Banking UK LTD Startup Difficulties and Shock

[Sols]

Hi Thanks for your reply. I sell medical devices. I don't think this is a "risky" business.

Medical equipment is considered high-risk by financial institutions due to the heightened liability companies may face.

If you do business in MENA, try Turkish Bank (https://www.turkishbank.co.uk), Zenith Bank (Welcome to Zenith Bank UK), Europe Arab Bank (Europe Arab Bank), Union Bank, and Ahli Bank UK. Those are the banks I tend to see the most when it comes to EMEA/MENA businesses in UK that for one reason or another have no success with the big banks.

You can try EMIs like TransferWise and WorldFirst, but have a discussion with them first to make sure that your business model is in line with their AUPs. Medical equipment is a broad term and can include everything from surgical equipment to gloves to respirators and large machines.

It won't hurt to try the others but if Barclays said no, chances are that the other high street banks will as well. It's an unfortunate reality that having a Lebanese passport puts you in an elevated risk category. Combine that with doing business in regions that are also considered high-risk selling goods/services that as well are deemed risky, and it's going to be a tough sell.

Your chances may increase if you are able to sit down with the bank (over a call, if in-person meeting isn't an option) and explain your business in detail. Cold applications submitted online tend to be rejected more often than those preceded by a dialogue.

 

[soly20]

Medical equipment is considered high-risk by financial institutions due to the heightened liability companies may face.

If you do business in MENA, try Turkish Bank (https://www.turkishbank.co.uk), Zenith Bank (Welcome to Zenith Bank UK), Europe Arab Bank (Europe Arab Bank), Union Bank, and Ahli Bank UK. Those are the banks I tend to see the most when it comes to EMEA/MENA businesses in UK that for one reason or another have no success with the big banks.

You can try EMIs like TransferWise and WorldFirst, but have a discussion with them first to make sure that your business model is in line with their AUPs. Medical equipment is a broad term and can include everything from surgical equipment to gloves to respirators and large machines.

It won't hurt to try the others but if Barclays said no, chances are that the other high street banks will as well. It's an unfortunate reality that having a Lebanese passport puts you in an elevated risk category. Combine that with doing business in regions that are also considered high-risk selling goods/services that as well are deemed risky, and it's going to be a tough sell.

Your chances may increase if you are able to sit down with the bank (over a call, if in-person meeting isn't an option) and explain your business in detail. Cold applications submitted online tend to be rejected more often than those preceded by a dialogue.

Thank you for the reply and the information. I do realize that sitting with the corporate person at the bank personally is much better than online application. Unfortunately with COVID, this was the only way to do it. I guess I will wait for COVID to cool down a bit (hopefully it will). I am here in the UK specifically to open this company as a subsidiary for the Lebanese company that I work for. I am yet to transfer the shares to the Lebanese company, they are still in my name. I am afraid that when i do transfer the shares, into the parent company's name, things will be even more complicated! If this doesn't wok, then I won't be ale to runt he business and therefore, my visa won't be extended and I would have wasted years of my life as well as having to move my family again.

BTW, Barclays said yes, opened the account and then 10 days later sent me a letter saying they will close the account in 2 weeks.

 

[Sols]

Thank you for the reply and the information. I do realize that sitting with the corporate person at the bank personally is much better than online application. Unfortunately with COVID, this was the only way to do it. I guess I will wait for COVID to cool down a bit (hopefully it will). I am here in the UK specifically to open this company as a subsidiary for the Lebanese company that I work for. I am yet to transfer the shares to the Lebanese company, they are still in my name. I am afraid that when i do transfer the shares, into the parent company's name, things will be even more complicated! If this doesn't wok, then I won't be ale to runt he business and therefore, my visa won't be extended and I would have wasted years of my life as well as having to move my family again.

If you're not in a rush, then waiting until you are able to meet with a bank in person would definitely be the path I'd go for in this case. Your business is probably fine but there are a lot of red flags that you need to navigate the bank through. A company is in a very different risk category when ownership changes from a local resident natural person to a foreign company.

Try the cross-regional banks mentioned.

BTW, Barclays said yes, opened the account and then 10 days later sent me a letter saying they will close the account in 2 weeks.

