When considering options for opening a corporate bank account in the UK, businesses have several choices, including:
Brick-and-Mortar Banks: Brick-and-mortar banks, also known as high street banks, are traditional banks with physical branches where customers can conduct face-to-face transactions and seek personalised assistance. These banks offer a wide physical branch network, allowing for in-person support and accessibility. Although these banks are usually more reputable and provide you with a wide physical branch network for personal assistance, they also have lengthy processing times and potentially higher fees.
Online Banks: Online banks operate exclusively through the internet and mobile apps, without any physical branches. They are known for their streamlined processes, cost-effective fee structures, and user-friendly interfaces. It’s important to distinguish online banks from FinTech providers.
FinTech providers and online payment platforms: As previously mentioned, these often differ from traditional and online banks in that they typically do not hold banking licenses issued by the Financial Conduct Authority (FCA), although they do offer a range of digital banking services to some extent. While these FinTech solutions may not provide a complete banking solution, they serve as powerful tools for international businesses looking to expedite their entry into the UK market.
UK Branches of Overseas Banks: These offer specialiszed services for clients from specific countries, making it easier for businesses with shareholders from that country to open a bank account in the UK. They typically hold a banking licencse from the FCA. These often have bilingual staff, experience in international transactions, and a better understanding of the regulatory requirements for clients from the respective countries. Especially if your company will need to make cross-border transactions outside of the EU for its operations, UK branches of overseas banks would be the most suitable solution, since whereas many banks may find it a red flag for account opening as it requires additional scrutiny and workload for the bank.
It is important to note that it might take up to three months to open a bank account in the UK. Therefore, we advise that businesses consider applying for multiple types of bank accounts concurrently to enhance their chances of successful account opening.
Know Your Shareholders
UK banks place significant emphasis on compliance with anti-money laundering (AML) regulations and Know Your Customer (KYC) procedures. They must undertake customer due diligence before setting up a bank account for their new customers. Therefore, detailed information about all key foreign shareholders (usually owning more than 10%), including personal identification documents like passport copies, two forms of proof of address, and the source of their funds for the capital, will be required. These will need to be translated into English if they are not already in English.
Appointing a UK Resident Director
When establishing a corporate bank account in the UK, it is important to highlight that most banks require the company to have at least one director who is a UK resident since it provides a local point of contact and enhances their ability to conduct due diligence on the company. Many financial institutions prioritise this requirement, and this is one of the first things to take into account when navigating the account opening process in the UK.
Appointing a UK Resident Company Secretary
Appointing a UK resident company secretary could potentially expedite the account opening process. The company secretary may act as a liaison between the company and the bank, facilitating communication and ensuring compliance with UK corporate governance requirements. While it is not mandatory to have a company secretary, it can positively influence the bank’s decision to open an account.
Providing Business Documentation and Proof of Substance
During the account opening process, the banks will require a comprehensive business plan that outlines your company’s activities, projected financials, and future growth prospects. They may also ask for licences or agreements relevant to your business operations. Your representative dealing with the account opening must have comprehensive knowledge regarding the company’s operations.
Considering Immigration Law Aspects
For companies planning to employ foreign employees, obtaining a Sponsorship License from the UK Home Office is a crucial step. To be eligible for the licence, the company should have a corporate bank account in the UK with a bank registered by FCA and Prudential Regulation Authority (PRA).
While some businesses may consider using bank accounts from FinTech providers or digital banks for convenience, these institutions may not meet the strict criteria set by the UK Home Office for Sponsorship License applications. Therefore, it is important for companies aiming to employ foreign employees to check and confirm whether the bank that they are applying for is a PRA and FCA-regulated bank or not.