Corporate Banking

Any body of people whether or not incorporated can open a bank account. This article covers banking for trading and holding entities such as limited companies and trusts. This article covers corporate banking, for personal banking please see our main article. A bank account alone should not render the holder liable for tax except on income arising from the funds on deposit (i.e. interest) which in most cases is paid net of tax. Tax considerations therefore are not generally a major consideration in choice of banking country except in respect of countries which impose restrictions on the movement of capital.

Choice of Bank
The choice of bank depends upon a combination of factors including reputation, credit rating, reputation of country, level of diligence required, confidentiality as well as range of banking services available.

Retail Banking
Retail banking refers to the normal use of a bank account in one of many currencies for making payments and may include online banking facilities and the use of debit and credit cards. Accounts of this sort generally have either a small minimum deposit requirement or a small account opening fee.

Deposit/Savings Account
Placement of funds will lock them for a longer term but the interest rates will be higher. Accounts of this sort are usually subject to a significant minimum deposit level and increased due diligence requirements.

Merchant Services (Payment Gateways)
The receipt of client funds by a corporate entity from card payments (such as online business) may be effected either by the bank directly or by a third party provider. It is generally more expensive to use a third-party provider but such providers may have a more flexible attitude to risk than a bank. A bank may also apply more stringent client take-on procedures than a third-party provider considering areas such as adult entertainment, replica products etc to be too high risk.

Custodian Accounts
Banks may also be used to hold shares on behalf of corporate entities. Whilst this is suitable for long term holdings the associated fees generally make a brokerage account more desirable.

Mortgage Financing
The loan of funds against security over an asset is termed a mortgage and is often used in the purpose of property, vessels and aircraft. Whilst the primary purpose is to raise purchase funding mortgage financing may also be used to conceal the movement of funds into a foreign entity. In this scenario a mortgage over the clients assets may be used as security for a bank to issue to loan to a foreign company in common ownership and thereby partially conceal the connection between client and company.

Back to Back Loans
If it is desirable to conceal the connection between a foreign entity and the person funding it, this can be done to some extent by the provision of a mortgage secured over the beneficial owner’s assets. If this not appropriate another course is a back to back loan. In this case a loan is made from the client to a bank and then onwards from the bank to the company.

The easing of cash-flow considerations by the mortgaging or selling of future income is termed factoring.

Anonymous Banking
Some clients may wish to use anonymous credit or debit cards whilst others may consider these to be somewhat dubious and likely to risk attracting unwanted attention from tax authorities.

Prepaid Credit Cards
The use of prepaid credit-cards may be an effective means to achieving anonymous payments or transfer of money in countries with unreliable banking systems or where other payment systems are not trusted. Since they are also associated with tax evasion, anonymous purchases and the avoiding of national restrictions on the use of online gaming sites they can be problematic since they may either trigger card processors’ anti-fraud mechanisms or attract unwanted attention from banks or tax authorities.

Foreign Exchange
Foreign exchange and foreign exchange options are a service which banks frequently offer to allow clients to manage the risk of currency movements.

Safety Deposit
In some cases the use of a safety deposit facility may be desirable.

Trading Accounts/Custodian Services
Some banks offer trading accounts and whilst generally more expensive than stockbrokers they may be desirable in some cases where few trades are envisaged since banks may be considered to be more financially stable than stock brokers.