After incorporating an offshore company, the next step is opening a bank account. However, it has become an uphill task for companies to open bank accounts. Most of the companies are getting their applications declined. Even those that already have bank accounts are also getting them terminated. Here are the main reasons why corporate offshore bank accounts applications are getting declined.
Failure to demonstrate a clear business structure
Banks want to understand the nature of their clients. Gone are the days when they used to rush to open accounts for anyone who knocked on the door. If your business fails to showcase its structure in a convincing way, the account will get declined. It is advisable to make sure you get it right on the business structure and demonstrate that the enterprise will not work with blacklisted countries.
Withholding tax information for shareholders and directors
Under the new CRS (Common Reporting Standards) Hong Kong Framework, all people seeking to open bank accounts are required to provide additional tax compliance related details. Therefore, if one of the shareholders or directors fails to provide all the required info, the account will be declined.
To get this right, you need to look at the corporate bank account more comprehensively. Make sure that the tax status of all the involved parties is captured well in the bank application details.
Trying to open an account for a shelf company
When considering incorporating a company, one of the options is buying a shelf company. Because the company is already incorporated, many tend to think that things are smoother and simpler.
However, it becomes extremely difficult when you try opening a bank account. To put it differently, the chances of getting a bank account for your shelf company is less than 1%. Instead, you should consider registering a completely new company.
How to get it right on the corporate bank account?
Instead of following a trial and error method that rarely works, consider using the proven strategy. Corporate services providers will guide you all the way and increase the chances of getting the bank account by more than 99% in the first attempt. They have been in the market for years, they understand the changing financial environment, and are willing to help.
They will help you with introduction and documentation so that the account gets granted in the first attempt. They can also help to jumpstart the process of registering a bank account if yours was terminated.