That means they said no, just with a delay. They probably gave you approval because you passed all the automatic checks, but then someone manually reviewed it and decided it was too risky.

 

[Martin Everson]

The more you explain the worse it gets...lol.

Lebanese Passport = High Risk
MENA Countries = High Risk
Medical Devices = High Risk
Subsiduary of Lebanese company = High Risk

What next you need to receive USD payments (High Risk) to complete the slam dunk?

You got your work cut out for this one to open and maintain a business account. Just find a MENA bank branch in UK or abroad if you want the banking relationship to survive.

 

[soly20]

The more you explain the worse it gets...lol.

Lebanese Passport = High Risk
MENA Countries = High Risk
Medical Devices = High Risk
Subsiduary of Lebanese company = High Risk

What next you need to receive USD payments (High Risk) to complete the slam dunk?

You got your work cut out for this one to open and maintain a business account. Just find a MENA bank branch in UK or abroad if you want the banking relationship to survive.

Yeah, it is quite sad to hear this. So you are saying, even if a bank agrees to open up an account, they will eventually ask me to close it once they see the activity? Why is USD high risk? Should I asked to be paid with Euros/GBP? Is it better?

 

[Martin Everson]

Why is USD high risk?

It's high risk as banks are subject to extra scrutiny by correspondence banks in NY when processing such payments. Remember all cross border movement of dollars globally within the banking system take place via banks in NY. If a bank in Lebanon sends dollar to a bank in London. Then the funds move between the Lebanon's banks Nostro account in NY and the UK banks Nostro account in NY. The US banks sees the movements and can at any time request data on the reason behind any random movement. The risk of compliance problems due to failure to document the movements or failure to fully adhere to anti money laundering, terrorism financing etc can result in a bank being fined heavily or losing its correspondence banking relationship. It is very different then GBP transactions where the bank is their own policeman as they have direct clearing of GBP with no middleman watching them. EMI's like Transferwise etc even have restriction over use of dollars and so do other EMI's.

Also European banks only really work with large or established companies doing business in MENA countries where the transactions involve documentary credit i.e LC's, SBLC's etc. Thats because these instruments are very profitable for the bank. Unless you can wave this carrot in front of their faces and plan to use such services then economically on a risk reward basis its not worth holding a relationship with a high risk business where they will only earn a small wire fee for all that risk.

Should I asked to be paid with Euros/GBP? Is it better?

Yes 100%. Working outside dollar will not spook banks out so much. However you need to walk into a major bank i.e HSBC branch in London Victoria station and go down stairs and speak to the business desk. Show them legitimacy of parent company and a track record and explain purpose of opening UK company and account. If your business sounds plausible and you will be using some of their documentary credit services then they may at least show some interest. But if Lebanon is on their blacklist then nothing you can do. You will have to keep searching for a MENA bank with operations in UK.

 

[soly20]

It's high risk as banks are subject to extra scrutiny by correspondence banks in NY when processing such payments. Remember all cross border movement of dollars globally within the banking system take place via banks in NY. If a bank in Lebanon sends dollar to a bank in London. Then the funds move between the Lebanon's banks Nostro account in NY and the UK banks Nostro account in NY. The US banks sees the movements and can at any time request data on the reason behind any random movement. The risk of compliance problems due to failure to document the movements or failure to fully adhere to anti money laundering, terrorism financing etc can result in a bank being fined heavily or losing its correspondence banking relationship. It is very different then GBP transactions where the bank is their own policeman as they have direct clearing of GBP with no middleman watching them. EMI's like Transferwise etc even have restriction over use of dollars and so do other EMI's.

Also European banks only really work with large or established companies doing business in MENA countries where the transactions involve documentary credit i.e LC's, SBLC's etc. Thats because these instruments are very profitable for the bank. Unless you can wave this carrot in front of their faces and plan to use such services then economically on a risk reward basis its not worth holding a relationship with a high risk business where they will only earn a small wire fee for all that risk.



Yes 100%. Working outside dollar will not spook banks out so much. However you need to walk into a major bank i.e HSBC branch in London Victoria station and go down stairs and speak to the business desk. Show them legitimacy of parent company and a track record and explain purpose of opening UK company and account. If your business sounds plausible and you will be using some of their documentary credit services then they may at least show some interest. But if Lebanon is on their blacklist then nothing you can do. You will have to keep searching for a MENA bank with operations in UK.

