this means that payments are generated by the paying to the payee bank.

oACH operations which will include the conventional debit and credit payment flows as well as Giro type payments

oCheque clearing operations

oCredit/ Debit card clearing operations which would include EFTPOS transactions

oOther transaction flows such as the settlement of actual banknote withdrawals and deposits with the central bank or other parties.

These four scenarios are more complex in that they involve the processing of both credit and debit transactions, usually in the same systems. An example to illustrate what is meant would be a bank sending out both credit and debit ACH transactions – Credit payments would be an outflow to the bank, while debit transactions would represent an inflow of funds. The process is made more complex by the fact that very often transactions are returned for one reason or another – cheques will not be paid; credit transfers cannot be applied because the account has been closed etc.

An often heard criticism against including the flows for these last four systems in an overall liquidity management system is that while they represents high volumes of transactions their value tends to be insignificant and hence irrelevant to the overall position of the bank. This depends entirely on the customs and practices of the banking operations in the country concerned. In some countries values of cheque and non-RTGS electronic payments may exceed the total of RTGS values. In others cheques, as an example, still represent a significant volume and sometimes significant values.

The technique in managing intraday payment flows is relatively simple in principal – more difficult though in practice.
The techniques described below are based on the well-established process used by many of the world’s larger banks to manage their overall liquidity position in terms of assets and liabilities. Banks use this technique or a variation of it over a period of weeks or months. This technique can be adapted to manage the specific requirements of a bank intraday and end-of-day payments flow.

While this technique focuses on the use of the framework by larger banks in-so-far as the range and diversity of the various payment systems used, this approach is equally applicable to bank payment liquidity measurement and control, even for local, strictly domestic banks. The basic principles revolve around:

oGood management

oInformation systems

oCentralized liquidity control

oAnalysis of net funding requirements under alternative scenarios, and

oContingency planning

All these are crucial elements of strong payment liquidity management at a bank of any size or scope of operations.
The information systems and analysis needed to implement the approach, however, can probably absorb fewer resources and be much less complex at a local bank or a bank that is active in fewer payment systems than the large, internationally active banks.

A bank’s “Treasury Manager” needs not only to have the appropriate liquidity available, but also he needs to have a range of strategies to help him fight this “war”. The strategies and techniques that he will use will include derivatives, swaps, repurchase agreements etc.

The Treasurer’s office has become the command post in this new liquidity “battle” and a key element is going to be the information that he will need for each day’s operations. This information will include details of:

oCurrent day transactions and flows

oDetails of transactions that are still in the “pipe-line”

oEstimates of expected transactions (for those transactions that have not quiet reached the pipeline), but based on know events, trends and historical information.

oSome very intelligent computing that combines all these sources of information into a single scenario that the bank treasures can use, effectively.

The Emergence of Online Banking

There was a day when personal banking required a trip to the bank, standing in often long lines, and making a transaction via a bank teller. Money was accessible only at a brick and mortar location. Any financial needs not taken care of by the end of the business day would have to wait until the next. Access to one’s money was dictated largely by the bank’s hours of operation.

Times have changed. Today, with the advent of the Internet, accessibility to one’s finances is more convenient than ever. With online banking there are no long lines or gas-guzzling drives to the bank. Transactions, bill payment and ordering new checks can all be accomplished with the click of a button in the comfort of one’s own home. ATMs allow instant access to cash. For some people, there is no brick and mortar bank behind their online accounts – their banking is conducted entirely with an Internet bank.

In fact, online banking has become the preferred transaction method for most of America’s banking customers. While an online transaction can take just under three minutes, it can take nearly 10 minutes at a bank to conduct that same transaction due to waiting in line and interacting with a branch teller.

While some may have questioned the validity of online banking in the 1990s, it has proven to be one of the most valuable assets banks can offer their customers today. While fewer than one in seven Americans were online in 1995, two out of every three Americans are online today, according recent statistics. Americans are surfing the web, conducting e-commerce, and examining their bank statements from their personal computers at rates much faster than in the time those things could be accomplished apart from a computer.

With the advent of the Internet in the 1990s, confidence in this new form of collecting and transferring information was an obvious pathway for banks to pursue. It gave bank customers what they never had before — access to their money 24/7. Features have become more sophisticated and user friendly through the decade. Today’s banks offer online banking services which allow users to conduct a variety of transactions – everything from account to account transfers and paying bills to applying for a loan or making an investment. Especially convenient, online banking allows users to instantly view their accounts, balance the books, and monitor spending. And with the use of personal finance programs, data can be easily imported making personal financial management easier than ever. Some banking programs even allow users to monitor all of their accounts at one site regardless if they are with their main bank or with another institution.

