What a bank looks at when you open a business account

A bank opens a business account once it understands three things: who owns and controls the company, what the company does, and how money will move through the account. Every document it asks for answers one of those questions. When the answers are clear and consistent, the review moves forward. When they are not, it stalls.

Why banks ask so many questions

Banks have a legal duty to know their customers. Before they open an account, they identify the business and the people behind it, understand what the account is for, and judge the risk it brings. The checks do not stop at opening: the bank keeps reviewing the account for as long as it is open.

Each bank also sets its own appetite for risk. Two banks can look at the same company and reach different decisions, because they accept different industries, countries and types of client. A refusal from one bank can say as much about that bank as about your business.

The four questions behind every application

Who owns and controls the company?

The bank wants to see the whole ownership chain, up to the people who ultimately own or control the company, often called the beneficial owners. If a holding company, a trust or a foundation sits in the chain, the bank asks for its documents too. It also wants to know who runs the company day to day, and who can give instructions on the account.

What does the company do?

A short, specific description of the business carries a lot of weight. The bank wants to know what you sell, to whom, and how you deliver it. A single word such as “consulting” or “trading” is too vague to assess. A website, contracts or invoices that match the description show the bank a real business.

Where do the money and the clients come from?

The bank asks where the company's first funds come from, and where its revenue will come from once it trades. It asks where your clients and suppliers are, because the countries involved shape the risk. For the owners, it may also ask how they built the wealth they are putting into the company.

How will the account be used?

Expect questions on expected activity: the currencies, the rough size and number of payments in and out, and the main counterparties. The bank uses the answers to set a profile for the account. Activity that later departs from that profile prompts more questions, so realistic estimates serve you better than optimistic ones.

The documents most banks ask for

The exact list depends on the bank and on the country. Most applications include:

• Company documents: the certificate of incorporation, the articles or constitution, and the registers of directors and shareholders.
• Ownership: a chart showing every layer up to the beneficial owners, with documents for each holding entity.
• Identity and address: a passport and a recent proof of address for each director, beneficial owner and authorised signatory.
• The business: a description or business plan, the website, and sample contracts or invoices where the company already trades.
• Source of funds and wealth: statements, sale agreements or other records that show where the money comes from.
• Licences: where the activity is regulated, the licence or registration, or evidence that you have applied.

Some banks ask for documents to be certified, translated or apostilled. Check what is needed before you gather anything, so you only do it once.

How the review works

Most reviews follow the same path, whether the bank opens accounts remotely or asks to meet you:

1. Application. You submit the forms and documents, through an online portal or a relationship manager.
2. Compliance review. The bank's compliance team checks the documents, screens the company and its people, and assesses the risk.
3. Follow-up questions. The bank asks for explanations or further documents. This is a normal part of the review, not a sign of refusal.
4. Interview. Some banks hold a call or a meeting with the directors or owners to talk through the business.
5. Decision. The bank opens the account, opens it with conditions, or declines. Banks often do not give reasons for a refusal.

How long this takes depends on the bank, the structure and how quickly its questions are answered. We give you an estimate for your case once we know the business and the banks that fit it.

Why applications stall

Most delays come from a few avoidable problems:

• Inconsistent documents. Names, addresses, dates or ownership percentages that differ from one document to the next. Each difference becomes a question.
• A vague business description. A description that could fit any company gives the bank nothing to assess.
• Unexplained source of funds. Money that arrives without a clear record of where it came from.
• Unclear ownership. Holding companies, nominees or trusts without documents that show who stands behind them.
• The wrong bank. An industry or a country the bank does not accept, however strong the rest of the file.
• Slow answers. Follow-up questions left open. A file that waits too long may be closed.

How to prepare

• Choose banks that fit your profile. Start with banks that accept your industry, your countries and your type of company.
• Write a clear business description. One page on what you do, for whom, where, and how money moves.
• Map the ownership. A simple chart from the company to every beneficial owner, with documents for each layer.
• Document the source of funds. Gather the records before the bank asks for them.
• Check every document against the others. The same names, addresses, dates and percentages throughout.
• Estimate activity honestly. Volumes, currencies and counterparties that match the business plan.
• Answer follow-up questions completely. One full answer moves a file further than several partial ones.

No bank can promise an account before it has reviewed the application. A well-prepared file gives it what it needs to decide.

How Apexum can help

We help companies, including newly formed ones, find banks whose criteria fit their profile, prepare the application the way each bank expects, and answer its questions with them until it decides. The bank makes the decision and opens the account. Read more on bank accounts and EMI accounts or, if the company does not exist yet, plan the account with the company formation.