Foreign Bank Accounts: Possible Issues and Their Resolution

Bank accounts opened abroad provide tangible advantages, which is the reason why they remain popular even despite some difficulties with setup and problems that may arise afterward. Overseas banks will protect you against galloping inflation, simplify payments on foreign websites, and make receiving a salary abroad a convenient process. While there are a lot of articles on the Internet on benefits of offshore accounts, there are few posts that analyze possible issues and how to deal with them. Let’s bridge this gap.

Failure to Receive Transfers from Counterparties

The most widespread issue when we are talking about payments from counterparties is the wrong payment information. The bank may turn the payment down if the recipient’s information or bank details turn out to be incorrect.

Here are some additional factors that may result in payment rejection:

  • If the recipient’s bank has limitations on international payments, the transaction will be blocked if the limit has been reached.
  • If the balance on the sender’s account is insufficient to make the payment, it will not be made.
  • If the recipient’s bank detects some suspicious activity, the transaction may be frozen as a precaution.
  • The bank may request additional details regarding the counterparty before it gives the go-ahead to payment processing.
  • Issues may arise if the counterparty’s business activities are not in line with those of the foreign account holder.
  • Some organizations may have no access to international payment systems.
  • Of course, we cannot exclude technical issues that may result in payment delay or rejection.

Sometimes, the sender can withdraw the payment by himself for different reasons.

How to Resolve: Get in touch with the bank’s manager to receive explanations. In most cases, the issue may be successfully resolved quite quickly.

Account Opening Application Turned Down

International banking system is undergoing changes, and some of them are reflected in laws. As a result, foreigners find it harder and harder to set up a bank account and they need to provide more and more supporting documents.

You usually cannot find out why this or that bank refused to create an account for you. Nevertheless, there are some common reasons behind this decision:

  • The banking institution discovered some negative facts about the company or its ultimate beneficial owners.
  • The applicant provided unreliable information.
  • The company carries out operations subject to licensing without actually possessing a license.
  • The company deals with any unrelated business operations.
  • There are signs of fraud in the submitted documents.

How to Resolve: Provide exhaustive information about the company and personal data to the bank manager. If you are rejected, analyze what may have been done in the wrong way before you choose another bank. However, if you don’t want to play this game for too long, you may turn to specialists. Click on the above link to get in touch with an expert and use the pre-approval service. It doesn’t cost too much, but it allows you to understand whether the bank is in principle ready to accept your company as a customer before you make any further steps.

Unusual Transaction Fees

Sometimes you may see that the bank commission is higher than usual. Let’s see how it can be explained:

  • Operational costs. Fees may be higher if the bank processes non-standard transactions requiring more resources.
  • Interbank fees. The recipient bank charges a certain processing fee if the amount you receive passes through several banks and payment systems.
  • Currency conversion. If the sender pays in a different currency than the currency of the recipient’s account, a conversion fee may be due.
  • Risk insurance. Processing international transactions or physical documents may result in additional fees.
  • High-risk foreign jurisdictions. If the country is flagged as a high-risk destination, the transaction may cost more.
  • Express Services. Speed usually costs something, and the banking services are no exception: urgent transfers come at a higher fee.
  • Nonstandard transactions. If a transaction seems dubious to the bank, a higher fee may be charged.

How to Resolve: The tactical solution is to immediately reach the bank manager and ask for explanations. As a strategic solution, it would be wise to look at the specific nature of this particular transaction and study the bank fees thoroughly to know what to expect in the future.

Third-Party Access to the Account

When you open an account, you may decide to provide joint access to the funds. Let’s look at the steps you will need to take to provide access to the funds to one or several third parties if the account was set up by a single holder:

  • Get in touch with the bank to find out the procedure required in this case.
  • Decide on the level of access you want to grant (making transactions, viewing the balance, or both).
  • Complete the required bank forms to protect the interests of all the parties involved and provide detailed guidelines on how to use the account.
  • File any additional documents upon request.
  • Make sure the bank has confirmed that third parties are now entitled to access the account.

We strongly recommend that you study the agreement on account access as meticulously as possible and seek legal advice if necessary.

Bank’s Repeated Requests for Certificates

When you set up a business account with a bank abroad, you will have to provide a Certificate of Incumbency (if your company is more than one year old) and a Certificate of Good Standing. These documents are usually valid for one year, and they have to be effective when you submit them to the bank.

However, the bank sometimes requests these certificates again and again. Here are the reasons why it may happen:

  • Technical mistakes that simply have to be corrected.
  • This is a part of credit risk minimization to protect the interests of the banking institution.
  • The bank needs to periodically update the data about the customer and confirm its financial standing.
  • The certificates have expired and the bank wants to have valid documents on file.

Want to know more about typical issues associated with foreign bank account opening? Please follow the above link to read the full text of the article or contact our professionals using the live chat during office hours or another means of communication you will find on the portal. A foreign bank account is a must in the present-day world, and all you need to do is to be well-informed to take advantage of this useful tool.

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