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How to open an account with a Georgian bank

Opening an account is the commonest point at which setting up in Georgia stumbles. Registering a company takes a predictable amount of time and depends on the register; an account depends on a bank, and a bank promises nobody anything in advance.

Who makes the decision

The decision to open an account is the bank's own, taken under its internal rules. Those rules are not published in full, they differ from bank to bank and they change. No lawyer, registrar or intermediary can guarantee the outcome - and anyone who does guarantee it is a reason to be wary.

From which follows a practical conclusion: you go to a bank prepared, not hoping for the best. Most refusals have less to do with the client being a poor one than with the file and the explanations failing to answer the bank's own questions.

What the bank is really establishing

Formally the bank collects documents. In substance it is answering three questions for itself.

Who you are

Identity, citizenship, tax residence, actual address. For a company - who owns it and who ultimately controls it. Consistency matters here: if one document gives one address and the application another, that will raise a question.

Where the money comes from

Proof of the source of funds is not a formality but the heart of the review. What works is documents showing a history: an employment contract and salary statements, documents on the sale of property, accounts of a previous business, dividend documents. A weak position is a large sum with no explicable origin.

What you will do with the account

A description of the business, expected turnover, who the counterparties are and which countries the settlements involve. The bank compares this against what happens afterwards. A gap between what was declared and what actually occurs is one reason an account can be restricted after it has been opened.

Being there in person

As a rule the bank holds a meeting or an interview with the client, and this is not something a representative can do under a power of attorney. A power of attorney works for registering a company; for a bank it is usually not enough. So if the account is needed straight away, the trip is planned in advance - and so is making sure that by the day of the meeting the company is already registered and the documents translated.

A company: describing the business

"Consulting" or "IT services" tells a bank nothing on its own. The question it is looking to answer is more specific: who pays, for what exactly, under which contracts, which countries the money comes from and where it goes.

It helps to bring to the meeting whatever shows the business is real: contracts or drafts, correspondence with clients, a description of the product, a website. A company with no signs of activity is a weak position, however properly it is registered on paper.

Why applications are refused

A bank is not obliged to explain its reasons, and usually does not. In practice a refusal generally comes down to one of the following:

• The source of funds is not evidenced, or the evidence looks perfunctory.
• The bank treats the activity as higher-risk - the type of business, the countries involved, the kind of counterparties.
• Discrepancies in the documents: names, addresses, dates, expired certificates.
• The company is registered but shows no signs of real operations.
• The client is connected with countries or persons subject to restrictions at that bank.

What to do after a refusal

A refusal from one bank does not close the door at another: their rules differ, and moving to a different bank is ordinary practice. But repeating the same application with the same file achieves little. It is more sensible to work out which of the three questions went unanswered and to answer that one.

It is also worth remembering that an account is not a one-off event. The bank may request documents later, about particular transactions. Life is calmer when there is something to answer such requests with, and when the business matches what was described at opening.

What to prepare for the consultation

• An international passport, and a domestic one if you have it.
• Proof of your actual address.
• Details of your tax residence - which country you are resident in.
• Documents on the source of funds: employment contract, statements, documents on the sale of property, accounts of a previous business.
• For a company: incorporation documents, the charter, an extract from the register.
• A description of the business in plain words: who pays, for what, from which countries.
• Expected turnover and the main counterparties.
• Contracts or drafts showing the business is real.
• Details of any previous refusals to open an account.

Disclaimer. This material is for reference, sets out the general procedure and is not legal advice. It has been prepared without regard to the circumstances of any particular matter and cannot serve as a basis for decisions on filing documents, entering transactions or taking other legally significant steps. Reading it or relying on it does not create a lawyer-client relationship. Document requirements, fee levels and time limits are set by Georgian legislation and secondary rules; the law and the practice of applying it change, so the currency of any information is checked on the date of the enquiry. Decisions in state procedures are taken by the competent authority, and no outcome can be guaranteed.