If your company is engaged in domestic business operations only, you probably do not need a foreign bank account. However, if you have customers, suppliers, or partners abroad, a corporate account in a foreign country would be a powerful business instrument. What is more, you can set up an account with a payment system instead of a traditional bank. Both options have their advantages and disadvantages that we discuss below.
Difficulties associated with opening a bank account abroad
The ongoing de-offshorization process and the fight against money laundering, tax evasion, and terrorism financing have made it quite difficult to open a foreign bank account for a business company.
The compliance procedures have been toughened and foreign applicants for banking services can confirm this. Today, the applicant foreign business owner has to submit all the corporate documents to the bank, provide exhaustive information about the company’s business activities, a list of the shareholders and other UBOs (Ultimate Beneficial Owners), partnership agreements, and so on.
Understandably, the banks want to make certain that they are taking a trustworthy client aboard who is engaged in a perfectly legal business. But sometimes the requirements that the bank puts forward are simply impossible to meet.
An alternative to a foreign bank account
Over the recent years, Payment Service Providers (PSPs) and Electronic Money Institutions (EMIs) have turned into strong competitors of the traditional banks. They offer a wide range of banking products and services but they employ the state-of-the-art digital technologies that make their operations more efficient. Below we discuss the main advantages of these financial institutions of the modern era.
Advantages of payment systems
PSPs and EMIs allow international companies to solve their financial tasks with a click of the computer mouse. At the same time, some differences exist between PSPs and EMIs and you should take those into consideration when choosing where to open an account.
PSPs are good for regular transactions but you cannot keep your corporate capital assets in an account with a PSP. On the other hand, EMIs offer a full spectrum of traditional banking services while boasting some serious advantages:
- Fast account opening procedures – you can start making international transactions almost instantly;
- Low service fees;
- Access to the account via several different electronic devices;
- Multicurrency accounts available.
EMIs will efficiently service a company of any size beginning with a small startup and ending with a transnational corporation. The main problem that may arise in the process of your collaboration with an EMI is that your account may be blocked one day. Just like traditional banks, payment systems have to comply with the security requirements imposed by the financial regulators.
If you make a large international transaction, the EMI officers may want to ascertain that the money has a legal source and the payment has a legal purpose. The way to avoid this problem is inform the EMI officers about the prospective large transaction in advance and prove its legality to their satisfaction.
Advantages of traditional banks
We have mentioned the difficulties associated with opening a foreign bank account above. The strict due diligence requirements also extend the process of setting up an account in a foreign bank. Usually it takes around a month to open a corporate bank account abroad and sometimes it may take up to three or even four months to do that.
There are some advantages, however, that traditional foreign banks boast. These include the following ones:
- Access to corporate credit products such as lines of credit, overdrafts, leasing, mortgages, and corporate credit cards;
- A possibility to deposit idle corporate money and earn some additional profit via making a short deposit or by opening a corporate savings account.
Factors to consider when setting up an account with a bank or a payment system
When choosing what foreign bank or international payment system to apply for services to, you have to take into consideration several important factors:
Transaction commissions: recon how many transactions you will have to make each month, take into account the countries that the money will go to and come from, as well as the transaction currencies. Chances are that if you have to make a large number of international transactions, opening a business account with a payment system would be the best option.
Credits: Bear in mind that you may urgently need a loan to cover your company operational costs. In this case, you will need a corporate account with a traditional bank, as payment systems do not issue loans.
Security deposit: Some banks require substantial security deposits. Some payment systems do not require such deposits at all. Find out about it before you apply for banking services.
Internet banking opportunities: make sure that you can have 24/7 access to your account via the Internet.
Available currencies: some traditional banks allow opening multicurrency accounts and payment systems give access to 40+ national currencies. Think what currencies you are going to use in your international business operations and inquire if they are acceptable for the particular financial institution that you are considering.
Protection: Find out about the possibility of account blocking. If such a possibility exists, it would be a good idea to set up a spare account with a bank or a payment system just in case.
Naturally, the geographical location of the bank also matters. If you do business with a particular foreign country, it will make good sense to set up an account there. On the other hand, payment systems are of a character that is more global and if you have business partners in various foreign countries, setting up an account with one of those may be a better option.
Documents required for opening a foreign bank account: corporate documents
The following corporate documents will have to be submitted when applying for services to a foreign bank:
- Company Registration Certificate;
- Memorandum and Articles of Association, company By-laws;
- Letter of company director appointment;
- Good Standing Certificate if the company has been in existence for over 12 months;
- Company structure description;
- Licenses (if applicable).
Documents required for opening a foreign bank account: personal documents
Every company beneficiary including shareholders, directors, trusted agents, and other company officers will have to supply the following documents:
- A notarized passport copy (the passport shall contain the personal signature that shall coincide with the signature in the application form);
- The original of a utility bill or a bank statement less than three months old to serve as a proof of residential address;
- Power of Attorney (if applicable);
- A detailed résumé
Our account opening service
Offshore Pro Group collaborates with 200+ banks and payment systems located in various countries of the world. The large number of the financial institutions that we work with and our vast experience in the area will let you accomplish the following tasks:
- Choose the best foreign bank or payment system for your company;
- Calculate the costs of services;
- Calculate the expected profits;
- Analyze the corporate and the personal documents;
- Properly fill out the application forms;
- Securely deliver the application documents to the bank.
We will keep track of your application processing right until the moment when your corporate account is opened and fully functional. Our Preapproval service will also let you save time and money required to set up a foreign bank account. Please send us a service request by email that you can find at the top of the page or use our Viber/ WhatsApp numbers: +372 5 489 53 37 , +372 5 495 26 39
We guarantee a high level of professionalism and confidentiality.