At the end of the tenth years, many negative events occurred in the banking services market of the CIS countries, making us think about the need to have a reserve account in a foreign bank. Moreover, the legislation of most countries allows this to be done without special permissions.
Opening an account in a foreign bank for an individual or company in our time is not easy, but it is possible. Moreover, in addition to foreign currency savings, an account in a foreign bank allows you to start your own foreign credit history. This will be a good start for your international business, obtaining a diploma from a foreign university or second citizenship, in case certain problems arise at home.
Why is it not so easy today for a resident of one of the CIS countries to open an account in a foreign bank?
Because many foreign banks, under pressure from international organizations such as FATF and OECD, are introducing more stringent procedures for their compliance services. These services are mainly engaged in checking the compliance of their clients and their funds with all the requirements of international banking legislation (KYC policy - an abbreviation from English, meaning know your client).
All banking structures, without exception, are afraid of being included in the so-called black lists, which threatens to be investigated by the licensing authority and can lead to the revocation of the license. For example, what happened to the second largest bank in Latvia, ABLV Bank, led to its complete liquidation in 2019.
The main thing that foreign banks seek from their clients is the understanding that you do not fall under any of the following prohibited activities:
And imagine, you are a large foreign bank, with a long-standing reputation and a customer base of many thousands. For example, in Switzerland you receive a new client from Russia, which is under US sanctions. Of course, the simplest solution is to initially refuse any such clients, so as not to waste time and money on a separate study of the case of each person applying to open a foreign account. But, fortunately, not all Swiss banks refuse to open accounts for our citizens and companies. And here it’s not even about who you are and what amounts you are willing to deposit into a foreign account.
The main thing is how you formulate your answers and what evidence you provide to support your words.
That is why it is very important to understand the banking risks when opening an account for a non-resident and be prepared to answer the following questions in questionnaires from compliance service specialists:
The lists and wording of such questions may differ slightly in different banks and countries, but the essence is the same. You need to understand that there is nothing personal or offensive to you in these questions. It’s just that nowadays the rules for conducting international banking have become exactly like this. Therefore, you need to treat this like weather changes. Rain is unpleasant. But, what can you do... we take an umbrella and run about our business. Same here too.
Answers should be simple and not ambiguous. There is no need to give reasons for other questions in your answers.
And once again, everything must be confirmed in the relevant documents.
That is why the more important question is what documents you need to have as confirmation of the source of origin of your funds.
It is not at all necessary that all these documents will be required. It all depends on the questions. As stated above, you need to have the maximum number of supporting documents in order to answer briefly, to the point and with maximum correspondence of the answer to your documentary evidence.
Some foreign banks may require translation and notarization of certain documents.
If you are an investor, businessman, rare specialist, IT entrepreneur, freelance programmer, copywriter or engineer who wants to receive/provide investments, get a job, found a startup, deposit your honestly earned funds in foreign financial instruments or simply travel the world, and at the same time apply for a second citizenship, then you need to prepare in advance for opening a foreign account.
To do this, try, for some time, to do simple but constant things, namely:
If you keep your legal paperwork and financial matters with your funds and assets in order, you should have no problem opening foreign accounts. You just need to think about it and prepare a little. And everything will work out. But there are benefits from owning foreign accounts, and they are very significant, both simply for a comfortable life and for the development of your business and personal wealth.
Opening an account in a foreign bank for an individual or company in our time is not easy, but it is possible. Moreover, in addition to foreign currency savings, an account in a foreign bank allows you to start your own foreign credit history. This will be a good start for your international business, obtaining a diploma from a foreign university or second citizenship, in case certain problems arise at home.
Why is it not so easy today for a resident of one of the CIS countries to open an account in a foreign bank?
Because many foreign banks, under pressure from international organizations such as FATF and OECD, are introducing more stringent procedures for their compliance services. These services are mainly engaged in checking the compliance of their clients and their funds with all the requirements of international banking legislation (KYC policy - an abbreviation from English, meaning know your client).
All banking structures, without exception, are afraid of being included in the so-called black lists, which threatens to be investigated by the licensing authority and can lead to the revocation of the license. For example, what happened to the second largest bank in Latvia, ABLV Bank, led to its complete liquidation in 2019.
The main thing that foreign banks seek from their clients is the understanding that you do not fall under any of the following prohibited activities:
- money laundering obtained by criminal means. In international finance, criminal funds usually mean funds from: drug trafficking, illegal gambling, fraud, human trafficking, stolen goods, smuggling, corruption in all its forms, illegal trafficking in weapons, medicines and everything that is carried out in violation of domestic and international legislation;
- terrorism. It doesn’t matter through what channels and reasons these funds came to you;
- aggressive tax evasion. This does not mean planning the tax burden, but specifically the targeted activity of illegal or fraudulent movement of funds from your country to a state with significantly lower taxation with a change in beneficial ownership and erosion of the tax base;
- are not a person or company designated as sanctioned by the United States or other countries.
