Important Matters Relating to your Cyprus, Malta and UAE Companies

Re: Bank Accounts – Important Matters Relating to your Cyprus, Malta and UAE Companies

This is a short and simple and without technical jargon (so it is clearly and quickly understood, given the complexity of the matter) but very important note to alert you of the urgent actions we strongly recommend you to take in terms of achieving the CRITICAL aims of:

• Ensuring banking facilities are available and continue to be available to your company (bank accounts) without disruptions to your operations resulting from the Banks’ new stricter compliance procedures globally which could mean freezing of accounts during lengthy compliance procedures, and
• Ensuring your company is not considered by tax authorities (adverse tax consequences) and banks (closing account and/or freezing of account) as a shell company without legitimate economic and commercial substance. Not having a bank account will cause just that!
• Ensuring you avoid unnecessary – unnecessary, as anyway you are engaging in legitimate business – disruptions in banking facilities and services (and your operations) as a result of the new stricter bank compliance regimes globally combined with poor communication between you and the banks.

This concerns all our clients who maintain a company that conducts legitimate business activities in Malta, Cyprus or the UAE.

For more information or to set up a bank account please preferably Click Here to contact Andreas Lambrou (Group Head of Banking Facilities) OR your contact persons in our Malta, Cyprus or UAE offices.

1. If your company has no bank account

You must open at least one bank account as soon as possible (preferably in 2 banks to avoid operational disruptions due to freezing of accounts/bank transactions during the nowadays lengthy and frequent bank compliance reviews. Such problems are avoided by the existence of a second bank account which is operative during a possible compliance review on the other account and your legitimate business may not be disrupted – note: both have to be used in banking/business transactions, as the banks close inactive accounts fast.

Also, this is recommended as without a bank account the tax authorities will consider that the company has no legitimate economic substance (shell company) and therefore will not be useful to you for its purposes AND banks are skeptical in opening accounts if a company has been set up a while back and has remained dormant since. The fact of ‘no bank account’ raises questions and it is an unnecessary disruption for clients with legitimate business activities and purpose such as our clients.

2. If you DO maintain one bank account

We strongly recommend to open another bank account as soon as possible to avoid operational disruptions due to freezing of accounts/bank transactions during the nowadays lengthy and frequent bank compliance reviews. Such problems are avoided by the existence of a second bank account which is operative during a possible compliance review on the other account and your legitimate business may not be disrupted – note: both have to be used in banking/business transactions, as the banks close inactive accounts fast.

3. If you have a Company that cannot open a bank account locally due to banking sector problems and as a result has no banking facilities available at the moment

Various jurisdictions, Malta being one of them, are undergoing regulatory changes internally which are affecting the banking sector compliance departments making – temporarily of course – the opening of bank accounts very difficult at this point in time. The situation will normalize soon, no doubt, but may take a few months or so.

To address this issue for clients with legitimate business, the only viable option in this case, that we strongly recommend, is to open one (or preferably two, for reasons outlined above) bank accounts in another country in the meanwhile but also to maintain them going forward to minimize operational disruptions.  As an example, in Malta, temporarily, the opening of bank accounts is a very lengthy and difficult process so most Malta companies open in the meanwhile (and going forward as a plan B option) Cyprus Bank accounts.

4. General guidance in dealing with banks nowadays – this is MUST READ

• Ensuring that as far as the banks are concerned and to avoid account closures or freezes:

Your business activities are legitimate and related bank transactions are consistent with them

1. The bank transactions are Normal and Consistent with the legitimate business activity and values/volumes you disclosed to the bank on opening the account AND going forward full supporting documentation and explanations of bank transfers is always at hand to send to the bank if asked so the banks understand clearly that your bank transactions match your legitimate business model as stated initially. For example monies going in and out a bank account in a short period as well as dormant non-moving accounts without valid and solid business rationale is a red flag! Banks don’t like surprises nowadays so discuss anything different or changes with them first – THIS ALSO IS OF CRITICAL IMPORTANCE AT THE ACCOUNT OPENING STAGE
2. The players and their activities are identified clearly: The Company has a website and so do ALL clients and suppliers so the bank can see and review and assess the legitimacy of the business and confirm that there is no connection with bad internet press, legal cases and other internet databases OR risky activities like betting or cryptocurrencies OR sanction list countries or persons  – THIS ALSO IS OF CRITICAL IMPORTANCE AT THE ACCOUNT OPENING STAGE
3. The company has written legal trading agreements (as well as commercial correspondence on all matters) executed with all its clients and suppliers that are not simplistic but fully-fledged professionally drafted agreements detailing the business relationship and transactions between the counterparties. Our legal department can help with that – THIS ALSO IS OF CRITICAL IMPORTANCE AT THE ACCOUNT OPENING STAGE
4. The Company has proper books and records continuously kept and not only at year end and timely prepares financial statements every year which the banks require to be Our Accounting and Auditing departments can help you with that.

The ownership of the company is transparent and clear (ultimate beneficial owners) without evidence or observations raising suspicions to the contrary

1. Apart from the initial KYC and KYCB and due diligence at the account opening stage the Banks, in the context of international banking, want to be in contact DIRECTLY with the ULTIMATE BENEFICIAL OWNERS for all information, documentation and explanations and these persons to be available at ALL times for the bank!
2. Avoid ANY communications via phone, email, text or other means between the bank and your lawyers, accountants, our group executives, an internal or external to your organisation administrator or lawyer or accountant or any third party as this is a negative indication for the bank and not seen as transparent ownership.
3. So, you must deal 100% with the banking relationship YOURSELF without the intervention of any 3^rd party for 100% of the time and for 100% of the matters in question as they arise AND to be 100% in detailed knowledge of each transaction and be able to provide immediately supporting documentation, information and explanations

• You must be fully patient, cooperative and polite with the bank staff – they are just doing their work and understand these procedures are here to stay and are imposed by international regulations, directives and agreements as well as domestic laws. You have to accept this fact and adapt and learn to work with banks in a new way.
• Avoid using your bank accounts for anything other than your main and legitimate business activities as disclosed to the bank at the start of the relationship. If you plan to change anything then BEFOREHAND do talk to the bank and inform them and discuss it and get their views BEFORE initiating transfers/transactions.

5. How we can help

• We run quite a specialized department which is up-to-date with the latest developments in banking and professional regulations and practices and we can give you a number of options for opening bank accounts in Cyprus (especially after the banking system has recovered and now restructured under US and Canadian Ownership) and the UAE as well as other jurisdictions. In Malta, temporarily, the opening of bank accounts is a very lengthy and difficult process so most Malta companies open in the meanwhile (and going forward as a plan B option) Cyprus Bank accounts.

For more information or to set up a bank account please preferably Click Here to contact Andreas Lambrou (Group Head of Banking Facilities) OR your contact persons in our Malta, Cyprus or UAE offices.