What is important to know when choosing a foreign bank in 2018

Recently, an increasing number of citizens, concerned about their future, the future of their family or business, face the issue whether it is possible to open an account in a foreign bank and what is required for this? Which bank to choose for this: European, offshore bank, etc.? Historically, (and sometimes it is quite justified) the trust to a foreign bank is higher than to local institutions, and obtaining, for example, a loan is possible on more favorable terms than in Ukrainian banks, moreover, many people wish to keep the confidentiality of their actual income.

Regardless of whether you want to open a foreign bank account online in offshore or onshore jurisdictions, a number of aspects need to be considered and analyzed when choosing a bank. That is why the company Finance Business Service works with more than 100 banks around the world. We ask only really necessary questions in the process of selecting banks for our clients.

The current situation in the banking shows that financial institutions are increasingly facing problems of unexpected loss of correspondent accounts in US dollars. In general, the US is only a part of the global pressure on the international banking sector, we should not forget about the OECD program on automatic information exchange, and about the guidance of the BEPS. The complexity of automatic exchange for international banks is not only in the risk of losing a significant number of customers, but also in understanding what and whom to provide as part of the exchange. Tension in the banking sector is clearly traced through the complication of the procedure of opening accounts and building of long-term cooperation, directly influenced by the financial regulators of international banks.

In such a situation, real risk diversification is possible only if you have a spare foreign bank account. It is worth mentioning the risks of owning a bank account in only one country. The vivid examples are the hacker attacks on financial institutions of different countries, the volatile policy of central banks, often aimed at reducing the number of financial institutions in the country, etc. The main criteria for choosing a bank

  1. Before choosing the most suitable bank for opening an account, first of all, you should determine the goals that you need to achieve using this account. They can be very diverse:
    • Saving of personal funds;
    • Private investment of private funds;
    • Earnings on the Internet or online commerce;
    • Sale of goods and services to foreign partners, etc.

    If the purpose of opening an account is a standard commercial activity with a large number of incoming and outgoing payments, then the most important criteria for choosing a bank will be the speed of the transfers carried out by the bank and the convenience of managing the account; in particular - the availability of a remote account management system (Internet bank), as well as the average cost of one transaction. It is also important to clarify whether the bank is working with the list of currencies you need. In the case when the main task of opening an account is to keep the financial resources already earned by the entrepreneur, usually attention is given to the bank’s reliability rating. The interest on the deposit will be relatively low in the banks of high reliability category (“AA” and higher), which is due to the conservative investment policy of the banks of this group. If an entrepreneur raises the issue to make his free funds, untapped in the main business, continue to “work”, creating additional income, then one should consider the option of opening an account in one of the investment banks that place client’s funds professionally in international stock markets, getting relatively high interest income.

  2. Is it necessary to visit a bank to open an account? Many customers prefer to open an account without going to the bank. Opening of accounts is possible remotely, subject to certain requirements of the bank. In addition, in some cases, you should be prepared for the possible need to meet with a representative of the bank in Kyiv or in one of the regional offices of the bank, for example, in Europe (depending on the bank).
  3. Tariffs, cost of service, availability of necessary bank products When analyzing tariff rates, it is necessary to pay attention to the availability of additional bank commissions, for example, for considering a package of documents for opening an account, etc. At the same time, it is important to clarify the fate of these resources, if the bank refuses to open an account - as the tariffs of banks may specify that these commissions are not returned. The banks of Europe (Liechtenstein, Switzerland, Austria, etc.), being respectable and reliable - mainly refer to savings banks. Tariffs for their services are much more expensive than in commercial banks with a priority rate for conducting banking operations. The availability of certain bank products may sometimes become a key factor when choosing a bank. Some banks offer cards that do not contain the owner's name, some cards require special transfer from the account, others are attached directly to the account, etc. Brokerage accounts will be necessary for transactions with securities, FOREX-accounts - for the operations in foreign currency markets.
  4. Do you want to give minimum information about yourself and your business to the bank? The general trends in the world financial system are such that now almost all banks request a lot of detailed information about the business and its ultimate beneficiaries. Banks are forced to comply with the requirements imposed on them by law, otherwise they can incur catastrophic amounts of fines, remain without a license ... The list goes on. Be very careful if your counselor / lawyer recommends working with the bank, arguing that “this bank does not ask anything”. There is a big risk that then you will look for the specialists to return your money earned for years of hard work.
  5. Bank secrecy. If this is one of the main criteria for you and your business, then, on choosing a bank:
    • pay attention to the international agreements of the jurisdiction in which the bank you are interested in is registered, about mutual assistance and the provision of information to other countries;
    • choose a country with high standards of bank secrecy and strict laws regarding the disclosure of bank secrecy (Switzerland, the Cayman Islands, Hong Kong, Singapore, etc.)
  6. The availability of personnel with the knowledge of the Russian language, Russian-speaking Internet banking, technical support in Russian. This is an important point for many customers.

