4/13/2016

Our views on e-residents opening a corporate account in SEPA (translated).

Dear All,

We have recently received a feedback to our recent post in regard to opening a bank account in SEPA region.  This is a caution we issued in regard to the current EU regulations applicable to the e-residents who cannot or does not wish to visit Estonia and the various proxy services offered to those.  

This is a topic which is very serious as it can undermine the integrity of EU as a single economic zone and our fight against corruption, terror, money laundering and support of the rogue nations with a poor human rights record. In the plight of our world utterly disturbed by the tax evasion scandal of the political figures and large corporations this topic may also have a severe consequence to the reputation of the Republic of Estonia if mishandled. 

While we have not named a business nor private individuals in the caution we earlier issued to the Japanese entrepreneurs - who are planning on making the most out of the e-residency scheme - this particular person who wrote us takes it as a personal attack upon him and continues to feel we are accusing him of conducting some illegal activities and actively attacking us on a social media rather than writing us a formal letter or an e-mail.  However that is not the case as you can read below.


Our current position on how we see the banking related rules for the non-residents under EU laws in response to this person’s feedback is as follows.
The text in Italic is the message received from a concerned individual (All questions are his).






- Please delete or suitably correct the post within 24 hours.

OUR RESPONSE:

We consider the amended post. However we are still waiting for the feedback from the Estonian government that we are currently comparing correct information provided by a bank, the current EU Directive  (http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:JOL_2015_141_R_0003&from=EN) and the guidelines issued by ECB.

- The market is chaotic. As you know the e-residency scheme is Estonia’s important national project. That is why I was also selected to be a member of the delegation of the visit of PM to Japan.  

OUR RESPONSE:

We certainly area ware of the importance of the project.  We also collaborate with the Estonian ministries to spread the accurate information on advantages of the e-residency.  We also form a part of FICE and negotiate with the Estonian government to amend the current laws to make Estonia more attractive place for foreign investment and startup businesses. You will soon feel the change made by our collaboration when the minimum wage for the foreign worker will drop to the par with the Estonian average.



- In this post there are errors.  Also by some of the readers may take that someone is bending the facts in order to profit.


OUR RESPONSE:

We have not published the caution by naming any specific businesses or private individuals.

We only sent out a general caution based on the current EU legislation and inquiries to the financial institutions.  If this is problematical to your business would you be requesting us to add a note stating that it is not about your service? We have received reports of three instances when someone offered name changes of the existing Estonian and EU bank accounts or proxy service to open a bank account by an agent in Japan, written in impeccable Japanese). Therefore we issued this caution to inform people. 

- Unless the post is removed or suitably corrected I shall send this post to the sworn translator and forward to the Estonian parties such as the governmental, business and academic communities. If the post is removed within 24 hours I shall remove this message from our Facebook community page.

OUR RESPONSE:

If you decide to take such an action please make sure not to forget to add the link about the current EU Directive which we sent you earlier  - http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:JOL_2015_141_R_0003&from=EN- , the link to the Estonian Ministry of Finance as well as the comments issued by the bank below in order to retain our neutrality:

The e-residency does not constitute a valid identity document in EU. The e-residency card is a tool to facilitate online services needed by the holder of the card and not an ID card.  The e-residency alone will not be adequate to open a bank account.  This is not a policy of one specific bank but the same rule is applicable at all banks.

Excerpts of our correspondence:

March 2015

Every account opening is always evaluated individually. The company, its legal representatives and owners are evaluated in terms of our customer policy (for example we do not service companies involved with weapon production) and their history of payment behavior. There are also other criteria which come from specifics of the potential customer. Under the Credit institution act and Money laundering and terrorist financing prevention act plus numerous international documents we cannot guarantee opening any accounts in advance, the decision is done only after careful evaluation.


In regards of the e-residency. We did understand e-residency then and do now. It is not a identification document. Nevertheless, currently during the process of opening a bank account in Estonia at least one face-to-face meeting with the legal representative has to be held, so holding a e-residency card (digital signature) is not enough for opening the account. Alternatively a notary can identify customers for us. E-residency card is definitely useful for signing any other agreements allowing to give signatures from distance.


Same requirements apply for all banks, but there may be differences who all these requirements are met.


No changes was made to rules and process of opening a bank account and a face-to-face interview is still required.

March 2015

Estonia wishes to get as many functionalities to e-residency card as possible. We have heard that a law amendment is being discussed, but at this moment it does not have official move (it is not in our parliament to discuss), so it is hard to give a prediction - I believe that not before the year end.


February 2016

Last time we discussed opening accounts to e-residents. I have to say there still are no actual changes regarding opening accounts as personal meeting with the new account holder is strictly required.

+++++ Bank is now focusing on serving local companies on the Estonian market and the cross-border customers of the +++++ Bank Group. We concentrate on medium-sized and large companies with more complex business needs. We have not closed our international business department, but the range of customers we will service, has changed. According to our strategy we welcome customers having actual business in Estonia.

Personal meeting with the new account holder is still required for any new customer, resident or non-resident, but the e-residency could help during the established relationship (for example digital signing of agreements). As opening of a particular new account will be decided in a customer committee, all the document copies can be collected and reviewed prior to the personal meeting, as well the decision of establishing new banking relationship can be made prior to the personal meeting. Decisions about opening the accounts are made in accordance with our new strategy.

