Last updated Dec 13, 2023 and written by Tom Richardson

The difficulty of international bank accounts - why is it such a fuss?

It is notoriously problematic for people outside of the UK to get a business bank account. There are very tough money laundering restrictions in place, which help to combat instances of identity fraud.

However, these regulations do claim an often unheard victim – people looking to pursue business opportunities in the UK. Business bank accounts for non-UK residents require considerable persistence to open – as there are numerous hoops through which one is required to jump.

At Company Formation MadeSimple we make an extra effort to cater to our international clients by offering international banking packages to make the process a lot simpler. With both the Banking International Package and the Resident Director International Package providing simple and easy bank accounts for businesses.

But why is it so difficult to open a bank account in the UK, and what are the potential hazards you might be forced to navigate as an international business person looking to work within the UK?

Why are UK bank accounts for non-residents so difficult to get?

If you’re a non-UK resident, even as a British citizen, you might find that your bank has some strange and sometimes unfair practices – this might include preferential rates for savers, as was reported by Lee Boyce for This Is Money.

There are cases of flat out refusals for non-UK residents even when the objectives for opening an account are completely valid, as Guardian reporter Anna Tims highlighted in summer 2014.

There are some important things to consider when determining why UK bank accounts for foreign run businesses are tricky. These range from the simply practical to the extremely significant:

  • Security – The most important reason there are barriers to getting a UK bank account is security. Foreign nationals are subject to more checks, this is because the potential problems range from low level fraud to more serious risks like funding organised crime.
  • Credit – Sometimes determining the credit of a foreign national is more difficult for a UK based bank. This may be because there are less stringent records kept in the country where the person trying to open the account is originally from.
  • Identity – It’s more difficult for the UK government to accept that a person is who they say they are when they aren’t a British citizen. As such, there is a potential for risk in terms of lending and fraud.

Essentially, the reluctance of banks to open UK business accounts for foreigners is based on risk – or the appearance of risk. There are some notable people such as economics journalist John Fingleton, writing for the Financial Times, who summed up the difficulty after trying himself – and concluded that banks have lost the ability to understand customers’ needs.

Fingleton was quoted as saying – “If my effort to open a simple business account reflects a collective inability to distinguish high-growth businesses from bad credit risks in their lending decisions, it is hardly surprising UK productivity figures are so dismal”.

So there we have it, the banks are worried. It’s a shame as it doesn’t promote business in a proactive way. As Fingleton went on to say “Our banks need a radical transformation if they are to stimulate, rather than depress, economic activity”. Company Formation MadeSimple helps to provide bank accounts for non-UK residents as part of certain international packages – so economic activity can flourish.

We now know why it’s so difficult to open a UK bank account, but let’s explore why exactly a UK bank account is so important if you’re based abroad.

Why is it important to have a UK bank account if you’re based abroad

The difficulty in opening a business bank account internationally has been established. The need to comply with Money laundering regulations set by HMRC and Know Your Customer checks advised by the FSA has meant that there are significant barriers.

So why do businesses go to such great lengths to get an account? What are the real tangible benefits? There are several, including the following:

  • Fraud – One of the benefits of all the fraud checks in the UK is that bank accounts are very stringently looked after, meaning that instances of fraud are comparatively low compared to other banks – particularly in high-risk territories outside of Europe such as Africa, Asia & Russia.
  • Accounts & Taxes – Business bank accounts make it much easier for you to file your annual return, as well as monitor business transactions. You could use a personal account, but as it is a requirement for limited company accounts to remain transparent this may not be advisable.
  • Banking Facilities – The type of financial products and services available from UK banks are quite beneficial to a small business, such as credit cards and phone banking.

It’s also important for credibility – other business recognise that there is a significant difficulty in getting a bank account. As a result this means that once you do have one, it’s very highly regarded – particularly if you do business with other people in the UK.

How do UK non-residents open a business bank account?

The easiest and simplest way is to buy one of the international packages provided by Company Formation MadeSimple. It’s a one stop shop for forming your company and setting up your UK bank account. Everything is taken care of and your business can be up and running within 3 hours.

There are numerous other benefits to these packages, with certain options providing international mail forwarding, a consultation with UK tax experts and a London registered office address – as a result, the company administration in the time after formation is made much simpler.

Officially speaking, the following is quite important to know for UK non-residents in business:

  • There is no official requirement for a UK business bank account when you form your UK limited company. It is possible to use a personal account, however using a personal account can make it difficult when filing tax returns and accounts.
  • You can use a bank account in the country where you live and have your documents apostilled to be certified and made legal – Company Formation MadeSimple offer apostilled documents from just £99.99.
  • Non-residency is fine, you don’t have any legal restrictions when opening a business bank account in the UK – it is down to the banks, many of which will not take applications from overseas.

It really can be challenging to open a business bank account in the UK, but with the great expertise of Company Formation MadeSimple you can enjoy a quick and easy approach. This allows you to get on with the daily running of your business, and focus on the core values of your company.

Opening a business bank account in the UK

The UK economy is a very well-established global force, and it has considerable resilience that makes it appealing to foreign business people. Whilst there is not a legal restriction for foreign business accounts, many banks are wary and find a way to prevent businesses from opening new accounts.

The Company Formation MadeSimple international packages are speedy, efficient and reliable to use – so you can form your company in the UK and set up a business bank account with our expert assistance.

Did you find this useful? Make sure you check out the rest of the blog posts on Company Formation MadeSimple for all the latest news and updates.

Resources:

https://www.theguardian.com/money/2014/aug/22/canadian-uk-bank-account-open-refused
https://www.thisismoney.co.uk/money/saving/article-2757760/Lloyds-Bank-blocking-expats-opening-current-accounts-savings-deals.html
https://www.ft.com/cms/s/0/47619478-7613-11e2-9891-00144feabdc0.html#axzz3VIp8zmzQ
https://www.fsa.gov.uk/pubs/discussion/dp22.pdf
https://www.gov.uk/business-tax/money-laundering-regulations