Online banking has also opened doors for those shopping for a loan. Online lenders make applying for a loan easy and convenient, including everything a customers needs to make an application, including application forms and instant assistance on their website. The success of these types of services have allowed consumers to seek the best terms and have brought about a new level of competition between banks looking to expand their bottom line.

One of the most important features to the growth of online banking has been the development of protection barriers to safeguard users and their money. Personal Identification Numbers (PINs) and/or passwords have allowed users to authenticate and protect accounts and transactions.

Indeed, the Internet has proven to be a powerful and growing tool for today’s consumers. Through it, online banking has provided customers more control over their finances and freed up time that would have been spent standing in a bank line. But as with many things, precaution and education are important elements for online banking customers. At the end of the day, online banking succeeds only with the vigilance of the banks and their customers.

How Is The Banking Industry Assimilating Modern Trends In Social Media And Networking?

When everything else is on the go, then why should the Banking Industry lag behind? With its inherent riches in terms of resources – financial, technical, human as well as technological, the banking industry has always been at the forefront of implementing positive change in society. It is only natural that the financial powerhouses of the world have sought to make best use of social media and networking opportunities to hone and enhance every facet of the industry.

SERVICE:The Banking Industry’s primary focus has always been optimisation of service. The motivation to provide simple, comprehensive, speedy transactions for customers has led the banking industry into computerising many of their services. Today, almost all leading banks in the world provide online services including monitoring of account activity, online transfer of funds, online stoppage of cheques, payment of taxes and other bills et cetera.

Online Banking Services have made queues for updating passbooks, making deposits or withdrawals, transferring funds, applying for loans a thing of the past. Nowadays, whether it be a home loan, an automobile loan, a gold loan applications can be made online, totally hassle free.

Fixed Deposits and Recurring Depositscan be done automatically so that your money is constantly working for you and not just sitting in your bank account.

Online Account Statementsare available so that you can check your account details any time of the day from the comfort of your home, without having to worry about holidays or working hours. Statements can be printed out and cheque-books can be ordered online without any charge from the banks.

Third-Party Transfers & Tax and Bill Payments can be done instantaneously at the touch of a button. Customers don’t have to spend hours of their precious time standing in queues of government buildings waiting to pay their electricity, water and sewage taxes.

WEALTH MANAGEMENT:Wealth Management is another key area which has benefited a great deal from technological advancements and computerisation. For example, online trading in the stock market through Demat accounts which provide instantaneous buying and selling options have given laypeople powerful tools to save and invest their wealth by the click of a button.

Many banks also provide a wealth of information, guidance and knowledge on varied topics such as

1.Company History: Detailed information about companies and their share market performances over the years are available.

2.Stock Market Trends: Complete and thorough information about stock market trends from around the world including up to date and accurate projections and predictions of future trends.

3. Mutual Fund Information: Accurate compilations of the available mutual funds that are company specific as well as industry specific. With the wealth of knowledge and guidance that is available the customer can easily make educated choices as to which mutual fund to invest in. There are also online staff available to help customers assess degree of risk while investing.

4.Foreign Exchange: Transactions involving exchange foreign currency is also one of the top priorities of banks today.

Challenges Faced by the Banking Industry in Terms of Making Full Use of Social Media Resources

Lack of Vision: Experts say that part of the problem of why banks, given the sort of abundance they possess in terms of resources, have not been able to make utmost use of social media resources is that banks do not understand how to strategically use social media, or have problems ‘selling’ the idea and benefits “internally” to senior executives. “For a surprisingly high amount of banks a convincing social media strategy is still not distinguishable,” recent report states, which analysed the social media performance of leading private banks worldwide. On average the banks only scored one third of the possible total of assessment points for Twitter usage. Facebook scored worse than Twitter however, as just 18 banks (55 percent) with an active Facebook profile reacted to a test friend request, which the firm sees as a clear sign of “insufficient interaction with the users”.

Deeply Ingrained Security Concerns: Money and bank details are perhaps one of the highest priorities for anybody in terms of assurance of privacy. If one cannot trust that one’s financial details are secure the chances of one using the Internet for communicating to the bank or making transactions online are extremely slim and for good reason. Stories of websites and databases being hacked and bank details being stolen, email scams, viruses from the Internet and other incidents have trained many web users to be wary of using money online. To the point this reluctance has manifested itself in communicating with the banks and discussing anything financial online.

Therefore, while the banking industry has come a long way in terms of making use of social media and networking avenues for Advertising and Marketing their products and services, it seems that there is a great deal more can be done. A comprehensive social media and networking strategy can help banks communicate with their customers on a much more personal, exclusive and individualised manner. The latest advancements in social media and networking can be a boon for everyone. Banks will do their customers a great service by making optimum use of all the available resources. The world is looking forward to a simple yet seamless banking system that will sustain an ideal bank/consumer relationship. With the wish, vision, technology already in hand I’m sure it will become a reality very soon! Till then, Happy Investing!