Thank you for the valuable info. I can insist on my clients on getting paid in GBP or Euros.
HSBC definitely has a ban on Lebanon The parent company was a client for years until HSBC pulled out of Lebanon completely a few years back.

 

[Martin Everson]

Thank you for the valuable info. I can insist on my clients on getting paid in GBP or Euros.

Any Lebanon connection is damning for business. US has it in its cross-hairs. Local banks are just not gonna want any connection to businesses out of there until the situation until it blows over. Again find a foreign bank in UK .

https://www.middleeastmonitor.com/2...individuals-and-entities-linked-to-hezbollah/

 

[soly20]

Any Lebanon connection is damning for business. US has it in its cross-hairs. Local banks are just not gonna want any connection to businesses out of there until the situation until it blows over. Again find a foreign bank in UK .

https://www.middleeastmonitor.com/2...individuals-and-entities-linked-to-hezbollah/

Yeah, I know all about these issues. However the US and the world knows that not all Lebanese are affiliated with this terrorist organization and a lot are vehemently against it. It is sad that the whole population is being discriminated against because of one group.

 

[exprtadvisrdev]

The more stuff I read like this the more I believe in cryptos. It makes me sad that most of the people are only using cryptos to speculate, get rich quick and scam others...

 

[netixone]

Hello again. I believe I posted a few weeks ago about having difficulties opening up a bank account for a newly formed LTD. I am a UK resident with a foreign passport. I got rejected by most banks including my personal account bank, Barclays.

I tried again with Barclays and somehow the accepted to open an account for me. I was so happy. I immediately deposited £5,000 into the account in anticipation to start buying some office supplies and paying off some bills i had.
However, to my surprise,10 days later, I received a letter by mail from Barclays telling me that they decided to close my business account in 2 months. I was given no specific reason, only directed to some points in the account opening agreement pointing out some vague stuff about their ability to close any account whenever they want.

It is important to note that in those 10 days, there was no activity other my £5,000 deposit into the business account from my personal account at Barclays. No other bank accounts were involved, no "weird" transactions or cash withdrawals, nothing whatsoever!

I am shocked and disappointed. I thought the UK was business friendly but so far it feels completely the opposite.

Any thoughts or experiences similar to mine?

BTW, I cannot use the usual EMIs since my work will involve international transfers andI will require the IBAN be in the name of my company so that I can receive payment.

In my desperation online, I found 3s.money. Has anyone had any experience with them? Is there anything I should be aware of with them?

Thank you in advance.

S

If you're in the UK you should have a credit file.

Do a credit search on yourself and find out if you have any CIFAS or NATIONAL HUNTER markers.

If you haven't, ask Barclay's why they sent you an NTC (notice to close) after you put money in, be prepared to prove source of origin of money (for example from a taxed source such as PAYE), and hit them with a subject access data request under the GDPR.

If Barclay's have stiffed you, there's a likelyhood that another of the high street banks will as well.


CIFAS

There is a range of markers that may appear on your credit report.

1. Protective Registration: this will appear for two years from the date you purchased the service. It appears on the CIFAS database as a request by the consumer.

2. Victim of Impersonation: if you have been the victim of identity fraud, then a marker will appear on your file for 13 months.

3. First Party Fraud: this involves the promise of future repayment in exchange for goods or services, but with no intent to repay. This can remain on your file for up to six years.

4. Facility Takeover: this is where an individual’s current facility, such as a bank account, is taken over by a fraudster and is then used for unauthorised transactions, or the details are changed. This can remain on your file for up to six years.

5. Misuse of Facility: this is where an account or other facility is obtained, with the deliberate intent of using that facility for a fraudulent purpose. This can remain on your file for up to six years.

6. Asset Conversion: this is where an individual sells goods, to which they do not have title to, under a hire purchase, conditional sale, contract hire, leasing or rental agreement. This most often involves motor vehicles. This can remain on your file for up to six years.

7. Application Fraud: this is where an application is made in the individual’s name, but false details, such as salary, address or employment is included. It may also include falsified documents. This can remain on your file for up to six years.

