A European Bank Account Impossible? Take a Detour

For many foreign companies, a European bank account can be a critically important solution yet an invincible challenge. You may also find yourself in this desperate situation unless you thoroughly study the banking landscape and see a couple of detours towards your goal.

Why are banks in European states reluctant to open accounts for offshore companies?

Banks in Europe are reputable, experienced, strong establishments. Their policies are recognized as the golden quality standard in the banking industry. 

To be a corporate client of a solid European banking institution is a great advantage in terms of credibility, reasonably inexpensive rates, technical solutions, fast transfers across the EU, other benefits.

The problem is that it is much more difficult today for a non-European entity to open and keep an account with a bank in Europe. As for offshore companies, it is almost impossible for them to resolve this complication.

Is there an opportunity to overcome the barriers?

Where there is a will, there is a way. However, the following misconceptions are quite popular both with bankers and entrepreneurs: 

International business is inconsistent with a policy of mistrust and doubt. 

It is quite obvious that for many promising startups a foreign bank account is a survival tool. Moreover, sound cooperative relations with a reliable bank encourage any company’s plans. If there is no account, they cannot raise funds,  accept payments, pay bills, launch production, or any other business processes. 

As for banks, wrong attitudes destroy any chance of mutual success.

Amid the pandemic, political uncertainties, and looming financial crisis, the banks’ unwillingness to lend a hand to offshore companies becomes a stumbling block. 

How old are the dividing lines set for offshore companies in and beyond the Eurozone banking?

The first dividing lines for offshore companies were drawn long ago, enforcing limits for their banking across the globe. The active phase of de-offshorization began in 2013 when major high-tax countries welcomed the international initiatives of the OECD, the  FATF, the EU to restrict the leakage of investment into low- and zero-tax hubs. Ratified agreements became the framework for relevant amendments in the national legislation of many states. Offshore countries were forced to join in and also adopt KYC, AML, CFT regulations. 

The above-mentioned situation has prompted the following trends:

• Offshore companies cannot open an account with a European bank and have trouble with accounts in other parts of the world because they are associated with a tainted gray/blacklisted reputation.
• EU directives strictly regulate the activities of banks, requiring them to thoroughly scrutinize and keep track of their clients. In case of any law violation by customers, the bank is held responsible and will be subject to fines, revocation of license, imprisonment of top managers.
• Banks serve as a tool of control and struggle against money laundering, tax evasion, and terrorist financing. They are accountable and obliged to report to central banks.
• Foreign clients are generally perceived as risky.
• Most bankers believe that it is easier to refuse ‘difficult’ customers than to deal with them.

According to the aims, objectives, and guidelines of the FATF, EC, OECD, and relevant conventions, the fundamental intentions of all stakeholders are aimed to combat the erosion of the tax base, to counter the laundering of criminal proceeds, and to help countries fight against other financial malpractices. 

However, since the 2008 global recession, major countries (including European countries) have experienced a severe shortage of funds. This being so, the policy of deoffshorization happens to be a handy tool of competitive struggle against the countries, where tax incentives attract big capital.

Therefore, it has become almost impossible for tax residents to avoid transparency, at least due to the Common Reporting Standard (CRS) for the Automatic Exchange Of Information (AEOI) between tax authorities of over 100 countries, including offshore jurisdictions. Nevertheless, they are still considered as hiding places for shady assets.

Is there a chance for an ordinary offshore company to open a bank account in Europe? 

Yes, there are legal ways to overcome bans and restrictions, though they are not as straightforward as before. 

What are the possible solutions for offshore companies planning to open accounts with European banks?

The basic solution for offshore companies is to set up accounts outside Europe.

It is possible to open a bank account outside the European banking system. Yes, offshore companies are perceived with suspicion everywhere, but opening an account, for example, in a Caribbean jurisdiction is quite feasible.

We can offer two recommendations for you to consider:

Besides, you should be prepared for meticulous inspections, a vast scope of paperwork, and occasional interviews. Even if you have cooperated with the bank of your choice before, your activities will be closely followed for a long time. 

To open a bank account for an offshore company within less than 1-2 months would be an unrealistic plan. Even when your business is not risky, the documents are in order, the requirements of the bank are fulfilled, the procedure will most likely take more time.

In any case, our advice is as follows: you should have access to professional expertise and consultations on any aspect of the account opening and banking – before, during, and even after your application to the bank. 

And another very important recommendation is to keep a second account available for use as a reserve in case the main one gets closed for some reason.

Can any international payments systems open corporate accounts and services as a sound alternative to European banks? 

If you need an account in Europe or another jurisdiction, you should refer to international payment systems. These are financial companies licensed to act as Electronic Money Institutions (EMIs) offering such banking services as:

Some PSs will refuse to serve offshore companies. However, we know which ones are willing to work not only with entities registered in OFCs but also with offshore structures engaged in ‘risky’ types of businesses (forex, crypto, gambling, etc.)

The account can be opened remotely, within a relatively short period (even within a couple of working days). The recommended payment system will allow the company to get an individual IBAN like those provided by regular banks), receive funds, and transfer them all over the world.

There are quite a lot of payment systems in Europe and the USA. Therefore, we recommend choosing the right one together with an expert. The menu of payment systems is vast, there are important criteria of selection that the experts will explain, many nuances that are not publicly published on the main pages, and there are things to discover by the EMI number. For example, some payment systems do not indicate that they are ready to cooperate with ‘risky’ clients.

How can a branch in Serbia help you open a European bank account? 

Can a branch in Serbia be a solution for offshore companies? Yes, this is a perfect arrangement for several reasons:

• a branch/subsidiary in this European country has every chance to open an account with a reputable international bank;
• any foreign company, including offshore companies, can register a branch in Serbia;
• the branch gets its TIN in Serbia, but remains part of the parent company;
• the branch needs to be physically present in Serbia, and it is usually sufficient to submit the documented evidence of a rented office plus bookkeeping costs,  the total monthly bill of which can be about EUR 200;
• the branch set up in Serbia can apply for a bank account, and it is provided very quickly;
• the variety of foreign banks in Serbia includes Hungarian, Italian, Austrian-German, Chinese international banks.

This solution of opening a branch with an account in Serbia is also beneficial in terms of the public recognition and business respect that your company will earn. Technically, the invoices will continue to be issued by the main company, but the bank account, substance, and other reputational aspects will be provided by the branch.

For more information about the solutions mentioned in this article, please contact our professional experts. They are ready to help with the setup of a branch in Serbia, the choice of an international payment system, and other matters. 

Our offer means that if you need to open an account in Europe, you can make it legally. The procedures will take some time, but you can use our fee-based service and achieve the goal without unnecessary risks and waste of time, nerves, and money. Please contact us at the e-address given at the top of this page.