Extremely Difficult to Open Bank Account for Offshore company

[BerlusconiSchmidt]

Hey everyone,

I run an online business (mixed services and ecom) making $1.2m in annual revenue (USD). Recently, I moved my business entity and operations to Hong Kong to minimize taxes.

I've had trouble opening a high street bank account in several countries:

- Several European countries: Denied because I don't have a physical presence or local tax residency. (Austria, Germany, Ireland, Slovakia, France)
- USA: They wanted an LLC and denied
- Singapore: No response to my emails.
- UK: No response to my emails.

I even traveled to these countries and visited bank branches in person after getting email confirmations, but they still refused to open an account for me (maybe my face looks dodgy?).

When I request to open an account, I mention I'm a resident of Germany (one of my three nationalities), even though I don't actually live there.

I do not need an EMI, i need a REAL high street bank account in any of these currencies: EUR/USD/GBP

Does anyone know of a country where I can open a real bank account remotely or with high success rate so I don't waste money on trips any longer?

Any advice would be greatly appreciated! Thanks!

 

[ilke]

Try Kazakhstan?

 

[Compliance Circle]

It's not your face that looks dodgy.

It's all about bank policies, counter tax-evasion, substance and the fact you're trying to live by offshore practices long gone.

You won't have any success opening account for a trading/consulting company in any of those jurisdictions simply because risk is not worth the renumeration for high-street banks. Have a thorough look through this sub-forum, and don't be so prejudiced to doing business through EMI's like Airwallex.

 

[BerlusconiSchmidt]

ilke said:
Try Kazakhstan?
Click to expand...

Not reliable. Only looking into Americas, Europe and Asia.

Compliance Circle said:
It's not your face that looks dodgy.

It's all about bank policies, counter tax-evasion, substance and the fact you're trying to live by offshore practices long gone.

You won't have any success opening account for a trading/consulting company in any of those jurisdictions simply because risk is not worth the renumeration for high-street banks. Have a thorough look through this sub-forum, and don't be so prejudiced to doing business through EMI's like Airwallex.
Click to expand...

Absolutely, but surely there must be a way, maybe through local lawyer, to open a local bank account with the right connections?

EMIs question me every single transaction, Worldfirst and Wise shut down my account because they couldn't " understand" my business model and wanted proof of every single transaction, high street banks do not do this unless a major flag is raised manually.

 

[ilke]

BerlusconiSchmidt said:
Not reliable. Only looking into Americas, Europe and Asia.
Click to expand...

Well, whatever you say.

The fact is: Banks don't really need you.

When you want a high street bank account for an offshore company, it's not about getting to pick. Beggars can't be choosers.

Kazakhstan is a relatively good jurisdiction (and it is in Asia, btw), that, if you choose right, has banks with strong correspondents and not so much risk.

If you want a high street bank account solely for the purpose of looking like you use a bank and not an EMI, go for Payset.

 

[wellington]

Banks making so much holding Gov debt they no longer need account holders that are on the risk curve

 

[BerlusconiSchmidt]

ilke said:
Well, whatever you say.

The fact is: Banks don't really need you.

When you want a high street bank account for an offshore company, it's not about getting to pick. Beggars can't be choosers.

Kazakhstan is a relatively good jurisdiction (and it is in Asia, btw), that, if you choose right, has banks with strong correspondents and not so much risk.

If you want a high street bank account solely for the purpose of looking like you use a bank and not an EMI, go for Payset.
Click to expand...

The reason for needing a Bank over an EMI is :

1. Less checks and scrutiny on each transaction, EMIs can be a time wasting machine with all their requests and queries
2. Less accounts frozen: I have never had a bank freezing my bank account
3. More reliability overall, more reputable and your money is safer
4. EMIs treat you like a child with all their blocks and limitations, I'm here to do business, not wasting time answering questions over my transactions every other week, They are just not professional

I wouldn't put more than $20K in an EMI, and my business generates 1.2$ in revenue a year, How do I sign up for 40x EMIs accounts?

 

[JohnLocke]

When I read your four points, they remind me of something I experienced about 10-15 years ago, but not something that resembles the behavior of a normal bank in 2024!

If you think an EMI has many checks and is annoying, I would like to hear what you would say if you found a bank that would take in a Hong Kong company that could and that doesn't have "substance" - I believe it would be a living hell for you.

My best advice to you is to make sure to establish a company, whether it is in Hong Kong, but one that has substance, i.e., a real office, an employee, a phone, and above all, a genuine business that is thoroughly explained on the company's website, which also needs to be professional.

