What is an International Bank?
An international bank is a banking institution that operates overseas and actively manages foreign accounts. Although the roles and basic functions of an international bank are similar to other banking institutions, the ability to deliver typical functions to customer and business accounts in different countries is the fundamental difference of international banks and smaller regionalized banking systems.
The typical regional bank in the United States possesses the ability to process checking accounts, savings accounts, or lending practices in limited jurisdictions. These banks do not handle accounts that are opened overseas nor do they lend funds to international businesses or customers.
An international bank is a financial entity that offers international companies and individual clients financial services, such as payment accounts and lending opportunities. Although the term ‘foreign clients’ encompasses both international businesses and individuals, every international bank will operate under its own policies that outline how they conduct their particular business.
According to OCRA Worldwide—an international organization that connects individual customers and companies to various international banking systems—an international bank will tend to offer their varied services to companies those wealthy individuals (typically individual clients with $100,000 accounts). That being said, some international banks, specifically banks in Switzerland, will offer their services to customers of any income bracket.
Why would a Business or an Individual Open an International Bank Account?
A company or corporation will open an account with an international bank to help facilitate international business (proposals, lending, or investment strategies executed in foreign countries). The facilitation is necessary due to the ever-changing and complex international laws that regulate international business transactions.
An individual will conduct business with an international bank for a variety of reasons, including tax avoidance. This process, which is most commonly attached to offshore banking, isn’t necessarily illegal, but is complicated due to the variance in tax laws that exist between foreign countries. Additionally, many individuals utilize international bank account to store their home country’s currency or income to take advantage or rates and taxes. As a result, numerous international banks are based in countries with low or no income and estate taxes, such as Belize, the Cayman Islands, Panama, and the Isle of Man.
Individuals will also open an international bank account to invest in the booming economies of particular countries, such as those in developing nations. Foreign banks may also be utilized to achieve a higher interest rate that is found domestically.
Another reason why an individual may store their money in an international bank account is to keep their funds safe from lawsuits or other legal actions.
What is an International Bank Account Number?
An international bank account number is a system that enables a financial institution to recognize a particular bank account regardless of where the account resides. The system was developed to enable the process of managing transactions that involved bank accounts connected with banks that were not located in the country.
The international bank account numbering system was primarily utilized among European nations; however, as international banking services become more popular, the use of the system is becoming more globalized.