The business strategy has changed significantly over the past 5 years. If earlier the owners tried to find a profitable office space, now the businesses are looking for a foreign bank, Neobank or a payment system. In this article, we will tell you about where it is easier to open a corporate bank account abroad in 2022.

Difficulties of opening a corporate account abroad

Absolute deoffshorization and strengthening of anti-money laundering tools by regulators caused a number of difficulties for businesses when trying to open a corporate bank account abroad.

These changes have increased the already high compliance control requirements of foreign banks. Now, in order for the application to be approved, the business must provide all the statutory documents, a list of shareholders, information about the company’s activities, ultimate beneficiaries, as well as potential partnership agreements.

But not all companies are able to provide the necessary documents to the bank, which will allow them to verify the legality of the business and the reliability of its owners.

Opening a corporate account abroad: available options

Recently, EMI and PSP have begun to actively share the market with classic banks. They offer businesses traditional services, but at the same time use the latest technology. Below we offer a comparison of the available options for opening a corporate account in a foreign bank. (1)

Advantages of payment systems

PSP (Payment Service Provider) and EMI (Electronic Money Institution) – what is it and why do you need it? Today, payment systems and other financial institutions with EMI and PSP licenses allow international companies to easily resolve financial issues with one click. But before choosing a place for international transactions, we recommend that you check the differences.

The main difference between EMI and PSP-type licenses is that the PSP cannot issue its own currency and keep corporate assets in its accounts. But EMI offers traditional banking services to small and large businesses:

fast process of opening a corporate account and its connection to international transactions;

work with cryptocurrency;

low service rates;

access to corporate money management from multiple devices;

multiple currency accounts.

EMI-licensed payment systems are able to recognize the actual needs of companies of any size, start-ups and entrepreneurs, unlike traditional foreign banks. But they also have disadvantages. One of them is the sudden blocking of a corporate account. This is due to the issue of security and anti-money laundering policies.

Most often, a sudden blocking of a foreign account occurs at the time of financial transactions with large amounts. But this can be avoided by discussing the payment with the manager of the financial institution in advance.

The choice of a payment system for personal and corporate purposes is best done with the support of legal, economic, tax, and financial consultants of the international portal.

Advantages of foreign banks

Above, we mentioned the difficulties of passing compliance control. So, opening a corporate account in a traditional bank is a difficult task. Banks abroad are developing special tools aimed at identifying information about the client, and detecting any suspicious transactions, including money laundering operations.

Passing compliance control increases the time for opening a business account abroad. If the structure and activities of the company are clear to the bank, it is possible to open an account within 1 month. In other cases, the process may take 3-4 months.

Benefits of  a bank account:

access to corporate credit products (credit lines, overdrafts, leasing, mortgages, corporate credit cards);

the ability to place free corporate assets to receive;

additional profit (short deposits, corporate savings accounts).

You can open an international account in person and remotely by filling out a questionnaire and contacting online consultants.

Neobank for business and personal account – pros and cons

Due to inexperience, many of the clients mistakenly believe that Neobank is a payment system with extended service. In fact, things are somewhat different.

What is Neobank? This is a challenger bank, a complete clone of any financial institution with good functionality, but without a physical presence. All transactions (from opening an account to withdrawing funds and obtaining a loan) are carried out in the virtual space. At the same time, many note to benefit from such a format of work, which is primarily associated with high client confidentiality and round-the-clock online support.

You can open a personal and corporate account with Neobank, which will allow you to solve all current problems, and also gives you the right to choose a currency and convert it directly in the payer’s personal account.

Advantages of Neobanks, what we should know about:

digital online banks do not incur costs for servicing client offices and branches, which allows you to save on costs and apply lower account maintenance fees;

for the same reasons (there are no high debit transactions), rates in Neobanks are increased, and the list of offers for savings accounts is wider;

high speed and convenience of customer service, which is primarily associated with remote work on opening accounts in Neobanks, selecting loans, their approval and issuance;

the same range of banking products as in a traditional bank – from a corporate account to a multi-currency account, from a loan to a mortgage;

 

The disadvantages of digital neo banks include the lack of physical offices, which is a problem for some customers, including obtaining cards. However, in the Russian Federation, this problem is solved by a courier card delivery service by the bank manager himself.

What factors should be considered when opening a corporate bank account?

Comparing the offers of traditional banks, neo-banks and international payment systems, we recommend paying attention to the following factors:

Transaction fee: calculate the number of payments per month, and determine the required countries and currencies. It is possible that for a large number of international transactions, a business account in the payment system will be the best choice.

Lending: the need to cover operating expenses may arise suddenly, keep in mind that obtaining a loan for business needs is possible only if you have a corporate bank account.

Minimum balance: make sure the company has enough money in the account to maintain a minimum balance at all times.

Internet banking: make sure the company has access to 24/7 cash management.

The number of available currencies: traditional banks offer to open a multi-currency account, while international payment systems and Neobanks offer access to 40+ foreign currencies. Compare available currencies before opening an account.

Protection: prevent the closure or blocking of foreign bank accounts, and open a reserve account if needed.

When choosing a foreign bank, we recommend asking about the geography of its presence. This will help to build a strategy for finding partners and establishing the sale, and purchase of goods. Well, if the company aims to constantly increase its partner network, it is worth considering options for opening a business account in traditional foreign banks and in a foreign payment system.

To open an account for international transfers to your clients, please contact us via [email protected]

1 – https://internationalwealth.info/en/offshore-payment-systems/e-money-and-payments-systems-vs-foreign-banks/

Disclamer: The article is meant solely for educational purposes only. By viewing any material or using the information on this page you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content. Collect & Pay Ltd is authorized by the financial regulator of the AIFC, Astana Financial Services Authority (“AFSA”), to conduct the activity(-ies) of Providing money services in a testing environment of FinTech Lab* (AIFC regulatory sandbox) under the Licence #AFSA-G-LA-2020-0005 with an expiry date of 01.10.2022. The status of the license and its validity may be verified at the AFSA website (www.afsa.kz).

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