Then you might have a chance to get a bank account and, above all, a bit of peace to run your business instead of having to comply with many requirements from the bank in a continuous stream.

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[BeyondBorders]

Hong Kong Banking has and will remain a big challenge beyond EMI. Your best bet might be to establish a fruitful (lucrative) Private Banking Relationship with a Bank in Singapore, Switzerland, Liechtenstein and you MAY get a shot pitching your Business with them. However, those banks usually refrain from transactional day to day corporate banking. This will not be an easy one...

 

[Sols]

BerlusconiSchmidt said:
I run an online business (mixed services and ecom) making $1.2m in annual revenue (USD). Recently, I moved my business entity and operations to Hong Kong to minimize taxes.
Click to expand...

BerlusconiSchmidt said:
When I request to open an account, I mention I'm a resident of Germany (one of my three nationalities), even though I don't actually live there.
Click to expand...

First you say that you incorporated a company in Hong Kong to save on taxes. Then you say you live in Germany. The Hong Kong company is tax resident in Germany and if the tax authority ever finds out, you're in for some pain. It sounds like you might be engaged in tax evasion at the moment.

Let's look at it from the bank's perspective. You present them with a company formed in Hong Kong, which has no presence in Hong Kong, whose owner lives in Germany, and which has has a monthly turnover of around 100,000 USD. You mention that you want access to EUR (a European currency), GBP (another European currency), and USD (an international currency subject to US laws and regulations). The bank will determine that there is no legitimate reason for the company being in Hong Kong, and your structure appears essentially fictitious with a very a high risk of tax evasion in the structure.

How much value do you bring to the bank? How much money will they make on you, relative to the amount of compliance headache that goes into onboarding you and keeping you.

BerlusconiSchmidt said:
I do not need an EMI, i need a REAL high street bank account in any of these currencies: EUR/USD/GBP
Click to expand...

I can understand this sentiment but probably no high street bank will accept you. So you either accept non-bank options, or start looking at back street banks.

BerlusconiSchmidt said:
Does anyone know of a country where I can open a real bank account remotely or with high success rate so I don't waste money on trips any longer?
Click to expand...

Hong Kong. Set up an office there, hire some people, and make it make sense. Give the bank a compelling reason for opening an account for you.

Or just form a company in Germany, open a German bank account, and focus on growing your business. You'll have a lot more money in your pocket if you grow your business rather than try to evade taxes. Move to a lower tax jurisdiction if you don't like German taxes.

BerlusconiSchmidt said:
1. Less checks and scrutiny on each transaction, EMIs can be a time wasting machine with all their requests and queries
Click to expand...

Banks and EMIs fall under the same set of regulations on AML/KYC. One difference is that EMIs are generally more nimble in adapting technologies. Another is that many EMIs are still much smaller than large banks, which makes every single risky transaction stand out. Those two factors combined is why some EMIs are (or seem) quicker to take actions like inquiring about transactions.

BerlusconiSchmidt said:
2. Less accounts frozen: I have never had a bank freezing my bank account
Click to expand...

And I've seen both banks and EMIs freeze account. I've seen banks kick companies out with just a few hours' notice.

BerlusconiSchmidt said:
3. More reliability overall, more reputable and your money is safer
Click to expand...

On what basis? If we look at EU/EEA EMIs, they are required to keep 100% or greater reserves of all deposits. With banks, you're lucky if the deposit insurance covers you.

Toggle signature
This is the probably the answer to your question.

 

[Don]

Sols said:
On what basis? If we look at EU/EEA EMIs, they are required to keep 100% or greater reserves of all deposits. With banks, you're lucky if the deposit insurance covers you.
Click to expand...

Great point! However, it's important to note that EMIs typically keep these funds in banks, meaning the ultimate safety of the money still depends on the banks where it is held.
Many banks have operated for decades, if not centuries, employing thousands of people, while EMI-s are often run from co-working spaces.
Especially in terms of user data protection, I am more concerned about trusting smaller EMI-s.
Some of the biggest banks have leaked documents on a mass scale, so how can we trust such small EMI-s with a few people?
I posted some time ago examples of leaks Dangers of KYC and compliance officers

Still, I'm in favour of using EMI-s like Wise, as it's often more practical for small businesses.

 

[Compliance Circle]

Don said:
Great point! However, it's important to note that EMIs typically keep these funds in banks, meaning the ultimate safety of the money still depends on the banks where it is held.
Click to expand...

