Opening a business account in an offshore bank for a high-risk company in 2020

Opening a bank account abroad has become quite a challenge these days – and this is especially true if yours is a high-risk business. Businesses considered high risk by offshore banks include things like cryptocurrency, forex, e-commerce merchants and affiliates, and everything from international shipping to adult and dating websites!

Banks want to be doubly cautious when considering applications for services from international private banking clients who potentially can cause trouble as they are engaged in a risky business.

This said, however, it is not impossible. Even today, with a little effort and the right help, you can open a corporate offshore bank account with an offshore bank – even if your business is considered high-risk!

At Offshore Pro Group we have been assisting clients since 2012 in finding an international financial institution that will meet your requirements and that will be prepared to take you onboard at the same time. If you urgently need a foreign bank account, please apply for a free consultation on choosing the right bank by contacting us via live chat or WhatsApp, or you can simply send us an email. 

Opening a business account in an offshore bank: the profile of a high-risk company

You may believe that you are a businessperson who is not prone to taking risks. You play safe in all circumstances. You may also believe that your business activities are not risky at all, as they are perfectly legal and you have all the necessary licenses and permits and whatnot.

We have to tell you though that what you personally believe is of little importance for the offshore bank where you apply for services.

All companies wishing to set up corporate bank accounts are assigned a risk according to a matrix based on a points system. In compliance terminolgy this is known as a ‘risk-based approach.’

In practice, you can assume you will be in one of the three risk categories: low risk, medium risk, and high risk. Naturally, high-risk companies have to face tougher requirements when undergoing the due diligence procedures. The logic behind this is obvious: if the client’s business is risky, he or she can potentially put the bank to higher risks as well and some precautionary measures need to be taken as a consequence of that.

Some people may think that having a high-risk business makes it totally impossible to open a corporate account in a foreign bank. This is not true and companies engaged in the types of activities that are considered risky by the banks can still establish business accounts. You have to realize, however, that it is going to take comparatively more time and effort.

It is also crucial to have a clear idea what your company looks like in the eyes of the bankers when you are applying for services to them. We will say this again: it is not so important how you see your company but it is important how the bank sees it. For this reason, it will be wise to put yourself in the bank’s shoes and have a look at your situation from their perspective.  

What types of business activities are traditionally associated with high risks? (We use the word ‘traditionally’ here with the purpose of stressing that most banks are very conservative in their outlooks and are often slow to change their practices even though the objective reality around them may be changing fast.)

You have to be prepared for stricter due diligence checks if your company is engaged in one of the following types of business activities:

• Fintech;
• Forex;
• Cryptocurrencies;
• Electronic money;
• Health-related products including drugs, medications, and BADS (bioactive dietary supplements);
• Any cannabis-related business activities (CBD);
• Multi-level marketing;
• Telemarketing;
• Cash-based businesses;
• Provision of all kinds of consultation services;
• Lotteries;
• Gambling and betting
• International logistics and trade

The reasons why such businesses qualify as high-risk businesses are different but the list above speaks for itself. Please do not think that involvement in one of the business areas listed above will mean an automatic “no” from the bank where you are applying for offshore bank account opening. It will simply be a reason to look at your company closer when considering the application for services.

You will be asked to supply an extended package of documents that can show to the bankers how exactly you company operates and how exactly it earns profits. Before they agree to open a corporate offshore bank account for you, they will have to develop a perfect understanding of how your company works.

Put another way: If they cannot figure out the way you make money, they will turn your application down.

This is why it is imperative that you should be honest and cooperative when trying to set up a corporate offshore bank account abroad.

If your company qualifies as a high-risk one, you will typically be asked to show the history or your payments and other business operations. Whether you apply for bank account opening remotely or you do it on a personal visit to the bank office, the following characteristics of your company operations are bound to put the bankers on the alert:

• A large number of returned incoming payments;
• A large number of cancelled payments;
• Low credit rating with international agencies such as Dun and Bradstreet;
• A small number of financial operations (when your business was stared only recently, for example);
• A large number of financial operations
• Overly complex company ownership structure (for example, if you set all your kids up with offshore trusts and made them each a shareholder);
• Transactions that do not make commercial sense;
• Unclear or unknown sources of funds;
• Multiple bank accounts in different countries without a clear purpose.

In addition to that, most bank will become suspicious if they have to deal with a person of high net worth; a PEP (politically exposed person); a person who is known to have a criminal past.

Yes –  if you are thinking that includes pretty much everybody – you are right! But don’t worry as our offshore professionals are here to help you.

