How To Open An International Bank Account

Michael MicheliniBanking, Blog, Corporate1 Comment

Are you “going global” and want to “branch out” from your home country and have a “location independent” company and lifestyle? Really, when it comes down to it – a bank account is still the way business gets done. You need an international bank account (or at least an international friendly one) to be successful and avoid a ton of issues when dealing with a local bank that isn’t sophisticated enough to deal with international business and activity.

While this is a topic I normally discuss in my private call sessions, as it is very dependant on your specific case, I will try my best to give general advice. Of course, the world of international finance and business is a tricky one, so please talk to a professional before making big moves.

Are You Opening a Personal or Business International Bank Account?

First question, is this for personal use or business use? A lot of “newbies” confuse the concept of business and personal. Think of your business as a separate entity – a baby (well, maybe it is a toddler, teenager, or full grown adult by now), that has its own identification and track record. If you want to use this bank account to do business, it is best to get an international business bank account.

Why go for business bank account?

The main reason to use a business at all is to protect your personal liability and assets in case of a business-related situation. Lawsuit, product defect, financial problems, you get the idea. While this is never the goal of a business owner and entrepreneur – if your business does “hit the fan”, you will be happy you separated your business from your personal finances.

Another reason is – personal bank accounts are getting under more scrutiny in 2016. US regulators want to make sure account holders have a valid reason to have an account in that country, and give banks a whole stack of new paperwork to file on their clients. So bankers are still a bit confused and being more cautious when approving new personal bank accounts.

Please note, this used to be the other way around (personal account easier than business) – but you shouldn’t open a bank account for business or personal just because of the “likelihood of being approved” – but instead for what you will use this international bank account for.

Opening a Bank Account For Your International Business

So we’ll focus on the business account, Global From Asia is all about business, baby!

The first step to getting a business bank account, well, is to have a business! Registering a company is one thing, but actually having real business transactions and activity is another.

As the global landscape has gotten stricter to opening new bank accounts, you should have proof of doing business. Such things as:

  • Invoices to clients
  • Purchase Orders to suppliers
  • Payment receipts
  • Letters of intent, contracts, proposals
  • As much business proof you can gather.

Why do you need all of this?

“I just want a bank account, not a loan or investment, what’s the deal”.

True, it is annoying. Banks are doing this to cover their behinds. Regulators around the globe have been cracking down on banks for not doing enough KYC (know your customer) procedures on opening new accounts. What that means is, regulators expect banks to police their clients and ensure none of them are doing illegal activity such as money laundering, drug dealing, terrorism, tax evasion, and other horrible things.

“But – I’m not doing any of those bad things”

Of course you aren’t! But what I tell consulting clients I work with is – do you think a “bad” person doing these bad activities goes to the bank account opening appointment and tells them they do these horrible acts? Nope. They go in there saying they are doing an Amazon FBA business or import and export trading with China for t-shirts.

So, the banks now are doing background checks on the information you submit to them when you apply. They need to make sure they are letting, let’s call them “bad people”, get these accounts. For a couple reasons,

  • It’s horrible to let “bad people” use bank accounts to fund horrible acts against society.

  • (The real reason) They don’t want to get massive fines from global regulators. If the bank is found to be allowing “bad people” to use their accounts for these things, the regulators know the bank has money (duh, banks = money) so they get slapped with huge fines.

So, hope this convinces you a bit why it is hard to get a bank account these days. You need to show you are a “legitimate” business person with an active business that they can verify is doing what you claim it is doing.

Does Your Bank Account Have To Be In The Same Country As Your Business’s Country of Incorporation?

So, many people think they have to have a company in a specific country in order to get a bank account there. While that is helpful and bankers like it as it is easier for them to background check and push through the back office – most banks around the world are open to international businesses opening an account with them.

Because this is a very deep and complex issue, I can’t dig too much here in a general article. But as an example, in Hong Kong a lot of people have been having trouble getting company bank accounts opened – for their Hong Kong based business! So what has happened next is a lot of these business owners go to banks in other countries.

