Benefits Of Mobile Banking And Their Legal Implications

When designing international tax strategies and corporate structures I oftentimes recommend setting up a bank account with a so-called ‘Digital Bank’ or ‘Fintech’.

The reason for this is that there are numerous benefits of mobile banking.

The reason I recommend setting up an account with a Digital Bank is simply because it is a tool where you can hold your money without having to comply with the usual Bank regulations.

The 2 banks I particularly recommend are Revolut and Wise, as they’re easy to use, professional, and they even provide you with a physical card.

Benefits Of Mobile Banking And Their Legal Implications

Benefits Of Mobile Banking – Overview

Let’s start this guide with some questions I often receive about the mobile banking advantages, like their convenience, the user data protection, and more.

Why are Mobile Banks More Convenient?

One of the benefits of mobile banking is being more convenient, as they enable users to perform banking tasks anytime and anywhere.

This includes checking balances, transferring funds, depositing checks via photo, and paying bills. The ability to access banking services without visiting a branch saves time and effort.

Additionally, mobile banking apps often provide instant notifications for transactions, enhancing budget tracking and account management.

What are the Advantages of Banking Online for User Data?

Mobile banking apps employ robust security features to protect user data.

These include encryption to safeguard data transmission, two-factor authentication (2FA) for added login security, and biometric logins like fingerprint and facial recognition.

Many apps also have automatic logout features and alert users to suspicious activities. Regular software updates ensure ongoing protection against new threats.

Can You Track and Manage Finances Effectively With Mobile Banks?

Yes, mobile banking apps offer powerful tools for effective financial tracking and management.

Users can view real-time account balances, categorize expenses, set budget limits, and monitor spending patterns.

Many apps also provide financial insights and advice based on transaction history. Features like automatic bill payments and savings goals help you stay on top of their finances.

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Benefits of Mobile Banking

I get asked the question “why should I have a mobile bank?” and it’s a pretty easy question to answer, as there are several benefits of mobile banking.

For people who are perpetual travelers or digital nomads, having a Digital Bank account is extremely beneficial.

This is true because with every other ‘traditional’ bank that a Digital Nomad will set up a bank account with they will most likely have to reveal their tax residency and their Tax Identification Number.

If they don’t yet have a tax residency within a low tax jurisdiction or a territorial tax country, then the tax residency, or the Tax Identification Number that they are left with and currently hold is most likely going to be the one from their old home country.

5 Best Online Banks For Small Business Anyone Can Open

Mobile Bank and Common Reporting Standard (CRS)

If that ‘traditional’ bank that you are opening up an account with is part of a country that is a signatory of the Common Reporting Standard (CRS) then chances are that the bank will have to notify the tax authorities of your tax residency country about your new overseas bank account.

(If you don’t know what the CRS is then I recommend you check out this blog post first.)

Note that over 100 countries are signatories to the CRS.

This situation is less than ideal if you are trying to get a new tax residency somewhere but haven’t been able to do so yet. This leaves you in the unfortunate position of most probably falling back into your old tax residency country’s system.

This situation is not a problem when you have got tax residency somewhere where you actually residing and paying property taxes. I’m talking more so to those people that are trying to get out of their old home tax system because they haven’t been living there for a long time, but haven’t bothered yet finding a new tax residency.

So, the recommendation is to set up a bank account with a Digital Bank because they don’t have to report anything to your country of tax residency.

How do I know this?

I wanted to know the exact benefits of mobile banking, so I wrote them an email and received a response and did a bit of research.

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Revolut’s Comment on the CRS

Here is the response I got from Revolut in February 2020:

Thank you for your request to explain whether Revolut has legal obligations to share information with tax authorities around the world under the Common Reporting Standard.

As a global financial institution, Revolut has to comply with tax obligations in a range of different jurisdictions. The Common Reporting Standard makes a distinction between reporting and non-reporting entities. Revolut Ltd is a non-reporting entity.

Notwithstanding this:

  • In Revolut’s Ltd’s Privacy Policy it reserves the right to share personal information where tax obligations require it to (e.g. the current Policy states: “We may also need to share your personal information with other third-party organisations… if we have to do so under any law or regulation”).
  • Revolut Ltd may become a reporting entity in the future.
  • The Revolut app may be used to access services provided by third parties who may be reporting entities.

Should you have any further questions or concerns, please do not hesitate to contact us again.

Taxes digital nomads

Wise’s Comment on the CRS

While Wise has some of the best benefits of mobile banking you’ll find, their website mentions the following:

What information do you report to tax authorities?

The answer to this changes based on which country you’re in. Certain Wise entities must comply with the global anti-tax evasion regimes, FATCA and CRS, due to the type of products they offer.

For example, our newest product, Assets, causes a subsidiary of Wise, TINV Ltd., which provides the Assets product to fall within the scope of FATCA and CRS as a Custodial Institution. Customers that participate in Assets who are deemed to be reportable persons will be reported to HMRC in line with the Automatic Exchange of Information.

Wise Australia Pty Ltd, another subsidiary of Wise, is also subject to FATCA and CRS due to the Authorised deposit-taking institution (ADI) licence it holds.

Wise is working directly with the Electronic Money Association (EMA) and the Organisation for Economic Co-operation (OECD) to ensure our processes and products combat any tax evasion.

As and when Wise is obligated to collect and report customer tax and financial information to tax authorities we will do so.

International taxes for digital nomads

Conclusion – Advantages of Online Banking and CRS

I’ve seen many comments and blog posts on the internet speculating whether or not Digital Banks have to adhere to the CRS and automatically exchange information with tax authorities.

So, I hope this blog post about the benefits of mobile banking cleared up any doubts for now.

If you are interested to learn more about other Digital Banks then click HERE to check out my blog post about Alternative Bank Solutions.

Note, that Digital Banks are not only meant for Digital Nomads, and anyone can enjoy the benefits of mobile banking. They can be beneficial to anyone that is looking for an alternative bank solution.

Even just making use of their debit cards across different countries when travelling and saving on ATM fees can be reason enough to set up an account with a Digital Bank.

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We hope you have enjoyed this article. If you have any further questions please leave us a message below and we’ll get back to you as soon as we can.

    NOTICE: The content of this article is not to be considered as a legal opinion or tax advice. Wanderers Wealth does not hold itself out as a legal or tax advisor. If you want to receive a legal opinion or tax advice on the matter in this article please contact us directly and we will refer you to a legal practitioner.

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