Bank account in another country. How to open an account in a foreign bank for an individual
Many citizens of our country believe that it is better to keep money in foreign banks. The Russian economy is constantly in crisis, sanctions are being introduced and lifted, oil is falling, the dollar and the euro are growing. All these factors do not contribute to increasing confidence in domestic banks, because people do not leave the feeling that at any moment everything can collapse. It should be understood that opening an account abroad is accompanied by certain difficulties. Is this even possible? In the article we will tell you how to open an account with a foreign bank, what difficulties may arise, and also help you choose the most reliable country for your account.
Which Russians can open an account abroad?
In Russia, Federal Law No. 79 of May 7, 2013 was adopted, restricting the circle of persons entitled to open accounts in foreign banks. So, this is prohibited for those who occupy senior positions in government agencies, such as:
- prosecutor general's office;
- federal executive bodies;
- board of Directors of the Central Bank of the Russian Federation and others.
Until recently, to register an account in a foreign country, it was necessary to obtain permission from the Central Bank of the Russian Federation, but now the procedure has been simplified. It is enough to notify the tax service up to 30 days after signing the contract with the bank. After that, every 5 years you need to submit a report on the movement of funds to the tax service.
Also in 2016, Russia became a party to an international agreement on the exchange of data on financial transactions. Starting in 2018, our country will be included in a single information field with other states, which will allow tax authorities to directly receive information about the movements of Russian funds. Therefore, you need to be prepared that it will become more difficult to hide your income.
The main question: how to choose a country to open an account
In order to open an account in another country, as a rule, you need to be its resident. Some banks do not have this requirement for customers. But then, perhaps, you will encounter other conditions of service.
Often, financial institutions require you to provide documentary evidence of your desire and ability to open an account in another country. The bank may require the provision of:
- residence;
- documents on property ownership;
- visa (if required to enter the country);
- a 2-NDFL certificate certified by a notary, a certificate of inheritance and other documents confirming the receipt of finances.
Each bank has its own rules for receiving applications for opening an account for citizens of other countries. Therefore, it is necessary to clarify the list of requirements on an individual basis. But it is worth noting the general trends:
- In the eurozone countries, as a rule, documents will be requested according to the list above (in Sweden, the UK, Spain and others). The exception is the Latvian bank Rietumu Banka, which even helps foreigners in obtaining a residence permit and is ready to open an account with a small investment.
- Also, large world banks set a threshold for a minimum amount for storage. Most often, it is 50,000 or even 100,000 in the state currency, and, for example, for Credit Suisse, Barclays or UBS without a residence permit they will accept 1,000,000 or more.
- At the same time, many Asian countries are interested in investing and provide comfortable conditions for opening accounts. For example, the Chinese ICBC and Bank of China are ready to approve the application when they enter the account from 1,000 yuan. But Singapore is not an example of a demanding attitude to the opening of accounts by citizens of other countries, and the authorities will require a full package of documents.
Of course, only the most important points regarding cooperation with foreign banks are listed here.
How to open a bank account abroad?
The main restriction for individuals when opening an account in another country is that the account can be used only for personal purposes. It is forbidden to carry out any operations related to entrepreneurial activity. You can use an open account in only three areas:
- storage of funds;
- payment of purchases, services and other personal expenses;
- investment activities.
As for the registration of the application, in different countries it will take from a week to several months. Documents are carefully checked, and the bank security service must make sure of your reliability and honesty. And only if the bank makes sure that there are no reasons for refusal, will you open an account.
As a rule, much attention will be paid to the legality of the origin of the investment. In addition, in the case of a positive decision and approval of the application with the further use of money from the account (especially when working with large amounts), you may also be required to justify the expenses. For example, request documents for the purchase of real estate or checks from a medical institution.
Most often, you will need to personally fill out an application for opening an account, so consider the possibility of a visit to the country that provides you with banking services. Additionally, it is worth checking with the manager of the selected bank some important details:
- guarantees of saving money on the account for foreigners (especially for those who are not residents of the bank's country);
- the size of the minimum balance of the account (also there is no one universal value for all institutions);
- how much and what deposit insurance gives.
Account Opening Methods
There are several options to open your own account abroad. This can be done in the following ways:
- Personally fill out all documents in the language of the country that accepts the application. Next, most likely you will need to come to the bank and fill out a questionnaire on the spot.
- Having concluded an agreement with an intermediary company, which will prepare and send all the necessary papers for a fee. This service can cost up to several thousand dollars.
- By issuing a power of attorney for a third party (for example, a colleague or a lawyer permanently in the country of the bank).
Large banks are not always ready to work with a future client blindly, through third-party organizations or proxies.
It is necessary to clarify the rules of work of a particular organization, in which either a mandatory personal visit to the office, a conversation with an employee of the company by phone, or a visit to a representative office in our country (usually in Moscow), such as, for example, at Deutsche Bank, Credit Suisse, can be prescribed.
