Overseas Banking

January 27th, 2021

overseas banking

Land and Expand Part VI – Overseas Banking

Brilliantly ebullient, basically brazen – how to open your overseas bank account and remain rational

We are often asked: what is the most common complaint when setting up in new territories?

Setting up overseas banking facilities.

With the ability to make international payments from the comfort of your HQ (in 2020/21 this translates for many of us as the home kitchen!), it is easy to overlook the need for a physical overseas banking service.  And it is this oversight that can see your land & expand plans that are already underway come to a grinding halt until the task of opening a local bank account is resolved.

Do you really need an overseas bank account?

Depending upon your destination, you may need to open a local country banking facility to comply with any one of a range of requirements. Those constraints may involve the retention of your overseas subsidiary’s share capital; the registration, management and filings of local territory reports and payments; the granting and operation of regulatory licences, actual industry-specific trading activities and so forth.

So why is it such a problem?

Well, technically it should not be an issue.  As with all such compliance requirements, complete the paperwork and, in theory, you are good to go!  But that can be where things fall over. As we are all well aware, it can be the smallest of tasks that become the largest of issues…

Obstacles can arise when you:

  • want or need to move at speed,
  • you struggle to put together all of the required paperwork, and
  • you do not appoint a local country representative to act as signatory.

How can you minimise your headache?

Be prepared!

As quoted by Warren Buffett, Risk comes from not knowing what you’re doing.

Paperwork, paperwork, paperwork!

  • Ensure that you have all of the correct documentation, duly certified or notarised (and in some cases apostilled) and readily available.
  • Identify whether you need a local resident national as signatory and put in place a suitable contractual agreement with that person.

The data required may be substantial and could include evidence of:

  • Proof of address and identity for each officer of the company (and possibly other companies in the group)
  • Same information for shareholders with a defined level of equity stake
  • Same information for the UBO (Ultimate Beneficial Owner)
  • Same information for bank account signatories
  • Incorporation certificates for the relevant company or companies

Consider carefully whether you wish to appoint local country signatories. In certain countries this will be a requirement and may impact banking, corporate control and equity. In other locations, you can choose to appoint your preferred identified known individuals within your home territory as signatories. However, in light of the ongoing pressure on financial institutions to carry out a risk analysis of each potential customer which includes reviews of identity, industry sector, location and so on, local country banks are becoming less open to overseas signatories without the addition of a resident individual.

For those of you operating US  corporates, you should also be aware of the impact of placing US taxpayers as signatories. Please refer to our separate article in this month’s newsletter on FBAR.

Active Banking

So, hopefully the bank account is now live. It may have taken several months to set up, but the day has arrived, and you can now continue with your Land & Expand plans.

Consider how to fund your account.

  • If there are automated debits then ensure there are sufficient funds being retained.
  • If operating in a different currency to your HQ then consider putting currency management processes in place to reduce the risk of losses arising on fluctuations.
  • Do you need credit cards or charge cards for your key personnel?
  • Ensure that the appropriate credit agreements are in place to enable these to be issued.
  • How do you intend to settle these? Do you need to provide corporate guarantees? What are your options? Will you lodge deposits and if so how effective will this be?

A simpler solution

It has been Briars privilege to be a part of our clients’ teams for almost 30 years, supporting your international expansion. It is one part of our duty to ensure that areas of corporate governance (such as provision of banking facilities) are implemented, monitored and managed in a speedy and effective yet compliant manner.

For many of our clients we ease this process with the provision of banking and foreign exchange services through Briars, both available in most currencies and achieved in a fraction of the time taken by the traditional routes. These solutions enable our clients to focus on their plans, instead of the compliance and administration: those are our jobs!

Our solutions also ensure that FBAR is not applicable to US taxpayers.

Your team at Briars is always on hand to manage your Land & Expand project for you, irrespective of your chosen destination and would pick up this aspect as part of the 18-stage plan. We are taken one edition out to focus on Brexit in February and will return to the plan again in March when we hope you can join us to look at Stage 7: Regulatory Requirements.

Kate Jolly

Kate co-founded Briars in 1991 with Andrew Brierley. She specialised in tax law and today continues to advise clients on international operations, particularly land, expand and exit! In her spare time Kate is a Past Master of the City of London Guild of Entrepreneurs and a Director of CCARHT (Cambridge Centre for Applied Research into Human Trafficking).