Paul Beare participates in the IR Global Guide – A Jurisdictional Guide to Opening a Foreign Bank Account
Foreward by Andrew Chilvers
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.
What is the general risk appetite of banks in your jurisdiction and how does that affect setting up a new business bank account?
Most overseas companies trading or beginning to trade in the UK will require a UK bank account to conduct business, but it is not a legal requirement to have a UK-based bank account to trade in the UK. For practical reasons it makes sense to have a locally domiciled account.
The general risk appetite of banks in our jurisdiction is very low. If the company we represent has a UK Director then we have a chance of succeeding in opening a bank account. However, the main issue comes about when the parent company or main shareholders are located in high risk countries such as Africa.
UK banks undertake customer due diligence prior to setting up a bank account for new customers and no-one should get a bank account personally if they do not reside in the country.
How accommodating are banks in your jurisdiction for opening a business and personal bank account?
UK banks are not willing to open a personal account if you do not reside in the country and business accounts are similar in the fact that they must have a UK director based in the UK as a minimum. This policy can vary slightly between banks, but the majority hold this same stance.
In our experience, it can take anywhere from two to six months to open a business bank account in the UK, depending on the complexity of the ownership structure. This is why we offer this service to overseas clients because the process can be very painful, lengthy and frustrating. With our support, we can reduce this time to approximately two months from start to finish. We can also set up a client trust account in certain situations. This type of account is where funds are held in trust whilst two or more parties complete a transaction. The client can’t have access to this account and transactions are completed by us on their behalf.
UK banks undertake customer due diligence prior to setting up a bank account for new customers. This is part of the anti-money laundering (AML) regime and is a key requirement of the Money Laundering Regulations 2007 in the UK. Key shareholders (usually 10-25% or more) together with those individuals who will be named on the UK bank mandate will be asked to prove their identity and home address, with documents such as:
• Proof of ID: passport, UK photo driving licence or national ID card;
• Two forms of proof of address: recent bank statement or utility bill or council tax statement;
• Proof of parent company and ownership structure.
If the individual is not in the country then the copies of proof of identity need to be certified by a notary.
Should you join an internationally reputable or established bank rather than a local bank?
At Paul Beare Ltd, for the majority of clients, we would advise them to join an internationally reputable bank as there really isn’t any such thing as a ‘local bank’ anymore.
The big 4 (HSBC, NatWest, Barclays, and Lloyds) do have the capacity to deal with and understand the complexity of our clients’ structure, however, even they like an application to ‘appear’ straightforward, which is where we come in, completing the work for the client and to make it an easier process for the bank. The smaller international banks such as Metro or Santander may look at very simple set up structures but the identification for these clients would require their presence in the UK to present their identification documents. The larger international banks would usually accept certified documents for identification. All banks are now ideally looking for a UK director as a minimum for bank account set up at the moment.