Conclusions

We wish to think, when preparing to become a client of a foreign bank, a potential client chooses his own bank himself. But the reality is that everything is exactly the opposite in banking for non-residents. The bank always makes a decision to open or not to open a bank account for you as non-resident. And it will not risk the existing customer base, the license, the freedom of the bank’s executives and the Compliance officers, because they are responsible (up to their freedom) to ensure that risky and problematic clients not to be included in the number of bank’s customers. Banks have their own and often quite vague list of characteristics that should be initially inherent to a potential non-resident client.

The company Finance Business Service is ready to help you and take painstaking and extensive work on itself. We suggest answering the questions of a specially designed brief for the professional choice of a foreign bank to open an account. It includes a number of issues, best adapted to the general banking standards and requirements. Based on the answers provided, we analyze and select the most suitable financial institution in accordance with your goals and plans.

Note:

By registering a company abroad with the help of Finance Business Service, you receive special tariffs for the package of services, while the standards of the constituent instruments of the companies registered by us meet the strictest requirements of international banks. Thus, the documents will be ready for immediate submission to the bank you need.

The newspaper “Journal du Dimanche” previously published information about the intentions of the French President Francois Hollande to hold a meeting with the leaders of Germany, Spain and Italy on March 6 in Versailles, dedicated to the future of the European Union. This mini-summit, among other things, should have to demonstrate the unity of the leaders of the four major European powers of the euro zone in the face of the many threats and crises that the EU is currently facing. The agenda also included the study of the issues “related to ensuring the strengthening of the development of the European Union”.
On March 6, the government supported the changes to the Law on the Financial Instruments Market, the Law on Alternative Investment Funds and their Managers, as well as the Audit Services Act. What is the ultimate goal of these changes? They should make the EU financial market more transparent and stable, reduce systematic risks, protect depositors, and ensure the effectiveness of financial markets and reduce the costs of their participants. The changes in the laws have been designed to adopt the Directive of the European Parliament and the Council on the markets of financial instruments.
In the process of painstaking work over the directives on the part of institutions and EU Member States, the assessment of the existing supervisory practice of the financial market was made, insufficient transparency in the general financial markets was recognized, actually taking place and partially unregulated trade actions by the regulations were analyzed.
The outcome of the integrated assessment was the conclusion that the existing regulation is not sufficient to ensure the full stability of the financial markets and transparency of their activities. Thus, in order to solve and eliminate the identified shortcomings, the draft directives have been developed.
By adopting the Directive, the financial institutions of the Member States have provided the comprehensive regulation to ensure the protection of depositors. An important part of this regime is the protection of customers’ funds and financial instruments. The duties of the investment brokerage companies is the implementation of appropriate measures to protect the rights in respect of securities and cash assets entrusted to the investment brokerage company, as well as the property rights of the depositor.
Investment brokerage companies will have to implement the appropriate specific order to ensure the protection of financial instruments and customer funds. The main goal of all legislative changes under consideration remains clarification of the legal regulation of investor protection and increase of the transparency of related procedures.
We will hope that, in accordance with the overall strategy, a single integrated legal and economic approach to the legislative reform of the EU countries will effectively ensure fair treatment for all participants in the financial market. And, in order to find always the necessary benchmarks in constantly changing trends and organize effectively your business in the EU and not only - contact the specialists of the company Finance Business Service!

Верховная Рада Украины

All sensational ideas and discussions about the "tax amnesty shadow of assets" or "legalization of income of dubious origin" embodied in the Tax Committee developed ASU bill "On Amendments to the Tax Code of Ukraine and other legislative acts of Ukraine concerning the single declaration of assets of individuals."

The draft law MPs are planning to introduce the procedure of single declaration, which envisages the voluntary submission by resident individuals Ukraine in the period from 01 October to 31 December 2016 the information to the tax authorities of its assets (cash, securities, precious metals, real estate and construction in progress , vehicles, aircraft and watercraft, valuable personal property, corporate law, financial instruments, the right to property benefit, other property rights and intangible assets) without specifying their cost and sources of origin. Will be declared as assets under joint ownership, as well as those owned by the other person, manages assets for the benefit of the subject of the declaration.

Finish with a single declaration of payment of the amount of tax liability, independently determined in a one-time declaration (such an obligation shall be deemed agreed) within 30 days after its filing. Subject disposable declaration may also have to pay not previously paid personal income tax from income (the amount of which is determined as their own), which was the source of acquisition of the assets specified in the declaration, at the rate of 5%.

