Reasons for Rejecting your Singapore Corporate Bank Account Application
Once you start doing business, you must open a Singapore corporate bank account. For any business, you need to send and receive money in Singapore. Singapore is one of the largest financial centres in the world and has strict regulations. There are specific rules pertaining to money laundering which has put an end to financial fraud in Singapore. In this article, we will focus on why your Singapore corporate bank account application was rejected.
For any business you need to send and receive money in Singapore. Singapore is one of the largest financial centres in the world has strict regulations.
Banks have modernized their way of doing business in Singapore. There are more than 125 banks in Singapore that provide services to local and foreign individuals. With changing business landscapes, almost all banks in Singapore have the option to open a bank account remotely.
Reporting Standards- CRS
According to the World Bank, there are international reporting standards present across jurisdictions. Such standards related to reporting have to be harmonized. These reporting standards are known as the Common Reporting Standards (CRS).
As per the above standards, if one authority requires information from another financial institution, then such information must be readily accessible. Reporting standards improve transparency across jurisdictions.
Mandatory Compliances are taken by a Bank while opening your account
All banks in Singapore must comply with the requirements of the Common Reporting Standards. Along with this, banks require to carry out customer due diligence before opening an account. One such diligence which is mandated by the Monetary Authority of Singapore (MAS) is the ‘Know your Client (KYC)’ requirements.
Along with this, the following should be updated by banks on all account holders:
- Estimate the Tax Residence of All Account Holders;
- KYC of All Account Holders; and
- Provide Financial reports of all account holders to the Inland Revenue Authority of Singapore (IRAS).
Establishing the tax residence and KYC compliance is the first step carried out while opening a bank account in Singapore.
Tax Residency Status- What is it?
An entity in Singapore must establish Tax Residency Status. Tax Residency Status is measured by the number of operations and control the business has in Singapore. The following transactions show that your business has Tax Residency Status in Singapore:
- Incorporating a registered or virtual office in Singapore;
- Generating Invoices for Clients, Providing Services and Having Sales in Singapore;
- Employing Staff in Singapore;
- Contributing to the Central Provident Fund (CPF) of Singapore; or
- Paying Corporate Taxes in Singapore.
Difficulties with Opening a Corporate Bank Account in Singapore
While Common Reporting Standards and Tax Residency Status are the main reasons for rejecting your bank account application, there are several other reasons for rejection.
- Physical Presence-Â Though many banks in Singapore have flexibility in operations such as remote opening facilities, still physically being present in Singapore is suitable for opening a bank account. When companies open branch offices in Singapore, many banks want to meet a representative (in person) from the foreign parent company. Some banks allow foreign directors to liaise with the overseas office of the bank for opening an account in Singapore.
- Documentation-Â It all comes to documentation when opening a Singapore Corporate bank account. All banks in Singapore would verify the documents provided by you. You must provide all documents specified by the bank. The following documents would be required by a bank in Singapore:
- Copy of the Board Resolution for Opening a Bank Account in Singapore;
- Copy of the Incorporation Certificates of the Company;
- Copies of the Residential Address of the Directors of the Company;
- Memorandum of Association and Articles of Association of your Business;
- BizFile+ Details of the Company;
- Shareholder or Directors Identification Documentation; and
- Copy of Directors Passport.
If the above documents are in a different language, then make sure to get the official English translation.
- Not Abiding to Terms-Â There may be certain terms that you must follow when opening a Singapore corporate bank account. For instance, several banks in Singapore require you to maintain an initial deposit. If you do not abide by these terms, then your application will be rejected.
- Matching your Business Needs with the Bank-Â You must carry out research before opening a bank account in Singapore. There are different banks to choose from according to your business requirements. Some banks have preferences while choosing the type of beneficiaries it wants to do business with. So, it ultimately goes with matching your business needs with the bank.
Successive Tips on Opening your Singapore Corporate Bank Account
- Increase your Presence-Â If you want to set up operations in Singapore, you can increase your presence by securing employment passes for representatives such as directors and shareholders. An employee present in Singapore would establish Tax Residency Status.
- Generate Revenue in Singapore-Â Another step that you can consider is to generate revenue for your business. This is another method to establish Tax Residency Status.
- Document Verification-Â Ensure that you verify all the documents before submitting them with the application. For instance, you can get a legal representative to verify the documents before opening a bank account in Singapore. Also make sure that all documents are translated into English, if in another language.
- Secure Professional Services-Â Securing the services of a professional such as a corporate services provider in Singapore will reduce the chances of a bank account rejection.
- Comply with Terms-Â When you open your bank account in Singapore, they would provide you with specific terms to comply with. Ensure that you agree with all the terms and carry out steps accordingly.
- Have a Registered Office in Singapore-Â You can incorporate a registered office in Singapore to establish tax residence.
Conclusion
Banks must comply with changing trends of businesses in Singapore. Banks are cautious when opening new accounts in Singapore. If you want to be successful when opening your corporate bank account, then make sure to follow the above guide. You must make sure to establish tax residency status in Singapore. Along with this, make sure to verify all your documents before submitting your application. Opening a bank account in Singapore is not straightforward. However, following the above article will make your application successful.
