Introduction
Companies registered in “offshore” jurisdictions are a popular solution for trading, providing services, and structuring ownership of various assets: foreign companies, real estate, other properties (e.g., vessels), securities portfolios, and so on.
Sooner or later, any company, including offshore ones, considers opening a corporate account. This may be required for transactions with clients and suppliers, payment of corporate expenses, and other business operations. However, opening an account for an offshore entity is not straightforward.
This article will explore all the complexities and nuances of this process, as well as discuss banks and payment systems that are willing to work with companies in offshore jurisdictions.
Opening a Corporate Account for an Offshore Company
Bank Requirements for Account Opening
When onboarding a new company, any bank or other financial service provider (e.g., a payment system) conducts a set of procedures known as Know Your Customer (KYC), aimed at:
- Identifying the identity of the actual owner of the company, making key management and profit distribution decisions;
- Determining the type of company activities, establishing its clients and various counterparties, their geography, and the presence of real operations and economic ties with a particular country.
Additional trust is generated by producing financial statements and conducting audits in the company’s country of registration, paying taxes, and reflecting current company information in publicly accessible legal entity registries.
Characteristics of Offshore Companies
Offshores have gained popularity due to several distinctive advantages, such as:
- Extremely low or non-existent taxation;
- Reduced financial reporting requirements and no mandatory audits;
- The ability to use flexible corporate governance tools, particularly nominee directors and shareholders;
- High level of confidentiality of information about the real owners of the company;
- Tolerance for high-risk business activities (except licensed ones), no currency control, and no capital movement restrictions.
For more on the advantages and disadvantages of offshores, read our material.
Complexity of Account Opening
The advantages listed above often conflict with the policies of most financial institutions, significantly complicating the initial KYC process, as well as subsequent checks of the company and its beneficiaries after onboarding. The “grey” status of offshore jurisdictions can also complicate making payments through foreign correspondent banks, which may request additional documents for transactions and information about legal entities.
One problem for banks or payment systems is disclosing the real beneficiaries of an offshore company, who may be hidden behind nominee shareholders. To address this issue, compliance specialists usually request proof of actual ownership: a Beneficiaries Register, as well as a trust declaration issued to the ultimate owner, a nominal agreement.
Equally important when opening an account is the need for the company to have real connections with the country of registration or place of business. Proof can be provided by evidence of tax payments, the presence of a real office with hired staff, financial reporting, and so on. These requirements are difficult for most offshore companies to meet.
Despite these challenges, a number of banks and payment systems are ready to cooperate with offshore companies. For example, we will later consider opening a corporate account for companies from such offshores as the Seychelles and the British Virgin Islands (BVI), which are among the most reputable of all “classic” offshores.
Where to Open an Account for an Offshore Company in the Seychelles or the British Virgin Islands?
Financial Institution | Service Acceptance Features |
---|---|
China Zhejiang Chouzhou Commercial Bank (China) |
A “classic” bank from China, accepting companies from most offshore jurisdictions. Does not accept beneficiaries with citizenship of certain countries or connections to sanctioned jurisdictions. |
ABC Banking (Mauritius) |
A “classic” bank from Mauritius, working with a large number of offshore jurisdictions. Conducts onboarding for companies with beneficiaries – citizens of certain sanctioned countries. Second citizenship or proof of living abroad is not required, but it simplifies compliance significantly. |
CB International Bank (Puerto Rico) | Works with most offshores but does not accept clients with citizenship from sanctioned countries. Such individuals will need a second passport. |
Nodabank (Dominica) |
Works with most offshore jurisdictions. Beneficiaries from certain sanctioned countries will need to provide proof of residence abroad. |
Currenxie (Hong Kong) |
The payment system works with companies from all countries except those considered high-risk according to the company’s internal policy, as well as the USA. Citizens of these countries will additionally need to provide documents proving actual residence in other countries. |
EQIBank (Dominica) |
Works with most offshore jurisdictions. Beneficiaries from certain sanctioned countries will need to provide proof of residence abroad. |
Aspire (Singapore) | Does not accept beneficiaries with citizenship of certain sanctioned countries, as well as passports from high-risk countries. |
Airwallex (Singapore) |
The Hong Kong branch serves companies from the BVI and Seychelles islands. Does not open accounts for companies with members – citizens of certain high-risk countries, even if they have a foreign residence permit. |
IFX Payments (UK) |
Accepts citizens of high-risk countries with a residence permit and proof of permanent residence in foreign countries. Opening an account for a company from the BVI will require demonstrating a real connection with the jurisdiction: a real office, a local director, and employees. |
WeavePay (UK) |
Accepts offshore holding companies, as well as legal entities engaged in service provision. Individuals with citizenship of sanctioned countries will need to provide documentary proof of residence abroad. |
PayDo (UK) |
The payment system is ready to cooperate with companies from most offshores; no local director or real office is required. Individuals with citizenship of sanctioned countries will need to provide documentary proof of residence abroad. |
In all the above payment institutions, it is possible to open a corporate account remotely with online identification of account managers. Note that in some cases, compliance services may request a set of apostilled company documents, as well as any other documents and information about the legal entity and its beneficiaries at their discretion.
Payment systems may impose significant restrictions or outright refuse to service companies engaged in unlawful or even high-risk activities: online casinos, betting and gambling, forex trading, providing financial services, and so on. Additional difficulties may arise with legal entities possessing a “tax-transparent” status. These include, for example, various types of partnerships (LP, LLP, GP, etc.) and American LLCs.
Conclusion
A corporate account is one of the main conditions for running a successful business for any company. Offshore legal entities possess a number of unmatched advantages, but may face several problems when opening an account in a bank or payment system. This is primarily due to the “grey” status of such jurisdictions, as well as the high confidentiality of shareholder information and low accounting requirements.
However, despite this, there is still a large number of banks and payment systems ready to work with offshore companies, and the possibility of acceptance for service depends on the citizenship of the beneficiaries, the type of company activity, and many other factors.
Uniwide has been providing services for opening corporate accounts for companies from offshores and “classic” jurisdictions for over 10 years. Contact us today to find a bank or payment system for your business.
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