If you are looking to open a bank account for your forex company or forex brokerage, then keep reading as we are going to tell you how and where.
It is no secret that banks and payment providers regard forex companies as a high-risk industry and do not want to open accounts for such clients. Even if the account is for proprietary operations (utility bill payments, payroll, rent, etc.).
Many traditional and digital banks just do not have an appetite for such accounts.
Why is it so hard to open a bank account for a forex company?
Opening a bank account for a forex company is very difficult due to the risks of reverse payments. Forex brokers are notorious for scam activities or inaccurate quotations to scam clients. It is especially a case for B-book brokers that are betting against their clients.
Clients who get scammed or feel like they were scammed often ask their banks to reverse their initial deposit payments.
Banks and payment companies are basically risking their correspondent relationship when there is a high amount of reversed payments going through them. Therefore, they do not support industries where the number of reversed payments is high.
How Does The Licence Of A Forex Broker Affect The Opening Of A Bank Account?
Being regulated increases your chances of having a bank account exponentially. Banking providers want to see that your activities are regulated, as it is a risk-reducing factor.
However, it matters where your brokerage business is regulated. It is much easier to land a good banking solution if you are regulated in the EU or any other developed market. If you have an offshore licence, like in Mauritius, the Seychelles, the BVI, and so on, it is much harder. Simply because the regulation and supervision are on a different level in the EU than in off-shore jurisdictions.
Jurisdiction and Group Structure: Things to Know
As mentioned previously, forex companies that are operating in European jurisdictions such as Cyprus, Malta, the UK, etc. are much more likely to obtain banking solutions. Those that are operated from off-shore jurisdictions have more problems getting bank accounts.
However, if we are talking about a group structure with multiple licenced and non-licensed entities, it is a different story. Many digital banks wouldn’t onboard an off-shore forex company. Interestingly, if there is at least one entity within the group structure that is within the EU, for example, Cyprus, it changes everything. Digital banks will look to onboard the whole group, starting with the EU entity and later the rest.
There are many things to take into account when opening bank accounts for a forex company. If you are looking to open an account for your forex company, reach out to us for more help and a list of banks that can onboard you.
Preparing a Strong Bank Account Opening Application
We have helped many forex brokers open bank accounts with digital banks that have proper top-tier banking correspondence relationships. It comes down to two things: knowing the bank's client acceptance policy and preparing a strong application.
Knowing a bank's client acceptance policy is fairly straight forward; upon contacting any digital bank or EMI, they will happily share such information with you.
Preparing a strong application is a demanding task. Banking providers evaluate many things, but there is a list of the most important ones that will be examined with caution.
- AML policies and procedures
- Shareholder and directorship structures
- Source of wealth (SOW)
- Professional background
- Flow of funds chart
- Transactions monitoring system and policies
- PEP/Sanctions Screening
- Wolfsberg's questionnaire
- KYC files of company clients
- Organisational questions like number of employees, offices, etc.
- Client acceptance policy of the broker itself, like jurisdictions, prohibitions, etc.
- Certificate of Good Standing
- History of banking, such as current bank accounts, closed bank accounts, and reasons for bank account opening with the current application
- And more regular requests like company incorporation documents, POAs, etc.
Reach out to us for any help required to prepare a strong application for bank account opening.
Moreover, if you are looking to open a bank account for your forex brokerage business, contact us for a free consultation or introductions to favourable banks.
All in all, it is not easy but possible to open a bank account for a forex company.
If you need help with opening bank account for forex company, reach out to us.