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Here’s Why You May Be Denied a Personal Bank Account: Top Reasons in 2024

Today, banking options for ordinary people have become limited. It is mainly financial institutions now that decide whether to accept a client. International banks scrutinize potential candidates and reject anyone they have even the slightest doubt about. These are the decisions impossible to overrule or even argue against. However, the question is, what motivates banks to adopt such practices?

Deny bank account

Here are some common reasons why ordinary people may want a foreign bank account (note that the list is incomplete):

  • to hide money from a partner or protect assets in case of divorce
  • to pay for goods and services online (e.g., subscriptions, music, or games)
  • to create a financial cushion abroad
  • to pursue various investment opportunities.

Something like 10 to 15 years ago, you would have had no issues with opening a personal bank account abroad. However, things have changed. Although potential clients used to choose their banks freely, now they wonder if they can open an account abroad at all. The main reason for such a drastic change is stricter compliance rules for clients.

You are welcome to set up a private account with an offshore bank in Belize.

In 2024, foreign banks have to follow AML, KYC, and due diligence rules to a tee, otherwise, they risk losing their licenses and facing sanctions. As a result, these financial institutions reject more clients, even those they considered trustworthy in the past.

Take a look at some universal reasons leading the banks to deny you a personal bank account abroad:

  • AML (Anti Money Laundering): Fighting against money laundering. All transactions must be documented (so that the bank can verify them). Even the slightest suspicion may lead to your personal bank account being blocked or result in total non-cooperation on the part of the bank.
  • KYC (Know Your Customer): Identifying customers. A foreign bank collects detailed information about you. It checks your account application thoroughly. However, even if you have already made a corresponding agreement with the bank it is no time to relax yet. Later on, the bank will also ask you for documents to verify any transactions or payments it considers suspicious.
  • Due diligence: Evaluating risks. A risk source is the client in this case. The reason behind this scrutiny is easy to explain, as discovering any dishonest depositor is a major blow to the bank’s reputation.

If a foreign bank is found to be collaborating with dubious clients, the financial institution will pay huge fines, and in the worst-case scenario (which is highly probable though), its license will be revoked. This is why banks check their new customers extremely carefully.

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Foreign bank accounts

Most major banks follow a standard account opening process. They go through several steps to set up an account for you but many of them do not require any personal input on your part. The only way to influence the ultimate decision is to prepare well for the interview. After the interview or the application submission, it is the bank that has the final say.

Please keep in mind that foreign banks may reject you at any of these stages:

  • Applying for an account either in person or online (depending on the bank’s rules).
  • Providing your personal information to the bank (NB: It is not the same as document submission).
  • Passing the bank’s compliance check (FYI: In the USA, the bank might use control mechanisms like ChexSystems).
  • Having an interview (which may potentially be held online) to sign the necessary documents.

You are welcome to open a private account with a bank in Vanuatu.

Sorry, we can’t help you: why some foreign banks say no

No matter the circumstances, reasons to deny an account opening are always to be found in customer information. However, hiding any compromising or damaging data is no good solution and won’t work as such. Banks will find out you are trying to cheat and ban you straight away.

These are some of the possible reasons why banks may reject you as a client:

  • Formal reasons: Official and objective, they are based on either documents or the regulator’s recommendations.
  • Informal reasons: These are unique to each bank.
  • Scoring system: The bank does not want to work with you because although you are not exactly high-risk, your score is low enough for them to dislike you.

Please keep in mind that in today’s market, the bank picks you, and not the other way around. So, do your best to impress them. To lower your chance of rejection even more, request an individual consultation with International Wealth experts!

Formal reasons to deny you a foreign bank account

Although formal reasons for overseas account rejection are strict, they are also easier to handle. These are standard and you can find them on the bank’s or regulator’s website. It means you have every opportunity to get ready for your interview and application submission. However, it is hard to deal with it all on your own. In this situation, it is a great idea to ask for professional assistance, and at International Wealth, we have seasoned industry experts ready to open a foreign bank account for you in no time!

Negative ChexSystems info

If you ever were a client of any other financial institution in the past, there is a record of you in ChexSystems. The new bank will certainly check this information, and if it portrays you unfavorably, they will promptly refuse to collaborate.

You are welcome to set up a personal account in the UK with a British payment system.

Notice blue

NB: Please note that TeleCheck, early warning services, and credit reporting agencies all have similar information. 

