How to open an account for high risk businesses
Certain businesses are universally considered high risk no matter where you incorporate the company or where you’re looking to open the bank account.
The term high risk applies to shareholder’s nationality, countries of business incorporation, as well as business activity.
Depending on the bank’s appetite for risk tolerance, a high risk company’s activity such as gold, oil, diamond trading and similar activities, may be considered high risk by certain banks and low risk by others.
Finding a bank that accepts high risk business activities is the key to opening a business account for companies engaged in high risk business activities.
What is considered high risk business activities?
Risk appetite varies bank to bank.
If your business activity is high risk and you apply in a bank that only accepts a little risk businesses, in is unlikely that you will obtain a favorable outcome.
Companies that are involved in these activities should be aware that banks that opens corporate accounts with these type of businesses involved in high risk activities usually charge a higher fee for onboarding, monthly as well as transactions, both incoming and outgoing of the account
The below section covers some of the most common businesses that are considered to be highest risk and the most difficult to open a bank account for, while the list is not inclusive of all high risk businesses, it is a good indication as to what financial institutions such as banks and electronic money institution that are able to open business accounts and offer an International Bank Account Number (IBAN number), considered to be high risk.
List of high risk activities, industries and countries
In general, the below business activities are universally considered as high risk.
1) Financial Services (Online and Offline)
Cryptocurrency exchanges and platforms such as:
- Binance, Kraken, Crypto.com and other Virtual Asset Service Providers (VASP) Where users come together and engage in Peer To Peer (P2P) trading.
- Cryptocurrency exchanges are a form of broker dealer platform, where end users can come and purchase cryptocurrency and other digital assets such as Non-fungible token or NFT for short, either directly from the exchange or from each other.
- Unregulated investment platforms where a company provides investing services but do not have the necessary regulatory licensing to do so.
Financial service providers such as:
- Electronic Money Institutions (EMIs) whose main function is to transfer digital money or “e-money”.
- Money Service Business (MSB) involved in exchanging and transferring funds either domestically or internationally.
- Payment Service Provider (PSP), commonly known as Payment Processors, responsible for processing, accepting and acquiring payment.
- Forex and binary options trading.
- Remittance services for cross border exchanges into cash or another bank account.
- Unregulated investment platforms where a company provides investing services but do not have the necessary regulatory licensing to do so.
2) Cash based companies
- Bars and nightclubs.
- Car washes.
- Casinos and gambling operations (commonly known as “gaming”, both online or physical).
- Convenience stores.
- Pawnshops.
- Restaurants (especially with high cash volumes).
- Parking garages.
3) High-Value or Luxury Goods Dealers
- Antique dealers.
- Art dealers and auction houses.
- Jewelry dealers.
- Precious metals and stones traders.
- Watch dealers.
- Yacht or private jet sales.
While it is possible to open businesses for accounts with these types of industries, the company providing these products and/or services should have the necessary Know Your Customer (KYC) and Anti Money Laundering (AML) policies in place to ensure that customer funds are of a legitimate source
4) Industries with corruption or sanctions exposure
- Construction and real estate.
- Contracts related to government entities in high-risk countries.
- Defense industries and arms trading.
- Oil and gas, mining and trading.
5) Geopolitical and Regulatory Risk
- Businesses operating in or with high risk/sanctioned countries:
- Afghanistan, Australia, Balkans, Bangladesh, Belarus, Bosnia and Herzegovina, Burundi, Central African Republic, Crimea, Cuba, Congo, Donetsk People’s Republic, Eritrea, Guatemala, Guinea, Guinea-Bissau, Haiti, Iran, Iraq, Lebanon, Libya, Lithuania, Luhansk People’s Republic, Mali, Myanmar, Nicaragua, Niger, Nigeria, North Korea, Russia, Serbia, Somalia, South Sudan, Sudan, Syria, Transnistria, Tunisia, Türkiye, UK, Ukraine, Venezuela, Yemen, Zimbabwe.
- Offshore companies or trusts in offshore tax havens such as Panama, British Virgin Island, Cayman Islands
- Dual-use goods that can be used as by both civilian/military such as drones and other Unmanned Aerial Vehicles (UAV).
- Trading conflict minerals or products as a result of exploitation of labor.
6) Digital & Tech Platforms
- Adult entertainment websites.
- Dating platforms, whether locally or cross-border.
- Online gambling and gaming.
- Privacy services providers.
- Unregulated social media platforms with payment options.
7) Others high risk activities
- Cannabis-related businesses (CBD – even if legal locally).
- Charities and NGOs (especially those operating internationally).
- Crowdfunding and peer-to-peer lending platforms.
- Second-hand car dealers.
- Tobacco and vape retailers.
- Used electronics resellers.
Bank account opening for high risk businesses
Certain banks and jurisdictions are known for accepting high risk businesses, as they are in the “high risk” jurisdiction themselves.
High risk jurisdiction can be classified as:
- Countries that are unstable due to economic conditions.
- Traditional offshore countries such as Cayman Islands, Bahamas, British Virgin Islands, Seychelles are considered high risk in certain aspects as these countries are classic offshore jurisdictions, but their financial and economic situation are completely stable.
Banks and other financial institutions located in these high risk jurisdictions that opens bank accounts for high risk businesses, understand the challenges faced by customers based in these high risk countries, industries and therefore develop their business model to mitigate risks and employ specialists who are industry high risk industry specialist in understanding risks associated with activities thoroughly.
How to open a bank account for high risk industries?
Companies should have the necessary framework in place that can satisfy and convince banks, that the business is doing their part in eliminating money laundering, by employing the necessary Anti Money Laundering (AML) procedures.
Strong AML policies assist companies in high risk businesses to understand their customers and identify customers that are suitable to engage in business with and those that are not.
Where to open business account for high risk companies
Most banks have financial institutions that opens bank accounts do not service risk businesses.
How BUH consulting can assist
BUH Consulting can assist companies to develop AML policies that are stringent to identify, mitigate and eliminate risks that businesses involved in high risk environments faces.
Our team will work with you to understand your requirements, eligibility criteria and apply for your business and personal bank account with the most suitable banks and assign relationship managers from various that can onboard your account for your company.
Contact information
For a tailored solution, contact us to discuss about your requirements.
Email: – sam@buh-consulting.com
Phone: +971585086656
Whatsapp: +971585086656
Telegram: BUHConsultingAE