In Part 1 of this article last week, I posed the question, Why do Offshore Banks Ask So Many Questions?

The documentation requested by offshore banks (bank reference letters, proof of source of funds etc) when opening accounts for the first time can sometimes appear overwhelming. Panamanian banks, in particular, are extremely bureaucratic. But don’t be perturbed. Once you understand the logic behind it, it’s really quite straightforward.

You can basically break down the requirements into just three things that the bank wants to document before opening your new account:

• Who you are. This is almost exclusively demonstrated with your passport. A passport is definitely the preferred identification document internationally. Most people who want to open accounts or invest offshore will be in possession of a valid passport. In certain cases, banks may accept other documents like government-issued ID cards or driver’s licences, but as a general rule you will need your passport.

This step is easiest if you are meeting your offshore bank in person, since you just need to show your passport and allow the banker to take a copy. It’s a little more complicated if you are opening the bank account by mail, as the copy will normally need to be certified as a true copy. Requirements vary by bank, but notaries are almost universally accepted for the purpose of certifying copies. Lawyers, consulates and embassies, and offices of international banks may also be accepted as certifiers. If you are meeting a consultant or corporate service provider, they can usually arrange to certify your passport copy too.

• That you’re a good guy (or girl). For this, the best document is a letter of reference from your existing bankers. A bank bank refreference just says something like “Mr and Mrs Bloggs have been clients of our bank for five years and have always maintained their accounts in good standing.” That’s it – no big deal! Some banks also refer to reference letters as “certificates.”

My clients are sometimes worried that their banks won’t issue references – but it is very unusual to find a bank that won’t issue a reference. Even if you don’t know any one individual who works in your bank, it’s a standard document that the back office should be able to produce based on their records.

British banks are some of the most difficult to deal with, but even they will, according to the guidelines of the British Bankers’ Association, issue exactly the reference you require if you ask in the right way. In the UK the reference must be requested by a hard copy letter in the post. Banks in other countries like USA, Canada, Australia, Europe etc will usually write bank reference letters on request.

You need to check with both banks (the new one and the old one) about any specific requirements. For example, whether the reference can be addressed “to whom it may concern” or if it has to be addressed to a specific bank.

Some banks will accept references from professionals like accountants, lawyers, corporate service providers and the like. This can be useful if a “to whom it may concern” reference is not an option, and you don’t want the old bank to know where you are opening the new account.

Overall, you should not worry about references. They are not a problem. If you have any doubts, contact me for specific case-by-case advice.

• The final thing you need to prove, is the source of funds: where the money is coming from. The rationale behind this, of course, is for bankers to be sure that they are not accepting money that is being laundered or was acquired irregularly. They are not usually interested in tax matters. Typically documents people present to show source of funds are contracts for sale of real estate, documents showing you inherited money or received it from a family trust, documents demonstrating that you own a business from where the funds are being withdrawn, or a contract of employment showing your regular income.

Of course, the documents presented must match the amounts you are depositing. A document showing you earn $5000 a month net would be fine if your average balance will be under $20,000. But then if a million suddenly arrives in the account, the bank will freak! If you want to receive a million all you need to do is provide documents in advance, for example showing that you sold a million dollar house or that you sold out your business for cash… then the bank will roll out the red carpet for you.

So that’s it… those three things are all banks are really looking for. Some also want proof of your residential address. And obviously if you are opening a corporate account the bank will want to see documents linking you to the corporation – but it’s best to let your corporate service provider take care of that for you.

Remember: banks are in business to open accounts and accept deposits. So if you are in doubt about what documents are needed, or if there’s something they ask for that you can’t supply, just talk to them openly and explain the problem. Most likely, they will be able to suggest a common sense, mutually-acceptable solution. If not, then take your business elsewhere.

So all in all, the documentation is not as difficult to handle as it sounds. If you use an intermediary such as my firm, it’s even easier – we can dedicate more time to you as an individual than banks can afford to on all but the largest accounts. Often, with a short telephone call we can help you complete all required documentation and just provide you with the finished versions to sign. Services of my firm are available exclusively to Q Wealth Members.

by Peter Macfarlane for The Q Wealth Report

Singapore is “a convenient destination to protect and add value to your international wealth” according to the website of one of the 205 banks operating in Singapore today. I couldn’t have put it better myself!

