Is it easy to pass compliance in a Georgian bank? Opinion of REVERA Georgia lawyers
- Principles of compliance procedure when opening an account
- Our observations and conclusions
- Our recommendations for successful compliance procedures
In our recent practice we have had several cases of opening bank accounts, and on their example we would like to share our insights on the results of compliance procedure. In this article the term “companies” refers to two types of legal entities:
- Legal entities registered on the territory of Georgia (companies, branches, representative offices);
- Non-resident legal entities.
Principles of compliance procedure when opening an account
As a standard, when considering an application to open a current account for a company, banks ask for the following information:
- Existence of a substance in Georgia.
This may be evidenced by contracts with counterparties in Georgia and abroad, labor contracts with employees or a lease agreement for premises.
- Information on the counterparties with whom calculations are planned
List of data: name of the company, country of incorporation, tax residency of the company, field of activity of the company.
- Information on the amounts and currencies in which payments are planned to be made.
In this case, it is the total amount and currency of transactions planned with counterparties located both in Georgia and abroad.
- Information on ultimate beneficiaries
List of data: citizenship, occupation, origin of funds deposited in the company account.
- Information about the company's activities
Includes a description of the planned projects to be realized by the company, the vision of the clients.
As a result, you have approximately the following package of documents: Extract from the register of entrepreneurs on the registration of the company and passports of the beneficiaries.
- Contracts with counterparties, labor contracts with employees in Georgia, office lease agreement.
- Documents confirming the activity of the beneficiaries (employment contracts from the previous place of work).
- Confirmation of the origin of the beneficiaries' funds deposited to the company's account (contracts, as well as bank statements on the accounts to which the funds were paid).
- Tax returns of the beneficiaries for the last year.
- Project presentations on the company's planned activities.
Our observations and conclusions
- The compliance procedure in Georgia will particularly scrutinize beneficiaries from Belarus and Russia, so you should be prepared to provide additional documents.
- If a company has no prior agreements with counterparties or employees, it is highly probable that the bank will refuse to open an account.
- Also, if the origin of funds deposited to the company's account is not direct and transparent, the bank will refuse to open an account for the company.
| Example: The purpose of payment for transactions (transfers of salary, dividends and other income) should explicitly state the reason for payment. If the income was received by private transfers between individuals, the bank will not take such a transaction into account. |
Our recommendations for successful compliance procedures
- Provide all documents at once and do not delay in responding to the bank's requests.
- Show direct and transparent origin of funds deposited to the company's account.
- Take care of drafting contracts or preliminary agreements with counterparties in advance.
- Provide documents in English or Russian.
- Use “live” phone numbers and emails.
If you need help preparing to open a Georgia bank account, the lawyers at REVERA Georgia can help.
Authors: Levan Pogosov
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