Congratulations, you have a company
On the small matter of somewhere to put the money — and the four weeks nobody budgeted for it.
Three weeks ago, in a provincial capital, a notary applied a stamp to a document and a company came into the world. It has a name. It has a tax number, a registered address, a director and a set of articles that nobody will ever read again. What it does not have, and will not have for a while yet, is anywhere to put money.
This is the point at which the project is usually described as finished. The invoice has gone out. The certificate has been forwarded as a PDF with a faintly triumphant filename. Somebody has said the words “so we’re all set”. We are not all set. We have built an extremely handsome car, and we are about to spend a month explaining to a petrol station why it should be permitted to sell us fuel.
The misunderstandingTwo different achievements
The confusion is structural rather than anybody’s fault. Incorporation is an administrative act with a published procedure and a knowable cost. Opening an account is a commercial decision taken by a private institution that owes you nothing, on a timetable it declines to share, against criteria it is not obliged to publish. These two things are related in the way that having a driving licence is related to being lent a car.
- The company exists and can be looked up
- It can sign, own, owe and be sued
- It has a tax number and filing obligations
- Nobody’s opinion is required
- Someone has agreed to hold the money
- The ownership chain survived being drawn out
- The business model fits an existing category
- An opinion was required, and was favourable
Clients hear the first and assume the second. Providers quote the first and mention the second in a sentence beginning “of course, bank onboarding depends on”, which is heard by nobody at all.
A company is legal the day it is registered. It becomes bankable some weeks later, if it is lucky, and if its shareholders have all lived at the same address for two years.
The interviewWhat the bank is actually asking
Compliance questionnaires are written in the language of procedure, which disguises the fact that every question is really the same question asked from a slightly different angle. It is worth translating them, because a client who understands the question answers it in two days instead of three weeks.
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I
Please describe the nature of the business activity.
In a category we already have a code for. Inventive descriptions are not rewarded here; “digital ecosystem” buys you a second questionnaire.
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II
Please confirm the ultimate beneficial owners.
All of them, including the one everybody forgot about because he holds eight per cent through a holding company in another country and is, we are told, “basically a friend”.
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III
Please provide evidence of source of funds.
Not of wealth. Of these funds. A screenshot of a portfolio is wealth. A bank statement showing where the first transfer is coming from is evidence.
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IV
Please indicate expected counterparties and jurisdictions.
We are checking this against a list we will not show you. Being broadly honest and slightly boring is the winning strategy.
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V
Please confirm the economic substance of the company in this jurisdiction.
Why here. If the honest answer is “a friend recommended it”, this is the question that will take the longest.
The timetableThe four weeks nobody budgeted
Assume nothing goes wrong, which it will, and the shape is roughly this. It is not a quotation. It is a shape.
Four weeks is the optimistic case for a straightforward file in a jurisdiction that wanted the company in the first place. Add a shareholder in an awkward country, a business model nobody has a code for, or a payment-services element, and four becomes twelve without any particular drama — just a longer, more courteous exchange of letters.
The remedyWhat actually shortens it
Very little, and none of it is clever. Start the banking conversation before incorporation rather than after, so that the structure is built to be acceptable rather than explained afterwards. Choose the jurisdiction with the bank in mind, not the other way round. Collect the documents while the client is still enthusiastic, which is a window of roughly nine days. And apply to two institutions in parallel, because one rejection is data and two rejections are a structural problem worth knowing about early.
What does not shorten it: urgency. Urgency is visible from the other side of the questionnaire, and it has never once been read as a good sign.
None of this is a scandal. Banks are not being difficult; they are being consistent with a set of obligations that somebody imposed on them and nobody thanks them for. The only real error in the whole sequence is the one made at the beginning, when a timeline was written that ended at the notary — as though the certificate were the product, rather than the receipt for the easy part.