Americans place millions of dollars in foreign accounts each year for a number of reasons. If you have friends or family abroad, do business overseas, have dual citizenship, or plan to move, you may need a bank account outside of the country you currently live in. Find out everything you need to know about banking abroad, and how to open a bank account abroad yourself, so you can easily receive and send money abroad.

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What is an overseas bank account?

An offshore bank account is an account held in a country other than your country of primary residence. Foreign bank accounts can be useful for the following reasons:

  • You regularly travel to different countries for work.
  • You plan to go abroad for work or retirement.
  • You have investments or assets abroad.
  • You regularly receive payments in a foreign currency.
  • You pay the expenses of a family member who lives abroad.

How to open a bank account abroad

If you are considering opening a bank account abroad, you have two options. You can either open an account by visiting a bank branch or open an account online. There are several providers that can offer these accounts, but each option has its own requirements and limitations. Here is information on how to open an overseas bank account in general and also on how to open one with HSBC.

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In general, here are the steps to open a bank account abroad:

  1. Choose a bank that offers offshore account options.
  2. Find out what documents you need to provide to open the account. You can expect to be required to provide proof of your identity and residence. Other forms of documentation include up to one year of bank statements from your current US bank, pay stubs from your employer, and documents related to your investments or business transactions.
  3. You may also need to have your documents notarized or sent to the local consulate of the country where you want to open the account before you can open the account.

How to open an overseas bank account with HSBC

You can start the process of opening an overseas bank account on the HSBC website. Opening a bank account abroad is free if you are an HSBC One, Jade, Global Private Banking, Premier or Premier Elite customer. Plus, if you meet these customer qualifications, you won’t have to pay monthly or annual account maintenance fees.

To open the account, you will need to provide a passport, driver’s license or national ID card as proof of identity. You will also need to provide proof of address, employment information and tax details. Additional documents may also be required depending on where you are applying for the overseas bank account. HSBC can help you open an account in over 30 destinations.

How can someone transfer money to a bank account overseas?

There are several ways to transfer money from the United States to an overseas bank account, including:

  • payment
  • Bank transfer services
  • Online money transfer services
  • Peer-to-peer currency exchanges

Keep in mind that different options come with different fees, even if these aren’t explicitly stated. A bank may not charge an outright fee that you would see on your bank statement, but they usually offer you a poor exchange rate, allowing them to profit from your transfer. The real exchange rate, or mid-market rate, is the midpoint between the buying and selling price of a currency and is available from independent sources such as Reuters and Google. If you receive a different exchange rate than what you see from these sources, you will be charged hidden fees.

Bank transfer services may increase the exchange rate. An online money exchange tool like PayPal charges transaction fees and also benefits by giving you an exchange rate below the average market rate.

What are the tax implications of having a foreign bank account?

Depositing money in foreign accounts can save you taxes, depending on the country’s tax laws. Some countries are known as tax havens due to their low or non-existent tax rates.

However, you must disclose the income you receive from abroad and information about your foreign bank accounts when filing US taxes if you are a US citizen. If you don’t, you could face significant penalties, interest, fines, or even jail time.

Should you open a bank account overseas?

If you have reasons to open a bank account abroad, for example if you plan to move abroad, if you regularly travel between countries for business or if you support a family member in a foreign country, opening a bank account abroad may make sense. .

However, keep in mind that you must comply with the requirements and regulations related to your US bank as well as the foreign bank where you open the account. Additionally, you will need to disclose your foreign bank accounts and any income you received at tax time.

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Gabrielle Olya contributed reporting for this article.

This article originally appeared on How to open an overseas bank account (and should you)?

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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