Besides, there are geographical restrictions that apply too. In particular, applicants from two FATF-sanctioned countries, namely, Democratic People’s Republic of Korea (DPRK) and Iran stand almost no chance to set up a bank account outside their home jurisdiction (there are a very few exceptions).

The list of FATF-monitored countries is much longer but potential clients from these jurisdictions have a theoretical possibility to open a corporate account in an offshore bank.

We also have to note that in case your company is domiciled in a ‘clean’ whitelisted offshore jurisdiction such as Marshall Islands but you have business relations with partners or clients from sanctioned or monitored states, your chances of establishing an offshore bank account are reduced, so you should declare this to your Offshore Pro consultant from the beginning.

Opening a business account in an offshore bank: why you need professional intermediary services

It is possible to set up an offshore bank account without leaving home – an opportunity that is especially valuable when almost the whole world is in quarantine. One good example of this is opening a Singapore offshore bank account remotely for your offshore company.

However, if you have read somewhere that an account with a foreign bank can be opened remotely within two or three days, we suggest that you should take a critical look at such affirmations!

If you are involved in a high risk sector and if the bank managers are going to miss the pleasure of meeting you in person, the due diligence checks could take months rather than days. You have to learn to live with the fact that good things – in this case your corporate offshore bank account – take time!

Again, put yourself in the banker’s shoes. The banks have been made responsible for taking on only trustworthy offshore corporate clients whose businesses are perfectly legal and perfectly transparent. The KYC (Know Your Client) requirement is quite a recent invention but it is a tough one indeed.

These days bankers can expect a “go to jail” card if they don’t play by the rules of the game.

Now let’s suppose the Compliance Department fails to scrupulously check a prospective client and it later turns out that this client is involved in some money laundering and/ or terrorism financing schemes. What can this entail for the bank when the truth comes out? The softest punishment is going to be a huge fine. The tougher one is going to be the banking license revocation. In the worst scenario, bankers may go to jail.

Why are we saying this? Simply to make you see that the bankers are not whimsical or lazy when they take so long to process your application for account opening. The international financial authorities have made a very clever manoeuvre in attacking individual privacy: they have co-opted the banks and their resources to defeat politically-incorrect practices that were regarded as normal just a decade ago.

The costs of Compliance-related activities performed by the banks in all parts of the world have grown by several billion dollars over the recent years. We won’t go on ramble on about it, but the bottom line is please be patient as the banks do have some serious reasons to conduct meticulous due diligence checks.

In case you work in a high-risk industry, the application document package that you will have to submit when setting up an offshore bank account is going to be considerably larger than in a normal case.

In theory, banks should ask for the same things: proof of identity, proof of address, source of wealth, and source of funds.

In practice, however, every bank will require a different set of documents when you apply for its services. Since we have been in close contact with all the banks that we recommend for opening offshore bank accounts with, we know exactly what documents each of them will want to see. Besides, we keep a close look on all the changes in the bank requirements that occur on a regular basis.

In addition to that, never mind which bank you apply to for services, you will have to fill out an application form. That is, again, different with every bank. Some banks require that you complete a paper version of the application form by hand, sign it, and then submit it to the bank. When the possibility for remote account opening is available, you may be asked to send the form by snail mail or with a courier (DHL, UPS, Fedex etc). In other cases, you may be able to submit a scanned copy of the completed application form via the Internet. We will be glad to supply the blank application forms to you that you can complete and send back to us.

Other banks do not use paper-based application forms any longer but put them online instead. However, you are likely to need professional assistance in completing the form anyway. Since we have been working with the banks that we recommend for quite a while, we know what information the managers of each bank want to find in the application form. Please remember that you are going to apply for services to an offshore bank. This means that this financial institution abides by the laws of its home country… laws which may well be unknown to you. This actually entails the necessity – not just desirability – to use professional assistance when setting up a corporate account with a bank located offshore.

While processing your application, the bank officers are going to ask you the following questions, among others:

• How are you going to use your account?
• What is the expected monthly account turnover?
• How many transactions do you intend to make per month?
• Where will your payments go to?
• Where will they come from?

And so on and so forth.

We would like to put special emphasis on the following aspect: you have to be frank and open in your answers to these questions as well as any other questions that the bank managers may ask you. If they see that you are trying to conceal the information about the company UBO’s (ultimate beneficial owners), for example, they will automatically become suspicious. This, of course, will lessen your chances of obtaining services from this bank.

At the same time, we can tell you what questions each particular bank commonly asks and this will let you prepare the answers to them in advance. Our assistance will also be useful when it comes to assessing the quality of your intended answers. We know what the bank officer will want to hear and we also know what you had better not say in your conversations with the bank. For instance, if you are asked why you would like to establish n offshore bank account and you reply, “for the purpose of optimizing my tax burden”, while this is a totally legal thing to do, it could easily result in a rejection.

