I guess I should begin this by saying that this post is probably not going to be at all helpful if you are looking for an offshore bank for an offshore company. This is simply offering an insight into what banking is like in developing countries.
When in Ghana
An unrelated venture on behalf of a client in the shipping business had suddenly taken me to Accra, Ghana, with about a week to spare before I was due to leave the country.
Ghana is an interesting country when it comes to banking, being one of the more advanced in Africa. The fine people of Barclays tried to enact a fully-fledged offshore banking legislation in the country, but the government backed out in the last minute, after massive criticism from OECD, the African Union and other international bodies. In the end, Barclays was the sole bank licensed under the offshore banking regulation.
With or without this legislation, money laundering was already a problem in Ghana. This is one of those parts of the world where you can still walk into a bank with a suitcase of money or precious metals and deposit it without any uncomfortable questions. Not because the banks encourage money laundering, but simply because this is a cash-based economy.
I received an email with a request from a client to open bank accounts somewhere in continental Africa (i.e., not Mauritius or Seychelles) for some newly formed legal entities, whose purpose is to either trade or invest in Africa and which need banking for cash pooling and local investments. Since getting into Ghana can be quite a hassle, with almost no nationals being granted visas on arrival and instead requiring a fairly long visa application process before travelling to the country, this was a golden opportunity.
I told my client to courier the company documents to my hotel and send me scanned copies by email, while I started making calls to banks. Since I know my client prefers to work with local or regional banks (as opposed to large international banks), I narrowed the choices down to a handful of banks.
Most banks were eager to take on a foreign client but many were lacking in features or functionality. After phone calls to every bank in Ghana (it’s not a very long list, especially if you remove international banks) and consulting with a local contact, I had narrowed the choice down to two banks: one of the nation’s largest banks and a smaller niche bank.
When I called the big bank, the person I spoke to on the phone said that they would be happy to open the account with scanned copies only but it would not become fully operational (no outgoing wire transfers) until hard copies of legalized documents arrived. It’s always a bit more fiddly to deal in countries that aren’t signatories to the 1961 Hague Convention.
The smaller bank was, as is common when smaller banks in developing countries are contacted by foreign investors, extremely willing to accommodate and made it clear that the account could be opened with far less stringent controls than the big bank. I dismissed the small bank.
After a few days, I received the documents from my client and headed to a branch where I had set up a meeting. The account opening itself was straight-forward. Ghana is an English speaking country but the accent can be a bit difficult at first. The people at the bank spoke almost perfect Queen’s English, though.
I inquired about remote account opening and was told that it’s possible but something they usually only do for high-networth natural persons, or persons (legal or natural) looking to invest in the local economy. The central bank frowns on remote account opening for other purposes. It’s well aware of the petty money laundering going on and do not want to see it grow into a large international problem.
“Can you please go to Ivory Coast as well?”
It was nearing the end of my stay in Ghana when the same client as earlier contacted me and asked if I could pop over to Ivory Coast and open a bank account there as well.
At the time, almost every country had issued travel warnings to Ivory Coast and getting in, I was told, can be quite difficult. Parts of the country were in a state of upheaval.
In reality, my visit to Ivory Coast was a pleasant if intense one. It was easy to get a visa from the SNEDAI office at the Ivorian embassy in in Accra. All in all, the process cost about 150 EUR. Some cash, some bank, some card.
Once on Ivorian soil, I started researching the Ivorian banks and establishing contacts. I didn’t have a lot of time so I had to narrow it down from 24 to only a handful of banks quickly.
While it in Ghana was easy to find banks that opened accounts in USD, GBP, EUR, and other international currencies, Ivorian banks proved a lot less internationally-minded. Not a single bank here seemed to offer internet banking and regular customer service in English. Most banks also seemed to limit themselves to local companies and persons.
After confirming if my client was happy with potentially having to work with French-speaking customer service, I proceeded to book appointments with three banks: Banque Internationale pour l’Afrique Occidentale (BIAO), Banque Nationale d’Investissement (BNI), and Société Générale de Banques en Côte d’Ivoire (SGBCI).
First up was SGBCI. Soc Gen tends to be a good bank wherever they are located. This was no different except for the hurdles they were insisting on in order to make full use of the bank’s services, including forming a local holding/shell company. I left the bank with the branch manager’s business card in my pocket, because this is a bank I likely will return to in the future but it wasn’t the right bank for this client.
Next was BNI. Government-run investment banks in developing countries are usually open to foreign persons of any kind (legal or natural), as long as most of the money stays in the country and is invested locally. Since this was my client’s intention, I was able to get a good start with BNI.
Lastly, I went to BIAO. This bank was a lot like Soc Gen, less the international reputation of a major bank. Of the three, they were the bank that seemed to be able to offer the best multi-currency solution but in the end I had to rule them out.
So back to BNI I went.
It was agreed with the bank that an initial deposit of a few million XOF (CFA), of which a portion must be invested in the local economy (effectively meaning term deposits), would be made in order to open an account for a non-resident company and issue Visa Gold cards for some of the directors. The due diligence process was quite thorough. A telephone interview with at least two directors from each legal entity was required.
