Offshore banking Information
To know your customer is a rule of thumb for any offshore banker these days. Why do bankers need to know their customers and what are the benefits and consequences for both parties involved?
Imagine the qualities you as a customer expect from your offshore bank:
- Experience, integrity, competence, reliability, security, safety and rapidity.
You might want to know their asset base, manager´s profile´s, business partners, and the list goes on. Isn´t it natural for the bank to want to know the same things about you or your business? It is today, although back in 80s and 90s these queries did not arise, but we live now in the 21st century. So do you want to disclose your nature of business, annual income, or any other confidential information to your offshore bank and what are the consequences and/or benefits?
First of all let´s talk about the benefits, let´s say you have been utilizing your offshore company for a while, however your banker does not really know what is the true nature of your business. One day you decide to start an Internet based business and you need to establish a merchant account. The tendency is for Internet merchant businesses to provide a specialized merchant account; these companies have taken over from typical high street banks that provided merchant accounts in the past. Such a company will ask you, among many other things, for a banker´s reference letter and the financial statements of the company. Probably you do not have the statements and it is most likely that the bank will be reluctant to give you a reference letter.
It is a common mistake when users of offshore companies treat their IBC´s as their own pocket and do not spend enough time or resources to compile the financial statements and ensure that all documentation such as contracts; invoices, etc are on file. It is in your own interests to build up a structure with documentary proof of the legitimacy of your business; otherwise it will be very difficult to get into new business areas or open new bank accounts. It is partially an oversight on the offshore service provider’s side, as they largely fail to educate their clientele, that in order to build the successful business, it is important to get the offshore base structure done right.
Don’t be afraid to tell your offshore banker what is the nature of the business, there is nothing wrong with it, once it is a legitimate business, it is in your own interests to know that your bankers are prudent and diligent, so you and other customers of that bank can be assured that the bank’s integrity will not be compromised by fraudsters or money launderers. Why should you care about the bank you are banking with? Because if the bank fails to prevent money laundering or fraud channeled through it, it may and most likely will face the sanctions from their regulators, the international banking community and other organizations. In most cases such sanctions will trigger serious disruptions to the operations of the bank and in some case may lead even to the liquidation of the bank. In any such case there will be disruption to the processing of customer orders and may result in heavy losses to the innocent customers of the bank. The lack of communication between the offshore customer and the bank is a serious issue these days; therefore if you want to secure a successful long standing relationship with your offshore bank you as a customer have to be very responsive and informative to their queries.
What are the consequences of such a transparency between the offshore bank and its customer, one may ask (thinking of privacy and secrecy). The answer is that it does not compromise your privacy or confidentiality, because the new KYC and AML legislation does not simply that the information about you or your business is furnished to any regulatory authority as one may think. In most jurisdictions, details of the accounts are released to the relevant authorities only upon the court order, so if you are a legitimate user of offshore financial services, you shall sleep well. To round up, we recommend to be informative with your offshore bankers, don’t keep them in the dark, it is in your own interests, so both parties will benefit from a long standing trustworthy relationship.
