You would benefit from obtaining preapproval of your application for banking services in case your intention is to set up an account with a foreign bank. It will be interesting to note that those seeking to open foreign bank accounts are often ignorant of this opportunity. On the other hand, you have gone through the preapproval procedure if you have ever applied for a car loan or a mortgage. IN the case of applying for banking services abroad, obtaining preapproval is about obtaining provisional consent on the part of the bank to open an account for you. What is great about the preapproval opportunity is that it can help you save time and money. You don’t have to collect the entire set of application documents when asking for preapproval: the bank needs fewer papers to assess the possibility of taking you onboard.
Preapproval of applications for banking services: the essence
In the ideal world, both parties should be willing to create a new bank account: the applicant and the bank. However, against the background of the global campaign against money laundering, the banks have to scrutinize every potential customer with great care. If they feel suspicious of a certain applicant, they will deny services to him/ her. Do you remember the times when the client chose the bank? Now things are just the opposite: banks choose clients. The preapproval procedure makes it possible to understand if a certain foreign bank is prepared to provide services to you while saving resources – your time and money.
You have to apply for professional assistance to apply for preapproval to a foreign bank. The procedure consists of the following steps:
- Choose the jurisdiction, the bank, and the account type.
- Complete the application form for preapproval.
- Send the application form to the bank.
- Obtain an answer from the bank: if the answer is affirmative, file the full set of application documents for bank account opening; if it is negative, apply for preapproval to another bank.
Some banking specialists make it possible to send applications for preapproval to several banks at a time. Besides, you can apply for preapproval online.
Obtaining preapproval: is it necessary?
You don’t have to apply for preapproval when opening a personal bank account in a foreign country if the following conditions are satisfied. First, you are able to clearly show where your money comes from (obviously, it has to come from legal sources). Second, you are able to justify why you need a bank account in the foreign country (you have to have some financial interest there). Third, you are a law-abiding citizen of a non-sanctioned country.
When opening a corporate bank account, applying for preapproval may be unnecessary if you company has a transparent business model, an understandable form of ownership, and highly reliable business partners. The types of companies listed below, however, should apply for preapproval by all means:
- Companies engaged in development of innovative products or technologies. The bank officers may simply fail to understand what the company does and what its business model is. Banks do not provide services to businesses that they don’t understand.
- Companies working in the adult sector. These include online casinos, betting service providers, and so on.
- Security traders.
- Pharmaceutical companies.
- Mining companies.
- Investment companies.
If you intend to withdraw large amounts of cash from your foreign bank account, you need preapproval in any case.
Opening a foreign bank account without applying for preapproval
Let us assume that you have chosen a foreign bank where you would like to open an account and you want to skip the preapproval stage. You have to collect a large set of application documents to apply for banking services these days. Because banks are combating money laundering, supplying your personal ID is not enough. You have to supply police clearances, proof of addresses, tax declarations, corporate contracts (if you are setting up a corporate bank account), letters of recommendation, and so on. When you have collected the documents, they need to be translated, notarized, and apostilled. Only when this task is complete, you can send the application document package to the bank.
You have to be aware that banks in some countries (such as Germany, for example) will charge you for registering your application for services. They will start processing your application only after you pay a fee (if banking services are denied to you, the fee is not refunded). Application processing takes different time in different jurisdictions and with different banks. There are some countries with comfortable fiscal conditions and advanced economies, which makes people from many other countries want to set up bank accounts there. The lines can be long and the application processing can take months.
You can receive the following two answers: ‘welcome onboard’ or ‘service denied’. If banking services have been denied to you, you will have to start the application process all over again. Banks often do not return the application documents when they deny services to an applicant. (They will return the document originals but not the copies.) Besides, the terms of validity of some documents will have expired. For example, utility bills (to serve as proof of address) normally have to be not more than 3 months old.
Therefore, you have to collect the application document package again, have the documents translated, notarized, and apostilled again, and send them to another foreign bank. If you choose this path, you may spend years trying to set up a foreign bank account. What is also annoying is the fact that you will have to spend money again: translation, notarization, apostille, and postage do not come free of charge.
Opening a foreign bank account applying for preapproval first
Find a reliable banking specialist and complete the application form for preapproval with his/ her guidance. It is highly important to provide truthful information in the form. You have to understand that the truth will come out anyway when you apply for bank account opening so you cannot lie when submitting an application for preapproval.
At this stage, application documents don’t have to be copied or notarized: they can simply be scanned. Besides, not the full application document package needs to be scanned: only the key documents. Sending the scans to the bank by email does not cost anything.
The bank officer will scrutinize the document scans, acquaint him- or herself with your business model, and check out the truthfulness of some information. This is going to take the bank officer from several days to a couple of weeks. At the end of the process, he or she will come to a conclusion. If your business model looks fine, you will be taken onboard. If your application for preapproval is rejected, you can send the same scans to another bank.
If your application for banking services is preapproved, you should not be too optimistic. It is not a 100% guarantee that a bank account will be opened for you. However, applying for preapproval makes life much easier anyway.