The way EEA/UK EMI's are required to keep their funds and the way in which banks shall handle those "safeguarding" accounts on their books is quite different from how your funds as a direct customer are treated by high-street banks and which use of them they may make.

In many cases nowadays, EMI customers' funds are effectively kept and cleared with central bank (i.e. CENTROlink in Lithuania).

Don said:
Many banks have operated for decades, if not centuries, employing thousands of people, while EMI-s are often run from co-working spaces.
Especially in terms of user data protection, I am more concerned about trusting smaller EMI-s.
Click to expand...

...so those banks are more likely to have older IT systems, 10x more potential employee sources of whistleblowing/phishing targets...

Don said:
Some of the biggest banks have leaked documents on a mass scale, so how can we trust such small EMI-s with a few people?
I posted some time ago examples of leaks Dangers of KYC and compliance officers
Click to expand...

Examples that you have provided in that thread are quite bizzaire, since how can you be sure those documents available for sale on darkmarkets are from EMI's, not high or back street banks, or airlines/hotels/any other website handling ID documents in one or another way, or simply stolen from pwned e-mail accounts of users?

Don said:
Still, I'm in favour of using EMI-s like Wise, as it's often more practical for small businesses.
Click to expand...

Agree with you here.

 

[JackAlabama]

BerlusconiSchmidt said:
Hey everyone,

I run an online business (mixed services and ecom) making $1.2m in annual revenue (USD). Recently, I moved my business entity and operations to Hong Kong to minimize taxes.

I've had trouble opening a high street bank account in several countries:

- Several European countries: Denied because I don't have a physical presence or local tax residency. (Austria, Germany, Ireland, Slovakia, France)
- USA: They wanted an LLC and denied
- Singapore: No response to my emails.
- UK: No response to my emails.

I even traveled to these countries and visited bank branches in person after getting email confirmations, but they still refused to open an account for me (maybe my face looks dodgy?).

When I request to open an account, I mention I'm a resident of Germany (one of my three nationalities), even though I don't actually live there.
Click to expand...

what is your other nationalities? Try one of these.
Germany is not liked much internationally to deal with, since it has a very aggressive tax authority and is generally a very noisy country who needs to give unwanted lectures around the world.

BerlusconiSchmidt said:
I do not need an EMI, i need a REAL high street bank account in any of these currencies: EUR/USD/GBP

Does anyone know of a country where I can open a real bank account remotely or with high success rate so I don't waste money on trips any longer?

Any advice would be greatly appreciated! Thanks!
Click to expand...

 

[Sols]

Don said:
However, it's important to note that EMIs typically keep these funds in banks, meaning the ultimate safety of the money still depends on the banks where it is held.
Click to expand...

It's true that the funds are (often) held with private banks. But the banks are required to hold them separately so that even if the bank holding an EMI's client funds goes under, the EMI's client funds are ring-fenced.

I see @Compliance Circle was quicker. 🙂

Toggle signature
This is the probably the answer to your question.

 

[Don]

Compliance Circle said:
The way EEA/UK EMI's are required to keep their funds and the way in which banks shall handle those "safeguarding" accounts on their books is quite different from how your funds as a direct customer are treated by high-street banks and which use of them they may make.

In many cases nowadays, EMI customers' funds are effectively kept and cleared with central bank (i.e. CENTROlink in Lithuania).


...so those banks are more likely to have older IT systems, 10x more potential employee sources of whistleblowing/phishing targets...
Click to expand...

I wasn't aware of what you pointed out. I trust you are right, so thanks for educating me on this matter.

Compliance Circle said:
Examples that you have provided in that thread are quite bizzaire, since how can you be sure those documents available for sale on darkmarkets are from EMI's, not high or back street banks, or airlines/hotels/any other website handling ID documents in one or another way, or simply stolen from pwned e-mail accounts of users?
Click to expand...

I agree we can't be sure that they are from EMI-s.
I must admit your comment has raised my confidence in using EMI-s (compared to banks).
What I find most concerning about EMIs is that they seem to lack resources. I have doubts about the sustainability of the business model, knowing that even many bigger EMIs are not profitable.

Compliance Circle said:
Agree with you here.
Click to expand...

What's your opinion about the EMI industry in general? Do you see it as sustainable?
If we look at the number of banks, the industry has declined and consolidated. At the same time, EMIs (as a modern concept) have emerged.
I wonder how the implementation of CBDC-s affects business models like EMI-s.

 

[ilke]

Don said:
I wasn't aware of what you pointed out. I trust you are right, so thanks for educating me on this matter.
Click to expand...

