Last updated: August 12, 2016
Having an offshore bank account — or two… or three — is an important step in planting flags around the world. As we often discuss, the actual opening of an account is relatively easy, and you don’t need a lot of money.
In my guide, The Best Offshore Banks, we discuss 55 banks that will open offshore accounts for anyone with as little as $500 to deposit. In some cases, you won’t even have to leave your living room, as a number of Caribbean and even European banks allow for remote account opening.
However, the bigger challenge for offshore banking newbies is how to move money offshore; precisely, how to get your onshore funds into your new offshore account.
To make things clear, this article is NOT about how to hide money offshore. While the media loves to do gotcha pieces about how easy it is to move money overseas, the reality is that playing by the rules is a lot better way to go.
In the era of FATCA, mutual legal assistance policies among governments, and offshore bank account reporting requirements, you don’t want to play hide and seek. When used legally, offshore bank accounts are an excellent asset protection tool to protect yourself from bankrupt governments.
If you don’t have an offshore bank account yet, you can learn more about how to get one here. However, if you do have an account but are confused about how to move money into it, here are several strategies for funding your offshore bank account.
International wire transfer
The most common and straightforward method is to simply wire the money from your onshore account (or your existing offshore account) to the new offshore account. Wire transfers work well because there is often no limit to the amount you can send, making it the most practical option for large transfers.
In some countries, sending a wire transfer is extremely simple and affordable. My Hong Kong bank charges about $11 to send money almost anywhere. The only problem is when the transfer gets rejected for some reason by the receiving party and I’m charged a large return fee. This shouldn’t be an issue, however, if you’re wiring money to yourself.
The downside to sending a wire is that it could take a while to arrive in some smaller banking jurisdictions, like Belize, that involve “correspondent banks” that are often in the US or Germany.
In countries where bankers tend to freak out about international wire transfers (see: the United States), you may need to go into a branch to initiate the wire. I know people who have had their US bank accounts restricted for daring to send an international wire transfer to themselves, so be careful. Then again, isn’t that why you wanted to move money offshore to begin with?
If you want to transfer money online, but don’t want to send a wire transfer, new services like Transferwise can help. (For a full review of the different services, read our article on the best ways to transfer money internationally coming out in September 2016.)
Transferwise is based on a peer-to-peer system that cuts out middleman banks and allegedly reduces the fees of moving money overseas. I haven’t found this to be the case; the cost to send $5,000 to a foreign bank account was as much as $50; even crappy US banks charge less to send larger wires.
In reality, services like Transferwise are a better replacement for expensive money senders like Western Union or Moneygram, not for replacing wire transfers. However, Transferwise is easier to use than a wire if your domestic bank dislikes your moving money offshore, since you send the money domestically and their service handles the rest.
Take cash from an ATM
It sounds too easy, but among the easiest ways to move money offshore is merely to take it out offshore to begin with. Sometimes, the most simple solutions are the best.
In The Best Offshore Banks, we discuss a number of high-quality banks that require $2,000, $1,000, or even less in their foreign currency equivalent to open. The only catch with some of these banks is that — unlike accounts that allow you to wire money in later — you need to deposit the money when you open the account.
These banks don’t allow remote account opening, but you can literally use their ATM to take out the amount of the minimum deposit. If your domestic bank ATM card imposes a limit on daily withdrawals (usually $400 or $500 for US banks), you may need to plan one day ahead so you can max out the limit on two different days in order to get enough cash.
How to Deposit Money to an Offshore Bank Account
Bitcoin and cryptocurrencies
Bitcoin has been put forward as the possible “ultimate offshore bank account” due to its ability to store money securely in the cloud. Bitcoin guru Stephanie Murphy spoke extensively about the privacy benefits of using Bitcoin at two of my Passport to Freedom conferences.
However, Bitcoin can also be used as a mechanism to transfer funds offshore. If you own Bitcoin in your home country, you can access them in your destination country by using services like Local Bitcoins, or by using one of the growing number of platforms that connects directly to a bank account.
Coinapult, for instance, allows you to store Bitcoins and freeze their value to the value of a foreign currency, gold, or silver, reducing volatility until you want to move them into your foreign bank account. Coinbase and other services allow transfers to connected bank accounts, although many offshore jurisdictions are not yet supported.
Sell your gold and silver
If you own gold or silver offshore, such as in a vault here in Singapore, you can often sell those precious metals and have funds wired into your local bank account. Singapore is an excellent option for this as gold storage here is highly secure and Singapore bank accounts are also excellent.
If you already own gold and silver, there are ways to ship it overseas (again, Singapore is a good option) and later sell it for cash. Transporting gold on your person can be risky since customs forms are required in many cases. You should also make sure you follow all rules regarding sales of precious metals, capital gains taxes and other reporting requirements in your home country. Consult a tax professional for help.
If you’re wondering why “put money in a suitcase and show up in the Virgin Islands” isn’t on the list, it’s because almost everyone on earth — save those in Hong Kong and a few other countries — has to declare cash being taken out of the country.
While transporting any amount of cash is legal in most countries, most law-abiding citizens don’t carry large amounts of cash over borders. Those who do often make customs officials suspicious enough to go so far as to confiscate your cash. On top of the legal hassles, most banks don’t want huge piles of cash being deposited due to money laundering concerns; many banks now charge a cash deposit fee for the privilege.