You have tried several banks in different jurisdictions, but you have been turned down. What could be the problem? There are usually five reasons why you may be so “unlucky”, and we will discuss them in this post. It will not help you in 100% of cases – however, nothing and no one can guarantee that a bank account will be opened in 100% of cases except for scammers! Discover a proven portal to see why banks may refuse account opening.
Why Open an Account Abroad?
Let’s look at the main reasons why you may need a foreign account:
- Capital diversification. If you spread your money across several financial portfolios, you may decrease the available risks and get higher returns. However, you should know that tax agencies monitor cards and accounts overseas as financial information is globally exchanged. It means that you may have to report the possession of a foreign account in your country of residence.
- Investment in foreign markets/businesses. You may need several accounts (corporate and personal ones) if you want to invest in foreign securities or establish a company abroad. It will help you manage your assets without much trouble.
- Purchasing real estate abroad. Buying/managing real estate in a foreign country requires a local and/or international bank account to simplify cooperating with the seller and dealing with rental income and utilities.
- Traveling abroad. You may need to go abroad for vacation, business, family matters, or education, and an account in that country will make your trip cheaper and more convenient.
No matter whether you are going to set up a personal or a corporate account, you will need to successfully complete the KYC (Know Your Customer) or AML (Anti-Money Laundering) procedures. These are important compliance elements that help banks establish your identity and prevent financial crimes.
Why Are Prospective Customers Turned Down?
Any bank has the right to say no without even explaining the reason. However, there are typical mistakes in the application process, and we will consider them below.
Document Errors and Failed Verification
The bank that has difficulties identifying you and checking the package of documents submitted will deny the services to you in most cases. Non-compliance in the process of verification mainly results from omissions, inaccuracies, or errors in the documents filed. Here are a few examples:
- Your foreign address is not confirmed (no utility bills/bank statements provided)
- The copies of corporate documents do not comply with the standards (no translation, legalization, or notarization)
- The identity of the company’s director could not be verified
- No document proves the legal origin of the funds
- There are mistakes in the customer’s questionnaire
If you are not sure you can control all these issues by yourself, you can engage an expert to do it for you. Please follow the link above to get help with the documents or with the choice of the right bank.
Risks
Risks may be connected with the applicant’s identity or with the business industry:
- The company director, beneficiary, or personal account owner is a resident of a sanctioned country.
- The above persons have any contacts or ties with sanctioned persons.
- The company’s activity is considered to be a high-risk one, like gambling, trading, banking, insurance, crypto, and so on.
In addition, the bank may refuse to provide the services to you if the data that the bank employees obtained during the identification step or the way you behave at an interview suggests that you may be engaged in any unlawful activities.
What can you do if you have the risks above? Well, you can opt for a neobank or a payment system, or choose a country where banking laws are more relaxed.
Restrictions
Each financial institution elaborates its own internal policies and procedures to comply with, and it also has to comply with the regulations and limitations adopted in the country where it operates. If you come from a FATF- or OECD-blacklisted state, for instance, you will be turned down if you apply to a bank located in the Middle East, the Far East, Asia, or the EU.
However, sanctions are just a part of the problem. Banks may deny the services to you if you fail to comply with the financial institution’s internal regulations. Here are the main reasons for being turned down:
- The account turnover mentioned in the application form is too high or too low.
- The company that seeks to open an account seems suspicious as if it attempted to hide the true nature of its business activities.
- The bank has specific restrictions in place that apply to certain categories of customers residing in countries under sanctions or affiliated with persons that reside in such jurisdictions.
- The company has no physical office in the country where the bank operates.
If the request you submit is not in line with the bank’s limitations or policies, it will not open an account for you.
Negative History
No matter whether you are an individual or a legal entity, your reputation is important to the bank. If you have a history of some issues with regulatory authorities, like those connected with money laundering or financial manipulations, you will hardly be able to open an account with a prestigious bank anywhere in the world.
The bank may receive information about some negative goings-on in the past from different sources, including data exchanged between countries, media coverage, social media, and so on. However, if such information becomes known to the bank, it will not be the only factor that influences the institution’s decision to cooperate with you or not. They will also take into account your financial solvency, integrity, documentation you submit, and many other factors.
Financial Mismatch
Some banks may turn down non-resident applicants simply because they do not meet their financial standards, such as a certain deposit amount at the stage of account opening or a minimum account balance. If you want to open a corporate account, you may need to prove that the company is financially stable by showing its income or maintaining a minimum balance.
There are jurisdictions where banks do not set any deposit requirements, and the income threshold to be demonstrated by the customer is much lower (these are Georgia, Kazakhstan, or Turkey, for instance). As an alternative, you can use an offshore bank or an international payment system to open an account.
If you have any questions, do not hesitate to explore the portal by following the above link or ask an expert using a live chat.