We would like to draw your attention to two services that will come in very handy when you set about establishing a corporate bank account overseas. First, we invite you to sign up for a free consultation on choosing the bank that will suit your business purposes best of all. We will ask you several questions and your answers will allow us to come up with several suggestions and then you can make a choice.

We are going to recommend only those banks that are a) reliable and b) will be prepared to take you on. Please write to us by WhatsApp, live chat or simply an old-fashioned email: [email protected] and request the free bank account consultation.

The second valuable service that we offer to those opening bank accounts abroad is the possibility to obtain an application pre-approval from the bank.

Unfortunately, it’s not a buyer’s market. Long gone are the times when clients chose banks. In the modern world, banks have to choose clients and in the text above, we have provided the reasons for the occurrence of such an unpleasant change!

When submitting the documents for pre-approval, you should collect a smaller document package. The complete set of documents will be required at the next step – after you obtain the pre-approval (Pre-approval for an offshore bank account is like a provisional consent on the part of the bank to provide services to you). Besides, obtaining a pre-approval from the bank takes considerably less time than obtaining the final decision to open an account for you.

Please bear in mind, however, that a pre-approval is not a 100% guarantee that you will get an account with the bank. This is only a nice chance to save time, effort, money, and your nerves in case the bank does NOT pre-approve your application. If this is the case, you can avoid wasting your time with this particular bank and move on to apply for services to other banks. The service is inexpensive and you can order it by writing to the e-mail address specified above, or simply by sending us a WhatsApp or reaching out via the online chat.

FAQ

How can I open a business account in an offshore bank?

There are many options to choose from when it comes to opening a corporate bank account offshore. The choice of the jurisdiction where the bank is located will largely depend on your goals in establishing a foreign bank account. We believe, however, that in the modern globalized world the location is not so important as the range and the quality of services that the bank provides. The best international private banks actually operated i multiple jurisdictions, with cross border booking allowing you to hold your account in one country and deal with bankers in another.

Can I get a multi-currency IBAN for a high risk business?

W will talk about briefly below especially attractive is its preparedness to provide services to high-risk companies. Another valuable characteristic that this bank possesses is the possibility to open an account with it remotely.

A corporate bank account in this bank will let you make and receive both US dollar and euro payments as well as other currencies like pounds, Swiss Francs, Canadian dollars etc as you can set up a multi-currency account there with just one IBAN. This is a true blessing for those who work with multiple currencies. In addition to that, you can make transactions in over seventy other national currencies via this bank if you place a special request for this service via the online banking portal.

SWIF and SEPA payments are readily available with most offshore banks. A well-thought-out online application or mobile app will let you effectively manage your account wherever in the world you may find yourself.

Can I get a credit or debit card for my high risk business?

The bank can issue a plastic or – in some cases – a virtual payment or virtual credit card to you. The cards can be linked to your corporate accounts or you can otherwise set up a separate card offshore credit account (that is, after you become a corporate client of the bank). For example we offer offshore secured credit cards As well as our famous “no limits” premium secured cards such as the American Express International Dollar and Euro Card available even in Platinum and Black versions.

Can I deal with crypto currency exchanges with my Offshore Bank Account?

The answer is yes. With one of our favourite offshore banks, you can even add a cryptocurrency payment aggregator to the card thus acquiring the possibility to make payments in crypto rather than in fiat currencies. The bank charges no card maintenance fee and neither is there a minimum balance requirement to the card account.

If you are prepared to pay some extra for the banking services, Private Banking is available with the best offshore banks. If you request this service, a personal manager will be assigned to you and you will receive access to some advanced financial solutions that will make your corporate account with the bank not just multi-currency but truly multi-functional. You can find the information about the basic bank tariffs and commissions by contacting us on the WhatsApp chat or live chat.

Offshore Pro Group is in cooperation with over 200 banks and payment systems scattered all over the world. We have a whole department whose staff keeps track of all the changes that happen in the banking industry and tries to find some new exciting opportunities to offer to our clients. The offshore bank accounts for high risk businesses mentioned here are only some of many options … even though we must admit that this particular bank looks especially inviting for the entrepreneurs involved in high-risk business sectors like forex, crypto, adult and so on.

Please contact us via [email protected] or drop us a line in the live chat and we will find you the bank that provides the services that you need, that charges commissions acceptable to you, and that will agree to open a corporate account for your company … notwithstanding the fact that it works in a high-risk business vertical. We have a great choice of offshore private and commercial banks to offer and vast experience in setting up offshore bank accounts for our clients. We will promptly reply to all your queries!  Hasta pronto!