Reasons Why the Bank May Refuse to Open an Account Abroad: Customer Errors

If you want to set up an account abroad, it is desirable to avoid mistakes that may influence the decision of the financial institution and result in denying the services. If you are planning to open an account independently, please study the current legal norms of the country where the bank is registered and the country of your permanent residence in advance. Lack of expertise in legal matters may also result in service denial even if the applicant’s reputation is impeccable.

How Foreign Banks Check Their Customers

All solid financial institutions and payment systems adhere to the established world standards as part of AML (anti-money laundering) program. To this end, the following points are used for checking:

• Transaction transparency and payment control at all service stages
• Sources of income and money transfer recipients
• KYC (know-your-customer) – identification of each customer’s identity and checking of documents
• Risk evaluation by several criteria: the beneficiary’s country of residence, citizenship and residence permit, business field, business contracts, partners, and other details.

Also, in accordance with international FATF recommendations, each bank develops its internal policy and regulations which set out certain conditions to serve persons from the countries on the EU black or sanctions list. The applicants from such countries get turned down in the majority of cases, but there are exceptions. For example, you can get access to financial instruments in a number of financial institutions if you provide a residence permit from another jurisdiction.

Main Reasons Why the Bank May Refuse to Set Up a Non-Resident Account

There are several reasons why you may be turned down which are in no way the applicant’s error: they are simply connected with the legal norms and internal regulations of the financial institution:

• Sanctions and black list of the countries/persons. If the applicant resides in a country from the EU blacklist and does not have another residence permit or citizenship, or has connections with persons under sanctions, the account will not be opened.
• Inadmissible age of the customer due to restrictions set by the country of the bank’s location or the financial institution itself. As a rule, only adult people aged 18 or 21 can open an account. Elderly people are also in the risk zone.
• No residency status in the country of address: some banks do not work with non-residents, including corporate ones. In this case, you should study the requirements in advance and opt for the bank that is prepared to work with foreigners who have no residence permit or fiscal obligations in the country where the financial institution is registered.

Payment systems and a number of banks are ready to open accounts for non-residents. However, if you want to receive a positive or negative reply before you make any further steps, you can use the service of application submission to several institutions at once (the so-called PRE-APPROVAL).

Errors That May Result in Service Denial by the Bank

Other reasons for refusal include the errors of customers themselves as they can be easily eliminated if you want to. For example, here are the cases in which the bank will turn you down:

• The application was received directly from the non-resident on the condition that the bank receives forms and documents from intermediaries only. This requirement is not a frequent case, but it is much wiser to check it up in advance with the bank’s managers or financial advisors.

• Bad history connected with credit delays and non-compliance with the requirements of other financial institutions (payment of service fees, etc.). Practically all countries and separate zones, for example, the European Union, have a common customer database. 
• The KYC verification has not been passed, which is a serious reason for refusal. Today, even offshore banks check their customers, so it is impossible to open an account without personal identification.
• Errors in documents that will raise suspicions and may be the cause why your application has been turned down:
  • No confirmation of the source of income
  • No CV and recommendation letter from another servicing bank
  • No proof of address
  • Differences between the information in the submitted documents and the data received by the bank’s compliance service
  • No translation and/or apostille stamp (if applicable).
• You have not passed an interview with the bank’s manager. A foreign customer has the right to invite an interpreter in case of an online or offline verification. However, there are banks that find it important to see the customer in person. If you disregard this requirement, the account will not be opened.
• Violation of the terms of documents, including extracts from utility bills or ID documents.

Non-obvious but possible errors that may be a complex reason for service denial: inconsistency of information in documents, a shortage of funds at the date of account opening (an initial deposit may be required), and so on.

If you want to be sure you have made no mistakes and the procedure of setting up an account abroad will pass seamlessly, please get in touch with a seasoned expert to receive professional advice. The specialists on our portal will be happy to provide services to individuals and corporate customers.