At the same time employees of regulatory bodies is prohibited to refuse to accept such a declaration and the declarant shall be exempt from criminal, administrative and financial responsibility for tax evasion, charges and ERUs for submitting knowingly untruthful statements, as well as for violation of tax and currency legislation (with the exception of heavy crimes), relative to income, on which the procedure is completed single declaration (ie, paid tax). There is also an exemption from liability declarants for violation of competition law and from fines for illegal construction.

In addition, the state guarantees the subject of the declaration of the preservation of public authorities the secrets of his personal data and other information specified in the declaration, the ban on tax inspection upon delivery of disposable declaration or regarding the information specified in it, as well as a ban on the use of this information as evidence the commission of any criminal offense or as a source of the circumstances, which may indicate a criminal offense.

In case of failure to return the declared considered disposable assets registered by other means provided by law, as of December 31, 2015 as well as funds in the amount of 1 mln. UAH.

Another new feature of the bill is the cost control of individuals by the tax authorities. This control provides a comparison of the size carried out in the tax period expenses, which begins with the January 1, 2017 (acquisition of assets, fee or loan issuance in excess of the boundary sum payment in cash, ie over 150 000 UAH.) With the obtained income in the tax period that begins with the January 1, 2016. In case of excess of expenditure over income in the amount of more than 10 times the minimum wage (currently 145 thousand UAH.), The fiscal body shall determine the procedure for the emergence of such excess. If within 60 days the information about the sources of funds for the implementation of such costs is not received, the fiscal authority shall determine the tax liability on personal income tax from the amount of such excess, and penalties in the amount of 25% of the tax liability.

One-time declaration of assets of individuals, the bill provided for the data, especially important on the eve of the introduction of electronic declaration procedure, as it will allow the owners of the shadow of assets "whiten" them at the lowest tax rate, as well as to take into account in the implementation of fiscal expenditure control bodies. However, given the vagueness of the application of the method of cost control and calculation of individuals' unconfirmed income ", there is a high risk of selective application of the rule of the fiscal authorities and, consequently, its use as a method of pressure on the Ukrainians.

In the case of the adoption of this law, the rate on one-time declaration of assets will enter into force on the day following its publication, but the rate of the method of cost control individuals - from 1 January 2017.

If you have any questions, our company lawyers are always ready to provide you with expert advice.

Author: Olena Kutova

senior lawyer of the Finance Business Service company

No one doubts the fact that assets need protection. But it is important to remember the key aspects of the process. In particular, to realize that it is impossible to completely avoid the risks. They will be, in any case, however, a successful offshore scheme involves their minimization. Often this can be achieved by choosing the "lesser evil", i.e. replacing one risk for another.

Be aware of the danger

The first thing that needs to be done in order to build an effective offshore scheme should be an inventory of possible risks in a particular case. What can threaten your assets? The next step - competently organize the defense in order to avoid potential hazards.

  1. Inadequate control. Do not forget that excessive desire for privacy can lead to loss of control over the assets. Of course, privacy is important, but it must be accompanied by supervision of the owner, it is important to consider when building an offshore scheme. Many have heard about the situation about saving accounts in Swiss banks that have remained in the possession of a banking institution only because the successors of assets have been unable to manage capital. If an access to the data regarding the assets is lost, something similar can happen.
  2. The weakest link. When building a solid structure, consider the consequences of a broken chain. Trust is good, but where is the guarantee that one does not take advantage of your location and do not jeopardize business? For example, there is always a chance that the control of trustee will be lost, striving for greater reward, it will act in favor of a third party. Meanwhile, the property has already been transferred to the trust, and nobody took care of a protector authorized to shift the trustee. The only option left will be to sue, but it will take a lot of time, money and effort.
  3. Section of business. This risk should not be underestimated. If case you create a business structure with a partner / partners, it is important to clearly define all the details out of the joint business. If this is not taken care of, you can get into a difficult situation in the future.
  4. Participant assessment scheme for protection of assets. It makes no sense to risk savings, trusting nominal owners. As for the directors, their rights must be restricted. And the physical and legal persons, who are involved in the scheme, should be checked, then the risk of losing everything will be reduced to a minimum.

To leave minimum loopholes for debt claims in the adjacent business, it is recommended to register every type of asset with a separate structure.

Take into account all the nuances

Possible risks for the assets are not limited only to the above mentioned. In each situation, a list of them will be different, but it is important to consider that:

  • legislation in the country of registration may be changed not in your favor;
  • even in the face of apparent stability there is a danger of unforeseen situations, including local conflicts, revolutions, civil wars, which may affect the performance of the company.

Construction of asset ownership schemes is a complex task. If you are unable to adequately assess the risks and to find solutions to minimize them, instead of protecting the resources other options can be applied. It is important to figure out all the options, and anticipate potential hazards on the basis of this analysis, build an elaborate and most effective scheme.

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Author: Yuri Krasilnikov

managing partner Finance Business Service