Providing additional information when opening a foreign account or company is not a fad. The tax service is closely monitoring whether money is laundered via different financial institutions and registrars. Any violation is punishable by a considerable fine.
That is why, when opening an account, the bank will have to follow the KYC - „know your client” procedure. It was developed by the international organization FATF (Financial Action Task Force on Money Laundering), and may slightly vary from state to state.
The story of KYC is beyond the scope of this article, so we’ll only note that, in the framework of this procedure, a businessman will be required to present:
- a copy of his passport or other ID;
- a document confirming the address of residence;
- information about the founder’s occupation;
- a receipt of the absence of illegal activities;
- a recommendation from a bank where he already has an account.
Also, most likely, one would need to make a personal visit to the bank.
Still, disclosing information about the real owner of the company is not always included in his plans. There are several options.
Firstly, you can hire a nominee director who will register the company, go to a bank, open an account, etc. Secondly, you can open a bank account with a real beneficiary, while declaring the tax residence of a country that is not involved in the automatic exchange of information. In this case, only notarized copies of passports will be required.
Both voiced options require time (10+ days). Entrepreneurs who do not want to wait (and do not particularly think about the consequences) usually buy a ready-made company. In this case, the intermediary company prepares all documents (including a token - an electronic key for access to the bank account) in advance for its employee. After that, the buyer of the company pays the commission, receives the constituent documents, the necessary powers of attorney and the token.
Unfortunately, one is unlikely to succeed in a long and productive activity, with the help of a freshly acquired company. Whether law enforcement agencies are interested in the beneficiary is an open question, but the entrepreneur is likely to become the victim of fraudsters.
Buying a ready-made company is like a shady phone that seems to be working, but in a week or two, it will most likely be dead.
How does this work? The businessman ses an advertisement for the sale of a Hong Kong (or Cyprus) offshore with a ready account in a local bank. The bank seems to be serious, the rates are satisfactory, and most importantly, the courier brings the electronic key to the account with the documents to the company.
To begin with, several “test” operations are carried out for small amounts. As a rule, there are no problems with them, the money reaches the recipient on time. When the main financial flows begin to be transferred to the purchased company, and the transaction amounts are measured in hundreds of thousands of dollars, access to the account suddenly disappears. The token stops working, the registrar company does not answer calls, and the bank refuses to communicate with the real owner of the business, since there’s a completely different person in the documents for opening the account.
The scheme is simple, but it comes across quite often. Interestingly, such cases do not reach the court, because when a lawsuit is filed, the businessman will have to reveal his incognito, which he did not plan to do initially. As a result, the money “hanging” on such accounts is classified as loss, and the unlucky buyer gains invaluable experience. The next time, he registers the company according to all the rules.
In the end, it is worth noting that, in some cases, the purchase of a ready-made company with a bank account can still be justified (although we do not call for this). We are talking about cases where there is no time to open a company “by all the rules”.
