How to IT pros in a foreign bank to prove the origin of funds

It's no secret that domestic programmers, designers, business owners are actively working in foreign markets. This freelance, and remote work, and its own foreign company. At certain speeds, there comes a time when it is more convenient and profitable to receive payment to a foreign account.



And here an IT specialist may encounter a very specific and extremely common problem: before opening an account and transferring money to it or starting to receive it from customers, it is necessary to prove the legality of the origin of the funds.

Money is no longer a reason to open an account

If you have money, this does not mean that a foreign bank will gladly meet you and open an account. Over the past 5-6 years, the banking world has changed a lot. This is connected not only with sanctions against Russia, but primarily with the so-called BEPS (Base erosion and profit shifting) and the fight against terrorist financing.



Many still have a picture before their eyes: you come to the bank, put a suitcase of money in front of the employees and open an account for you without any questions.



Firstly, not every IT specialist has a suitcase of cash. Secondly, the larger the amount, the more meticulously checked the client and the origin of his funds. And cash always raises suspicions, even if you deposited it into an account through an ATM in your native country.

Today there is a situation when it is not the client who chooses the bank, but the bank who chooses with whom to cooperate. And the moment with checking the origin of funds is one of the most important. This is especially true for non-resident clients, that is, immigrants from other countries who are not taxpayers in the country where they open an account.



Example: a developer lives in Russia, but customers in Germany. He wants to open an account in Europe to accept payments on favorable terms. The Russian developer will be tested more thoroughly than the local programmer.



In general, the trend is developing in the world to refuse non-resident banking (from servicing foreigners for no good reason). In some countries, for example, in Latvia, this has already led to an outflow of billions of euros and to problems for the business, which opened corporate accounts in Latvia.



For IT industry workers from Russia, as well as from the CIS, the following points are an additional challenge:

• Sanctions against Russia and some banks;
• The general information background in other countries where banks are afraid of becoming accomplices in laundering large sums of money through another Laundromat , as happened at Deutsche Bank, Danske Bank and many others.

That is why opening a foreign account is first and foremost a meticulous preparation of documents. Any bank will need to provide an identity document (passport) and proof of address (utility bill). This is the base.



But increasingly, banks are demanding proof of the legal origin of funds. What do they mean by that?

Get ready in advance: what documents does a foreign bank require in order to prove the legal origin of funds?

The first point worth paying attention to: are you getting your income in cash or to your account? In the first case, additional efforts will have to be made, and the second is more familiar and understandable to banks around the world.



The first document that all foreign banks require to make sure that your funds are legal is a tax return. Your personal tax return, received a confirmation, and a copy certified by a notary is the easiest way to prove the legality of money.



And this is perhaps one of the ways to prove legality and cash: you write out invoices, keep a cash register, issue checks, pay taxes. If you paid taxes, then in general there are no complaints against you.



Except in the only case: if the amount you deposit into a foreign account is higher than the amount that you earn.



The second common option that is suitable for those who do not submit a personal declaration is a printout from a bank account for at least 6 months. It must be properly framed, have the necessary information (not only a name, but also an address).



If the IT person receives the main income from the local employer, then he can request 2NDFL form. Information is also relevant here as to how you are paid your salary: to your account or in cash. It is recommended that before opening a foreign account, first deposit your income into a bank account (for example, through an ATM). As a result, you will be able to provide two documents: account statement and 2NDFL form, which together can already work and convince bank employees to take you as clients.



The above examples are more relevant to those who receive a salary or earn freelance. And if there is no salary or freelance / salary is only part of the income and do you plan to open an account for large amounts?



Firstly, a tax return helps, in which you can enter all your income (do not forget to pay taxes on them).



Secondly, there are other documents proving the legality of funds:

• The contract of sale of real estate (if cash was used, it is better to immediately put this money into the account and provide an extract);
• Proof of receiving dividends from your own company;
• Accounting / tax reporting of the company itself;
• Inheritance;
• Lottery (this also happens);
• Selling a business / company share;
• Credit;
• Sale of shares;
• Investment activities;
• Other documents proving the origin of the funds.

The more documents you can provide, the better.



The item “I had personal savings” by banks is not taken seriously. Money from your personal “nest egg” also needs to be confirmed with documents.