UK and US Banks
The most serious requirements for customers are presented in English and American banks. It is especially difficult to open an account for non-residents, but for those who already have rights in the state, confirmed by a residence permit, strict rules are established. You may be required to provide:
- letters of recommendation from colleagues or business partners;
- rental agreement on letterhead of a British real estate agency;
- bills paid for housing rent and utility bills (the address and name must be indicated) and other documentation.
Therefore, if you are not a resident of these states, then think carefully about the profitability of opening an account. You will encounter a number of difficulties and far from the fact that you can break through all the bureaucratic barriers.
Account Management and Service Shutdown
In the modern world, a well-developed online banking system, so managing your account will not cause problems.
Replenishment of the account in addition to the traditional cash deposit through the cash desk is also possible online. But there are some nuances:
- you can transfer money from a Russian account to a foreign one only after notification by the Federal Tax Service;
- when depositing funds in a bank, it is necessary to explain the origin of the money and confirm its legitimacy.
Before opening an account in the institution of your choice, specify how it can be closed later. As a rule, you will need to pay a personal visit to the department where you applied and filled out the application form.
Minimum package of documents for opening an account with a foreign bank
The most necessary documents that you need are as follows:
- a copy of your passport certified by a notary, as well as your spouse's passport, if any;
- birth certificates of children and other documents confirming the composition of your family;
- substantiation of the reasons for opening an account (residence permit, real estate in the country of the bank, etc.);
- income statements for the last 6-12 months, certified by the Federal Tax Service;
- certificate of no criminal record.
If in Russia there is a branch of the bank in which you plan to open an account abroad, then consult a company office for advice.
Summing up, we can conclude that in order to open an account with a foreign bank, you need:
- carefully collect all the information about the requirements of a financial organization in advance;
- clarify the nuances of servicing, closing an account and providing guarantees for citizens of other countries;
- meticulously prepare the requested documents and carefully communicate with employees;
- be prepared to come personally to the country that opens the account, or spend some amount to pay for the services of an intermediary company in opening an account.
The main thing is to be patient and not wait for an instant result, and with a responsible approach, you will be able to open an account with a foreign bank.
A crisis in the economy is forcing people to look for alternative ways to preserve capital and develop their business, including abroad. That's why ordinary citizens and companies are increasingly interested in,. This procedure is not simple, requires certain knowledge and is solved in two ways - personally and through an intermediary.
Why is this needed?
The reasons for opening an account in a foreign bank are different :
- Saving capital.
- The desire to withhold income from the state tax inspectorate.
- Establishing cooperation with partners abroad (for companies).
- Obtaining more flexible conditions for conducting international business.
Before opening an account with a foreign bank , decide on the tasks. Based on the goals set, the country and institution are selected (more on that below).
Read also -
Open an account with a foreign bank: what are the advantages?
Opening an account with a foreign bank guarantees the following benefits :
- Guaranteed investment retention. The main thing is to give preference to countries with a stable economy.
- Data confidentiality. An account with a foreign bank is reliably protected from strangers, because for foreign credit institutions banking secrecy comes first. Deviation from this principle entails reputational losses.
- Obtaining favorable credit conditions. Foreign banks are loyal to regular customers and offer more flexible terms than in domestic organizations. This feature is a plus for legal entities that need additional financing.
- The accumulation of funds by opening a deposit. Despite low interest rates, deposits in foreign institutions are in demand. First of all, due to reliability.
- The ability to open a credit line at a significantly better rate than in Russian banks.
- Convenience of design. Opening an account with a foreign bank online or in person is not difficult. The option is available for individuals and companies.
Which account to open?
There are three types of accounts in a foreign bank:
- Settlement (trade) - option for legal entities (companies). Purpose - conducting financial activities, making payments. Preference should be given to specialized agencies, where a minimum transaction fee is offered. Legal entities and individuals can open an account with a foreign bank online and manage it remotely.
- Investment (savings) - an option for individuals whose purpose is to preserve and increase capital. Deposits are short and long term. The conditions vary and depend on the bank or type of deposit - for ordinary storage or for investment events. In the latter case, risks and interest are higher. Before how to open an account in a foreign bank, choose institutions involved in raising capital from individuals.
- Private - a service designed to save funds. Such accounts are suitable for personal savings and are not used for conducting business activities.
Opening an account abroad: step by step
The main question: how to open accounts in a foreign bank? The algorithm is
:
- The choice of state.
Today, three areas stand out - the Baltic, European and Asian. Baltic credit institutions are distinguished by favorable rates for cash settlement services and the simplicity of the procedure. European banks accept funds for long periods, and the cost of cash settlement services is higher. Asian institutions open accounts when there is business in the country. Opening accounts and transferring capital to England was also in great demand, but in light of the country's withdrawal from the European Union, the mood changed a little, as the economy is in a new way, which will certainly lead to a change in service conditions. - Bank selection. Landmark when choosing:
- Reliability.
- Tariffs.
- Requirements for non-residents.
- Terms of replenishment and withdrawal of money.
- Filing applications and papers. To open an account with a foreign bank, the package of documents is transmitted:
- Statement.