Singapore has developed in recent years into a sophisticated private banking and wealth management base for Asia. But besides targeting their traditional but fast growing market of wealthy entrepreneurs in Asia, the best offshore banks in Singapore today are also developing products and services tailored for North Americans, Europeans and Australians, including multi currency accounts.

If this sounds like you, read on to find out about some of the advantages and disadvantages of opening an offshore bank account in Singapore, and learn how to open an offshore bank account as a non-resident. Is Singapore the best offshore banking country for the new decade?

Typical investors from this latter group are looking for first-world banking services, delivered over the internet in English, in a country that is outside the zone of influence of the United States and the European Union.

One of the world’s most prosperous countries, Singapore today boasts a prominent financial centre and highly developed economy. Its flexible regulatory framework, independent judiciary and practical English-inspired legal system have become the foundations of the country’s success.

In common with most offshore financial centres, interest earned by individuals on bank deposits and foreign sourced income – including foreign sourced dividends received on non-Singaporeans securities – is exempt from Singapore taxes. Singapore also has no capital gains tax nor estate duty on bank deposits and investments.

Accounts can freely be maintained in all major currencies. These multi currency accounts provide an excellent hedge for those of us who foresee major devaluations of currencies like the dollar and the euro in the months and years ahead.

Accounts may also be opened in the name of foreign entities like corporations, trusts and LLCs, achieving even greater privacy and asset protection benefits, and sometimes legally sidestepping any requirement to report assets as personal holdings.

All these benefits are delivered in a strong bank secrecy regime, helping account holders to protect their investments from prying eyes inside or outside the country. Banking secrecy in Singapore is not just laid down by law, but is part of the national business culture. Indeed, tax authorities in Singapore are specifically blocked from having any access to individual bank accounts.

As in Asia in general, a lot of business in Singapore has traditionally been carried out in cash. This is epitomised by the $10,000 bill, the largest bank note in the world: at current exchange rates (January 2010) one of these bills is worth more than seven thousand US dollars. These days, however, as restrictions on cash are becoming tighter, sophisticated internet banking is becoming the norm.

So, if you are not resident in Singapore how can you access these banking services? Everything starts with opening a basic current, savings or checking account – the basis of your banking relationship.

One of the disadvantages of banking in Singapore is that you will need to go there to open an account. Banking regulations do not permit the opening of accounts by mail, unless the client is already known to the bank. The only possible exception to this is opening an account at one of the many banks in Singapore that send officers to visit their wealthier clients in their overseas homes, or have associated offices in other countries. HSBC clients, for example, may be able to open accounts at HSBC in Singapore via their local offices. The above process, however, is not advisable if banking secrecy is important to you – since it leaves permanent records of your accounts accessible in other jurisdictions. In any case I always recommend visiting at least once so you can get to know your banker personally.

Apart from that, opening your account should be relatively straightforward. There are few complications. If you choose one of the commercial banks such as DBS Bank or United Overseas Bank, a few hundred dollars will be enough to open an account. If you want a higher level of personal service and are prepared to make a higher deposit, let’s say over a hundred thousand dollars or equivalent (bank policies vary widely), contact one of the more discreet private banking operations. I recommend you go for one of the lower profile ones, since they tend to offer the best privacy protection.

A full list of banks operating in Singapore is available on Wikipedia, and you can contact them directly. It is always easier, however, if you have an introduction from a regulated professional who is known to the bank, such as a lawyer, accountant or company formation agent. My firm can help with that, for example, if you are a Q Wealth member. Membership costs just $87 so won’t break the bank!

In terms of documentation needed to open an offshore account, you will be expected to provide proof of who you are (a copy of your passport), where you live (such as a utility bill) and most importantly of all, proof that the funds come from a legitimate source. For example, if the funds you are depositing were obtained from a real estate sale or from an inheritance, you would show the relevant legal documents to prove this. Finally, it is advisable to take a letter of reference from your bankers at home, introducing you as a responsible account holder. This bank reference may be addressed ‘to whom it may concern.’

Note: Peter Macfarlane is editor of the Practical Offshore Banking Guide, an annually updated guide available free to readers of The Q Wealth Report. If you haven’t got yours yet, sign up today to access this information.