Can't open a business bank account: Main reasons & Solutions

Starting a business or expanding operations overseas can be thrilling, but it also comes with its share of challenges, one of which can be opening a business bank account. Unfortunately, many entrepreneurs find themselves facing repeated rejections from banks and online payment institutions, even though they're running a perfectly legal operation. As a digital payments platform ourselves, we unveil the reasons behind these rejections and offer possible solutions. Let's dive in!

Main reasons for denied business account applications

Let's explore the most common obstacles businesses face when applying for a bank account.

Overseas registration or lack of local presence

Businesses that are registered overseas or lack substantial operations within the country of the bank account application often face hurdles. This includes international companies trying to open accounts in foreign markets, and businesses without a significant physical presence in the application country.

For example, an Estonian-based online business attempting to open an account in the UK might encounter difficulties due to being perceived as an external entity with limited local footprint. Banks may view such situations as higher risk due to concerns about the business's commitment to local regulations and economic stability. This can be a particular issue for digital nomads or online businesses without a fixed location.

However, it does not mean it's not possible to open a business account overseas. Digital alternatives like MultiPass can be a good option, offering IBANs and helping businesses manage payments just like locals in the UK, EU, US and other foreign markets.

Non-resident directors or beneficiaries

Banks may be hesitant to open accounts for companies with directors or beneficiaries who are non-residents or hold foreign passports. This is also seen as a higher risk, even though such discrimination based on nationality (along with race, gender, religion, or other protected characteristics) is technically prohibited.

In reality, banks have the right to reject any potential client deemed risky as long as the bank's decision is based on legitimate business considerations and compliance with the law, without disclosing the specific reasons for rejecting a client.

Medium or high-risk business industry

Banks often label certain sectors as high-risk, extending beyond typical industries like CBD, adult entertainment, gambling or cryptocurrency. The list of 'undesirable industries' often includes finance, IT and tech companies, especially those with innovative business models, such as telecommunication firms selling data or minutes. This is because their revenue streams and financial flows might be complex or unconventional, making it difficult for banks to assess and monitor them effectively.

This is where smaller e-money institutions help, ready to invest time and resources to review the underserved cases. To facilitate successful account applications, businesses in these sectors must be ready to thoroughly explain their business models and financial practices, providing all the necessary documentation that may include invoices, agreements with partners, detailed information on business owners, and more. This will help mitigate legal concerns, prevent issues like blocked payments, frozen accounts, and pave the way for a stress-free banking experience.

Complex business ownership structure

Some businesses are structured with various tiers of ownership, which might include multiple holding companies, subsidiaries, and partnerships internationally. This layering can make it difficult for banks to determine the ultimate beneficial owners – the individuals who control the company. Banks often refuse to open business bank accounts to these businesses due to the increased risk of money laundering and fraudulent activities.

For holding companies, it is a good idea to work with a cross-border payments provider that is ready to thoroughly check and onboard all the holding's companies. This way it can benefit from quicker and cheaper payments between its subsidiaries, while the financial institution can keep a clear view of all the company's activities. This approach to managing funds is not only easier but also helps in keeping things transparent and in line with financial regulations.

Foreign partners in sanctioned regions

Businesses with partners overseas and frequent cross-border payment flows such as those in logistics or wholesale trade also often find it hard to open bank accounts. Having foreign partners does not automatically lead to rejection but these businesses may face additional scrutiny during the account opening process. This is to make sure they have no payment flows in sanctioned regions, high-risk locations or any connections to individuals from international sanction lists. This careful review is necessary to comply with global financial regulations, AML and KYC policies.

Newly registered business

Newly registered businesses, often just listed with Companies House, typically lack a financial track record, which can be a red flag for some banks. A startup just getting off the ground may find it harder to establish banking relationships.

While the majority of banks do offer startup-friendly packages for domestically-focused enterprises, startups engaging in international operations or e-commerce, and those needing merchant services, might find the onboarding process more streamlined with online payment providers. These digital platforms often provide more tailored solutions and are generally more adaptable to the unique needs of customers with cross-border activities.

Previous account closure

There are many reasons why banks may terminate a business account. Some of them such as overdrafts, suspected fraud, breaches of terms & conditions and others can negatively impact new applications. This information is typically added by the banks to the 'blacklist' banking databases which are then checked by other banks and payment service providers before accepting a new client.

Incomplete or incorrect documentation

Failing to provide complete or accurate documentation is a common reason for business bank account denial. Simple errors or omissions can halt the entire process. This could include inaccuracies in company registration details, incorrect addresses, or outdated financial statements. Moreover, deliberately concealing information or providing misleading documentation can lead to immediate rejection and potential legal consequences.

Finding alternative solutions

searching online alternatives for business bank accounts

If you feel unfairly treated by the banks, you may stand a better chance with an e-money institution. After all, they appeared to provide competition to the high street banks, innovate and together build a better, more flexible and transparent financial landscape for both large corporations and small businesses globally.

Most traditional banks already have a large customer base that transacts locally, this is where the biggest part of their revenues comes from. They are not particularly interested in more complex international banking cases that require a more thorough and individual approach, unless these companies have a huge turnover.

At MultiPass, we're committed to making cross-border payments simple and accessible to businesses around the world, no matter their size. We are more than just a banking service provider, we're here to be your partner for cross-border growth, always ready to review your business case and advise on optimal payment routes for your exact business needs, whether you need to import goods from China, sell software solutions to the United States or pay your globally-based employees. Apply today or contact us for a free consultation!


Why can't I open a business bank account online?

Traditional banks often don't allow opening a business bank account online due to strict verification and regulatory requirements, which typically require in-person confirmation of identity and document review. It is generally much easier to open a business account with non-bank payment providers that have more relaxed onboarding rules and digital verification in place.

Are online banks a reliable alternative for business banking?

Yes, online banks are a reliable alternative for business banking. Just like the banks, they must be regulated by the local financial authorities such as the FCA in the UK. Before choosing one, ensure they are properly regulated and have measures in place for safeguarding customer funds.

What should I do if my business is in a high-risk industry?

Look for online payment providers that specialise in servicing your industry, and be prepared to provide a detailed business description and all the necessary documentation. Consulting with a financial or legal expert can also help in finding the right banking partner.

Why is it so difficult to open a business bank account in the UK?

Opening a traditional business bank account in the UK can be difficult due to stringent regulatory requirements aimed at preventing financial crimes like money laundering. Banks conduct thorough checks on the business, its nature, and the individuals involved, which can make the process lengthy and complex, especially for non-residents or high-risk businesses.

How quickly can I set up an alternative business account?

That depends on your business model and the availability of documents. Business checking account opening with online banks typically takes from a few days to a couple of weeks.

What are the costs of alternative digital banking solutions?

The costs are generally lower than those of traditional banks and include an account opening fee, monthly fees, as well as transaction or currency conversion charges that are typically lower than those of traditional banks. The specific costs can also vary based on the regions with which the business transacts. Businesses in higher-risk industries may face higher account maintenance or transaction fees, reflecting the need for more extensive due diligence in payment processing.

Apply for a business account with MultiPass today

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