- Copies of documents confirming the identity of the client.
- Letter of recommendation from banks.
- Founding papers of the company.
Transferred papers must be certified and translated. The exact conditions are worth checking with the bank.
- Tax Inspection Notice.
As soon as an account with a foreign bank is open, it is required to issue and send a corresponding notification and receive confirmation. A document from the tax office is needed to transfer money to a foreign bank.
The term for opening an account abroad - usually about seven days after the receipt of all securities by the banking institution. For urgent clearance - up to 4 days.
25.06.2018
Foreign banking for non-resident clients has recently become a constant source of news. And if some of them turned out to be quite predictable (especially for those who in one way or another used the services of foreign financial institutions over the past years), then others will still have to get used to.
If earlier banks fought for a future client, offering the best conditions, and clients could afford a choice from many options, now banks carefully select a “suitable” client, taking into account a variety of factors - from the jurisdiction of the company to the business biography of its beneficiary and the law of origin his funds. Under the pressure of international organizations and national regulators in the field of banking services to non-residents, there is a constant "tightening of nuts."
Nevertheless, a foreign bank account has been and still remains an indispensable tool in international business, since the task of opening a bank account arises for almost everyone who registers a business abroad or expands its borders. Therefore, further - about everything in order.
Why do I need a foreign bank account?
Corporate Account in a foreign bank is necessary for convenience of calculations companies with their business partners (customers, suppliers), accumulation of cash assets, payment of mandatory payments, salary projects, use of corporate bank cards, etc. Such an account can be opened both in the same country in which the company is registered, and in another country or countries.
One of the most important advantages of opening a foreign account for a foreign company (and not for an individual) is lack of currency restrictionsstipulated by the Russian legislation for currency residents of the Russian Federation. To foreign companies do not apply obligations to notify tax authorities about opening a foreign account, submitting reports on the movement of funds on the account, as well as restrictions on crediting funds to the account.
For citizens personal foreign account needed in case of employment or obtaining a residence permit abroad, ownership of foreign real estate and in many other cases. In addition, many customers simply decide to keep and / or invest part of their funds abroad in order to preserve or increase personal or family capital. Only for some categories of citizens (senior officials, civil servants) the opening of foreign accounts and the use of foreign financial instruments is prohibited by law.
The main disadvantage of a personal foreign account is its very limited functionality. The currency legislation of the Russian Federation allows residents of the Russian Federation to credit to such an account only those categories of funds that are directly named in the law, classifying all other operations as illegal. Such restrictions are lifted only if the person loses the status of a currency resident of the Russian Federation.
Types of accounts
Foreign banks usually offer the opening of settlement and / or savings accounts.
Settlement Accounts are intended for regular transactions involving frequent crediting and debiting of funds on the account, which is necessary when the company conducts normal operating activities (trading in goods, rendering services, etc.). Some accounts may operate in settlement mode, however, they require maintaining a constant minimum balance in the account in a certain amount or placing an investment portfolio.
Savings (investment) accounts are opened for the purpose of saving and / or investing client funds and, as a rule, cannot be used for current settlement transactions.
How to choose a foreign bank?
At present, choosing a bank to open a bank account for a foreign (especially offshore) company is becoming an increasingly difficult task. It depends on many factors, starting with the ownership structure of the company and the type of its activity, and ending with the particularities of the policy of the national banking regulator.
Here are just some of the questions whose answers should be clarified by choosing a foreign bank:
- does this bank work with companies (including from offshore jurisdictions) and non-resident individuals?
- does the bank offer settlement accounts (i.e. accounts for frequent incoming and outgoing transfers)?
- will this bank accept customer service with this type of activity, with these beneficiaries, with these business partners and payment directions?
- in which currencies can payments be made (this depends on the availability of the corresponding network of correspondent banks) and are there any currencies you need among them?
- what are the bank rates?
- what are the ratings, reputation, financial performance and prospects of this bank?
- and much more.
Therefore, in order to choose a foreign bank for opening a corporate or personal account abroad, we recommend that you contact only those specialists (professional intermediaries and bank agents) who are familiar with the current (and constantly changing!) Situation in the field of opening accounts and can objectively assess the chances of opening an account taking into account all the factors inherent in a particular client and bank.
In which country to open an account?
For the purpose of opening corporate accounts for foreign (including offshore) companies, banks can be divided into three main groups:
1. Banks of Europe. Basically (except Switzerland. Liechtenstein and Montenegro) these are banks of the European Union member states that are subject to the requirements of the pan-European regulator - the ECB. Inside this group should highlight:
- banks of the Baltic countries (Latvia, Lithuania, Estonia);
- banks of Cyprus;
- banks of Central Europe (Poland, Hungary, Czech Republic, etc.);
- banks of Western Europe (Austria, Liechtenstein, Luxembourg, Switzerland);
- other banks (Montenegro, etc.)
Banks of this group continue to be popular when opening corporate accounts for foreign companies. Many of them have Russian-speaking customer support.
