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Offshore Banking: Failure to Open a Bank Account

Offshore Advisor
05 September, 2008

You decided to join the club and enjoy the benefits of offshore banking. You incorporated an offshore company as recommended by your advisor, chose a sound and reliable bank, prepared the requested documents and submitted your application, but unexpectedly the bank didn't approve it and denied to open you an account. Why would a bank that spent so much time, money and efforts to attract more customers reject some applications?

Unfortunately any bank has the right to refuse with no comments. Let's see what could be the reasons.

Generally, this might obviously happen because the bank is not interested in you as a client. You don't fit the current appetite of the bank. You are expected to become a new investor while you are looking for a current trading account for your business; or the bank is oriented to clients with a significantly bigger account turnover than you anticipate.

Another problem is that the bank may be afraid of having you as a client because you fall into the category of undesirable customers. None of the well-established banks with good international reputation would ever wish to provide service to a criminal. Every bank has its own perception of troublesome business and relevant technical procedures assisting its managers to detect potentially unreliable clients. It might happen that the country of your citizenship, residence or domicile, jurisdiction of incorporation of your company or type of your business are black-listed by that bank.

Some clients fail to provide the bank with the right image of their business in general. You may simply be inaccurate and make a typo here and there, in the telephone number or address details, and that's it, you look suspect to the bank's compliance manager. Sometimes the reason lies deeper. You overdo trying to keep your privacy. You tend to tell the bank as less as possible. The result is the bank doesn't get a sufficient picture to be sure no problems will follow you. Most banks prefer to brush aside any suspicious client rather than engage in investigation because in case of mistake they might easily get more troubles than benefits. To avoid this situation do your best to make your business reality transparent enough for the bank to make a positive decision.

All these and other issues of that type can normally be avoided should you have a quality preliminary consultation with a professional independent advisor.


About the Author

Offshore Advisor

Mary is a consultant and blogger at Offshore Advisor - free online consultancy on offshore services covering asset protection, offshore banking, second citizenship and more. Contact Mary via mary@isla-offshore.com.


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