I hope this gives you full overview of the changes we're having.

end of excerpts.

There is possibility that you may have taken this information on bank account for e-residents as a possibility to open a business account. 

We assume that you were informed by your legal team about the same subject as we clarified in the message sent to you.  There is a possibility for the e-residents to open a private account with a 2,000 Euro monthly limit that is meant to be used for payment of various fees and other small expenses prior to arrival of the e-resident to attend an interview.  This account is not meant to be used as a company account.


- We would like to continue exchanging information and establish a healthy market.


OUR RESPONSE: 

We are a not-for-profit non-commercial organisation therefore we cannot say we can assist you the way you want to profit from us. However, as we have always been, we still offer consultation service so please do not hesitate to contact us.

- There are people who are on the banks’ blacklist. When the authorisation letter issued by the client is used by the agent the bank carefully conducts a character check.
OUR RESPONSE: 

As mentioned above, there are some who are rejected as a result of background check prior to the interview. As a high credit rating at a Japan’s financial institutions may not be taken seriously here as Japan is listed as a country which does not commit to anti- terror, anti-money laundering and anti-funding of rogue nations of poor human rights record. Please consult with the information available at ECB.
 

- My consultants at a large legal firm confirmed that there is nothing illegal.

OUR RESPONSE: 

 As above, it is possible to open an e-residents’ small expenses account but not a business account without an ID check. If there is someone issuing an official statement to counter this please send us a copy.  We will request the government to conduct an investigation.

- Nobody told me that it’s best for the client to physically visit Estonia.  I already work with the Estonian government on another project. At the meeting we unanimously agreed that there is no need for the client to come to Estonia as long as there is an authorisation letter (power of attorney)
OUR RESPONSE: 

A face-to-face meeting is required. Please refer to the information above.

- These people are the delegate members when the PM and ministers visit overseas. Also the authorisation letters are issues by the large listed bank.

OUR RESPONSE: 

We also meet with the ministers.  We also notice that the importance of e-residency scheme is fading due to the other more important agenda related to the upcoming election and currently this scheme has its hands tied due to the EU ruling as described above.  The same rules apply to huge international banks and small local banks.


- My legal consultants and the large banks should already know about the EU Directive.



OUR RESPONSE: 

As mentioned above, no changes to the regulations.  Also submitting the proposals to the EU has not been successful.  Please check the past logs of Estonian news or parliament’s records.


- If so Estonia is finished as a sovereign state. Also the Swedish banks are finished. I have a confirmation from the banks that it is OK for me to work as an agent.
OUR RESPONSE: 

If you have names of companies and their owners who are e-resident holders who managed to open a bank account without visiting Estonia please let me know.

- Isn’t by requesting assistance to someone trustworthy and letting him open a corporate account the best way? It must be tricky to fly in from Japan without preparation.  If one wishes to open a corporate account there is a necessity of a guidance by the professionals. However this may be costly. One’s command of English is questioned and I understand that coming with a translator is not permitted - in fact I was informed by the senior bank manager that no translator can be present during the interview.  Even when an EU citizen who can speak English fluently was rejected at the counter.  We summoned the managers from three banks and had a discussion about it.

OUR RESPONSE: 

Such debate has been on for a long time already.  Yet there is no concrete outcome. Estonia being an EU member state and also being a member of ECB there is no exception.  Opening of a corporate account is based on thorough background check of the owner and there maybe a possibility of bringing a sworn translator if the owner is considered incapable of comprehending and agreeing the conditions on the contract the application is rejected.

The e-residency scheme was designed so that anyone can simply apply for it with a minimum amount of paperwork.  If one requires full support from the start to the establishment of a business perhaps the person concerned won’t be able to operate the business or day-to-day banking adequately. 
We offer assistant services to those who fully understood the system yet not enough time at hand to manage all necessary tasks. We introduce the specialists in the necessary field to facilitate the process and make the short visit to Estonia a worthwhile.  We also do not operate as a commercial entity that we remain not-for-profit. We strive to make Estonia a more attractive place for foreign investment and starting up businesses with a partnership with the foreign chambers of commerce.

- That’s all.


OUR RESPONSE: 

As mentioned above we merely stated our general understanding of the current EU laws and the statements of the financial institutions.  We are not targeting or naming any specific businesses or private individuals.  If you are confident and completely in control of the services you offer then you have no need to threaten this way.  If you still have any doubts you can simply request the official statements to the appropriate institutions on their understandings. If you are still not completely sure of the legal situation surrounding the opening of a corporate bank account by the e-residents without attending an ID check this is not be beneficial to both the clients and yourself.  As an established business if you receive a question or comment from others you can simply take that into account and conduct  search to find the right information from the right parties. Simply extracting the words, sentences and paragraphs which is advantageous to you and rejecting anything else is rather immature reaction and best avoided.

We wish you a big success in the future.


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We do not make rules nor accuse a particular business or individual. However if one feels accused of malpractice and threatens us to change our views we will resist.  We do not provide any forms of legal advice using our names and we consult the appropriately qualified legal advisors.  The above is for information only. The most current laws you must consult with the appropriate European Institutions.

The above is an expression of our current understandings based on the information we have gathered with the utmost care. In the case some of the items are out of date or inaccurate we stand corrected.  Please feel free to contact us for any items you wish to discuss with us.  Our e-mail is here.