However, most European banks (as well as any other banks) are characterized by an increasingly lengthy processing of applications for opening an account, a request from the applicant for various additional information, and also (especially for Western European banks) rather high tariffs. And, most importantly, the banks of most of these countries today moved away from the practice of opening and servicing accounts of offshore companies (for example, it is now impossible to open an account in a Latvian bank with an offshore company or with a partnership formed from offshore companies such as LP or LLP).
Only a few banks, despite the general negative attitude towards offshore companies, continue to consider opening investment accounts of offshore companies on terms favorable to the bank (namely, investing in bank products or maintaining a significant minimum balance), of course, with full satisfaction of all other requirements by the client.
2. Banks of Asia (Hong Kong, Singapore).
Asian banks as a whole are focused on business that somehow works in the Asian region or with partners from it. They are also characterized by a general trend towards deoffshorization and strengthening due diligence procedures.
Hong Kong banks today have virtually refused to open accounts for residents of Russia and other CIS countries or companies with beneficiaries from such countries. In order to open an account with a Hong Kong bank, an in-person interview with the Bank manager in English or Chinese is always required without the help of an interpreter (directly in Hong Kong). At the same time, banks only consider companies that have a real office in Hong Kong (it should be borne in mind that such companies are taxable in Hong Kong).
Today, only Singaporean companies can open an account with Singapore banks, and their directors and shareholders must be residents of Singapore. The director must exercise real authority to manage the company and have exclusive access to her bank account.
The relative disadvantage of Asian banks is also the more complicated communication between the bank and the client, due to the lack of Russian-language support, as well as a significant difference in time zones (which is relevant for the European part of Russia).
3. Offshore banks (Saint Lucia, Mauritius, Seychelles, Saint Vincent and the Grenadines, etc.).
Offshore banks are banks in offshore jurisdictions that have traditionally specialized in serving non-resident customers. However, to date, such banks not only do not have any significant advantages over banks from onshore countries, but they lose to them, primarily because of their offshore image and extremely limited options for settlements with certain countries and in certain currencies.
The fact is that most developed countries have a negative attitude towards offshore banks, which complicates the establishment of correspondent relations with them and impedes payments. In particular, for this reason, offshore banks (with the exception of the banks of Mauritius) have recently experienced difficulties with settlements in US dollars. Therefore, if you need to pay in USD, as well as with American / European / Russian partners, opening an account with an offshore bank is usually not advisable.
On the other hand, the procedure for opening an account in an offshore bank today is practically no different from similar procedures in other banks. As elsewhere, the client must submit the required package of personal and / or corporate documents as part of the due diligence and know-your-customer procedures. An application for opening an account can be considered for a long time. An offshore bank, like any other, will refuse to open an account if the potential client does not comply with the bank’s policy and the risks for the bank are exceeded by the client. In the course of settlement services, offshore banks can, as regularly as regular banks, request supporting documents for current client transactions.
We also add that foreign banks should not be confused with banks operating in Russia with foreign capital, which, although they operate under the corresponding foreign brands, but, like any Russian banks, are subject to Russian law and the requirements of the Central Bank of the Russian Federation. The foreign banks in question here are banks located outside the Russian Federation and subordinate to the relevant foreign regulators. In Russia, such banks can operate only in the form of representative offices officially accredited by the Central Bank of the Russian Federation, which do not open accounts and do not carry out banking operations.
Procedure for opening an account in a foreign bank
In order to open an account with a foreign bank, you must:
- Choose a foreign bank.
- Personally visit the bank’s office directly abroad, or meet with a bank representative or contact authorized bank partners in your country. A number of banks (in particular, banks in Latvia, Cyprus, Switzerland, Mauritius, Saint Lucia) allow you to open accounts remotely (without going to the bank). In other cases, a personal visit of the future account manager to the bank branch is required (typical for banks in Poland, Hungary, Hong Kong, Singapore, etc.).
- Fill out bank forms and provide a complete set of documents required by the bank. If necessary, also provide any additional documents and explanations.
- Wait for a decision on opening an account.
Each bank makes its own requirements for the form and content of client documents. However, in general terms, the following is required from a client (opening an account with a company):
Firstly, a set of corporate documents (originals or certified copies - depending on the requirements of a particular bank).
Secondly, information about the activities of the client’s company, including:
- a description of the business of the company to which the account is opened (often also copies of contracts and invoices confirming the declared activity);
- data on counterparties for incoming and outgoing payments;
- estimated parameters of the account (annual turnover, number and frequency of operations, etc.).
The activities of the client’s company within one open account must be fully understandable jar legal and more or less uniform (ideally, one account - one type of activity). The declared activity must be similar to the existing resident business of the beneficiary of the company.
Thirdly, the client provides information on the beneficial (i.e., actual, ultimate) owners of the company. This information includes:
- personal identification documents;
- proof of address of residence;
- data on sources of income (this can be any documents confirming legal sources of origin of funds: a certificate of employment, an employment contract, data on entrepreneurial activity, savings, etc.);
- bank statements and statements;
- letters of recommendation from significant business partners;
- names and activities of the existing resident (for example, Russian) client companies (including links to their websites, other materials);
- a resume with data on education and career (as noted above, it is important that the beneficiary has experience in the field of work that is declared as the main activity of the company to which the account is opened).
