Recommendations on opening a bank account for your offshore company

Having a business company registered abroad brings many valuable advantages as it contributes to asset diversification and increases the number of investment opportunities for the owner. However, opening a company in a foreign country makes little sense if you cannot set up a corporate bank account for it (unless you simply want your foreign company to be the owner of an asset).

With the current fight against tax evasion, money laundering, and terrorism financing, however, it has become uneasy to open a foreign bank account in your company is registered in an offshore jurisdiction. In this article, we provide some recommendations on opening a bank account for an offshore-registered company as ‘offshore’ will usually imply ‘high-risk’ for bank managers.

Some people spend months and months on trying to determine where they should set up a corporate bank account for their offshore company. They compare the legislations of different countries, analyze the banking sectors in each of them, try to understand if a bank account in a certain jurisdiction will serve their business objectives well enough, and so on.

They choose to do their own research and find the answers to the following important questions:

• Is the bank that I am considering a credible financial institution?
• How well qualified and experienced is it personnel? 
• Does the bank provide client support in a language that I speak?
• What banking products and services are available there?
• Does the bank service offshore-registered companies at all?
• Will I be able to make the transactions to the countries that I want with this bank?
• Does it cooperate with the banks where my company co-owners have accounts?

These and other similar questions are very important but finding answers to them may not be so easy. We believe that setting up a foreign bank account is not any more difficult than opening a foreign company but you have to understand what bank managers are looking for.

Below we are going to discuss the areas that cause most of the problems when you are trying to set up a foreign bank account for your offshore-registered company. If you know the mistakes that should be avoided in the process, you stand a much better chance to succeed in the endeavor. If you apply for our assistance in this matter, your chances are going to be great!

Bank account opening application form

The application form that you fill out when applying for services to a foreign bank lays the foundation of your future relationships with the bank. The form provides the necessary information about your company to the bank managers. They have to see that they will be able to meet the regulators’ requirements if they agree to provide services to you. If you fill out the application form wrongly or if you fail to supply some information that has to be supplied, you risk being involved in an endless conversation with the bank officer who will ask you questions to clarify certain things. Knowing how exactly the application form needs to be completed is crucially important.  

The applicant’s source of capital

The ‘pecunia non olet’ (money does not smell) and the ‘it-is-none-of-your-business-where-my-money-comes-from’ attitudes do not work any longer. Banks need to know the origins of your wealth to be able to provide services to you.

In the modern times, banks have a legal obligation to know their clients. This is very convenient for the financial regulators and not so convenient for the banks but there is nothing the latter can do about it: they have to know where your money comes from. This is one of the key factors that bank managers take into consideration when deciding whether to set up an account for you or not. 

The source of the initial deposit

The bank manager will also want to know how you have earned enough to make the first deposit. This particular question is usually easy to answer, as the required initial deposits are normally not very high. The important thing is that the source of the first deposit is perfectly clear for the bank. You can supply a document confirming sale of securities or some real property, for example.  

The main goal of opening the bank account

The bank managers will also want to know how the prospective client intends to use the account. Where will the transactions go? Where will they come from? What are their purposes going to be? Who are the counteragents? What countries do they live in? All of these questions have to be clearly answered.

Besides, if any changes occur in the information that you initially supply to the bank (transaction destinations change or their purposes change, etc.) you have to inform the bank about it ASAP. Otherwise, it is going to block your account until you provide exhaustive explanations of the changes.

Banks in some countries will not accept payments from some jurisdictions under any conditions. Other banks will have certain restrictions on transactions to and/ or from certain jurisdictions. What makes things more difficult is that each individual bank will have its own policies in this respect.

A not less important factor is that the correspondent bank will also have its own policies concerning the application of anti-money laundering and anti-tax evasion mechanisms. Some banks will inform the prospective clients about their ‘banned’ jurisdictions and types of business activities while others will refer you to the regulators such as FATF, for instance, and you will have to find this information out by yourself. In any case, a jurisdiction or a business activity type that is ‘banned’ for one foreign bank does not have to be ‘banned’ for another one. So you have to inquire about the matter with each individual bank. Otherwise, you might just waste your time on trying to acquire services from this financial institution.