Errors in ChexSystems reports

These errors are also a reason for a foreign bank to refuse you an account, even if you are not the one to blame. Therefore, it’s a great idea to make sure the information about you in the ChexSystems is accurate. This recommendation also applies to the cases when the ChexSystems information is negative. However, it is much easier to correct an error than to address the consequences of your actions (for example, repay your debts).

Poor financial history

Unfortunately, overdue loans are not your only problem. Banks may also reject you because of overdrafts, frequent cash withdrawals, unpaid bills, or transfers you can’t or won’t explain. Fixing your financial history is hard, so better stay out of trouble altogether to avoid these troubles.

A common issue is a negative balance account (already closed) that you had with a different bank. In this case, the best solution is to fix this issue before applying for a foreign bank account, provided your previous bank is still operational. If it is not possible, your refusal risk will grow exponentially and it will be extremely challenging to resolve the issue.

Potential client’s identity unverifiable

This is a much more serious reason to turn you down as a customer because client verification is a must in any country’s banking laws. So don’t look for easier offshore options. You’ll find none as they simply don’t exist. Tax-free jurisdictions follow KYC rules just like onshore ones do. Sometimes, offshore banks may need fewer additional documents from clients but this is not the case in every situation.

You are welcome to open a personal bank account in Comoros.

Hoping that a KYC procedure is nothing but a formality is a pie in the sky. Banks will never break the set rules just to acquire one more client. To stay out of trouble, you’d better avoid offshore banks that skip KYC procedures or check you poorly. These institutions are inherently risky. 

For a standard identification procedure, you’ll have to present two confirming documents, one of them issued by a government authority. Therefore, when submitting an application or preparing for an interview, make sure you have all your personal documents on hand. This will show the bank that you are serious and understand the importance of compliance.

Poor track record with law enforcement agencies and the customer’s previous banks

Banks prefer clients with good references and avoid bad or shady ones. They will reject you if they think you are a fraud, a criminal, or an identity thief, and not a single bank in their right mind will dare accept you as a customer. NB: Sometimes, banking databases contain mistakes and raise false suspicions. In this case, you may be able to fix them.

However, if a court has not cleared you of charges or closed your case, you can do nothing. Unfortunately, we are not able to recommend you to the bank if you have any legal issues. This is why be sure to tell us about any problems in your background before applying to the bank!

Sanctions lists

Being on sanctions lists is not always the customer’s fault. The bank’s compliance department may simply be biased against your jurisdiction if it is on any sanctions lists or you as an individual if you are on OFAC lists as a representative of a specific social group. Unfortunately, no reputable bank will open an account for a customer with such a background.

You are welcome to open a personal account with the bank in Armenia.

Informal reasons to deny you a foreign bank account

Informal reasons to turn you down as a bank customer are as common as formal ones. Although most often International Wealth experts can cope with these issues, sometimes the client’s request is impossible to handle. In such cases, we look for better alternatives with more success potential.

Sources of income uncertain

This is the standard scenario when money comes from alternative sources instead of a bank. For example, getting paid for an order or service in cash or envelope wages. If the bank doesn’t know where the money came from and finds out it was illegal, it runs the risk of losing its license. This is why reputable banks avoid such clients.

No proper CV

After you apply, the bank will carefully check all the information about you as their potential client. So, your resume must be impeccable. Data will come from all open sources, like social media. If the bank sees any issues or red flags, they will most likely decline your application.

Low income

The bank aims to work with clients who are legally transparent and boast a sufficient income although qualification criteria vary among financial institutions. Potential clients with modest salaries or low incomes are not appealing to them.

Inadmissible age

If you are under 18 (or under 21 in some banks), you may not be eligible to open an account. While there is no set upper age limit, clients nearing a three-digit age are also considered at risk.

You are welcome to open a personal bank account in the Bahamas.

Using your personal bank account abroad for commercial purposes

If you specify the primary purpose of using the account as receiving payment for goods or services, there may be issues. Banks do not allow using personal accounts for commercial or business purposes. Your account may be blocked if they find out.

Sanctions lists contain the customer’s citizenship jurisdiction (but not the customer themselves)

This is a tricky case where the outcome will depend on whether you have a residency permit in another country. With such a permit, the issue may be solved, although this is not guaranteed. Without it, your chances to set up an account with a reputable foreign bank are significantly lower.