Recently, banks have been paying special attention not only to data about the client (applicant) and its beneficiary, but also about his partners, which should be as clear and transparent to the bank as the future client himself. For example, if your counterparty is a British partnership (LLP, LP), then the bank may be interested in who and what is behind it, up to clarifying the resident business of the beneficiaries of such a partnership. Further, the presence of the counterparty in any sanction lists, or even simply communication with third parties from such lists, can cause a refusal to open an account.
The term for consideration of an application for opening an account may currently be from 2 months and more. An expedited application process is not provided. At the same time, there are no guarantees that the account will be opened.
If the application is approved, the client is assigned an account number, means of access to the Internet account management system, bank cards (if necessary) are issued.
Compliance Due diligence. Know-your-customer
These foreign words have long been familiar to everyone who had to open foreign accounts and fill out bank forms.
Banking compliance is the bank’s internal procedures for identifying and assessing customer satisfaction, based both on information provided by a potential client and obtained from other sources available to the bank. The Bank collects and analyzes such information, implementing the principle of “know-your-customer”, and, in a broader context, the principle of “due diligence”, applied not only in banking practice, but also in business as a whole.
Compliance with these principles is not a whim of the bank: it is due to the need to comply with the requirements of the national (and also for the EU countries - supranational) regulator and standards aimed at combating money laundering and terrorist financing (AML / CFT). The indicated work in one volume or another has always been carried out by banks, however, in the last decade, the “rules of the game" have changed significantly in the direction of tightening. For example, failure to provide the bank with the documents required by it, confirming the origin of the funds received, or a sharp deviation of the grounds (nature) of payments from those that were declared when opening the account, may well become the reason for its closure.
A relatively recent innovation was the requirement to indicate the place in banking forms tax residency the company and its beneficial owners (as well as their tax identification numbers and information about the active or passive nature of the company) for the purpose of implementing automatic exchange of information according to the CRS standard.
Another complicating factor was the policy of anti-Russian sanctions. In connection with it, they can refuse to open an account either directly to a Russian citizen or to a foreign company, the shareholder or beneficiary of which will be a Russian citizen, one way or another appearing in the sanctions lists.
Given that the approach of banks to assessing customer satisfaction has long ceased to be formal, when opening a foreign account, you must be prepared to inform the bank not only of the standard information about the company to which the account is opened, but also
- details of your existing resident business,
- identification and biographical data of the beneficial owners of the company (including detailed work experience),
- comprehensive information about the sources of origin of their funds,
- and other information required by the bank.
Therefore, adaptation to the new rules implies careful and advance documentation of the operations of your both foreign and resident business, personal income, sources of wealth, taxes paid, not only while working with a foreign account, but also for several years preceding the moment when there was a need to open an account abroad.
Key Account Opening Trends
So, the choice of reliable foreign banks that are ready to service the accounts of non-resident companies (especially offshore) is currently very limited and continues to narrow. Why? Here are some reasons:
- Refusal of offshore. Foreign banks reduce the share of offshore companies in their client portfolio or refuse to service them at all (moreover, the criterion may be not only the offshore jurisdiction of the company, but also the lack of real economic content - these companies are called shell companies). Somewhere this will happen at a time, somewhere - in stages. For example, in the light of the well-known events related to the self-liquidation of the Latvian ABLV bank in the spring of 2018, many other banks have intensified the cleaning of their portfolios from “unwanted” customers. In Latvia, the decision to stop servicing shell companies' accounts was made at the legislative level. In the very near future, other countries, primarily Cyprus, can follow this example, where the introduction of new requirements for banks is expected in the summer of 2018.
- The reality of the business. Preference is given to companies whose country of registration coincides with the country of the bank, or to companies that have a real economic presence in their country (office, assets, personnel), financial statements and paying in it taxes, as well as having any connection with the country of the bank in which the account is opened.
- Clarity and transparency of the client. Banks strive to accept customers with a fully understood business, a transparent source of income and the nature of cash flows, as well as with completely acceptable (for a number of parameters) beneficiaries and counterparties.
- Strengthening due diligence requirements. Such requirements continue to be strengthened both in relation to potential and existing customers of foreign banks (in particular, on identification of beneficiaries and documentary evidence of operations).
- Close to zero chances foreign start-up companies (so far not able to confirm the relevant experience of previous activities and indicate counterparties), as well as companies representing “high-risk” categories of business (for example, blockchain and cryptocurrencies, unlicensed forex, payment systems, gambling, dual-use goods) have an account open destination, precious metals, etc.). Traditionally, loyally (subject to other conditions), banks relate to international trade, freight forwarding and logistics activities, understandable IT projects, and financial services licensed in the EU countries.