If you understand that your documentary base is too flimsy, then you should prepare. At least in the last 6 months you should have clear evidence: bank statement, declaration and other documents. In other words, it can be called a “credit history”, which has long been mandatory in the Western banking system and serves as a tool for checking the client.



When working with foreign banks, the phrase “without a piece of paper - you're a bug” takes on a truly grandiose scale.



This applies to the opening of both personal and corporate accounts. The Bank has the right at any time to demand additional documents and they must be submitted in a short time.



IMPORTANT : you need to understand that the final decision on opening an account is always made by the bank and its security departments. Unfortunately, even 100% correct documents and a presentation from a specialist may not work if the bank is not ready to cooperate with you for some reason.

How to prove the legality of the origin of bitcoin and other cryptocurrencies?

Cryptocurrencies are one of the most promising assets of today. No matter how the price of bitcoin jumps, there is always the opportunity to earn money, both in the top 10 and in smaller players in this market.



What many do. When the time comes to withdraw funds to fiat, questions may arise.



Cryptocurrencies are not a fully developed part of economic legislation. Somewhere they are treated with understanding, somewhere they are compared with securities (with all the ensuing tax consequences), and somewhere they are waiting for what others will come up with in order to adjust in time.



Foreign banks are divided into those that refuse to work with funds received from cryptocurrency trading; those that are willing to consider options; and those that deal with them professionally, including in large volumes (transactions from $ 500,000).



From the point of view of the proof of legality, everything is extremely individual here. In the best case, you will be required to provide screenshots of your wallet and the history of the purchase / sale of bitcoin. At worst, they will require you to show in which part of the tax return cryptocurrencies are indicated and how many taxes have been paid from them.



This point should be decided individually with a professional consultant and checking the rules of the selected bank.

After opening an account, checks do not end

When the account is open, it would seem that you can breathe freely. But it was not there. The principle "not a step without a piece of paper" continues to be valid after the activation of your account.



Regardless of your type of activity - freelance, business, or salary account - in order to save “karma” in the bank, you need to clearly monitor several things:

• The first transactions are the most important. Each transaction must have confirmation in the form of invoices, accounts, checks and so on. If the bank has any questions, it will freeze the transfer and try to contact you personally. In the early days, it is vital to stay in touch and respond promptly to bank questions. He may be interested in where and where the money goes, ask for documents or explain the structure of the transaction.
• All subsequent actions should fit into your chosen model of behavior. For example, in business, when opening an account, they ask you to provide a list of the main contractors with which your company collaborates: hosting, consulting, large consumers of services and products. It also indicates the average amount of the check, the approximate turnover per month. If any parameters change dramatically, questions immediately arise. Therefore, if you plan to hold a major contract with a new client, then in order to avoid hassle when communicating with the bank's security service, notify them in advance about the upcoming transaction. At least a few days.
• Your personal data is stored in the bank and is periodically checked. If you have been interviewed in a bank (and many banks practice them in a personal or remote format), then his record can be stored and checked on occasion: do you act according to what you said?
• Bank rules change over time. Political, social, tax reasons force to change the law, which then leads to a change in the policies of banks. In just 5 years, banking has become much more difficult, and experts predict that the peak of "rigor" is yet to come. That is why documents should be approached carefully and conscientiously from the very beginning.

How to prove the origin of funds: useful principles

Finally, I want to summarize and make several principles that should be followed in order to open and maintain a foreign bank account:

1. Documents are the foundation of everything.
2. Documents are required to be submitted at least 6 months in advance, or better, more.
3. Declaration, account statement, company accounting - the main documents. The rest is useful to add.
4. If now there are not enough documents to open an account, from today begin to prepare and save them.
5. Consult with specialists who will tell you how to restore some old documents, how to prepare reports and, most importantly, how to prepare a common set of documents so that the bank understands it with understanding.
6. Before opening an account, make sure that you choose the bank that suits you and your business - otherwise it will be a shame to spend time and money, and then get completely different from what is required.

Despite the difficulties that await you, opening a foreign account is an important step to diversify risk, increase convenience and reduce commission costs.



Confirm the origin of the funds - the task may not be simple, but it is temporary.



Accustomed to save all documents, you will quickly gain the necessary mass, which will be enough for any foreign bank.



And if you permanently reside in Russia, do not forget to declare foreign accounts within 30 days.