Switzerland, Latvia, even USA. People have been taking their Hong Kong company registration documents and proof of business and opening bank accounts in countries around the world. They do this because, well, they didn’t get an account in Hong Kong, and they need a bank account somewhere to do business.

You will still declare this international bank account to your Hong Kong tax department when filing taxes, and go about your normal business.

But, Be Careful on Choosing The Right Bank

I know a lot of people have been struggling lately to find an international bank account. And many of these people are legitimate business owners simply trying to get a bank account so they can continue to operate their companies.

But, don’t get too desperate. Still do your due diligence on the bank as a stable business. Work through referrals, or at least do online research to see how long the bank has been operating. Do they have a good track record? Are they backed by any government programs if they have financial problems? Even the biggest banks around the world have been tumbling, so where is really safe – but at least do some due diligence beforehand.

Heck, I could say I’m a bank and you can send me money, right? And some of these offshore banks are not much more than that – they receive your funds, give you an online login to see the funds are “there” and then send out the money when you put in a wire transfer request.

International Banks Can Have Massive Fees

So during my scramble to help many people on finding alternative international banks, you will be shocked at some of the fees. Some have 60 USD wire fees, 40 USD fees to receive incoming wires. High monthly fees, horrible FX (foreign exchange) rates.

These banks know you have limited options, and they probably have higher operating costs as well.

So, don’t assume all banks have about the same fees, check for monthly minimum requirements, wire fees, foreign exchange rates. Sure, banks need to make money, as do all of us, but should be in a reasonable range.

Is Their Online Banking Safe From Hackers?

I have heard stories of some of these “island banks” getting hacked and all the funds missing. Sounds like a bitcoin debacle? Yes, it is a crazy story to hear things like that happening in 2016, but read the fine print on your banking agreement.

You probably won’t get any of those funds back if they are stolen. And maybe it was a legitimate hacker, or, maybe a conspiracy from the owner or an insider in the bank to wipe the funds out.

What can you really do about it? This is why you need to do your due diligence and find a reliable bank.

Another Option: Using Your USA Bank Internationally

American banking is still the cheapest in the world. Not sure the exact reason, some say Fed rates, others say volume, others say technology efficiency. Whatever the reason, banks and credit cards are the most attractive in America.

Many of my friends operate their international business from a US company. They find a bank in America that has low (or zero) international ATM fees, low international wire fees, attractive foreign exchange rates, and other perks.

The main drawback for me is they don’t have multi-currency accounts. You would need to convert everything to USD to come in and out of the bank (as far as I know, I’d love to be corrected in the comment sections below).

How Has Your Quest To Find an International Bank Account Been?

Hope this guide was helpful for you. The main idea is:

  • Choose if you’re applying as an individual (personal bank) or as a business (corporate banking)

  • Prepared to provide all the required documentation to the banker (KYC is getting more and more strict)

  • Research the bank fees, as international business can become more expensive as it is more complex and multidimensional.

So, now it is your turn! I’d love to hear from you in the comment section below. Have you had trouble finding the right international banking solution lately? I remember ten years ago, when I would walk into Hong Kong banks with t-shirt, shorts, and flip flops and get a bank account approved on the spot and my information mailed in a few days. Those days are long gone (sigh) – now we need to be ready to prove everything.

Hope we can all help each other in this, and I wish you the best success in your international business endeavors!

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Tags: accounting, asia, bank, banking, career, china, corporate, e-commerce, ecommerce, entrepreneur, guide, hong kong, legal, tips

One Comment on “How To Open An International Bank Account”

  1. Francesco

    Hey Micheal, great content!

    I have a question though. Here you say that you have to provide proof of an ongoing business. But what if you’re just starting out?

    I’ve already opened an ltd in hk for amazon fba/websites/ecommerce but I’m struggling with the business bank account. Consider also that I live in Italy, so I have to make sure that once I’m in hk I’ll get it done.

    I have a website monetized with adsense but it seems google doesn’t provide any document useful to open the account.

    Any advice?

    Thank you,

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