Reasons for Failure to Open a Personal Bank Account in 2024

Today, the banks are no longer interested in absolutely every person who comes to open a personal account. They value their reputation with international regulators, and they’d better lose a client than end up being involved in some scandal that will ruin their activities. As a result, if a potential customer seems doubtful, the bank will deny the services. Naturally, you should be ready for meticulous checks if you decide to apply for a personal account. In this post, we will take a brief look at what stands behind the bank’s refusal to set up accounts. If you need more detailed information on why a financial institution may deny you a foreign bank account, follow the link where you will also be able to contact professionals and ask any questions free of charge.

Let’s take a look at some of the most widespread reasons for opening an account abroad:

• To engage in different investment opportunities
• To create a financial cushion outside the home country
• To pay for goods and services online
• To hide money from a partner
• To protect assets in case of divorce

If you wanted to open an account abroad 10 years ago, there were no problems with that. However, times have changed, and customers now have to comply with more stringent requirements to be approved.

This is not because the banks have become more picky: they have to strictly adhere to due diligence, AML, and KYC requirements, or they risk facing sanctions or losing their licenses. All this results in more rejections than before.

Let’s take a more detailed look at each point where the bank may have its doubts:

• Due diligence. At this point, the bank has to carefully evaluate the risks of having the applicant as a customer. A dishonest depositor may deal a heavy blow to the bank’s reputation.
• KYC (Know Your Customer). The bank will need detailed information about you, and it will meticulously check every fact in your application. However, even if you have successfully concluded an agreement with the bank, you cannot sit back and relax: if the bank considers some documents or transactions suspicious, they may request additional documents.
• AML (Anti Money Laundering). The bank will verify each transaction, so you’d better document them properly. Don’t give the bank a reason for the slightest suspicion or your account will be blocked.

All of that may sound frustrating or irritating, but the present-day situation looks exactly like that: foreign banks don’t want to be caught working with dubious customers as they will have to pay heavy fines – or, in the worst case, their license will be revoked. The only way out is to cooperate with the banks in the way they want you to.

Foreign Accounts

The account opening process is a standard thing in the majority of banks. There are several steps they need to take to set up an account, and many of them do not need any personal input on your part. However, you’d better be well-prepared for the final interview as it seems to be the only way to influence the bank’s decision.

The bank may turn you down at any of the stages below:

• Application submission (in person or online)
• Providing personal information to the bank (which differs from the submission of documents)
• Passing the required compliance procedures
• Having an interview (some banks conduct it online) to put your signature on documents

Reasons for Refusal to Cooperate

The bank may have three large groups of reasons to turn your application down which can be roughly divided into formal reasons, informal reasons, and miscellaneous reasons. Let’s take a look at each of them in detail.

Formal Reasons

• If you were a client of any other bank and there is some unfavorable information about you in the database (like ChexSystems), the bank will refuse to cooperate.
• Errors in the database. In this case, you have to take care and correct them, or you will have everlasting trouble with banking.
• You may have a poor financial history. We are talking not just about overdue loans but also about unpaid bills, overdrafts, transfers you can’t explain, frequent cash withdrawals, or a negative balance on the account with another bank you have closed.
• Poor track record with previous banks or law enforcement agencies.
• If you are on a sanctions list, the bank may refuse to cooperate.

Informal Reasons

• Your income comes from a source that seems dubious to the bank. Getting a fee for the service in an envelope is one such example.
• You fail to submit a proper CV. The bank will then check every detail and look at your social media to make sure everything is fine.
• If your income is low, the bank may be uninterested in you.
• If your age is under 18 or over 90, you may be considered a risky customer.
• If the primary purpose of opening a personal account is to use it for commercial purposes, the bank will not work with you.
• The jurisdiction of your citizenship is under sanctions.
• You fail at the interview stage – well, simply because you are unprepared.
• Language barrier at the interview. If you doubt you can communicate in English properly, it’s perfectly OK to bring a translator with you.
• You failed to provide proof of residence address or there are some issues with it.
• You encounter problems transferring an initial deposit to the bank account.

Miscellaneous Reasons

• You apply for an account on your own (many banks prefer working with agents who do the primary work of checking your documents for compliance).
• You have a poor statement from another bank (there are late or missed payments, the balance is low, or there is not much account activity).
• You can’t provide a proper reference letter to the bank.
• Your foreign passport will soon expire.

Conclusion

The first thing you can do to increase your chances for success is to strictly follow the rules, which will help you to avoid at least the formal reasons for refusal. However, if you have a history of service denial by several banks or you want to be sure the account will be opened, use the services of professionals. You can follow the above link to read more or talk to an expert if you have any doubts about yourself as a potential bank customer. The good news is that practically all issues can be successfully resolved!