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NEWS AND RESOURCES

OPENING AND MAINTAINING A CORPORATE BANK ACCOUNT

Why do businesses require a corporate bank account?

From an operational perspective, all businesses should have a bank account so that it allows the organisation to run smoothly making it easier to determine how a business is performing from a profitability standpoint. Income and expenses can also be scheduled to determine whether the business has positive cash flow and making money. From a legal and tax perspective, having a bank account may help separate the potential liability and taxes with personal assets. Foreign companies investing overseas are likely to require a bank account for capital injection into its subsidiaries and/or associate companies, it may also be required to have a bank account to obtain relevant licensing in respective jurisdiction.

​Why is it so difficult to obtain a corporate bank account now?

The problem arguably started when the US regulators fined a number of international banks over money laundering allegations back in 2012. HSBC was fined US$19 billion whilst Standard Chartered was fined US$667 million, ING US$619 million, Credit Suisse US$536 million and the list goes on. Since then banks are put on probation and have had to improve its due diligence and know-your-client procedures increasing its cost of compliance globally. Furthermore, with the implementation of FATCA (www.alcpa.com.hk/fatca-hk), banks are reluctant to open bank account for Americans in order to minimise compliance with the US regulators.

For new or existing businesses that require a bank account, it will take around 2 to 4 weeks just to have it opened, provided you are one of the lucky ones to obtain a bank account in the first place. Clients that conduct business in so called “high risk” industries or with "high risk" countries are often refused a chance to even book an interview with the bank. Clients are often found guilty unless proven innocent and the onus is on the business to proof it is not involved in illicit trades, criminal activities, money laundering, terrorism financing etc.

Some banks were so concerned with the probation by the US regulators that they have assigned dedicated “Exit Teams” to eliminate “undesirable” clients with existing bank accounts. There were numerous incidents where clients were not given any specific reasons and having their existing bank accounts closed down, paralysing their business. It was so extreme that some clients were only given days to provide an alternative bank account of the company to have the exiting funds transferred otherwise all funds will be returned to the original remitter. Needless-to-say, with the approval process taking up to 2 to 4 weeks it is near impossible to have a new account opened before the existing bank account is closed.

With compliance ever more demanding and costly for banks, it would most probably be even harder and more expensive to obtain a bank account in future, for some cases if it’s even possible.

​How can ALCPA assist?

ALCPA is a regulated professional firm with more than 35 years of track record in assisting clients in compliance and related activities. We are specialised in advising and assisting clients to establish corporate structures as well as opening and maintaining corporate bank accounts. We have been recognised and awarded by various local and international banks (www.alcpa.com.hk/HSBC-Business-Advisor) to refer and introduce clients to them. Through various agreements with banks, on recommendation by ALCPA, we may be able to reduce or waive account opening fees costing as much as US$1,100 even before a bank account number is provided.

Please feel free to contact us should you require more information on the above.