Tuesday, October 20, 2020

Offshore bank account in Georgia – August 2020 update

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Philipp Burger

Treuhänder mit eidg. Fachausweis Steuerexperte

Georgia as a financial centre is gradually changing. From our point of view, however, this is very positive and is associated with a further increase in attractiveness. In this article, we will give you a quick update on the latest developments.

Offshore bank account requirements in Georgia

It is still possible to open a offshore bank account in Georgia remotely, i.e. without the need for travel. The requirements for opening an account are the same, regardless of whether you let us open the account remotely or personally on site. However, if you open an account remotely, we also need a power of attorney and a copy of your passport as explained in more detail below:

Documents for a remote account opening:

  • Power of Attorney certified and with apostille * (form will be provided by us)
  • Copy of passport, certified and with an apostille *
  • Completed KYC (Know Your Customer) form. We fill out this form for our customers directly at the bank. You will receive the questions asked by the bank by email in advance to answer.
  • Bank account statement for the last 6 months of an existing bank account. This proof has recently been requested by the banks in Georgia. The bank account statement is only to be made available on request and can then be sent to the bank directly by email in PDF format. We do not require any bank statements from our customers!

(Note: * An apostille is a form of authentication or legalization that was introduced between the contracting or member states of the multinational convention number 12 of the Hague Conference on Private International Law in 1961. Apostilles are e.g. created by local and regional courts. We recommend having the certification including the apostille done by a notary. In our experience, the costs are around EUR 90.00.)

During the opening process, the bank can ask additional questions or request documents. In this case, we will inform our customers accordingly and forward the required documents/answers to the bank. It is also possible for a bank advisor to call you directly on the telephone number you provided, to additionally verify the account opening. So make sure you give us a valid phone number.

Documents for opening an account on site

  • Valid passport (the banks do not accept ID cards!)
  • KYC (Know Your Customer) form. You have to fill out this form directly at the bank.
  • Bank statement for the last 6 months of an existing bank account. Georgian banks are increasingly asking for a bank account statement. It is, therefore, best to take a copy with you (in English) so that it is available during account opening and there is no unnecessary delay.

We accompany our customers to the opening of the bank account on-site in Tbilisi and support you with the translation (the bank employees speak English) and with any questions that may arise.

Please note: In the past, bank accounts were opened within 24 hours, including bank cards and e-Banking. Nowadays you have to reckon with 3-5 working days due to increased requirements unless the bank requests any further documents. Experience has shown that you should plan more than 1-2 weeks for remote account openings.

Offshore bank account in Georgia and the “Automatic Exchange of Financial Information” (AEOI)

We at TaxFree Matrix have informed our customers that Georgia will most likely participate in the automatic exchange of information in the next 3-5 years.

As the OECD announced on July 16, 2020, Georgia plans to exchange financial data for the first time in September 2023. However, this date is not yet definite and can still change. The fact is, however, that Georgia will take part in the international exchange of information. From our point of view, an important and correct step, which will further strengthen Georgia as a financial centre and its international reputation.

>>Report from the OECD regarding Georgia’s participation in the AEOI

>>OECD list of countries participating in the AEOI (as of June 2020)

Protect your assets with a secure bank account

On my behalf

We have noticed that some founding law firms and brokers of bank accounts in Georgia advertise allegedly having direct contracts with banks or being an official partner of a bank, making it easier to open bank accounts.

The following should be noted: Banks, whether in Georgia or elsewhere, do not make contracts with brokers of bank accounts! At most, banks enter into partnerships with professional institutions such as licensed asset managers or credit brokers. But even with such a “contract” or a “partnership” with a bank, opening accounts are not made any easier.

From a bank, an account is opened as follows:

  • The account opening process begins with the contact of the agent and/or the customer at the bank counter respectively with the responsible bank advisor on site. Here the bank clerk at the front desk only receives the necessary information. These are the personal data, a copy of the passport, contact details of the customer and the completed KYC form. The bank advisor at the front desk is not authorized to open a bank account himself/herself.
  • After the bank advisor has recorded all the information, it is sent to the bank’s compliance department. They will then check the documents and may request further information and documents. Then the compliance employee who was assigned the case decides whether the account is to be opened or not. The head of the compliance department also makes spot checks. The same compliance employee is not always responsible for the same bank advisor. This means that even the bank advisor does not know which compliance employee is processing the account opening. This way, possible abuse is prevented.

As you can see, even if a founding law firm has good relationships with a bank and / or has good contact with a compliance officer, these people will have little influence on the decision to open an account and if they do, it would be, in the virtue of their work, the excess of competencies and privileges. The bank and its employees are bound by strict rules that are specified by the bank and the tax authorities of the country.

“Preliminary investigations”, as some agents offer and advertise, are also not possible. A bank can only make a definitive decision on whether or not an account can be opened for the customer based on the submission of the complete documents and KYC information. So-called preliminary investigations do not help here!

From our point of view, it is questionable for marketing reasons to advertise with dubious statements. Statements made can easily be checked directly at the bank by interested parties and customers.

Conclusion: The bank and its compliance department always have the final say in deciding whether to open a bank account or not. No founding law firm and no intermediary can influence this!

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