I can confirm what @Compliance Circle and Sols are saying is true, the funds safeguarded in the banks are treated differently than general funds held in the bank, and it is more and more common for EMIs to hold funds in central banks.

EMIs can also hold the funds under insurance policies or some governmental bonds. This usually isn't as financially effective, but some larger ones like Wise do so.

Don said:
I agree we can't be sure that they are from EMI-s.
I must admit your comment has raised my confidence in using EMI-s (compared to banks).
Click to expand...

In actuality, it does make sense to assert that EMIs (generally) can be more safe than banks for finances. Lietuvos bankas is good in the fact that they reveal all EMI statistics (which of the 4 methods is used to safeguard the money) and if the EMI truly holds 100% of deposits + X% more. There aren't any more undercapitalised EMIs in Lithuania based on the Q4 2023 data. All have 101%+ of deposits held. It's generally encouraged for them to hold 102%+ (100% safeguarded, 2% in own funds) to be able to cover all liquidation without needing to find other SoF.

Don said:
What I find most concerning about EMIs is that they seem to lack resources. I have doubts about the sustainability of the business model, knowing that even many bigger EMIs are not profitable.
Click to expand...

There are a lot of business models that simply aren't profitable for all businesses.

It's difficult for EMIs because they don't have access to the most profitable part of finance - customer funds. They don't have the ability or legal allowance to lend out or invest customer funds, which is how most banks make money. EMIs have to rely on fees, interchange, etc. They have to make you spend, rather than hold.

Don said:
What's your opinion about the EMI industry in general? Do you see it as sustainable?
Click to expand...

I would say that the industry is sustainable, but currently, EMIs are seen as more sketchy. There have been many problematic cases (Trustcom, cough cough, money laundering as a service) and they don't yet instill the trust that they should - as institutions that consistently hold full reserves and usually pretty strong AML departments.

Don said:
If we look at the number of banks, the industry has declined and consolidated. At the same time, EMIs (as a modern concept) have emerged.
Click to expand...

There's a lot of demand to start EMIs. Often for good business plans, modern ideas and startups. Sometimes for money laundering - and that's an issue.

Don said:
I wonder how the implementation of CBDC-s affects business models like EMI-s.
Click to expand...

That's an interesting point to consider.

 

[CyprusLawyer101]

BerlusconiSchmidt said:
Hey everyone,

I run an online business (mixed services and ecom) making $1.2m in annual revenue (USD). Recently, I moved my business entity and operations to Hong Kong to minimize taxes.

I've had trouble opening a high street bank account in several countries:

- Several European countries: Denied because I don't have a physical presence or local tax residency. (Austria, Germany, Ireland, Slovakia, France)
- USA: They wanted an LLC and denied
- Singapore: No response to my emails.
- UK: No response to my emails.

I even traveled to these countries and visited bank branches in person after getting email confirmations, but they still refused to open an account for me (maybe my face looks dodgy?).

When I request to open an account, I mention I'm a resident of Germany (one of my three nationalities), even though I don't actually live there.

I do not need an EMI, i need a REAL high street bank account in any of these currencies: EUR/USD/GBP

Does anyone know of a country where I can open a real bank account remotely or with high success rate so I don't waste money on trips any longer?

Any advice would be greatly appreciated! Thanks!
Click to expand...

What exactly is your business? If similar lack of clarity is given to the banks, maybe that is the source of failure to open an account.

 

[BerlusconiSchmidt]

I have German, NZ and another nationality, I do not live in Germany and I do not live in NZ either.

I just say to the banks I am a resident of Germany but I'm a registered Fiscal resident elsewhere.

I am looking for a high street bank because from my past experience with NZ and German banks, I could receive payments of $200-300K at once without a single question raised. I have received payments of $0.20 cents with a-i-r-wallex, Wise and Worldfirst and had accounts frozen because the information provided "wasn't enough".

High street banks are just better overall from my experience at helping long term business success.

 

[Sols]

BerlusconiSchmidt said:
I just say to the banks I am a resident of Germany but I'm a registered Fiscal resident elsewhere.
Click to expand...

So you're going around lying to banks? Sounds like the bank's onboarding procedures are working.

Toggle signature
This is the probably the answer to your question.

 

[jafo]

BerlusconiSchmidt said:
another nationality
Click to expand...

Use this one! Why not?

BerlusconiSchmidt said:
I'm a registered Fiscal resident elsewhere.
Click to expand...

Why not try to open an account here?

Or at least tell the banks so.

BerlusconiSchmidt said:
USA: They wanted an LLC
Click to expand...

Do it! Why not?