Opening an account for an offshore company is no easy task – especially if the business owner wishes to register an offshore company and open an account for it with a European bank. The reason for this is continuously changing legislation and political pressure. The purpose of this article is to find out how realistic it is to open a European bank account for a “classic” offshore company.
How Did the FATF and the OECD Affect Offshore Operations?
A decade ago, offshore companies served as an instrument to reduce the tax burden and safeguard the owner’s assets. For this purpose, companies were created in places like Seychelles, Panama and Cyprus.
And after offshore jurisdictions came under pressure from international organizations like the FATF and OECD, it became difficult for certain offshore-based businesses to carry out their day-to-day banking, especially in European countries.
But despite all the difficulties, going offshore is still an effective tool to manage one’s assets, protect them and run a full-fledged international business. Access to good banking services is often the difference between success and failure!
After the policies aimed at combating tax evasion were amended, pressure from regulators caused European banks to change their attitude to offshore companies dramatically.
They had to tighten compliance, and along with it add a raft of additional and burdensome requirements for potential clients. These depended on the type of business, financial transactions, and the currencies in which transactions were undertaken.
Today it is impossible to apply to a bank and become their client simply by providing a scanned copy of one’s documents. Now it is important for a business owner to disclose the corporate structure, partners, counterparties, explain the origin of capital, and maybe confirm the economic substance of the company.
European banks are reluctant to open accounts for offshore companies, mainly because they fear becoming unwittingly tied up in the next political scandal. Violations and non-compliance with policies and requirements of European regulators, result in substantial fines or license revocation.
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Therefore, banking and non-banking institutions (in this context, EMIs, PSPs and the like) try to avoid unnecessary attention from regulators. It is easier for them simply to reject the so-called “offshore” clientele. After all, in terms of time and effort invested, these accounts are poor prospects from the banks’ standpoint unless there are huge fees or investments at stake – at which point of course doors miraculously open wider!
This is why choosing an offshore area using the old-fashioned method of simply applying to a European bank directly for a non-resident account for an offshore company no longer works. For foreign companies, to work, to prosper, to achieve the goals they were established for, it is necessary to begin not with the search for an offshore jurisdiction, but with selecting the right financial institution.
Criteria for Choosing a Foreign Bank
The process of opening a corporate account in a random bank is doomed to failure. The choice of a traditional bank, payment system, or neobank, should be based on your needs and requirements. You can find a number of important criteria for choosing a bank below:
- the list of services available
- institution’s specialization (for example some banks like e-commerce, some like shipping companies, etc)
- interest rate setting policy
- availability of good internet banking
- remote account opening if required
- foreign currency accounts available
- the possibility to order a personal/corporate card
- minimum deposit amount
- crypto currency transactions
- access to the SEPA and SWIFT payment system
- individual IBAN account
- investment, brokerage services
- service languages
- foreign currency payments processing time
- application and documents processing time
- level of personal data security, statutory bank secrecy
- number of correspondent accounts
- bank’s requirements as to potential clients and their type business
Bear in mind that much of this information is not in the public domain, and the banks will not necessarily want to discuss it with you if you just contact them randomly by phone or over the net. In order to avoid possible mistakes when choosing a bank, we recommend selecting a European bank for an offshore company using our Pre-approval Service.
Pre-approval will definitely help you save time and money. You can be sure that we know the rules, both written and unwritten, of dozens of European banks so we can quickly match our clients to the best one. We even know which bankers to talk to in which banks to get things done faster and more efficiently. All this is based upon decades of experience as one of the biggest offshore service providers.
Can an Offshore Company Qualify for the Services of a Reliable Bank?
The ideal option is to open a current or settlement account in the jurisdiction where the legal entity is registered. But business owners often wish to open a European bank account for the already operating offshore company.
What is the solution? It’s really quite simple. First of all, we need to analyze the client’s profile, and then select a bank.
In certain cases it makes sense to register a new legal entity. For example, let’s take the company registration Portugal, Canada or the highly-recommended solution of branch registration in Serbia.
Having substance in a European company allows the bank to confirm that your business is real, and offer you high-quality corporate banking.
If for some reason this is not an option, you can open an account, for example, with a bank in North Macedonia through our special relationships there.
Where do I start?
First of all, one should carefully study the AML and KYC requirements of foreign banks for offshore companies, and then match them with the potential client profile. This of course is our job as professional offshore service providers.
It is not unreasonable to enquire in advance about the tax and administrative consequences that apply to owners of foreign accounts. Compliance of the corporate entity with the current compliance requirements is another important criterion too. It is also important to find out what requirements the bank imposes with regard to the company’s economic substance.
There are a number of peculiarities and pitfalls that are worth considering in advance. This is the only way to transfer one’s business to a reliable banking institution in Europe.
Would you like to know more about our services for opening accounts in Europe for offshore companies? Please feel free to schedule a free consultation with the Offshore Pro Group experts right now.