Riccardo Raso participates in the IR Global Guide – A Jurisdictional Guide to Opening a Foreign Bank Account

Categories:

Foreward by Andrew Chilvers

For companies and individuals looking to move into new jurisdictions for business opportunities, setting up a bank account is a crucial part of the process. But this is never as straightforward as it seems.

In all countries, banks are obliged to crack down on fraud and any potential financial scullduggery. As a result, they tend to be very risk averse. Regardless of where a business establishes an office in the world, local banks will generally have the newly arrived expatriates jumping through various hoops, pulling their hair out in frustration.

The new arrival will need the relevant paperwork, including personal identity papers, a personal and business address, personal references and other numerous documents. And that’s just the beginning.

Every jurisdiction has its own banks and banking rules, which are often complex and bureaucratic. Consequently, seeking advice from local legal and financial experts before setting up a bank account is imperative if a company is it get the right account for its particular business objectives. This is why it’s so important to use local advisers who are experts in the jurisdiction to provide information about the local banking rules.

What is the general risk appetite of banks in your jurisdiction and how does that affect setting up a new business bank account?

There has been an unmistakable recent shift in the risk appetite of banks in Australia following a legal enquiry into the sector, known as the 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Since this time, anyone opening a bank account or obtaining finance in Australia has faced significant regulatory challenges as Australian banks and financial institutions have overhauled their AML/KYC and business operating procedures.

It is important to recognise that some banks have more stringent requirements than others. With respect to opening a company bank account, some banks will not permit any account to be opened or accessed unless all directors have presented themselves in person at a local branch in Australia to be identified. To avoid a “necessary” 20-hour each-way flight from Europe, Asia or North America, we have encountered situations where overseas directors could not be appointed to a company board so that the Australian bank account could remain operational.

Even within the banks themselves, there is often a misunderstanding by the banks employees on the documentation requirements for foreign organisations and individuals in opening an account. Contacting the bank through a general call centre can be frustrating and result in significant delays in opening an account when compared with making first contact with an employee experienced with international business banking. This is where McBurneys can greatly assist by making introductions to the bank that cannot otherwise be easily accessed through a general enquiry. We can also add our significant wealth of experience to help navigate which bank may be more accepting of the situation.

For foreign individuals coming to Australia, obtaining a bank account can be far more straightforward. An account can even be opened from overseas and funds can be deposited in advance of arrival in Australia. Then having landed in Australia, a foreign individual need only present themselves to a local Australia branch with their passport and the account can be fully activated. An expatriate moving to Australia would probably want to ensure some if not all of their pay is received in Australia for them to cover their living expenses.

How accommodating are banks in your jurisdiction for opening a business and personal bank account?

Whilst opening a personal bank account can be fairly straightforward with a foreign passport and attendance at a local branch, a lot more organisation and planning needs to go into the opening of a business bank account. The key is preparation and having the right documentation available to be provided to the bank.

Australian banks are accommodating to opening business bank accounts provided you are able to meet their vetting process. Restrictions may be placed on companies who can be traced back to countries or individuals that have embargoes.

An organisation chart should be made available to the bank early in the process to enable them to understand the group and to identify the organisation’s ultimate economic owners.

Under the relevant AML/KYC regulations, all directors, shareholders and account signatories will need to be identified in order to open an account. Individuals will be required to provide at least two of the following certified documents;

• foreign passport, foreign drivers’ licence, Foreign Government issued National Identification card, Birth certificate issued by a Foreign Government, Foreign citizenship certificate.

The documents will need to be certified by a Public Notary and/or Australian Embassy or Consulate staff.

The name on the identity documents must match with the company registration documents otherwise further documents may be required.

Foreign company shareholders in the group will require a certified copy of the certificate of incorporation from the relevant jurisdiction in which it is registered.

McBurneys can assist to liaise with the respective bank’s staff to ensure the documentation provided can be appropriately vetted BEFORE sending documents to be certified and arranging for the original certified copies to be sent by courier to Australia. 

Should you join an internationally reputable or established bank rather than a local bank?

The Australian banking sector is dominated by four major banks: Australia and New Zealand Banking Group (ANZ), Commonwealth Bank of Australia (CBA), National Australia Bank(NAB) and Westpac Banking Corporation (WBC)

There are a number of good reasons to join a local Australia bank including;

• access to a walk-in branch network;

• locally tailored internet banking platform;

• understanding of local business dynamics and access to resources;

• confidence for Australian customers;

• data integration with local accounting, taxation and software systems International banks that also have a presence operating at a retail level include ING, HSBC and Citibank. While these banks do offer personal banking and home loan products, they primarily focus on large corporate entities requiring complex international banking solutions. They have limited branch networks and predominantly accessed via call centres, on-line and at their CBD headquarters.

There is limited benefit in have pre-established relationships overseas with international banks because of mandatory government legislation that dictates the minimum identification requirements for opening a bank account at a local level.