KNOWLEDGE BASE

Account Opening Procedures

INTRODUCTION

All the offshore and international banks we work with regard the prevention of money laundering and terrorist financing to be of the utmost importance, so do we.

OCRA Worldwide does not seek to work with offshore banks which have low standards of compliance as, apart from our own desire to only work with reputable partners, the culture and business ethos of such offshore banks must not be flawed.

Consequently the offshore and international banks we work with will seek to:

• Obtain evidence of our clients' identities
• Develop a documented understanding of our client's banking and business activities
• Identify the source of funds paid into accounts to ensure that such funds are not derived from criminal activity and to document evidence relating to source of funds
• Monitor banking transactions to identify and forestall money laundering
• Risk assess each and every client

This means that offshore account opening procedures can be onerous and time consuming.

Typically offshore banks will require some or all of the following information to open and operate an offshore account for a simple offshore company which is owned by individuals (rather than a corporation, trust or other form of entity):

• Certified proof of identity of owners, directors, account signatories and all parties connected with the offshore company.
• Acceptable proof of identity would normally include a passport copy certified in a prescribed manner by an officer of the bank, a notary or an authorised OCRA Worldwide Manager.
• Proof of residence of all parties associated with the offshore company. Acceptable proof of residence would typically include an original bank statement or credit card statement.
• The provision of a curriculum vitae.
• The provision of bank or professional references.
• Information relating to the expected annual income or asset base of the offshore company, the number of transactions per month, the geographic spread of the proposed business and the amount of money that will be left on deposit at the bank.
• A detailed description of the proposed business activity, often supported by documentation such as brochures, copies of contracts, audited accounts, business plans and details of trading partners or investments.
• Documented evidence relating to source of funds, e.g. if a million dollars is to be paid into an offshore company's account, the bank will seek to obtain documentary evidence relating to the source of such funds in the form of a bank statement, contract or similar.
• An initial meeting with potential bankers possibly with an OCRA Worldwide Manager.
• Some banks require clients to visit them on an annual basis.

In addition, enhanced due diligence will be undertaken if the affairs of the offshore company are complex or if it, or any party connected to it, is associated with what banks or regulators perceive to be high-risk. For example, stringent enhanced due diligence is typically applied to business emanating from countries which were former members of COMECON, counties classified as "non co-operative" by the Financial Action Task Force, or countries associated with the production and distribution of illegal drugs or infamous for corruption.

OFFSHORE BANK ACCOUNT MAINTENANCE

Once an offshore account is opened it is important to keep the offshore bank briefed and current with the affairs of a client company or trust. Banks do not react well to unexplained account activity, so if a company's trading pattern is set to change or a large or unusual transaction is about to occur it always wise to pre-warn the bank and provide documentation such that the bank can understand and maintain evidence of the wholesomeness and reason for the proposed transaction.

Maintaining an efficient relationship with a bank is a two-way process.

WHY WE CONTROL OUR COMPANY AND TRUST BANK ACCOUNTS

When OCRA Worldwide provides Directors, Managers and officers to a client company or when OCRA Worldwide provides trustee services, its officers must control any underlying bank accounts.

Why?

There are various legislative and regulatory requirements and precedents relating to the duties of directors and trustees relating to their obligations to exercise effective management and control over a company's or trust's assets and affairs. Put more simply, would any reasonable businessperson, aware of the duties and liabilities of directors or trustees, be prepared to act as a director of a company or act as a trustee, if they did not control the company's or trust's bank account?

If our clients were to exercise control over bank accounts it could be perceived that they are controlling the affairs of the company or trust even though they may not be officers or trustees. Statutory authorities in high tax and other areas often seek to apply "the management and control test" to assess whether the profits/income earned by an entity controlled in a low tax area should be taxed as if they were resident in the high tax area.

There is an inherent possibility that if we allowed clients to control bank accounts, then a regulatory authority may deem that our clients are effectively managing and controlling the company or trust in their countries of residence or more radically may seek to pierce the corporate veil or judge a trust to be a "sham".