Business banking for overseas Directors

01 May 2020

Written by Libby James

Libby James is co-founder, director and an expert in all things merchant services. Libby is the go-to specialist for business with more complex requirements or businesses that are struggling to find a provider that will accept them. Libby is regularly cited in trade, national and international media.

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Navigating Business Banking for Overseas Directors in the UK

Finding a suitable business account for a UK-registered company with directors residing abroad presents a unique set of challenges. Traditional high street banks often shy away from accepting applications from such entities due to complexities in credit referencing outside the UK and difficulties in obtaining the necessary documentation for Know Your Customer (KYC) compliance.

Business Banking Challenges and Solutions for Offshore Directors

While options for business owners with overseas directors are limited, several UK-based providers are willing to offer solutions. However, the process may take slightly longer due to manual due diligence checks. One such check involves verifying the director’s registered address, requiring the bank to send instructions overseas for confirmation.

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Application Requirements and Documentation

Initiating the application process requires awareness of potential delays associated with opening a business bank account with an overseas director. Properly packaging the application is crucial to mitigate unnecessary hurdles. Prospective applicants are advised to communicate directly with the chosen bank to confirm their acceptance of applications from the director’s country of residence.

Application Requirements: To ensure a smooth application process, prospective applicants need to prepare the following information and documentation:

ID: Valid identification.

Proof of Address: The bank will send instructions on confirming the overseas location, often involving password confirmation or a PIN.

Business Registration: Documentation confirming the business’s legal registration.

Business Activity Documentation: Evidence showcasing the nature of the business.

In a hurry? Timeline Expectations

Merchant Advice Service work closely with business banking providers to help companies with Directors based outside of the UK. Typically, the account approval process takes approximately 2-3 weeks, acknowledging the additional steps required for KYC.

Why Offshore Directors Are Deemed High-Risk

Offshore directors are often perceived as high-risk due to the potential challenges associated with conducting thorough credit references and obtaining documentation from foreign jurisdictions. The complexity of verifying the identity and legitimacy of offshore entities contributes to the cautious approach taken by banks.

Declined Offshore Director Bank Account

Banks may decline offshore director bank account applications due to the heightened risk associated with international transactions and the potential difficulty in enforcing regulatory compliance. The lack of transparency in offshore financial systems can make it challenging for banks to conduct comprehensive due diligence.

How Merchant Advice Service (MAS) Can Help

Merchant Advice Service plays a pivotal role in bridging the gap for businesses with directors based outside the UK, navigating the intricacies of offshore director bank account applications. Our dedicated team of experts not only collaborates closely with reputable business banking providers but also streamlines the application process, ensuring that the required due diligence checks are efficiently conducted. MAS specialises in providing tailored solutions, offering guidance on opening new accounts, addressing business finance needs, and facilitating card processing for seamless financial operations.

Navigating the complexities of offshore banking is where MAS excels, providing invaluable support to mitigate potential challenges. Our comprehensive understanding of the unique requirements associated with international business structures allows us to guide businesses through the intricacies of KYC compliance and other regulatory hurdles. By choosing MAS as a partner, businesses gain a strategic ally committed to simplifying the process, reducing the timeline for account approvals, and enhancing the overall banking experience for companies with overseas directors.

Conclusion

UK businesses with directors residing abroad can overcome the challenges of opening a bank account by seeking specialised services like Merchant Advice Service (MAS). MAS provides expert guidance through the complexities of due diligence and KYC compliance, helping to facilitate the application process with international banks, while managing risks related to tax liability, multiple currencies, and compliance with financial services compensation schemes.

The involvement of MAS can streamline the process, reducing the timeline and assisting businesses to open an offshore bank account, potentially in locations like Hong Kong or the Channel Islands, ensuring tax year obligations and the benefits of offshore savings accounts are understood and maximised. Companies House registration and the presence of a resident director on the board can further align with compensation schemes and support efficient tax management in the home country.

FAQs

Can I open a business account in the UK if I’m a director residing abroad?

Yes, there are UK-based providers that cater to businesses with overseas directors.

Why do traditional banks hesitate to accept such applications?

Traditional banks face challenges in credit referencing outside the UK and obtaining overseas documentation for compliance.

How long does the approval process typically take?

The account approval process for directors abroad usually takes 2-3 weeks.

What factors contribute to offshore directors being perceived as high-risk?

Offshore directors are considered high-risk due to challenges in verifying identity, conducting credit references, and enforcing regulatory compliance in foreign jurisdictions.

Why might a bank decline an offshore director’s bank account application?

Banks may decline applications due to the heightened risk associated with international transactions and challenges in enforcing regulatory compliance in offshore jurisdictions.

Are there specific requirements for verifying the offshore director’s identity?

Yes, banks may have additional requirements for verifying the identity of offshore directors, given the complexities associated with international business structures.

Can Merchant Advice Service assist with offshore director bank account applications?

Yes, Merchant Advice Service specialises in assisting companies with directors based outside the UK, facilitating the account opening process, providing financial guidance, and aiding in card processing.

Is there an appeal process if a bank declines an offshore director’s application?

Some banks may have an appeal process. It’s recommended to communicate with the bank directly to understand the reasons for the decline and explore possible avenues for reconsideration.