Offshore Banking While Abroad

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Reasons Why an Expat Can’t Get an Offshore Account

Here at ExpatMoneyChannel we have written in some detail about British expats not being able to keep open their UK onshore accounts. However, there are good reasons why an expat may want or should have an offshore account. This may be to simplify your tax situation, have your savings grow without deduction of taxes, albeit if you are resident in an European Union country this is now more difficult, as well as the sheer convenience of having a chunk of your money in one central place with a savings institution geared up to expat requirements in the popular centres of Guernsey, Jersey or the Isle of Man.

However, we have been contacted by several readers to say that they have been refused offshore accounts and they don’t understand why. For example, one particular reader asked us the following: “I retired to Australia 5 years ago on a temporary visa and only need to pay tax in Australia on my Australian income.  All my pensions and investment income is paid in UK and taxed at source and I have retained bank accounts However, HSBC International, Lloyds TSB Offshore and NatWest International have all said they will not let me open an account because I reside in Australia, saying their regulations do not allow.  Can you please find out what regulations are causing the problem".

So we asked all three banks to explain. Hats off to NatWest International who came back reasonably quickly to explain the situation, which we have reprinted below. "The simple answer is that RBS International Ltd trading as NatWest (the offshore bank) is not licensed in Australia under the Australian Corporations Act 2001. It would potentially be in breach of this if it were to market or sell to an Australian "retail" resident in Australia.”

Unfortunately, Lloyds TSB Offshore took a few prompts before responding and when pressed for a more thorough explanation said they would come back to us... we are still waiting. And despite promising an answer, HSBC International did not come back to us at all!

Australia is, of course, not the only country to apply strict licensing laws when it comes to marketing financial products and services. Other countries include the United States and Japan. The laws are there to protect retail consumers by restricting and closely monitoring the type of financial products and services on offer in a country - which is why the same bank in two different countries cannot generally swap products and services to each other’s customers resident in that country. However, it can be a bit of a grey area as there are exceptions to the rule such as the ability to market to high net worth residents, who are not deemed as vulnerable as retail clients. Unfortunately, there are no separate laws for expats, so if you are a resident, even for just a few years, of one of these countries you may encounter some difficulty opening an offshore account once you have taken up residence.

So we have listed below some tips on what to do if you find yourself in this situation.

  • Open an offshore account before you take up residency
  • If you do have a large sum to deposit offshore then tell the bank the amount rather than simply asking to open an account as you may be eligible as a high net worth resident.
  • Use any existing banking arrangements to see whether they can help you open an offshore account.
  • Wait until your next trip back to the UK to open an offshore account.
  • Emphasize your earnings and savings going forward. Banks are more likely to take you on if they think they are going to make money out of you in the future!

- See other articles on offshore banking

- See our campaign on Expats being able to keep open a UK bank account