8. Insurance Claims Fraud: this concerns instances where false information is provided on an insurance claim with the intention of receiving a monetary payout. This can remain on your file for up to six years.

 

[soly20]

If you're in the UK you should have a credit file.

Do a credit search on yourself and find out if you have any CIFAS or NATIONAL HUNTER markers.

If you haven't, ask Barclay's why they sent you an NTC (notice to close) after you put money in, be prepared to prove source of origin of money (for example from a taxed source such as PAYE), and hit them with a subject access data request under the GDPR.

If Barclay's have stiffed you, there's a likelyhood that another of the high street banks will as well.


CIFAS

I am subscribed to Credit Karma and Experian. I have no markers whatsoever. I just got to the country last November.
The source of the money is my Barclay's Premier personal account. I transfered money from my saving's account when I moved to the UK. They don't seem to have have a problem with it in my personal account.

"If you haven't, ask Barclay's why they sent you an NTC (notice to close) after you put money in, be prepared to prove source of origin of money (for example from a taxed source such as PAYE), and hit them with a subject access data request under the GDPR."

I called Barclays and some guy on Business telephone banking said he has no idea why it was done and he said he had never seen this done before, so close to account opening date.

Do you know who can I email about NTC and the subject access data request under the GDPR??

 

[bizniz]

Medical equipment just became super high risk in the last year since Covid started, because there are so many scams with fake PPE, fake everything and banks do not feel they can distinguish between legitimate businesses and scammers. Having read the thread, I think this is the main reason Barclays closed the account.

 

[Fred]

As you mentioned you will deal with Dubai mainly from the MENA country I can imagine that Dubai based banks with presence in London could be open for you as well as you have with your UK residence and company economic link to the UK as well as economic link to the UAE with your clients in Dubai.

You have FAB, ENBD and ADCB in London.

 

[Martin Everson]

Why is USD high risk?

btw I posted a whole article about why USD is high risk. It goes into more depth than I could.

https://www.offshorecorptalk.com/th...ney-laundering-act-of-2020.32659/#post-165160
P.S Never work with USD if you can find a way to avoid it

 

[soly20]

As you mentioned you will deal with Dubai mainly from the MENA country I can imagine that Dubai based banks with presence in London could be open for you as well as you have with your UK residence and company economic link to the UK as well as economic link to the UAE with your clients in Dubai.

You have FAB, ENBD and ADCB in London.

Thank you. I will check them out.
It seems like International/MENA banks seem to be the way to go.
UK banks seem useless.

 

[soly20]

btw I posted a whole article about why USD is high risk. It goes into more depth than I could.

https://www.offshorecorptalk.com/th...ney-laundering-act-of-2020.32659/#post-165160
P.S Never work with USD if you can find a way to avoid it

I can avoid it and use Euros instead. Except for Chinese manufacturers, they require USD! Not sure if they are flexible on this point.

 

[soly20]

I just got rejected by NatWest!

Thank you for your recent application for a NatWest Business Current Account.

We’re sorry, but we can’t progress with your application. As part of our checks we found that you don’t meet the criteria required to open a NatWest Business Current Account.

As a result, you’ll need to make alternative banking arrangements for your business. There’s no opportunity to appeal this.

Despite being unable to help with your request on this occasion, we’d like to thank you for your interest in NatWest.

Kind regards,

New Business Team, National Westminster Bank PLC

I don't know and they don't let you know what the "criteria" is! This is grossly ambiguous! All their questions were answered and they did not require any additional information and/or clarifications.

 

[Martin Everson]

I just got rejected by NatWest!

Natwest is 62% owned by the UK government. They will probably be the last bank to help you sadly

Did you try any of the other recommended banks on the thread?

 

[soly20]

Natwest is 62% owned by the UK government. They will probably be the last bank to help you sadly

Did you try any of the other recommended banks on the thread?

I just got accepted for cardonemoney Business account. Now I am scared they will ask to close the account like Barclays in 10 days!
The approval was not automatic, they called me a few times asked some questions and asked me to send some documents. They said they do provide company IBAN. Is that correct? I don't have to list their account details for incoming transfers? I can't find anything about this on their website.