You may ask: why do we need Latvia, if there has long been no interest in opening accounts for an IT specialist? The fact is that information from search engines and social networks is actively used by other banks around the world. And IT-schnicks who live and create in virtual worlds often leave many traces on the network.
Latvian example of combating money laundering
The Latvian newspaper Diena has conducted its investigation of a new directory, which they promised to make an assistant to business and banks. All parties counted on explanations, step-by-step instructions and a clear understanding of how to proceed to open an account. This is what the current head of the Financial and Capital Markets Commission (Finanšu un kapitāla tirgus komisija - FKTK) promised less than a year ago.
The appearance of the handbook put everything in its place and emphasized: at the moment, few people are interested in the regulator in the clarity and transparency of procedures, as well as in the convenience of banks working with business.
Potential and existing clients of the bank need to ask so many questions that there will definitely be a reason to refuse service. At the same time, the procedure is highly bureaucratic, and even the presence of just a couple of marks opposite the "negative" items is a path to denial of service. Just to avoid regulator problems.
Especially acute attacks of paranoia occur in banks, if the client has partners in Russia, Kazakhstan, Belarus, Ukraine and others - it is also easier for the bank to refuse than to understand business relationships and real businesses. The bank does not even need detailed explanations for each transaction - it closes the account and asks to withdraw money within 1-6 months.
An interesting addition to the picture is the need to check each customer using search engines. Clients from the CIS countries are asked to check both through Google and Yandex and to make inquiries in Russian.
In particular, it is proposed to take the full name of the client or the name of the company and drive it into the search along with such keywords as: money laundering, terrorism, fines, sanctions, prohibition, fraud, arrest, drugs, corruption and others.
Commentators under the article have already joked that the Commission itself should also be blacklisted by banks, because if you combine FKTK and "scandal" or some other keyword, unpleasant information about the organization will appear in the search engine ...
And although FKTK officials claim that the results searches are only complementary and the data still needs to be checked, the wording in the document itself suggests that negative information should be taken into account when making a decision.
Moreover, for a Latvian bank, the negative can be either the news of a corruption scandal, or simply the presence of a connection between the company that opens the account and the company in Russia.
Humanly speaking, the negative in search engines, which can be found on almost any entrepreneur, can become an obstacle for you on the way to opening an account in Latvia.
And again you ask: what if I open an account in the USA or in Portugal - how does this concern me?
Directly.
Google, social networks and other sources of information for analyzing bank customers
The experience of working with hundreds of banks over two decades has shown that banks can be conservative in terms of accepting customers with new business models, avoid new directions, but everything related to customer verification and the fight against money laundering, terrorist financing and the like is introduced very quickly. ...
Especially if there is a regulator with a fine with six zeros and an ax that revokes a banking license.
Initially, customers were checked using special paid databases. However, in the modern world, for many faces, much more information can be found in open or semi-open form on the Internet. Social networks, Google and occasionally, like in Latvia, other search engines are used by the staff of the compliance department in full force.
If HR departments use this method when hiring employees, what is the difference between a bank that needs to choose the perfect client?
The situation is aggravated due to the fact that today it is the banks that choose the client, and not the client that chooses the bank. Financial institutions may refuse to open an account at any time and without giving a reason. Compliance departments have a special power, which is constantly growing, checking not only new clients, but also their transactions.
At the same time, there are no clear and understandable rules of how clients and transactions are checked. Moreover, for employees of such departments, in fact, there are no rewards for good customers and clean deals, but only harsh penalties for mistakes and mistakes.
Now imagine that such a department makes a decision on your IT project, which decided not to follow the path beaten by someone, but to create something new? Or launch a new version of a business that is already considered risky, such as cryptocurrencies or online gambling.
Almost any startup in the fintech field will also be classified as risky business and will be thoroughly and long-term checked before opening an account.
So think about how the situation will turn if the auditors start to study search results and stumble upon some negative news about you, your business or partner? The chances of opening an account will drop sharply, even if the published information is a rumor, ordered black PR and other unpredictable factor. This can be specially organized by competitors in order to strike at you.
Is there really no way out but to disappear from the net so that no information leaks out?
How to open an account abroad for business
Before opening a foreign account, you need to understand a simple principle: the fewer potential problems a client can bring, the better. On this basis, almost all banks operate.
Also, adequate banks take into account the proportion of problems and benefits that the client will bring. On the one hand, a client from Russia is always a challenge. On the other hand, if the client's business is transparent, and the profit according to the business plan is in the millions, then why not start cooperation?
In addition, there are completely objective factors that need to be considered:
- If you plan to work in the European market, then opening an account in the USA may be impractical - it is better to immediately look for an account in the EU or closer to the place of business;
- If your business is associated with risky activities, then it is worth obtaining a license from a respected country and hiring professionals in this area - they will inspire the bank's trust much easier than you alone;
- The quality of preparation of documents also plays an important role: any errors and misprints can lead to a refusal on a seemingly flat spot. In addition, each bank has its own nuances. The most anecdotal example, but one that really prevented many clients - the request will be filled out with only blue paste. Those who wrote with black pen immediately lost the opportunity to open an account.
Therefore, there are two conclusions:
- Opening an account abroad is not easy and new rules are constantly emerging that make the process even more confusing and complex.
- You can open an account if you choose a suitable bank, prepare documents correctly and minimize the negative, while increasing the positive for the bank. For example, show the benefit in the form of net income.
If on average, then to open an account abroad you need to take the following steps:
- Determine the goals of the account, clarify in what conditions it will be used.
- Finding a bank that works with your type of clients - here you should contact the professionals who will help you choose an account faster and without unnecessary hassle.
- Prepare documents.
- Also, the bank may request additional documents.
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After opening an account, the business remains in constant attention mode. This is to ensure that the account is not closed. Suspicious transactions or even excessive nervousness of a particular verifier can lead to a freeze of the transfer, and then the account, and even a break in relations.
Here is the main recommendation: to always be in prompt communication with the bank, to warn about major transactions, the emergence of new partners, to respond to inquiries. Most often, it is required to send documents proving the transaction: contracts, invoices, etc.
Today banks have an alternative: payment systems. They offer a similar service, but often faster and cheaper. This is a great option for starting and securing a business. But here, too, you need to understand: quickly opened - quickly closed for minimal reason.
So you need to choose not only a bank, but also a payment system and be careful both there and there.
And to end the material on a more positive note, remember Nassim Taleb and the concept of antifragility - the ability to benefit from failure, loss, error; the ability to temper, develop and become stronger when faced with chaos.
In simple words, it will be like this: the world around can change, along with the rules and conditions. Business can get hit after hit and the account can be closed by the account. But if you gradually become stronger, create safety nets and experience even global pandemics, then you are antifragile. And foreign accounts will help you in this process.