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There are many reasons you may want to open an offshore bank account.
If you run your own business, like I do, and get paid by clients from abroad, it makes sense.
It’s generally expensive to transfer money outside of South Africa, but it can be equally costly for people from abroad to transfer money here, so having an overseas transactional bank account is handy.
But there are other reasons you may want an offshore account.
Nesan Nair, senior portfolio manager of Sasfin Wealth, says it could provide you with an opportunity to invest in offshore money markets with no capital risk and better interest rates.
Japie Lubbe, a structured product consultant at Investec, says having an offshore account gives investors an opportunity to diversify their risks, particularly considering South Africa is in a technical recession and may need to be bailed out by the International Monetary Fund if its debt gets out of control.
But how can you open an offshore account? Here are three ways:
CONSULT YOUR LOCAL BANK
According to Nair, South African banks such as FNB have made this an easy exercise.
“At FNB, you can do this online if you have a local account. Minimum [transfer amounts] will differ from bank to bank, but some may not have a minimum.
"The advantages can include investment diversification and access to your funds offshore, but the investment needs to be measured against what the costs are,” he advises.
Justin Porteous, wealth manager at Ivory Wealth Management, says: “If you want to have more of a European and UK need for banking, Standard Bank Isle of Man is a great option.”
However, there are minimum balance requirements with Standard Bank.
With its Offshore Reserve Account, for example, you need to have a minimum balance of £3 000 (R55 900). But not all offshore offerings are as restrictive.
“For instance, if you want to use a bank in Africa, Bank One is a great example. It is based in Mauritius and can have multiple currencies. There is no minimum balance and the charges are really low,” says Porteous.
If you are setting up an account to just pay beneficiaries directly, consider Standard Bank’s Shyft account and app.
You can store up to four currencies in separate wallets, add people or businesses as beneficiaries, send money to their bank accounts, and swipe and draw cash in currencies loaded to your card.
EMBRACE TECHNOLOGY
If you have an address in the UK – say your partner has gone there first to establish him/herself and get a job ahead of you – it’s really simple and easy to set up your own bank account with Monzo while you’re based in South Africa.
Digital UK bank Monzo gives out “golden tickets” to existing Monzo customers after they’ve made some purchases on their account. Golden tickets can be found in the payments tab in the app.
Once the golden ticket has been sent, you can use it to set up a Monzo account.
You’ll need an email address, your passport and the ability to make a video of yourself using your phone requesting Monzo to open an account for you.
While I was able to successfully open a Monzo account before arriving in the UK, the same could not be said for my application to Lloyds Bank.
While it does allow you to apply for a bank account through its website, it still wants you to go into a branch to do the final paperwork and provide proof of address.
USE IMMIGRATION CONSULTANTS
It can be difficult to open a bank account when you move overseas.
In the UK, for example, the banks often request three months of recent utility bills and a lease agreement to open an account. Even if you have all of these things, you may not be given an account that best suits your needs.
Immigration agencies like 1st Contact can help South Africans who are moving to the UK to open a bank account.
As it has special relationships with overseas banks, it is able to secure accounts for its customers.
For £35, the company will help you open a UK bank account, find you accommodation, assist with your job search and give you a SIM card for your cellphone.