BNI was great to deal with and they were even able to assign my client an English-speaking account manager.
However, it is important to keep in mind that banking in Ivory Coast has a history of being risky. The country is quite unstable, both financially and politically.
Caveat: Parts of this post had to be re-written quite some time after the events took place after some of the original text was lost.
What about banking secrecy?
This is difficult to answer. While there is some literature on the situation in Ghana, Ivory Coast remains (probably) untested.
Both countries have legislation in place that should allow for EOI but whether such legislation actually works, doesn’t contravene other legislation, and is enforced remains unknown. There have been individual cases of information being exchanged but it’s always very difficult to gauge the compliance of relatively poor nations with rampant corruption and political instability, especially Ivory Coast.
These are not reputable jurisdictions, but for banking in the region, Ghana nonetheless remains one of the few decent options on the African west coast.
Follow Up
This post was written quite some time ago. I decided to push back publishing date to let my clients get used to the bank and provide feedback.
The conclusion seems to be that the Ghanian bank is the one they prefer working with for its English website and customer service. The bank has very a very capable remote banking facility.
They have less day-to-day interaction with the Ivorian bank since its purpose is just to store funds. There have been some problems using the cards, relating to the transaction limits being lower than promised and problems when withdrawing money at ATMs in certain countries. The issues have been resolved but the English-speaking contact at the bank had not always been available.
Overall, they knew what to expect from banking in countries like Ghana and Ivory Coast, and are satisfied.
Before you ask: “Does this mean I am guaranteed to be able to open an account with these banks? And that they will open bank accounts for my offshore company?” No.
See Also
What’s up in Djibouti?
I was referring to this phenomenon:
http://truthfed.com/2014/06/13/red-alert-governments-around-world-confiscating-bank-accounts-including-u-s/
http://www.theblaze.com/stories/2014/06/17/this-is-such-a-dangerous-thing-you-might-be-shocked-to-learn-what-the-government-can-do-with-so-called-inactive-bank-accounts/
Another interesting post. Keep them coming!
This comment is a bit off-topic, but I don’t know where else to place it. I know your blog isn’t written for U.S. residents, not at all, but I was wondering if you could incorporate into a future post a peculiarity of American banking that may not exist offshore. I’m referring to a tendency in a number of U.S. states whereby the amount on deposit in an account will be confiscated by the state if there is inactivity in an account! In a matter of a few years of inactivity in some instances. And in the U.S. state of Georgia, it may occur in one year’s time. At least, I read something in the past year to that effect. Are you aware of any other countries where this is becoming common?
Hi,
Inactivity fees are fortunately still quite rare in the banking sector. It’s not necessarily that the banks are unaware of the practice or benevolently deciding not to, it’s that it would be illegal to just take money out of accounts. Another factor is customer outrage, especially in Europe. If one or two banks in any given country were to suddenly start charging an inactivity fee, customers could easily switch to a bank that promises it would never charge such a fee or just close the inactive account. In South America, Africa. and Middle East, the banks already tread on thin ice by balancing fees against the fact that they are largely cash-based economies and banks play a far less important role in day-to-day finances for most people.
It’s hard to say if this will change and, if it does, if it will be implemented and, if it is implemented, how severe it would be. I’d say we’re more likely to see other fees go up before we see inactivity fees becoming a widespread global phenomena.
Thanks for this very interesting post !
I’d like to know what are the 2 banks you are talking about in those lines (if possible) :
– “When I called the big bank, the person I spoke to on the phone said that they would be happy to open the account with scanned copies […]”
– “The smaller bank was […] extremely willing to accommodate and made it clear that the account could be opened with far less stringent controls than the big bank. I dismissed the small bank.”
And why you decided not to choose the smaller bank ? Because they lack of controls or something like that ?
Is that open to anybody to open a bank account remotely in Ghana ?
Thanks again Streber for giving us such good quality post !
Hi Znjia,
Thanks for your comment! Glad you liked it.
I thought about publishing the names of the banks in Ghana at first but I’m afraid I had to decide not to. The reasons that are complicated, but at least I was able to publish the names of the bank(s) in Ivory Coast.
Yes, that is the reason why. The bank was basically going happy to open an account with nothing more than scanned copies of company documents and did not need to know the specifics of shareholders, meaning they would not know the UBO. This means the bank already is or very likely soon will hold significant amounts of illegal money, which can lead to problems down the line.
When I am researching a bank on behalf of a client, one very important aspect is how strong the bank’s due diligence controls are. I personally prefer banks that strike a good balance between being easy-going but also making sure that criminals aren’t allowed in. Some clients want nothing to do with banks that engage in high-risk transactions whereas some don’t mind as long as the bank lives up to other qualities.
This is difficult to answer. In developing countries like Ghana (and Ivory Coast), there is rarely any standardised practises on how banks operate. For example, while you can be reasonable certain that a bank in Singapore absolutely won’t open an account remotely and that a bank in Belize will, it’s much harder to say generally what is or isn’t possible in a country like Ghana. I’d just try to contact a couple of banks that you find interesting.