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Martin Nordh

UK de-risking – The impact on legitimate business

So, you’re running an awesome company and want to expand to the UK. Makes sense, it’s still the financial hub of Europe despite Brexit and all that. So, you set things up: A UK Limited company, tax registration, payroll, an office and all other things that comes with.

You obviously also want a business account with a UK bank to pay salaries and get paid by customers. It’s easy! If you first create a shell company with a front man director that is. Otherwise it’s impossible. The reason? UK AML Regulations.

Wait. How could this happen? Aren’t the AML regulations supposed to prevent dodgy activities such as conducting business via opaque corporate structures? Let’s take one step and see what’s going on here.

Since some time UK banks have started to deny any corporate customers with directors living abroad. Makes sense, right? Non-residents, we all know them and we’ve seen them: Russian oligarchs lurking in the shadows.

This time around however, something seems to have gone wrong. It doesn’t appear to matter what industry your company is in or what country your directors reside in. It doesn’t even matter that your UK company is 100% owned by a parent company in an EU country and that you can prove a very transparent ownership structure. The simple fact that your directors don’t live in Leeds is all that’s needed to decline your bank account application.

We faced this very challenge ourselves when starting Acuminor in London and I’ve heard so many stories from entrepreneurs and UK advisers that it’s clear to me that this is not just a random thing – it’s an approach adopted by the entire UK banking industry.

So what advise did I receive from others in the same position and from professional advisors? Well it’s easy:

  1. Create or buy a UK Limited company with UK residents as front man directors.
  2. Start your UK bank account (now no questions are being asked since you can prove that your UK resident director is not a bad guy since he can send the bank a photo of his gas bill).
  3. Once you have your bank account, simply replace the front man directors with the directors you actually want. No one will know because no one will check.

We did not go down that route for the simple reason that we live and breathe anti-financial crime every day. We will never be part of creating opaque ownership structures or promoting advisors who provide those kind of services.

Funny as it might be, it’s also a very good example of what effects broad de-risking could have – in this case encouraging a behavior that all anti-financial crime professionals are trying to prevent.