Politically exposed persons

Another factor to take into account is the possible presence among the company owners of a Politically Exposed Person (PEP). FATF gives a definition of a PEP. Many national authorities have also issued regulations on servicing such clients. If a PEP is among the company stockholders or directors, the bank is going to conduct stricter due diligence checks before taking the company onboard. It will thoroughly inquire into the sources if capital issue and into the goals of opening a bank account for the offshore company.

Client identification and supporting documents

When applying for services to a foreign bank, you are going to make several statements and some of them will have to be confirmed by supplying relevant documents. When the supporting documents are available and reliable, the bank is going to take less time for application processing.

All banks will also conduct the client identification procedures. The instruments of client identification can be different but in most cases, they are fast and efficient. Some banks will have online applications allowing verification of scanned passport copies, others will identify prospective clients via a videoconferencing application, still others will require notarized documents copies, and so on.  

Risk assessment

The bank is not going to assess your business risks. It is going to try and determine what risks it will run by agreeing to provide services to your offshore company. The bank managers will use various instruments to ascertain that the information that you have supplied is true and exhaustive. For this reason, it is important to supply truthful information when applying for services to a foreign bank. If the bank officers find out that you have supplied some false information, service is going to be denied to you in all likelihood. This is quite understandable as an untrustworthy client is potentially a risky client for the bank.

Let us suppose that the bank that you are applying to is happy with the jurisdiction where your company is registered as well as with the type of business activities that it is engaged in. If this is the case, the bank managers are going to ask you about the countries where your transactions will go to and come from. They will want to make sure that your counteragents are not sanctioned by the correspondent banks.

Let us consider an example. Because of the policies of their correspondent banks, banks in Curacao have restrictions on transactions to such countries as Andorra, China, Cyprus, Colombia, Egypt, Gibraltar, Hong Kong, Liechtenstein, Macau, Malta, Monaco, Russia, and Venezuela. This means that if your company is registered in Nevis, for instance, you can set up a corporate bank account in Curacao but it is going to be difficult for you to send money to, or receive money from, any of the above mentioned countries.   

Difficult does not mean impossible but there are also some national states that banks in Curacao will not work at all under any conditions. Some of these countries include the following ones: Belize, Bermuda, British Virgin Islands, Seychelles, Panama, Tunisia, Ukraine, and others.

Thus, when applying for services to a foreign bank, you have to describe your business model in detail so that the bank managers can clearly see the geography of your business operations. Your business model description should contain the following elements: 

• Name of the company and country of registration;
• Types of business activities (sector of economy); 
• Name of the parent company if your offshore company has one;
• The company operations including detailed information about the good and services that you trade in; 
• The target sectors of the market; 
• The primary and secondary goals of opening a corporate bank account for the company;
• Where the transactions are going to come from and who is going to make them;
• Where and who the transactions are going to go; 
• List of your clients and suppliers with their names and types of business activities indicated and their website addresses provided; 
• Brief CVs for company owners with work experience and company ownership period indicated. 

Please be prepared to provide this sort of information when trying to open a corporate bank account for your offshore company. It is not necessary that all of this information will be required in every particular case, but you have to be prepared to submit it upon request from the bank managers.

What is more, if you prepare yourself well enough for setting up a foreign bank account, you will be able to ask the right questions at the very beginning of the application process. Negative answers to one or two questions may let you see that this is not the bank you should be applying for services to. This will allow you not to waste your time on a hopeless endeavor.

Whatever the requirements can be, however, setting up a corporate account in a foreign bank for your offshore company is quite possible and not overly difficult if you know how to approach this task. You need a bank account to make your company operable and the bank needs clients to make some money! So, banks are interested in taking you onboard. Your task will be to simplify the decision-making process for the bank managers by providing all the information that they request. If they find that the regulators are going to have nothing against their servicing your company, they will open a count for you and you can develop your business project.

Our experts will be happy to assist you in establishing a foreign bank account for your offshore company. We have been in this business for over a decade, we keep in close contact with a number of banks all over the world, and we know the requirements that each of the bank has to foreign clients.

Please send a request for a free consultation on opening a bank account to our email address or WhatsApp number (found at the top of the page) or use the live chat to talk to us. We will assess your chances to obtain service from a foreign bank and issue recommendations pertaining to the jurisdiction and the particular banking institution that will suit your purposes best of all. Some non-standard solutions are available. We are looking forward to hearing from you!