Registering an international currency account

As recently as 20 years ago, registering accounts was a relatively easy task for foreign entrepreneurs and individuals. However, now the requirements for applicants have increased, and additional compliance and due diligence checks have been introduced. Nowadays, foreign banks themselves choose whom and under what conditions to approve the application. In this article we will disclose the main aspects of registration of individual and corporate accounts, as well as familiarize you with the formation of prices for financial services.

Whether it is legal to open an account in a foreign bank

Most jurisdictions have standard account registration procedures for individuals and corporate clients (most often typical LLCs – limited liability organizations). It is important to keep in mind that deposits into a bank account may create tax liabilities under local law.

For example, most institutions in Europe exchange client data, so it is impossible to hide currency transactions made in another country. If a company is registered in Poland but has a bank account in another EU country where funds are transferred, it will not be possible to file zero reports with the Polish tax authorities.

Individuals can also open a credit line or a deposit account. It does not matter where they are registered or permanently reside. Income received on personal accounts is taxed at current rates where the owner spends more than 6 months a year.

For example, a citizen of Kazakhstan resides in the country permanently, but receives credits to an Estonian account. Then the income will be taxed according to Kazakh legislation.

Prices for opening an account in a foreign bank

In general, the tariffication of financial services depends on the specific institution, the cost of the approval procedure and the determination of the level of risk for the company’s activities. If the bank has an onboarding system in place or has a lengthy due diligence process, the cost of opening an account will be higher.

The higher rate is usually valid for corporate clients who work in the spheres of gambling, trading, forex, VoIP-traffic trading, which are characterized by a higher risk. For these categories of companies, the accounts are opened with a higher tariff (the fee can be up to 3-5 thousand EUR).

In some payment institutions there are no fees for account registration if the client does not present any risks. Such conditions usually apply to individuals or companies that operate in more stable and classical spheres of activity. Most often the cost of the account opening procedure ranges from hundreds to thousands of euros.

What is required to open a bank account for a natural person

The full list of requirements for a foreign client in a banking institution may differ, depending on the legislation of the country and the rules of the financial institution. To open an account for an individual, the following documents are required:

• travel passport;
• proof of source of income;
• proof of residence for the last 3 months;
• proof of wealth (the presence of movable and immovable property is required only in some countries for clients who plan to keep large amounts on the account).

It is necessary to provide the bank with information about the applicant, including identification and contact details. It is important to specify the reason for opening an account, the planned turnover, and the number of transactions.

In addition, banks have separate requirements for applicants:

• Citizenship/residency.
  Some banks have separate conditions for citizens of certain countries. For example, financial institutions of Malaysia, Singapore, Hong Kong are cautious towards applicants from post-Soviet countries and rarely open accounts for them.
• Minimum account balance.
  Banks in Liechtenstein, Switzerland and Austria require a certain amount to be transferred to the account. In Austrian financial institutions you usually need from 30 thousand EUR. Some Swiss banks open accounts for foreigners if they deposit about 2-3 million EUR.    

What is needed to open a bank account for a company

Corporate clients will need to collect a standard package of documents to register an account:

• certificate of registration of a legal entity;
• company charter;
• extract from the register of legal entities in the country of registration.

In addition, it is necessary to specify all identification and contact information of the owner of the company or a representative under a notarized power of attorney. The set of documents for the owner of the company is similar to those provided for individuals (foreign passport, proof of source of income and proof of residence).

From the beneficiaries of the company may require data on the availability of experience for business activities (brief report), as well as specialized education (diplomas and certificates). Banks scrutinize the clients’ ability to fulfill their account obligations and to operate in accordance with current legal requirements.

Requirements of financial institutions to corporate applicants

Country of incorporation of the company

Legal entities established in offshore zones (Seychelles, Belize) are not always desirable clients for classical banks. For example, Swiss institutions will open an account for such companies only if large investments are expected or the client is ready to invest at least several million (EUR or USD) in the bank’s products. Chinese financial institution OCBC is generally loyal to corporate clients registered in Seychelles, Cayman or Marshall Islands.

Types of business to be served

Depending on the riskiness of the business, the likelihood of a favorable decision to open an account may vary. There are several main types of businesses according to bank assessment:

• Low risk.
  Most often these are trading companies that can easily confirm the reality of their work with transport invoices (export and import of goods, organization of deliveries and logistics).
• Medium risk.
  Businesses that are more difficult to support with documents. For example, consulting, IT services, legal advice. The services rendered may be real, but it is difficult to verify their veracity.
• High risk.
  This category includes companies in the field of gambling, dating, betting, content for 18+, casinos. It is difficult to assess the legality of the business of such companies, so most financial institutions prefer not to work with such firms.

Classic banks usually have no problem opening accounts for the first two categories. Companies with high risk should pay attention to payment institutions, which have special increased tariffs for clients in the High-risk category.

Minimum investment requirements

Most investment banks set requirements to corporate clients on the mandatory account balance. In other words, the approval of an application from a company representative is possible only if he/she will keep a certain amount of funds on deposit with the bank. Usually, investment accounts are opened with a limit on the number of transactions per month.

Whether is it possible to open an account remotely

The general procedure for registering an account requires the personal presence of an individual or the owner of a company. In some financial institutions it is possible to execute all documents remotely without the requirement to visit the country.

As an exception, it is possible to open an account remotely if:

• the bank has a standard online approval procedure (e.g., Swiss CIM Banque);
• the financial institution has official representatives in the applicant’s country to open the account (Serbian banks);
• documents for account registration are apostilized, certified in the consular representation (in Turkish and Kazakh institutions).

However, most banks in Europe do not allow remote application. At the same time, payment institutions most often provide an opportunity to register an account online and in a short period of time. Such institutions allow to confirm the identity of the user without leaving home by means of a system of passwords and electronic signature.