What could be more frustrating than applying for an offshore bank account only to be denied? After all, the leg work and due diligence that led you to that point was no easy feat. Trying to figure out why your offshore bank account has been denied can be a challenge, but there are usually a few main reasons why these rejections actually do occur.
When you are applying for an offshore bank account, one of the most important things to keep in mind is that the bank you’re interested in is likely enforcing KYC, or Know Your Customer, policies.
KYC policies are in place to protect both you, banks, and the overall economy.
KYC policies include rigorous identification checks to ensure that you are who you say you are, and these policies exist to reduce and eliminate fraud and financial crimes such as money laundering and tax evasion. While this could potentially add an extra step to the process of opening an offshore bank account, if you’re prepared, it shouldn’t cause a denial. In fact, as long as you provide all of the documentation that you’re asked to furnish, then you shouldn’t expect to see your offshore bank account be denied on the basis of Know Your Customer.
One of the best tools for figuring out why your rejection happened is to identify which step in the application process in which your account was actually denied. By gathering this information, you can more accurately diagnose the problem with your offshore bank account application.
Who is Reviewing your Application?
There are layers of ‘reviewers’ – so to speak – who will make sure whether your account application checks all the items in the account approval checklist. Please note that the policies differ from one jurisdiction to another, but generally-speaking, here are the typical individuals responsible in reviewing your offshore bank account application.
1. First: The Relationship Manager
When you consider an offshore bank account, the first person you typically speak with is the relationship manager. This person will take a first look at your income as well as your risks. If your risk level is considered to be too high, the relationship manager could deem you ineligible for an account.
2. VIP: Compliance Officer
Once the relationship manager approves your initial application for an offshore bank account, a compliance officer is the next person to check out your information. You most likely won’t have one-on-one interaction with a compliance officer, but just know that this person has a major impact on whether your account will be accepted or denied.
If you have risks, now the time is to discuss mitigation and make your case. One smart strategy? Encourage your relationship manager to talk to the compliance officer on your behalf if you are concerned about your risk.
Offshore bank account applications typically require the head of the business to sign off, but as long as you’ve done your due diligence and taken care of the application and risk mitigation, you needn’t worry too much at this stage.
3. More Reviews…
If you do have risk, however, expect that your account will be reviewed before one or perhaps even more committees. Your relationship manager can still go to bat for you, so make sure that you’re keeping open communication with this person!
Committee reviews can lead to more questions that need to be answered, and your responsiveness is absolutely critical at this stage.
The last stage is onboarding. So, if you get a rejection at this point, it could just be that the bank isn’t going to be a good fit for you. They’ve basically decided, based on your profile, that you don’t fit the base they’re looking to build, but do not fret. There is an offshore bank out there for everyone.
Due Diligence is Your Best Friend
There are many things to consider when you are opening an offshore bank account, but due diligence is your best friend. Making sure that your application is honestly and completely filled out and that you’ve provided all requested documentation is absolutely the first key in ensuring a successful application for an offshore banking account.
The next thing that you’ve got to do is build a relationship with your relationship manager. This person is going to be a proxy for you with the compliance officer early on and then potentially again later if you fall under committee review.
One more thing: Know your value. What do you bring to the offshore bank? Assets, of course, are just one part of the picture. Would a bank consider your application more seriously if you stood to bring more business? Quite possibly!
One Last Pro Tip…
Before submitting an application, carefully consider what you bring to the table. Know the bank, get to know your relationship manager, and work to make sure that you are cultivating a solid relationship as you go. This will help to ensure that you don’t receive a rejection.
If you still end up receiving a rejection, then it’s time to go back to the drawing board and see what you can do differently next time.