- U.S. dollars. The situation with transfers in US dollars has deteriorated sharply (for example, banks in Latvia, as well as a number of offshore banks, have completely refused to open accounts in this currency).
- Sanctions. The attention of banks to various sanctions lists and the corresponding categories of individuals and companies has increased. The presence of “sub-sanctioned” persons among the declared beneficiaries or contractors (or any connection with them) will result in a refusal to open an account.
- Customers from Russia. Practically targeted discrimination against Russian customers takes place (a peculiar “presumption of guilt” is being formed in relation to customers from Russia and other CIS countries). However, even such circumstances do not preclude the application of an individual approach and the search for acceptable solutions.
- Automatic exchange. In September 2018, the second phase countries, including Russia, Switzerland, Austria and many classic offshore jurisdictions, enter the practical phase of the automatic exchange of information on financial accounts under the CRS standard. This means that data on personal and corporate bank accounts (primarily accounts of companies with predominant passive income), the beneficiaries of which are residents of the Russian Federation, will be sent to Russia by the tax authorities of countries that have agreed to such an exchange.
It is still premature to predict its results, however, if the automatic exchange is fully implemented, it will be possible to talk about a completely different level of transparency of tax information in the world.
The scandal around the Panama Archive is not abating in the world - in the course of the information leak it turned out that politicians and businessmen were withdrawing money to offshore companies of this country. Among them were friends of Vladimir Putin. that these people withdrew about $ 2 billion from the country.
Not only influential people can place money abroad: many banks work with non-residents, however, the conditions for them are somewhat different from the rules for citizens of the country. The rates on deposits of European banks are much lower than in Russia, and it is not very convenient to transfer money from country to country. However, Russians still carry money to Western banks, not trusting Russian credit organizations and fearing the introduction of new barriers to the conversion of rubles into foreign currency. The Village learned about the features of opening foreign accounts and talked with one of the contributors.
Where and how to open an account
Not all banks are ready to open ordinary settlement accounts to foreigners. Many of them require that such a person have a residence permit in the country or other justification for the need for an account like the availability of real estate. For example, most Scandinavian banks - Swedbank, DNB - also do not open accounts for Russian citizens without reason. The same is true for Singapore. “And, for example, in the UK, even if you have a student visa, opening an account is almost impossible,” says Alexey Pospekhov from Futur Capital. “For this, several startups in the field of finance, aimed at“ migrants ”, to which Russian citizens belong, are being launched.”
According to Pospekhov, almost the only bank in Latvia that is actively working with Russians both in business and in personal finance is Rietumu Banka. “They have their own processing and many other goodies,” he notes. Remote account opening there will cost 250 euros - then the card will be delivered by courier to Russia. From it you can transfer money to a card of other European banks, as well as to Russia using the SWIFT system. In addition, the bank helps foreigners obtain a residence permit in Latvia.
The Baltic States is perhaps the only place in Europe where a Russian can open an account for a small amount. In other countries there is a high entry threshold for opening a deposit by foreigners - from 50 thousand euros. The list of credit organizations willing to work with you is expanding significantly if you are ready to deposit more than 100 thousand dollars into your account. Well-known banks like Credit Suisse, UBS, Barclays will be ready to deposit over a million from a foreigner without a residence permit, said Konstantin Ziyatdinov, head of the international projects department of the Prime Advisory consulting group. More democratic conditions are offered by Chinese banks - for example, Bank of China or ICBC. Opening an account will require only 20 yuan (about 200 rubles), and the entry threshold does not exceed a thousand yuan, said MTKK Greenwood Oleg Tkach.
Permission to open an account is issued by the bank manager abroad. And he may have many different reasons why he may not give it. Almost always it is necessary to prove the fact that the funds were received legally. There are situations when one manager refuses to open an account, and when considering the application later, another manager approves it, says CEO of Fast Lane Group in Russia and the CIS Vladimir Knyazhitsky. Therefore, when opening an account, Russians need to understand that this is a rather long process that requires a personal visit (most likely, not one). In some cases, you can open an account by proxy, for example, a lawyer. But it is necessary to clarify the closing conditions: in many banks, you can close the deposit only in the office where the account was opened, or at least in the same country. When choosing a bank, it is also worth clarifying what deposit guarantees the country gives and what minimum deposit balance the bank wants to see (for non-residents it is usually high).
How the Russian authorities look at it
“Russian residents are free to open accounts and deposits with any foreign banks. The only thing that needs to be done is to notify your tax office about this fact within 30 days after opening the account, otherwise you may be fined up to 5 thousand rubles, ”says Konstantin Ziyatdinov. After opening an account, a tax report on cash flow should be submitted annually (essentially four figures - the balance at the beginning and end of the year and the amount of write-offs and credits for the year).
Unfortunately, Russian currency legislation severely limits the list of transactions by which funds can be credited to such a foreign account of an individual, Ziyatdinov complains. Failure to comply with these requirements entails draconian fines in the amount of 75 to 100% of the amount of operation not prescribed by law.
