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How to Open an Offshore Bank Account: A Guide for US Citizens

Offshore

February 7, 2025

The topic of offshore banking has long been surrounded by myths and misconceptions, especially when it comes to US citizens. 

Perhaps this is down to how the offshore world is portrayed in film and the media, with many commentators asserting that opening an offshore bank account is either risky or impossible. 

In reality, these assumptions couldn’t be further from the truth.

While US laws like the Foreign Account Tax Compliance Act (FATCA) have created hurdles, they’ve hardly closed the door to overseas banking. 

Many jurisdictions still welcome US citizens who seek financial diversification, asset protection and access to global opportunities. The key is knowing where to look and how to go about doing it correctly. 

This guide to offshore banking for US citizens cuts through the noise and misinformation, debunking the most common myths about offshore banking. 

Here, you’ll find practical insights into the process, making it simpler for you to take full control of your financial future.

How to Open an Offshore Bank Account

US Citizens and Overseas Bank Accounts: Debunking the Myths 

If you look at online forums or blogs, you’ll see content about how it’s almost impossible for US persons to open offshore bank accounts.

While this isn’t true, the idea didn’t exactly emerge from nowhere.

It dates back some years to when the US government put FATCA in place.

You can learn more about FATCA here, but to summarise, it forces banks who want to be a part of the US financial system to effectively become unpaid tattletales to the Internal Revenue Service (IRS).

Naturally, plenty of foreign banks said, ‘No, thank you.’

Now, this doesn’t mean these banks were somehow complicit in tax evasion or money laundering. While many were happy to comply with the IRS, FATCA placed a whole new burden of responsibility on them.

Therefore, some banks simply didn’t want the hassle that came along with FATCA and closed their doors to US citizens and permanent residents.

In the wake of FATCA, some foreign banks began to turn away US customers, prompting a degree of panic in the offshore industry.

As a result, rumours grew that FATCA was the US government’s way of preventing its citizens from banking overseas. 

Although FATCA may have reduced US citizens’ options when opening offshore bank accounts, it’s always been perfectly possible and legal for US citizens to bank overseas.

Yes, a handful of banks have turned their backs on US citizens, but most offshore banking institutions have complied with FATCA to keep their US clientele.

In fact, many national governments have taken steps to ensure their banking systems are FATCA-compliant.

So, while FATCA certainly threw a spanner into the works, it didn’t close off the possibility of offshore banking for US citizens.

Offshore Bank Accounts FATCA

How FATCA Can Limit Offshore Banking for US Citizens

Now, let’s explore some of the ways that FATCA affects US citizens who bank offshore.

Although most banks play ball with the US government, others decided that implementing FATCA wasn’t worth the time and risk.

So, many banks in places like Central Europe and the Caribbean sent their US customers packing.

Because FATCA increases overseas banks’ reporting requirements and liability, those banks simply decided to opt out.  

Additionally, most remote banks have decided that US citizens aren’t worth the trouble.

Therefore, US citizens and permanent residents are somewhat limited in where they can bank, but those limitations are minor.

For the most part, US citizens can still bank quite freely around the world. Although most offshore banks have become FATCA-compliant, some are still off-limits to US citizens.

Opening Offshore Bank Accounts for US Citizens

Despite some limitations, US citizens are still free to open offshore bank accounts in many places.

However, the global landscape of offshore banking is rapidly changing, so you should understand how these changes may affect you as a US citizen banking abroad.

Whether you want better privacy, currency diversification or just the allure of moving your money outside of Uncle Sam’s grasp, there’s plenty to gain – if you know the rules of the game.

Documentation Needed

Opening an account offshore isn’t a casual stroll into a teller’s booth. Be ready with a stack of documents that scream, ‘I’m legit.’ 

Offshore banks usually want your passport, proof of address and sometimes, a financial reference from your current bank. If you’re out to impress, bring notarised or apostilled copies of these documents, just in case they ask.

Naturally, each bank will likely request something different, so we suggest contacting them beforehand to avoid wasting a trip to the office just to be denied.

Proving You’re Not Evading Taxes

As we’ve made clear, offshore banks aren’t as secretive as the movies make them seem. Thanks to FATCA, these banks will ask detailed questions about where your money comes from. 

Whether it’s pay stubs, investment reports or that inheritance letter from Aunt Edna – banks want to know all about your source of funds. 

And remember, as a US citizen, you’re expected to report any foreign account holding over US$10,000 to the IRS through the FBAR form. They are watching.

Choosing the Right Offshore Bank

Like traditional US-based banks, offshore banks offer various perks and services. It pays to know what you’re looking for here.

Want high privacy? Aim for Switzerland. 

Banking in USD? Think in terms of the Cayman Islands

Lowering your taxes? Dig into Belize or Singapore. 

