In our previous Article Opening a Bank Account in Cyprus we have explained the procedure and the documentation needed to open a bank account in Cyprus, below we are providing 6 tips to make the procedure easier and to avoid common mistakes.
Increase your chances of a successful bank account application
Let's be honest. Opening a bank account in Cyprus like any other European country is becoming extremely difficult, however, with the right guidance from your service providers, everything is possible. In this short article, we illustrate what the bank is looking for so that you increase your chances to open a Cyprus bank account.
1. You, the owner of the account. Who are you and what you do for a living
Besides the obvious review of the information provided in the application pack about your business and your company or group structure, the bank will want to know who you are and what you have been doing for a living. This is crucial and the number one application rejection reason.
You cannot include in your application pack that your business is about the trading of healthy products, buying for instance from Italy and Greece premium olives, olive oils and similar products selling them to 3rd countries whilst your profession is in IT without any previous experience in the trade of premium products or any trade at all.
This will also become obvious when the banks will be comparing your CV with the online research and your application pack.
2. Experience with the business introducer (accounting firm or the law firm)
Like most cases, it is who you know and how well your service provider is trusted by the bank that would determine the success of your bank account application.
3. Does your application stand?
The bank will visit your suppliers' and clients' websites and will review the contracts (yes you will be asked for those as well) to ascertain the substance, existence, and feasibility. Is your business model proven and likely to be successful?
Let's not forget that banks are like any other business. They want to make money. The administration cost for keeping a bank account is a significant cost to them, even if the account is not active therefore the banks are reluctant to open bank accounts with low activity.
Tip - do not declare that your bank account will have low activity, even if this is the case. Make sure that the bank will review your business account as an account with lots of volumes so that it will be making money rather than the minimum bank account maintenance fees or low transaction fees which are in the region of 350 Euro - 500 Euro per annum.
4. Incomings and outgoings, but most important, incomings
Cyprus is a small island and a fully-fledged EU member. Being a small island with corresponding small for the EU sizes local businesses, the banks are not used to seeing millions of incomings and outgoings unless from a reputable, really, big local or international corporation. Think about it. If 90% of the local business bank accounts held have average business transactions in the region of Euro 5,000 - Euro 50,000 and you declare in your bank opening paperwork that your incomings will be on average Euro 250,000 each and the bank has never heard of you, it will potentially immediately classify you a risky client thus making it harder for you to open the bank account.
Consequently, the minute you declare in your bank application that you will be receiving millions of Euros for your services your application becomes immediately risky and likely to be declined.
Tip: Try to use realistic incoming numbers from services rendered and once the bank account is open and the relationship is established you can increase the incomings which you can discuss with the bank at any given point, but once the bank account is open.
5. Part of a Group --> High-Risk Client (by virtue)
If you belong to a group, you may have thought that this is a good thing and could increase your success in the bank account opening. Especially because you have group audited financial statements and accountants and lawyers all over the world!
Wrong.
Banks classify groups as risky and request extensive due diligence and transaction monitoring continuously, to such an extent that could render the keeping of the bank account a hustle, especially for the Ultimate Beneficial Owners who will have to, on an annual basis, provide KYC information to the bank and have personal electronic communication (via email) with their bankers. This is a key requirement for risk bank account holders; as mentioned above since you belong to a group you immediately become a high-risk client.
Our Advice: If you have a way to set up a standalone company with physical persons as the 100% shareholders of the applicant company it would make your life much easier than disclosing the entire group structure and having to disclose annual KYC information and group financial reports to your local banks each year!!!
6. Physically meet your bankers during the application process
It is a universal rule. Human beings respect and value relationships. Imagine being a bank employee who receives tens of bank account applications per day from service providers who never meet with business owners they also never met.
It is much easier, at all levels, to decline a bank application than an application from a businessman or woman who has visited the branch, met the bank clerk, and discussed their needs. We see it all the time.
Having a physical meeting rather than a Video Skype Call certainly increases your chances of a successful bank account setup. We see this all the time, even for applications we are not sure they will get approved, not because of the credentials of the applicants and UBOs but due to the nature of trade or counterparties involved. Nevertheless, a physical meeting could secure your success.
We have summarized the most important parameters we believe are the most important for you to secure a successful bank account application. There are other factors involved as each application is different but the above factors Will Significantly Increase Your Chances!
About Us
CYAUSE Audit Services has extensive experience in the insurance industry has helped tens of insurance brokers and agents register and get licensed by the local Cyprus regulator granting them passporting access to the rest of the European Union.
CYAUSE Audit Services is an Audit & Assurance firm with offices in Cyprus and the UAE. During 2015 we have been awarded by I.C.P.A.C and the A.C.C.A (local and international association of Chartered Certified Accountants) for the Quality of our Audit Services and our Office's Procedures.
Being a Truly International Audit & Assurance firm, we have associates from all over the world and we are constantly looking for new associates to expand our network further. At present, CYAUSE Audit Services operates internationally through its membership with BKR International amongst the largest American associations in the world, Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience. Our network covers almost 40 jurisdictions with over 2,000 professionals, it supports more than 10,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and processes at least 170,000 payslips globally.
CYAUSE Audit Services Ltd is also a member of BKR International one of the biggest US Accounting Associations of the word and the 3E Accounting Network, an international accounting network which originates from Hong Kong and has more than 80 members from all over the world.
Learn More about Cyprus Corporate Environment
Information about CYAUSE Audit Services and the Cyprus Corporate & Tax System can be obtained from our Website or our YouTube channel which provides valuable information about the Corporate & Tax Environment of Cyprus.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