Failure to pass an interview with bank employees

This issue typically arises when you need to meet a bank representative in person but for whatever reasons beyond your control you aren’t prepared for it. Banks may allow video interviews but you still need to get ready. It’s not easy to become a client of a serious bank with a solid reputation anymore, and it won’t be anytime soon.

Communication issues

English is the language that is most common in the banking sector. However, certain financial institutions exclusively use their native languages. It may be French, German, Arabic, Spanish, and so forth. It’s perfectly acceptable for a potential client to bring a translator to the interview, particularly if you apologize for not being fluent in the bank’s language. However, if you and the bank staff can’t understand each other (and you didn’t think of a translator), they may say no.

You are welcome to open a personal bank account in the UAE.

Flawed CV

This can happen for many reasons, usually resulting from issues that the potential client missed in the interview. This is a typical outcome when a potential customer tries to open a personal bank account abroad independently. However, if they are supported by International Wealth experts, no issues arise as a rule.

These are the factors that are likely to make a foreign bank suspicious:

  • You receive large transfers to your account all of a sudden, and your education doesn’t match your job, or your job changes a lot.
  • You are a Politically Exposed Person (a.k.a. PEP).
  • You haven’t provided any proof of your address.
  • Utility bills issued to your address (like a house, apartment, etc.) have someone else’s name or signature on them, and not yours.

Insoluble deposit issues

If the bank approves your application, you’ll be required to make an initial deposit. Sometimes issues arise at this stage, with a common reason being your physical inability to transfer funds. This could result from temporary difficulties, which are less concerning. However, if the financial institution in your country has no access to payment systems like Mastercard, Visa, or SWIFT, a foreign bank may decline the transaction. While this issue can be resolved, you should inform International Wealth experts about it in advance.

You are welcome to open a personal bank account in Lithuania.

Other reasons to deny you an account opening

In our experience, we have seen many refusal cases, some very unusual. We successfully solved them by discussing the risks with the customer in advance. So, we advise you to seek professional help with this. Remember, it is the bank that picks you, not the other way around. 

Here’s why a foreign bank may turn you down:

  • Your foreign passport is about to expire.
  • You can’t provide the bank with a proper recommendation letter (from another bank, your lawyer, or accountant).
  • Your bank statement from another bank is poor (not much account activity, low balance, and instances of late or missed payments).
  • You applied for an account opening by yourself (some banks only work with middlemen to give less headache to their compliance department).

Where and when can things go wrong?

At International Wealth, our experts handle the most complex cases, achieving successful outcomes. 

NB: These are the persons and the departments that have the right to reject your foreign bank account application:

  • application manager
  • compliance officer (in charge of application analysis)
  • bank manager (unlikely if the previous steps are positive)
  • special bank departments (especially for high-risk accounts or clients).

You are welcome to open a personal bank account in Macedonia.

Yes, you can open a personal bank account abroad

Most often, issues arise when trying to confirm the source of income. The potential client may believe it to be legitimate, and that might even be the case. However, without the corresponding documentary evidence, the bank won’t listen to you.

Don’t forget that crypto transfers (even from a perfectly legal licensed exchange) are not considered a confirmed income source. The bank doesn’t know where the money to buy the coins came from. Until they do, a Binance statement means nothing.

Income source is another tricky issue when you apply. You know where your money came from and how you will use it. You may assume that bank employees are equally informed. However, this is not the case.

The bank relies solely on the information provided by you. Compliance department employees will not speculate or make assumptions. Therefore, when preparing an application (or documents for an interview), remember that the information should be clear, understandable, substantiated, and well-organized.

You are welcome to open a personal bank account in Nevis.

Is it true that you can only open an account with a foreign bank if you are filthy rich and your bank account boasts a six-figure income? This belief is quite widespread on Internet forums. However, nothing can be further from the truth than this. International Wealth experts have successfully opened foreign bank accounts with EUR 5000 deposits (with EUR 1000 being the minimum balance).

If your financial institution and account type are chosen wisely, fees for many transactions will be minimal or close to zero. Not only will you be able to open an account in a foreign bank but also receive a debit card, effectively making the account a mainstream product. What is more, you will have an opportunity to apply for loans, access additional investment services, or opt for a package with extra services.

Have any questions left as to how you can open a personal bank account abroad? Get in touch with International Wealth for an individual consultation! Our seasoned experts will be happy to answer them all.

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