There are more tips for where to bank below (hint: there are several options outside the traditional spots).

The Drawbacks and Challenges

Sure, offshore accounts sound sleek, but they come with red tape and scrutiny. Plus, international wires and currency conversions don’t exactly scream ‘cheap and easy.’ 

Plan ahead and know the costs before you jump in.

The Offshore Banking World is Bigger Than Switzerland and the Caribbean

One of the biggest mistakes US citizens make in the wake of FATCA is becoming so hung up on where they can’t bank that they neglect the places that are still open to them.

While traditional offshore banking hubs like Liechtenstein or Puerto Rico may be FATCA-averse, you should keep in mind that an offshore bank includes any bank that’s outside your home country.

That, quite literally, gives you a world of options.

If high interest rates are what you’re looking for, then head to Eastern Europe and the Caucasus.

Georgia, for example, is one of the easiest places to open a bank account in the world, and if you’re willing to deal in local currency, you can earn interest rates of around 10%.

Other former Soviet states like Armenia and Azerbaijan also offer relatively stable banking and impressive interest rates.

However, if you can’t stomach the risk that comes with post-Soviet currencies, you can head to Asia for a bit more stability.

Singapore is, for example, home to some of the world’s safest banks. 

South Korea also has an impressive banking infrastructure, and Hong Kong is a classic offshore banking destination – though it’s getting harder to open an account there.

Offshore Banking is Becoming Harder for Everyone… Not Just US Citizens

Although you can open an offshore bank account with ease in some places, it’s generally becoming more difficult for everyone – regardless of your nationality.

This increasing difficulty is likely due to two major trends in the offshore world – more competition and more regulation.

As the world becomes increasingly globalised, more people want to internationalise their assets and open offshore bank accounts.

This means that with more potential customers, banks can be more selective about who they work with.

In Hong Kong, opening a bank account as a foreigner is becoming more difficult due to a large influx of wealthy people from the Chinese mainland.

With so much local wealth already at their fingertips, many Hong Kong banks simply don’t need foreign cash.

Additionally, regulations like FATCA and the Common Reporting Standard (CRS) have made dealing with foreigners from the developed world a regulatory headache.

So, if a bank can avoid that headache, it will.

The simple truth is that money talks. So, while offshore banks are becoming more selective about who they open accounts for, it just means you need to be strategic with your money.

If you want to open an account in a competitive place like Singapore or Hong Kong, for example, you may want to pursue a high-value corporate or investment account over a low-value personal one.

While it’s getting harder to open offshore bank accounts around the world, there are plenty of options if you know what you’re doing.

How to Open an Offshore Bank Account: FAQs

What is the best country for offshore banking?

The ‘best’ depends on your goals. For privacy, think Switzerland or Liechtenstein. Favourable taxes? Try Belize or Singapore. Diversifying currencies? The Cayman Islands might be best.

Where are the safest offshore banks?

Switzerland, Singapore and Luxembourg rank highly in terms of bank stability and strict financial regulation. These countries prioritise security, making them a strong choice for offshore banking safety.

Which foreign bank accounts are popular with US citizens?

For Americans seeking stability and global access, popular options include accounts with HSBC Expat (Jersey), Santander International (Isle of Man) and Singaporean banks like DBS. However, we suggest you consult a professional who can help you find the right offshore private banking solution.

Can US citizens open a bank account from abroad?

Yes, but it involves submitting identity verification documents and proving your source of funds. Some banks may require in-person visits, though many accept applications remotely with sufficient documentation.

Is there a minimum amount to open an offshore account?

Minimums vary widely. While some banks require between US$100 and US$1,000, elite institutions may demand US$100,000 or more. A common minimum deposit is usually around US$5,000.

What are the disadvantages of offshore banking?

Expect high fees, strict documentation requirements, currency conversion costs and intense scrutiny from tax authorities.

How much money can you take offshore?

Legally, there’s no limit to how much you can transfer offshore. However, reporting requirements for US citizens kick in for amounts over US$10,000. Obey disclosure laws to avoid penalties.

The Best Offshore Strategy is a Legal Offshore Strategy

We’ve said it before, and we’ll say it again – going offshore isn’t about hiding – it’s about making smart decisions with your money.

And frankly, engaging in shady or illegal banking practices isn’t smart.

In today’s world, you can’t just swan off to the Cayman Islands and secretly stash your fortune. You will get caught – and you’ll lose far more money to the IRS than you would in taxes.

There are, however, perfectly legal and FATCA-compliant ways to make the most of your money and maintain your banking privacy.

If you’re interested in using offshore banking to maximise your wealth, our specialists can help. We help seven- and eight-figure entrepreneurs and investors diversify their wealth and go where they’re treated best. To find out more, contact us today.

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