There is several reasons why it’s becoming more difficult to open a corporate bank account. Here are the main reasons:
- Stricter regulations: Banks are subject to increased regulatory scrutiny and compliance requirements to prevent money laundering, terrorism financing, and other illicit activities. This has led to more stringent due diligence processes and Know Your Customer (KYC) requirements. Banks need to gather extensive documentation and conduct thorough background checks on potential corporate account holders, which can prolong the account opening process.
- Risk aversion: In the wake of financial crises and scandals, banks have become more risk-averse. They are cautious about the businesses they serve to mitigate any potential legal, reputational, or financial risks. Consequently, they may adopt stricter criteria for accepting new corporate account applications, especially for high-risk industries or businesses with limited operating history.
- Compliance costs: Compliance with regulatory requirements involves significant costs for banks. To offset these expenses, some banks may increase their fees or impose higher minimum deposit requirements for corporate accounts. This can create financial barriers for small or newly established businesses trying to open an account.
- Global tax transparency initiatives: International efforts to combat tax evasion and promote tax transparency, such as the Common Reporting Standard (CRS) and the Automatic Exchange of Information (AEoI), have increased the reporting obligations of banks. They are now required to gather more extensive information about the account holders’ tax residency and report it to tax authorities. This additional administrative burden may make banks more cautious about accepting new corporate clients.
- Technology limitations: While digital banking services have improved over time, certain aspects of the account opening process may still require manual verification and review. Banks may not have fully automated systems in place to handle the increasing volume of corporate account applications efficiently, leading to delays and difficulties.
How can Forsythe help me make the process of opening an account for my business easier?
Forsythe has been in business for over 20 years. During this period, we were able to observe the evolution of banking and legislative rules. Forsythe processes new customer inquiries on a weekly basis and is therefore in weekly contact with the banks and their employees.
This therefore allows us to understand the process of each bank and on what basis it will accept, or not, to open an account for a company.
Consequently, when a client comes to us, it is possible for us, at first, and having knowledge of the internal rules of the banks, to predict relatively precisely in which bank the chances of success are better than another.
When we have identified the bank or banks most likely to open an account, and knowing their rules, it will be important to provide the bank with what it wishes to obtain in terms of documents and information, and above all to ensure that everything it wishes to obtain will be provided in a simple and clear manner.
Indeed, banks like clear, simple and transparent situations. If the activities of the company are unclear or if there are doubts or questions about the company wishing to open an account or its directors, shareholders and/or beneficial owners, the bank will refuse to open the account (usually without reason) rather than asking additional questions or requesting additional documents.
It is also important to know that the majority of banks have, in fact, delegated their compliance to Google or other search engines. For example, we have never seen, in any file (and we have dealt with thousands of them), a bank asking a customer for his extract from the legal proceedings, but on the contrary we have often seen banks refuse to open an account because the client or the client’s company had negative reviews on the internet, and even if this information came from obscure blogs (and usually only intended to tarnish the reputation of the client or his company, often even by competitors of the client itself) or gossip media.
Therefore, the image of a company or its shareholders on the Internet will have more impact on the decision of the bank than the facts. This is why it is important, if a company or its shareholders have a bad reputation on the internet, to fix it, which we can also help you to do.