Conditions for opening bank accounts for companies and individuals

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The main condition to open a bank account for a legal person or an individual in any international bank is that the bank must know his client. Currently, every bank regardless of its location uses the KYC (Know Your Client) principle and studies information about the prospective customer and his funds (due diligence procedure).

What is bank’s ‘Due diligence’? Is there any reason to be scared of it?

In fact the due diligence procedure is absolutely legal, justified and is not as scary as many businessmen may think. Every bank wishes to know who it is working with, what the source of client’s funds is, who client’s major business partners are and what amounts of money will the bank service through the client’s account.

Recently most international banks have altered the required list of documents to open an account and this made the procedure stricter. Before, providing a persons passport and corporate documents was enough, but now it’s more than that.

Let us sum up all the documents needed to open an account in an international bank.

When we classify banks we can highlight Baltic banks, which are famous for their low tariffs, Cyprus banks, which are located in the EU, yet still have a less stringent procedure for opening an account in comparison to other European banks, and last but not least – Western European banks.

In order to open a bank account many Baltic banks let their clients fill out and sign all necessary bank forms at their agent’s office, i.e. a professional consulting firm. All forms need to be signed only by the authorized person (signatory) and the beneficiary. The following documents are to be presented to the bank:

  • copies of beneficiary’s and attorney’s passports;
  • copies of founding documents of the company;
  • in case the beneficiary or the attorney have a resident-company, it is necessary to provide the bank with the registration certificate and the Articles of Association of this company;
  • otherwise, it is necessary to provide a statement from the current employer and copies of beneficiary’s and attorney’s work record cards.

Cyprus banks no longer limit themselves to requesting merely the abovementioned information, but also ask for:

  • a utility bill, proving residency address;
  • a reference letter from another bank;
  • original founding documents.

There is also a requirement to have some of the bank forms signed by the director of the company, which is why we recommend appointing a Cypriot director, who can personally fill out and file these bank forms and vouch for you. Some Cyprus banks also require arranging a personal meeting with the client in one of the bank’s regional branches. Having submitted all the aforementioned documents and having filled out all forms correctly the bank account may be activated in the matter of days.

European banks

When opening a bank account at a European bank one should understand how serious the banks approach to his client will be and it usually takes time to open an account. Many other banks have policies of knowing their clients but for European banks it is a strict rule. And that is why they require:

  • СV – specifying the source of funds, education, professional activity, company that employs the person, person’s position in the company, etc. All provided information is kept with the bank in confidentiality and can only be disclosed in case of an official inquiry from a court
  • copies of beneficiary’s and attorney’s passports certified by a notary
  • original or apostillized copies of corporate documents.

Personal presence in the bank’s main office will be necessary. But if the bank will allow the client to open the account remotely, he would still need to travel to the country where the bank is located within 6 months from the time of opening the account to meet a bank manager. The bank needs to know who they work with and understand the client’s needs and intentions.

Major requirements as to opening bank accounts with European banks:
  • purpose of opening a bank account
  • company’s activity (bank usually do not work with financial intermediaries, companies that carry out only Forex transactions, and other companies that can be defined as risky)
  • company’s turnover
  • disclosure of company’s major partners
  • full information on the company’s beneficiary (many banks can do a so called interview with the client when they ask all sorts of questions, but mainly about the source of funds, education or work experience)
  • signing bank forms
  • minimum deposit

It is worth mentioning that European bank do not really care about the jurisdiction of the company, which will have the account, be that Belize, Seychelles or BVI. What they do care about is the client himself.

However, it should be noted that a bank may require some additional information or documents from the client that may be relevant to opening and operating an account. The bank can also refuse in opening a bank account without explaining the reasons.