How profitable is it
“Withdrawing cash is generally a big headache, despite the so-called SEPA,” says Pospiehov. Single European Payment Area - a single zone of European payments, which includes the euro zone, as well as Hungary, Poland, the Czech Republic, Romania, Bulgaria, Sweden and Denmark. If you opened an account in Italy, and withdraw money in Sweden, it is possible to accrue a commission in accordance with the rules of the bank.
For interest-free withdrawal Pospekhov advises using Russian cards and accounts. The same Sberbank has ATMs in many countries of Eastern Europe - no commission is charged for withdrawing money from them. You can also use the services of Citibank. “This is the largest international bank, it is represented in more than a hundred countries of the world and also does not charge ATM fees from its cards,” says Oleg Tkach, MTVC Greenwood’s financial director. In his opinion, the benefit of deposits abroad is doubtful. Investors here pay not only for opening an account, but also a significant income tax. In Switzerland, for example, it is 35%.
“Interest on deposits is completely insignificant by Russian standards,” says Vladimir Kniazhitsky, CEO of Fast Lane Group of Companies in Russia and the CIS. This may be 0.25% per year, and if the account currency is not native to the country, then interest is often not charged. Thus, it is almost impossible to make money on a bank deposit in developed countries - rather, it will be small losses in the form of commissions for transfers and account servicing, Knyazhitsky summarizes.
But opening accounts with foreign banks is rarely dictated by the goal of obtaining increased profitability or to obtain a better level of banking service than in Russia. Rather, it is about confidentiality and independence from the Russian banking system and the associated "country" risks, says RB Partners partner Alexander Lukin. For example, many opened accounts for fears that authorities would impose restrictions on cross-border transfers and currency conversions. In addition, foreign accounts provide access to international investment products, and when buying and servicing real estate, you can avoid losses during conversion.
Inna Alekseeva
cEO of PR Partner
Personal experience
Last year I opened an account as an individual in two Spanish banks, I chose those that allow you to do this without an identification card, that is, roughly speaking, I opened an account as a non-resident.
I was considering the possibility of having a second child in Barcelona, \u200b\u200bso I needed to have about 10 thousand euros on my account. The bank requested information about my salary in Russia - I translated and certified a 2-NDFL certificate as well as a dividend certificate from a notary. Then I transferred a thousand euros to the bank for a whole year every month to show my trustworthiness. If I want to transfer a large amount, for example, 90 thousand euros for studying at a business school, then I will also need a certificate explaining where the money came from.
Bank employees immediately warned me that if I suddenly want to withdraw the accumulated amount, I cannot do this without justifying where and why. In my case, the justification could be an account and a certificate from a local hospital-maternity hospital. In the same way you can pay for a business school, language courses, travel around the country and more. So far I have not needed an account, but if that, it works.
In recent years, a new trend has emerged: foreign banks are careful to choose non-resident customers, and the “tightening of nuts” due to the requirements of financial institutions at various levels affected both individuals and legal entities. Nevertheless, the issue of keeping money abroad is still relevant for Russians and CIS citizens.
Why trust money to foreign banks?
For citizens of the Russian Federation, having a bank account in another country is an important condition for employment abroad, obtaining a residence permit, buying real estate. Storage of funds abroad, investments in local companies help maintain and increase capital. In addition, the opening of a multicurrency account will save money during purchases, payment for services abroad.
For business, a corporate foreign account is:
- insurance against financial shocks (changes in foreign exchange control, inflation, devaluation);
- maintaining confidentiality;
- positive impact on business reputation;
- an opportunity to attract new partners to cooperation;
- the ability to use international loan offers.
Note! Finance abroad is limited in functionality: residents of the Russian Federation are allowed to transfer only certain categories of income to foreign accounts. For example, since 2018, restrictions on income received from the sale of foreign real estate, shares, as well as cashless transfers from domestic banks have been lifted.
When opening, the type of account is indicated:
- Settlement: allows you to conduct frequent operations (accrual or write-off of financial assets). This is important if you plan to trade or provide services to foreign partners. The Bank is entitled to establish a limit on the minimum non-expendable amount, which should remain regardless of the volume of transactions.
- Savings (savings): help to increase savings, so using them for current settlements is very problematic.
What do individuals need to know about opening a foreign account?
The first thing that citizens of the Russian Federation will face is the choice of a country suitable for this purpose. Not all states are ready to provide financial services to non-residents without a residence permit or real estate. For example, financial institutions in Singapore and the Scandinavian countries require additional documents explaining the origin of the savings, but the Latvian Rietumu Banka, on the contrary, is ready to cooperate with foreigners through a remote service.
There is a restriction on the minimum deposit size for banks: Barclays and UBS are asked to deposit at least € 50,000 for opening, and ¥ 20 (about 200 rubles) is enough for the Chinese Bank of China or ICBC. In addition, almost all foreign financial institutions do not allow non-residents to open accounts for doing business.
When choosing a bank, you should consider:
- rate size and interest;
- guarantees of the safety of the deposit (including from the local authorities);
- amount of non-expendable balance on the deposit;
- deposit insurance conditions;
- the need for a personal meeting with the manager.
