For companies and individuals looking to move into new jurisdictions for business opportunities, setting up a bank account is a crucial part of the process. But this is never as straightforward as it seems.
In all countries, banks are obliged to crack down on fraud and any potential financial scullduggery. As a result, they tend to be very risk averse. Regardless of where a business establishes an office in the world, local banks will generally have the newly arrived expatriates jumping through various hoops, pulling their hair out in frustration.
The new arrival will need the relevant paperwork, including personal identity papers, a personal and business address, personal references and other numerous documents. And that’s just the beginning.
Every jurisdiction has its own banks and banking rules, which are often complex and bureaucratic. Consequently, seeking advice from local legal and financial experts before setting up a bank account is imperative if a company is it get the right account for its particular business objectives. This is why it’s so important to use local advisers who are experts in the jurisdiction to provide information about the local banking rules.
This will help businesspeople when they arrive to understand the complexity of the local banking system. It’s important to understand that the risk appetite of banks varies from jurisdiction to jurisdiction. Banks will undertake their own due diligence to ensure any company setting up is legally compliant and not engaged in any illegal activities.
Banks in some countries are particularly risk adverse, while others are more relaxed. For example, some banks require a director (or directors) of the company to present in person at a local branch before an application will be considered, so company directors need to be prepared to jump through some hoops to get an account.
Likewise, some jurisdictions are more accommodating to opening business and personal bank accounts. In the UK, banks will look for a director of the company to be based in the UK before they will assent to opening an account. Other countries have more relaxed legislation. But banks will be governed by the same legislation, so if you don’t like one bank’s vetting procedures, it’s likely to be the same at other banks as well. The process can take weeks or even months – so be prepared for that when you are planning to set up in a jurisdiction.
Companies also need to consider whether they choose an international or local bank to open an account with. Both types of banks have their merits and, in some countries, it is easier to open an account with a local bank, and others with an international bank, depending on the banking regulations in the particular territory. What type of bank to open an account with will also depend on the complexity of the business – some local banks will not have the capacity or expertise to effectively deal with some of the different issues international businesses have.
All businesses looking to set up a bank account in a different jurisdiction should provide a clear and concise business plan for a corporate bank account, as well as basic compliance documents covering the directors. These are just a few of the issues that will concern businesses. What follows is the expert opinion on opening a bank account in different jurisdictions from a range of IR Global members from across the world. They address specific questions relating to their own jurisdiction, including the risk appetite of banks, how accommodating they are to overseas businesses and whether to join an international or local bank. Their responses demonstrate the myriad differences that exist across the world.