And imagine, you are a large foreign bank, with a long-standing reputation and a customer base of many thousands. For example, in Switzerland you receive a new client from Russia, which is under US sanctions. Of course, the simplest solution is to initially refuse any such clients, so as not to waste time and money on a separate study of the case of each person applying to open a foreign account. But, fortunately, not all Swiss banks refuse to open accounts for our citizens and companies. And here it’s not even about who you are and what amounts you are willing to deposit into a foreign account.
The main thing is how you formulate your answers and what evidence you provide to support your words.
That is why it is very important to understand the banking risks when opening an account for a non-resident and be prepared to answer the following questions in questionnaires from compliance service specialists:
- what goals do you pursue by opening an account in a foreign bank,
- what or who is the source of the funds that will go to this account,
- can you provide proof of the source of funds,
- whether taxes have been paid in your country on the funds that will be deposited in our bank account,
- are you ready to disclose the total amount of income you receive,
- what is its structure and what is the source of its production,
- who will be your main partners from whom funds may be transferred to your account in a foreign bank,
- indicate the type of banking operations that you would like to use in our bank,
- what volume of funds will appear in banking transactions per month, quarter or year,
The lists and wording of such questions may differ slightly in different banks and countries, but the essence is the same. You need to understand that there is nothing personal or offensive to you in these questions. It’s just that nowadays the rules for conducting international banking have become exactly like this. Therefore, you need to treat this like weather changes. Rain is unpleasant. But, what can you do... we take an umbrella and run about our business. Same here too.
How to answer questions from foreign banks about the sources of your funds
In the application form, all of the above questions must be answered only within the framework of the supporting documents that you have available.Answers should be simple and not ambiguous. There is no need to give reasons for other questions in your answers.
And once again, everything must be confirmed in the relevant documents.
That is why the more important question is what documents you need to have as confirmation of the source of origin of your funds.
So, what documents may be required to confirm the sources of origin of your funds?
- Your submitted tax returns, certified by your tax office upon receipt. Somewhere you will need to make a translation and notarize these papers. Some foreign banks have their own support in Russian and there, it may be enough to simply send a well-scanned copy of the accepted declaration. This document is especially relevant for entrepreneurs and self-employed freelancers. Otherwise, you may have problems. Especially if you receive payment in an envelope or only in cash.
- A statement from your current bank account for at least the last 6 months. It would be better, of course, in the last few years. It is advisable that there are no large deposits and withdrawals in cash. Otherwise, suspicions may arise on the part of the foreign bank.
- Labor contracts, contracts for the provision of services. Anything that confirms that you received funds from them. Together with your tax return, this will be an irrefutably proven source of your funds. If such contracts are accompanied by non-disclosure agreements on the terms of such documents, then it is possible that it will be enough to provide a certificate from the accounting department of this company in Form 2 of personal income tax.
- Agreements for the sale and purchase of real estate or property for which you received amounts of more than 100 Euro/USD/GBP.
- Agreements of gift or inheritance of real estate, property, funds.
- Agreements for receiving grants for research, obtaining foreign education, and other documents from which it follows that you will receive funds for the main purposes of your stay abroad.
It is not at all necessary that all these documents will be required. It all depends on the questions. As stated above, you need to have the maximum number of supporting documents in order to answer briefly, to the point and with maximum correspondence of the answer to your documentary evidence.
Some foreign banks may require translation and notarization of certain documents.
How can you prepare in advance for opening an account in a foreign bank?
Of course, a lot depends on the purpose for which you are opening an account in a foreign bank. If you are a student who will study on a grant at a foreign university, then you will only need to provide your passport and a document stating that you have been awarded an educational grant.If you are an investor, businessman, rare specialist, IT entrepreneur, freelance programmer, copywriter or engineer who wants to receive/provide investments, get a job, found a startup, deposit your honestly earned funds in foreign financial instruments or simply travel the world, and at the same time apply for a second citizenship, then you need to prepare in advance for opening a foreign account.
To do this, try, for some time, to do simple but constant things, namely:
- Collect and store documents confirming that you have received funds for the sale of real estate and property.
- File tax returns.
- Conclude and not lose, over time, employment contracts, agreements, agreements.
- Keep documents on ownership of securities. For example, an agreement on the establishment of an enterprise in which you have a property share, or an agreement on the ownership of a brokerage/investment account, etc.
- Keep all cash transactions to a minimum if possible.
- Open a separate bank account where only non-cash banking transactions will be carried out.
- Once a year, order a confirmed annual account statement from the bank.
- Order an extract from your credit history from the Credit History Bureau, if, of course, you have one and it is positive. Try not to have overdue loans. This can help a foreign bank when compiling your profile and making a positive decision on opening an account for you. At the very least, the intention to provide such an extract will be perceived as a positive sign on your part.
If you keep your legal paperwork and financial matters with your funds and assets in order, you should have no problem opening foreign accounts. You just need to think about it and prepare a little. And everything will work out. But there are benefits from owning foreign accounts, and they are very significant, both simply for a comfortable life and for the development of your business and personal wealth.