In some institutions (Deutche Bank, Credit Suisse, BPI) you can not use the services of an intermediary - the manager will definitely want to talk personally. Be prepared that you will be asked to show documents about the origin of the money, recommendations from other financial institutions or partners.
How to choose a bank for a corporate account?
Even if it’s not about an offshore company, choosing the right institution becomes a daunting task. Here are just a few points that you should pay attention to when analyzing offers in the banking services market:
- does the bank work with companies from the Russian Federation;
- is it possible to open current accounts;
- is a company service available with the specified type of activity, a list of beneficiaries, partners, as well as with specific areas of transfers and payments;
- types of currencies for transactions;
- bank rating, its reputation in the financial market, recent years indicators, development prospects.
If it is not possible to conduct a full analysis on your own, you should seek the help of specialists. They have all the relevant information, so they can make a risk assessment for each specific company.
If we talk about countries, then for legal entities are recommended:
- European banks (Baltic countries, Central and Western Europe, Cyprus, Montenegro): enjoy well-deserved trust of foreign companies, often ready to provide support in Russian. Of the minuses - increased time for consideration of documents, request for additional information (up to tax reports for several years), high cost of service, the impossibility of opening an offshore.
- Asian financial institutions (Singapore, Hong Kong): give preference to companies doing business in the eastern region, be sure to conduct an independent expert assessment of investor assets. In Hong Kong, it is very difficult for companies from Russia to gain a foothold: in addition to face-to-face conversations (not in Russian), the legal entity will be required to open a representative office in Hong Kong (as well as regularly pay local taxes). Another disadvantage is that there are no Russian-speaking specialists from the support service, a big time difference.
- Offshore banks: severely limit settlements with certain countries, national currencies. It is not recommended if you need to make USD payments, as well as for settlements with companies from the United States and the European Union.
As a rule, the foreign banking sector refuses start-ups (they cannot indicate partners, confirm relevant experience), businesses with high risks (cryptocurrencies, blockchain, precious metals). Companies in the field of trade, logistics, finance, and IT projects have a high chance of approval.
Algorithm for opening an account abroad
The basic procedure is the same for any banking institution abroad.
2. Filling out the required forms. Providing additional information (documented) to the manager. Each bank has the right to make its own list of requirements, including:
- statutory documents (for legal entities);
- confirmation of the type of commercial activity;
- information about contractors, content and direction of future payments;
- information about the owners of the company (individuals);
- volumes of movement of funds (annual turnover, frequency of operations, amount of non-expendable balance).
3. Waiting for a decision on the submitted application (from 7 to 60 days).
For individuals, the list of documents contains:
- identity document and place of residence;
- income statements, an employment contract confirming the availability of a source of finance;
- bank statements;
- receipts of tax and utility payments;
- certificate of no criminal record;
- information about the composition of the family.
If the decision is positive, the non-resident receives information about the account number, free access to Internet banking, and if necessary, a plastic card.
Bank Information Collection
Compliance - internal banking procedures to evaluate the integrity and reliability of the client from all sides. The submitted documents are checked, as well as information from other sources.
To collect information, the bank adheres to the principles of “due diligence” and “know-your-customer”. Such a check is a consequence of decisions of national regulators (and in the case of EU countries - international) to combat the financing of terrorism and the laundering of “dishonest” incomes.
For Russians who decide to keep money abroad, it is better to preoccupy themselves with documenting their commercial activities, sources of wealth, tax or utility bills.
CRS (Common Reporting Standard): what you need to know about the international exchange of information
Since the fall of 2018, Russia has fully participated in the international program for the exchange of information about bank accounts according to the CRS standard. From now on, all foreign banking companies send information to the Federal Tax Service of the Russian Federation on private and commercial accounts abroad owned by Russian citizens.
Exchange subject to:
- passport data, TIN;
- numbers of settlement, savings accounts;
- information on the status of the account at the end of the reporting period (closing), types of assets.
To date, the Agreement has been activated by about 60 countries, including the European Union and the Asian region.
Foreign Financial Reporting
If a citizen of the Russian Federation resides in the country for more than six months, he is considered a currency resident. Therefore, any account opened abroad must be declared in accordance with applicable law. A citizen must:
- inform the Federal Tax Service about the opening or closing of a foreign account, change of its details;
- send a statement on the movement of funds for the past period by April 30 of each year;
- comply with restrictions on foreign exchange transactions provided for by federal law N 173-FZ.
Instead of a conclusion
For CIS citizens, foreign banks are still one of the most profitable options for saving and increasing funds. However, finding a suitable financial institution is not easy: every year the requirements for non-residents are tightened.
In order not to waste time and money on the wind, we recommend that you contact an accredited intermediary. They will help to make a choice taking into account the goals (for private or corporate use, investments or payments), such as currency, features of commercial activity, region. To minimize risks, the decision-making process will necessarily take into account the financial policy of the state, as well as geopolitical factors.